NORFOLK SOUTHERN CORPORATION NORFOLK, Va., Oct. 22, 2014 /PRNewswire/ -- Norfolk Southern (NYSE: NSC) reported third-quarter net income of $559 million, 16 percent higher than $482 million for the same period of 2013. Diluted earnings per share were $1.79, up 17 percent compared with $1.53 per diluted share in the same period last year.
"Norfolk Southern reported another record-setting quarter during which we achieved our best third-quarter results in revenues, operating income, net income, earnings per share, and operating ratio," said CEO Wick Moorman. "Higher traffic volumes along with continued gains in productivity drove these excellent results. We remain focused on ensuring we can support continued demand for freight rail transportation by hiring additional employees, investing in new equipment, and completing capacity projects in order to provide our customers with the freight rail service they expect today and in the future."
Third-Quarter Results Set Quarterly Records
-- Railway operating revenues increased 7 percent to $3.0 billion.
-- Income from railway operations improved 18 percent to $998 million.
-- Net income increased 16 percent to $559 million.
-- Diluted earnings per share rose 17 percent to $1.79.
-- The railway operating ratio improved 4 percent to 67.0 percent.
Third-quarter railway operating revenues climbed 7 percent compared with the same period of 2013 to top $3.0 billion for a second consecutive quarter as growth in the merchandise and intermodal markets offset a weaker coal market.
Third-Quarter Revenue by Commodity Group
-- Intermodal: $667 million, up 10 percent
-- Coal: $626 million, down 2 percent
-- Chemicals: $488 million, up 14 percent
-- Metals/Construction: $414 million, up 11 percent
-- Agriculture: $364 million, up 5 percent
-- Automotive: $254 million, up 12 percent
-- Paper/Forest: $210 million, up 3 percent
General merchandise revenues reached $1.7 billion, a 10 percent increase compared with the third quarter of 2013, driven by volume gains in all markets, with particular strength in chemicals, automotive, metals and construction, and agriculture.
Intermodal revenues increased to $667 million, 10 percent higher compared with third-quarter 2013. Volume rose 10 percent, fueled by robust growth in both international and domestic markets.
Coal revenues declined 2 percent to $626 million in the third quarter compared with the same period of 2013. A weak global export market and mild weather and lower natural gas prices in the utility market combined to decrease volume by 2 percent.
Railway operating expenses were $2.0 billion, 3 percent higher compared with third-quarter 2013, largely due to costs associated with higher business volumes.
Income from railway operations was $998 million, 18 percent higher compared with third-quarter 2013.
The railway operating ratio, or operating expenses as a percentage of revenue, was 67.0 percent, a 4 percent improvement compared with 69.9 percent during the same period of 2013.
Norfolk Southern Corporation is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 20,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal, automotive, and industrial products.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Third Quarter First Nine Months
2014 2013 2014 2013
---- ---- ---- ----
($ in millions, except per share amounts)
Railway operating revenues
Coal $626 $641 $1,839 $1,902
General merchandise 1,730 1,578 5,002 4,696
Intermodal 667 605 1,913 1,766
--- --- ----- -----
Total railway operating revenues 3,023 2,824 8,754 8,364
----- ----- ----- -----
Railway operating expenses
Compensation and benefits 728 735 2,183 2,241
Purchased services and rents 429 420 1,235 1,223
Fuel 387 390 1,227 1,210
Depreciation 236 230 711 683
Materials and other 245 200 714 631
--- --- --- ---
Total railway operating expenses 2,025 1,975 6,070 5,988
----- ----- ----- -----
Income from railway operations 998 849 2,684 2,376
Other income - net (note 1) 32 30 76 194
Interest expense on debt 138 131 416 388
--- --- --- ---
Income before income taxes 892 748 2,344 2,182
Provision for income taxes
Current 329 194 834 570
Deferred 4 72 21 215
Total income taxes 333 266 855 785
Net income $559 482 1,489 1,397
==== === ===== =====
Earnings per share (note 1)
Basic $1.80 $1.55 $4.80 $4.45
Diluted 1.79 1.53 4.75 4.40
Weighted average shares outstanding (note 2)
Basic 309.4 310.4 309.5 313.0
Diluted 312.6 313.9 312.7 316.6
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
Third Quarter First Nine Months
2014 2013 2014 2013
---- ---- ---- ----
($ in millions)
Net income $559 $482 $1,489 $1,397
Other comprehensive income, before tax:
Pension and other postretirement benefits 8 38 314 110
Other comprehensive income of equity investees - - 10 2
--- --- --- ---
Other comprehensive income, before tax 8 38 324 112
Income tax expense related to items of other
comprehensive income (3) (15) (121) (43)
--- --- ---- ---
Other comprehensive income, net of tax 5 23 203 69
--- --- --- ---
Total comprehensive income $564 $505 $1,692 $1,466
==== ==== ====== ======
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2014 2013
---- ----
($ in millions)
Assets
Current assets:
Cash and cash equivalents $1,432 $1,443
Short-term investments - 118
Accounts receivable - net 1,103 1,024
Materials and supplies 249 223
Deferred income taxes 178 180
Other current assets 50 87
--- ---
Total current assets 3,012 3,075
Investments 2,610 2,439
Properties less accumulated depreciation of $10,740 and
$10,387, respectively 27,230 26,645
Other assets 354 324
--- ---
Total assets $33,206 $32,483
======= =======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,387 $1,265
Short-term debt - 100
Income and other taxes 301 225
Other current liabilities 392 270
Current maturities of long-term debt 2 445
--- ---
Total current liabilities 2,082 2,305
Long-term debt 8,919 8,903
Other liabilities 1,084 1,444
Deferred income taxes 8,682 8,542
----- -----
Total liabilities 20,767 21,194
Stockholders' equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 309,441,867 and 308,878,402 shares,
respectively, net of treasury shares 311 310
Additional paid-in capital 2,150 2,021
Accumulated other comprehensive loss (178) (381)
Retained income 10,156 9,339
------ -----
Total stockholders' equity 12,439 11,289
------ ------
Total liabilities and stockholders' equity $33,206 $32,483
======= =======
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
First Nine Months
2014 2013
---- ----
($ in millions)
Cash flows from operating activities
Net income $1,489 $1,397
Reconciliation of net income to net cash provided by operating activities:
Depreciation 715 687
Deferred income taxes 21 215
Gains and losses on properties and investments (note 1) (13) (100)
Changes in assets and liabilities affecting operations:
Accounts receivable (79) 26
Materials and supplies (26) (8)
Other current assets 47 48
Current liabilities other than debt 258 121
Other - net (66) 18
--- ---
Net cash provided by operating activities 2,346 2,404
Cash flows from investing activities
Property additions (1,379) (1,470)
Property sales and other transactions 69 109
Investments, including short-term (4) (29)
Investment sales and other transactions 60 21
--- ---
Net cash used in investing activities (1,254) (1,369)
Cash flows from financing activities
Dividends (511) (476)
Common stock issued - net 119 92
Purchase and retirement of common stock (note 2) (166) (564)
Proceeds from borrowings - net 100 492
Debt repayments (645) (248)
---- ----
Net cash used in financing activities (1,103) (704)
------ ----
Net increase (decrease) in cash and cash equivalents (11) 331
Cash and cash equivalents
At beginning of period 1,443 653
----- ---
At end of period $1,432 $984
====== ====
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized) $340 $305
Income taxes (net of refunds) 733 485
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 ProgramWe repurchased 1.7 million shares of common stock
in the first nine months of 2014, totaling $166 million, and 7.5 million
shares at a cost of $564 million for the same period of 2013. We have
remaining authorization from our Board of Directors to repurchase up to
36.6 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
138.4 million shares at a total cost of $8.3 billion.
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SOURCE Norfolk Southern Corporation
