Norfolk Southern's Q1 earnings rise 10% from a year ago to US$450M as revenue dips 2% to US$2.7B, shipment volumes grow 3%; intermodal revenues up 9% year-over-year to US$573M

NORFOLK, Virginia , April 25, 2013 (press release) –

For 2013 vs. 2012:

  • Railway operating revenues were $2.7 billion.
  • Income from railway operations was $691 million.
  • Net income was $450 million, or $1.41 per diluted share.
  • Net income included $60 million, or $0.19 per diluted share from a property sale.
  • The first-quarter railway operating ratio was 74.8 percent.
For the first quarter of 2013, Norfolk Southern Corporation (NSC) reported net income of $450 million, or $1.41 per diluted share, 10 percent higher than $410 million, or $1.23 per diluted share, for the first quarter of 2012.

First-quarter results included a gain from the sale of land to the Michigan Department of Transportation, which increased net income by $60 million, or $0.19 per diluted share.

"We're pleased with Norfolk Southern's first-quarter results, which illustrate our diverse customer base, superior operating performance, productivity initiatives, and expense controls," said CEO Wick Moorman. "We are working to ensure that our rail franchise continues to thrive regardless of how our business mix changes."

Railway operating revenues were $2.7 billion, 2 percent lower compared with first-quarter 2012, but shipment volumes increased 3 percent.

General merchandise revenues were $1.5 billion, 2 percent higher compared with first-quarter 2012, driven by increased shipments of chemicals and automobiles.

First-quarter coal revenues were $635 million, down 17 percent compared with the same quarter last year, due to lower average revenue per unit and a 4 percent decline in volume, the result of mild winter weather and low natural gas prices.

Intermodal revenues climbed 9 percent to $573 million as volumes increased by 9 percent compared with first-quarter 2012. 

Railway operating expenses for the quarter were $2.0 billion, about even compared with first-quarter 2012.

Income from railway operations for the first quarter was $691 million, 7 percent lower compared with the same period of 2012.

The railway operating ratio was 74.8 percent compared with 73.3 percent for first-quarter 2012.

Norfolk Southern Corporation (NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 20,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal, automotive, and industrial products.

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Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)

   
 

First Quarter

 

2013

 

2012

 

($ in millions, except per share amounts)

           

Railway operating revenues

         

Coal

$

635

 

$

766

General merchandise

 

1,530

   

1,496

Intermodal

 

573

   

527

Total railway operating revenues

 

2,738

   

2,789

           

Railway operating expenses

         

Compensation and benefits

 

780

   

786

Purchased services and rents

 

393

   

391

Fuel

 

429

   

413

Depreciation

 

227

   

224

Materials and other

 

218

   

230

Total railway operating expenses

 

2,047

   

2,044

           

Income from railway operations

 

691

   

745

           

Other income – net (note 1)

 

135

   

29

Interest expense on debt

 

129

   

120

           

Income before income taxes

 

697

   

654

           

Provision for income taxes

         

Current

 

173

   

156

Deferred

 

74

   

88

 Total income taxes

 

247

   

244

           

Net income

$

450

 

$

410

           

Earnings per share (notes 1 & 2)

         

Basic

$

1.43

 

$

1.24

Diluted

 

1.41

   

1.23

           

Weighted average shares outstanding (note 3)

         

Basic

 

314.5

   

328.3

Diluted

 

318.1

   

332.9

           

See accompanying notes to consolidated financial statements.

 

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)

   
 

First Quarter

 

2013

 

2012

 

($ in millions)

           

Net income

$

450

 

$

410

Other comprehensive income, before tax:

         

Pension and other postretirement benefits

 

36

   

32

Other comprehensive income (loss) of equity investees

 

1

   

(4)

Other comprehensive income, before tax

 

37

   

28

Income tax expense related to items of other   

         

comprehensive income

 

(14)

   

(12)

Other comprehensive income, net of tax

 

23

   

16

           

Total comprehensive income

$

473

 

$

426

           

See accompanying notes to consolidated financial statements.

 

Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)

       
 

March 31,

 

December 31,

 

2013

 

2012

 

($ in millions)

Assets

             

Current assets:

             

Cash and cash equivalents

$

 

672

 

$

 

653

Short-term investments

   

15

     

15

Accounts receivable – net

   

1,158

     

1,109

Materials and supplies

   

246

     

216

Deferred income taxes

   

167

     

167

Other current assets

   

65

     

82

Total current assets

   

2,323

     

2,242

               

Investments

   

2,341

     

2,300

Properties less accumulated depreciation of $10,042 and $9,922,

             

respectively

   

25,870

     

25,736

Other assets

   

65

     

64

               

Total assets

$

 

30,599

 

$

 

30,342

               

Liabilities and stockholders' equity

             

Current liabilities:

             

Accounts payable

$

 

1,188

 

$

 

1,362

Short-term debt

   

-

     

200

Income and other taxes

   

319

     

206

Other current liabilities

   

350

     

263

Current maturities of long-term debt

   

47

     

50

Total current liabilities

   

1,904

     

2,081

               

Long-term debt

   

8,438

     

8,432

Other liabilities

   

2,226

     

2,237

Deferred income taxes

   

7,921

     

7,832

          Total liabilities

   

20,489

     

20,582

               

Stockholders' equity:

             

Common stock $1.00 per share par value, 1,350,000,000 shares

             

authorized; outstanding 315,088,379 and 314,034,174 shares,

             

respectively, net of treasury shares

   

316

     

315

Additional paid-in capital

   

1,976

     

1,911

Accumulated other comprehensive loss

   

(1,086)

     

(1,109)

Retained income

   

8,904

     

8,643

               

Total stockholders' equity

   

10,110

     

9,760

               

Total liabilities and stockholders' equity

$

 

30,599

 

$

 

30,342

               

See accompanying notes to consolidated financial statements.

 

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

   
 

First Quarter

 

2013

 

2012

 

($ in millions)

Cash flows from operating activities

         

Net income

$

450

 

$

410

Reconciliation of net income to net cash provided by operating activities:

         

Depreciation

 

228

   

226

Deferred income taxes

 

74

   

88

Gains and losses on properties and investments (note 1)

 

(99)

   

(1)

Changes in assets and liabilities affecting operations:

         

Accounts receivable

 

(49)

   

(34)

Materials and supplies

 

(30)

   

(19)

Other current assets

 

17

   

5

Current liabilities other than debt

 

96

   

316

Other – net

 

36

   

44

Net cash provided by operating activities

 

723

   

1,035

           

Cash flows from investing activities

         

Property additions

 

(379)

   

(461)

Property sales and other transactions

 

19

   

2

Investments, including short-term

 

(5)

   

(4)

Investment sales and other transactions

 

(1)

   

27

Net cash used in investing activities

 

(366)

   

(436)

           

Cash flows from financing activities

         

Dividends

 

(157)

   

(155)

Common stock issued – net

 

55

   

31

Purchase and retirement of common stock (note 3)

 

(33)

   

(400)

Proceeds from borrowings – net

 

-

   

696

Debt repayments

 

(203)

   

(218)

Net cash used in financing activities

 

(338)

   

(46)

           

Net increase in cash and cash equivalents

 

19

   

553

           

Cash and cash equivalents

         

At beginning of period

 

653

   

276

           

At end of period

$

672

 

$

829

           

Supplemental disclosures of cash flow information

         

Cash paid during the period for:

         

Interest (net of amounts capitalized)

$

62

 

$

60

Income taxes (net of refunds)

 

23

   

2

           

See accompanying notes to consolidated financial statements.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

  1. OTHER INCOME – NET
    First quarter 2013 results include a $97 million land sale gain, which increased net income by $60 million or $0.19 per share. 
  2. EARNINGS PER SHARE    
    For basic earnings per share, income available to common stockholders reflects reductions for the effect of dividend equivalent payments made to holders of stock options and restricted stock units as follows:  for the first quarter, $2 million in 2013 and $3 million in 2012.
    For diluted earnings per share, income available to common stockholders reflects reductions for the effect of dividend equivalent payments made to holders of stock options and restricted stock units as follows:  for the first quarter, $1 million in 2013 and $2 million in 2012.
  3. STOCK REPURCHASE PROGRAM   
    We repurchased and retired 0.5 million shares of common stock in the first quarter of 2013, at a cost of $33 million, and 5.7 million shares at a cost of $400 million for the same period of 2012.  On August 1, 2012, our Board of Directors authorized the repurchase of up to an additional 50 million shares of common stock through December 31, 2017. The timing and volume of purchases is guided by our assessment of market conditions and other pertinent factors.  Any near-term share repurchases are expected to be made with internally generated cash, cash on hand, or proceeds from borrowings.  Since the beginning of 2006, we have repurchased and retired 128.9 million shares at a total cost of $7.5 billion.

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