Norfolk Southern reports second-quarter 2013 earnings

            Norfolk Southern reports second-quarter 2013 earnings

PR Newswire

NORFOLK, Va., July 23, 2013

NORFOLK, Va., July 23, 2013 /PRNewswire/ --

  oRailway operating revenues were $2.8 billion.
  oIncome from railway operations was $836 million.
  oNet income was $465 million.
  oDiluted earnings per share were $1.46.
  oRailway operating ratio was 70.2 percent.

For the second quarter of 2013, Norfolk Southern (NYSE: NSC) reported net
income of $465 million, 11 percent lower than $524 million for second-quarter
2012. Diluted earnings per share were $1.46, down 9 percent compared with
$1.60 per diluted share in the same period last year.

"In the second quarter, Norfolk Southern delivered solid results, supported by
growth in our chemicals, intermodal, and automotive businesses, despite
continuing weakness in the coal markets," said CEO Wick Moorman. "We continue
to focus on service efficiency and velocity, which is enabling us to control
operating expenses and deliver superior performance to our customers."

Railway operating revenues were $2.8 billion, 3 percent lower compared with
second-quarter 2012, with shipment volumes increasing 2 percent.
Second-quarter 2013 fuel surcharge revenues were $306 million, or $59 million
less than the same period last year.

General merchandise revenues were $1.6 billion, 2 percent higher compared with
the second quarter of 2012, driven by increased chemical and automotive
shipments.

Coal revenues were $626 million, 17 percent lower compared with the same
quarter last year, due to lower average revenue per unit and a 4 percent
decline in volumes, the result of a combination of reduced global demand for
U.S. coal and competition from natural gas.

Intermodal revenues increased 4 percent to $588 million compared with the same
period of 2012. Volumes increased 5 percent due to continued domestic and
international growth.

Railway operating expenses were $2.0 billion, 1 percent higher compared with
second-quarter 2012.

Income from railway operations for the second quarter was $836 million, 10
percent lower compared with the same period last year.

The second-quarter railway operating ratio was 70.2 percent, 4 percent higher
compared with 2012.

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
                                       2013        2012       2013     2012
                                       (in millions, except per share amounts)
Railway operating revenues
Coal                                   $  626      $  755     $ 1,261  $ 1,521
General merchandise                       1,588       1,556     3,118    3,052
Intermodal                                588         563       1,161    1,090
 Total railway operating revenues       2,802       2,874     5,540    5,663
Railway operating expenses
Compensation and benefits                 726         724       1,506    1,510
Purchased services and rents              410         392       803      783
Fuel                                      391         390       820      803
Depreciation                              226         229       453      453
Materials and other                       213         205       431      435
Total railway operating expenses          1,966       1,940     4,013    3,984
Income from railway operations            836         934       1,527    1,679
Other income – net (note 1)               29          31        164      60
Interest expense on debt                  128         122       257      242
Income before income taxes                737         843       1,434    1,497
Provision for income taxes
Current                                   203         269       376      425
Deferred                                  69          50        143      138
Total income taxes                        272         319       519      563
Net income                             $  465      $  524     $ 915    $ 934
Earnings per share (notes 1 & 2)
Basic                                  $  1.47     $  1.62    $ 2.90   $ 2.86
Diluted                                   1.46        1.60      2.87     2.82
Weighted average shares outstanding
(note 3)
Basic                                     314.1       322.7     314.3    325.5
Diluted                                   317.8       327.5     317.9    330.2
See accompanying notes to consolidated financial statements.



Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)
                                              Second Quarter  First Six Months
                                              2013    2012    2013      2012
                                              ($ in millions)
Net income                                    $ 465   $ 524   $  915    $ 934
Other comprehensive income, before tax:
Pension and other postretirement benefits       36      32       72       64
Other comprehensive income (loss) of equity     1       -        2        (4)
investees
Other comprehensive income, before tax          37      32       74       60
Income tax expense related to items of
other
comprehensive income                            (14)    (13)     (28)     (25)
Other comprehensive income, net of tax          23      19       46       35
Total comprehensive income                    $ 488   $ 543   $  961    $ 969
See accompanying notes to consolidated financial statements. 



Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)
                                                      June 30,    December 31,
                                                      2013        2012
                                                      ($ in millions)
Assets
Current assets:
Cash and cash equivalents                              $ 587        $  653
Short-term investments                                   -             15
Accounts receivable - net                                1,072         1,109
Materials and supplies                                   228           216
Deferred income taxes                                    137           167
Other current assets                                     54            82
Total current assets                                     2,078         2,242
Investments                                              2,366         2,300
Properties less accumulated depreciation of $10,152
and
$9,922, respectively                                     26,098        25,736
Other assets                                             63            64
Total assets                                           $ 30,605     $  30,342
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                                       $ 1,180      $  1,362
Short-term debt                                          -             200
Income and other taxes                                   284           206
Other current liabilities                                304           263
Current maturities of long-term debt                     47            50
Total current liabilities                                1,815         2,081
Long-term debt                                           8,430         8,432
Other liabilities                                        2,198         2,237
Deferred income taxes                                    7,974         7,832
Total liabilities                                        20,417        20,582
Stockholders' equity:
Common stock $1.00 per share par value, 1,350,000,000
shares
authorized; outstanding 311,952,780 and 314,034,174
shares,
respectively, net of treasury shares                     313           315
Additional paid-in capital                               1,984         1,911
Accumulated other comprehensive loss                     (1,063)       (1,109)
Retained income                                          8,954         8,643
Total stockholders' equity                               10,188        9,760
Total liabilities and stockholders' equity       $ 30,605     $  30,342
See accompanying notes to consolidated financial statements.



Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)
                                                              First Six Months
                                                              2013     2012
                                                              ($ in millions)
Cash flows from operating activities
Net income                                                    $ 915    $ 934
Reconciliation of net income to net cash provided by
operating activities:
 Depreciation                                                  456      456
 Deferred income taxes                                         143      138
 Gains on properties (note 1)                                  (99)     (2)
 Changes in assets and liabilities affecting operations:
 Accounts receivable                                       37       (64)
 Materials and supplies                                    (12)     (33)
  Other current assets                                      28       23
 Current liabilities other than debt                       6        162
 Other – net                                                   32       49
 Net cash provided by operating activities                  1,506    1,663
Cash flows from investing activities
Property additions                                              (884)    (968)
Property sales and other transactions                           68       15
Investments, including short-term                               (7)      (12)
Investment sales and other transactions                         16       33
Net cash used in investing activities                           (807)    (932)
Cash flows from financing activities
Dividends                                                       (315)    (308)
Common stock issued – net                                       80       47
Purchase and retirement of common stock (note 3)                (314)    (850)
Proceeds from borrowings – net                                  -        696
Debt repayments                                                 (216)    (236)
Net cash used in financing activities                           (765)    (651)
Net increase (decrease) in cash and cash equivalents            (66)     80
Cash and cash equivalents
At beginning of period                                          653      276
At end of period                                              $ 587    $ 356
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)                         $ 244    $ 232
Income taxes (net of refunds)                                   238      264
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. 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 second quarter,
$1 million in 2013 and $2 million in 2012; and for the first six months, $3
million in 2013 and $4 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 andrestricted stock units as follows: for the
second quarter, $1 million in 2013 and less than $1 million in 2012; and for
the first six months, $2 million in both 2013 and 2012.

3. STOCK REPURCHASE PROGRAM
We repurchased and retired 4.2 million shares of common stock in the first six
months of 2013, at a cost of $314 million, and 12.3 million shares at a cost
of $850 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 132.6 million shares at a
total cost of $7.8 billion.

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SOURCE Norfolk Southern Corporation

Website: http://www.nscorp.com
Contact: Norfolk Southern contacts: (Media) Frank Brown, 757-629-2710
(fsbrown@nscorp.com) or (Investors) Michael Hostutler, 757-629-2861
(michael.hostutler@nscorp.com)