NORFOLK SOUTHERN CORPORATION NORFOLK, Va., July 23, 2014 /PRNewswire/ -- For the second quarter of 2014 Norfolk Southern (NYSE: NSC) reported record net income of $562 million, 21 percent higher compared with $465 million in second-quarter 2013. Diluted earnings per share increased 23 percent to a record $1.79, compared with $1.46 per diluted share in the same period last year. The railway operating ratio, or operating expenses as a percentage of revenue, improved 5 percent to 66.5 percent.
All-time Quarter Records
-- Railway operating revenues increased 9 percent to $3.0 billion.
-- Income from railway operations improved 22 percent to $1.0 billion.
-- Net income increased 21 percent to $562 million.
-- Diluted earnings per share rose 23 percent to $1.79.
-- The railway operating ratio was 66.5 percent, a 5 percent improvement.
"Norfolk Southern delivered excellent financial performance during the second quarter, reporting the highest railway operating revenues in its history," said CEO Wick Moorman. "We see continued strength across most of our business segments and are optimistic that overall economic conditions will drive growth. Our focus remains unchanged. We are committed to running the safest railroad, providing superior service, increasing efficiency, and driving superior returns to our shareholders."
Second-quarter railway operating revenues increased to a record $3.0 billion, 9 percent higher compared with the same period of 2013, driven by an 8 percent increase in volume.
General merchandise revenues increased 8 percent to a record $1.7 billion compared with the second quarter of 2013. Shipments of metals and construction, chemicals, and agricultural products fueled a 7 percent increase in traffic volume.
Second-Quarter Revenue by Commodity Group
-- Intermodal up 11 percent
-- Metals and Construction up 17 percent
-- Coal up 7 percent
-- Chemicals up 10 percent
-- Agriculture up 5 percent
-- Automotive up 3 percent
-- Paper up 2 percent
Coal revenues increased 7 percent to $672 million in the second quarter compared with the same period of 2013, with volume up 3 percent, the result of increased demand for utility coal from stockpile replenishment in response to a severe winter and higher natural gas prices, which offset lower export volume.
Intermodal revenues increased 11 percent to a record $650 million compared with the second-quarter 2013. Volume increased 11 percent, the result of continued domestic growth coupled with new international business.
Railway operating expenses were $2.0 billion, 3 percent higher compared with second-quarter 2013, principally due to costs associated with higher business volumes.
Income from railway operations for the second quarter was a record $1.0 billion, 22 percent higher compared with the same period of 2013.
The railway operating ratio, or operating expenses as a percentage of revenue, was a record 66.5 percent, a 5 percent improvement compared with the same period of 2013.
Norfolk Southern Corporation (NYSE: 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.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Second Quarter First Six Months
2014 2013 2014 2013
---- ---- ---- ----
(in millions, except per share amounts)
Railway operating revenues
Coal $672 $626 $1,213 $1,261
General merchandise 1,720 1,588 3,272 3,118
Intermodal 650 588 1,246 1,161
--- --- ----- -----
Total railway operating revenues 3,042 2,802 5,731 5,540
----- ----- ----- -----
Railway operating expenses
Compensation and benefits 715 726 1,455 1,506
Purchased services and rents 414 410 806 803
Fuel 408 391 840 820
Depreciation 238 226 475 453
Materials and other 248 213 469 431
--- --- --- ---
Total railway operating expenses 2,023 1,966 4,045 4,013
----- ----- ----- -----
Income from railway operations 1,019 836 1,686 1,527
Other income - net (note 1) 18 29 44 164
Interest expense on debt 139 128 278 257
--- --- --- ---
Income before income taxes 898 737 1,452 1,434
Provision for income taxes
Current 311 203 505 376
Deferred 25 69 17 143
Total income taxes 336 272 522 519
Net income $562 $465 $930 $915
==== ==== ==== ====
Earnings per share (note 1)
Basic $1.81 $1.47 $2.99 $2.90
Diluted 1.79 1.46 2.97 2.87
Weighted average shares outstanding (note 2)
Basic 309.5 314.1 309.5 314.3
Diluted 312.8 317.8 312.7 317.9
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
Second Quarter First Six Months
2014 2013 2014 2013
---- ---- ---- ----
($ in millions)
Net income $562 $465 $930 $915
Other comprehensive income, before
tax:
Pension and other postretirement
benefits 7 36 306 72
Other comprehensive income of equity
investees 7 1 10 2
--- --- --- ---
Other comprehensive income, before tax 14 37 316 74
Income tax expense related to items of
other
comprehensive income (4) (14) (118) (28)
--- --- ---- ---
Other comprehensive income, net of tax 10 23 198 46
--- --- --- ---
Total comprehensive income $572 $488 $1,128 $961
==== ==== ====== ====
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2014 2013
---- ----
($ in millions)
Assets
Current assets:
Cash and cash equivalents $1,667 $1,443
Short-term investments - 118
Accounts receivable - net 1,122 1,024
Materials and supplies 251 223
Deferred income taxes 161 180
Other current assets 65 87
--- ---
Total current assets 3,266 3,075
Investments 2,505 2,439
Properties less accumulated depreciation of $10,634 and
$10,387, respectively 26,927 26,645
Other assets 342 324
--- ---
Total assets $33,040 $32,483
======= =======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,245 $1,265
Short-term debt - 100
Income and other taxes 359 225
Other current liabilities 331 270
Current maturities of long-term debt 433 445
--- ---
Total current liabilities 2,368 2,305
Long-term debt 8,814 8,903
Other liabilities 1,122 1,444
Deferred income taxes 8,659 8,542
----- -----
Total liabilities 20,963 21,194
Stockholders' equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 309,515,208 and 308,878,402 shares,
respectively, net of treasury shares 311 310
Additional paid-in capital 2,113 2,021
Accumulated other comprehensive loss (183) (381)
Retained income 9,836 9,339
----- -----
Total stockholders' equity 12,077 11,289
------ ------
Total liabilities and stockholders' equity $33,040 $32,483
======= =======
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
First Six Months
2014 2013
---- ----
($ in millions)
Cash flows from operating
activities
Net income $930 $915
Reconciliation of net income to
net cash provided by operating
activities:
Depreciation 478 456
Deferred income taxes 17 143
Gains and losses on properties
and investments (note 1) (3) (99)
Changes in assets and
liabilities affecting
operations:
Accounts receivable (98) 37
Materials and supplies (28) (12)
Other current assets 30 28
Current liabilities other than
debt 144 6
Other - net (33) 32
--- ---
Net cash provided by operating
activities 1,437 1,506
Cash flows from investing
activities
Property additions (809) (884)
Property sales and other
transactions 44 68
Investments, including short-
term (3) (7)
Investment sales and other
transactions 121 16
--- ---
Net cash used in investing
activities (647) (807)
Cash flows from financing
activities
Dividends (335) (315)
Common stock issued - net 82 80
Purchase and retirement of
common stock (note 2) (100) (314)
Debt repayments (213) (216)
---- ----
Net cash used in financing
activities (566) (765)
---- ----
Net increase (decrease) in cash
and cash equivalents 224 (66)
Cash and cash equivalents
At beginning of period 1,443 653
----- ---
At end of period $1,667 $587
====== ====
Supplemental disclosures of cash
flow information
Cash paid during the period for:
Interest (net of amounts
capitalized) $255 $244
Income taxes (net of refunds) 313 238
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS:
1. Other Income - Net
In first quarter 2013, we
recognized a $97 million gain on
a land sale, which increased net
income by $60 million or $0.19
per share.
2. Stock Repurchase Program
We repurchased 1.0 million shares
of common stock in the first six
months of 2014, totaling $100
million, and 4.2 million shares
at a cost of $314 million for the
same period of 2013. We have
remaining authorization from our
Board of Directors to repurchase
up to 37.2 million shares 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 137.8
million shares at a total cost of
$8.2 billion.
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SOURCE Norfolk Southern Corporation
