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Norfolk Southern reports record-setting 2013 fourth-quarter and full-year results



  Norfolk Southern reports record-setting 2013 fourth-quarter and full-year
                                   results

PR Newswire

NORFOLK, Va., Jan. 22, 2014

NORFOLK, Va., Jan. 22, 2014 /PRNewswire/ -- Norfolk Southern (NYSE: NSC)
reported record fourth-quarter 2013 net income of $513 million, or $1.64 per
diluted share, 24 percent higher compared with $413 million, or $1.30 per
diluted share, earned in the fourth quarter of 2012. The railway operating
ratio, or operating expenses as a percentage of revenue, improved 5 percent to
69.4 percent.

Fourth-quarter 2013 records

  o Railway operating revenues totaled $2.9 billion, up 7 percent.
  o Income from railway operations was $881 million, 23 percent higher.
  o Net income totaled $513 million, up 24 percent.
  o Diluted earnings per share of $1.64 improved 26 percent.

2013 Records

  o Railway operating revenues reached $11.2 billion, up 2 percent.
  o Income from railway operations was $3.3 billion, 4 percent higher.
  o Net income totaled $1.9 billion, up 9 percent.
  o Diluted earnings per share of $6.04 improved 12 percent.
  o The railway operating ratio improved 1 percent to 71.0 percent.

"Norfolk Southern's team of safety and service-oriented employees drove our
record-setting fourth-quarter results through increased productivity,
efficient network operations, and continued revenue gains," said Norfolk
Southern CEO Wick Moorman. "We're seeing the results of our investments in
network capacity and technology enhance our ability to offer superior service
to all of our customers.

Moorman continued: "In 2014, we plan to invest $2.2 billion, a 12 percent
increase over 2013, to maintain safe railway operations, purchase locomotives
and freight cars, and support growth and productivity initiatives."

Fourth Quarter 2013 Summary

Operating revenues increased to $2.9 billion, marking a 7 percent jump
compared with fourth-quarter 2012. Strong intermodal, chemical, automotive,
and agricultural shipments more than offset declines in coal traffic to drive
total volumes up 4 percent.

Fourth-quarter revenue by commodity group

  o Chemicals up 21 percent.
  o Metals and construction up 12 percent.
  o Intermodal up 6 percent.
  o Agriculture up 9 percent.
  o Automotive up 10 percent.
  o Paper and forest products up 8 percent.
  o Coal down 2 percent.

General merchandise revenues were $1.6 billion, 12 percent higher than the
same period last year. Strong crude by rail shipments and expanded automotive
production helped boost traffic volume by 8 percent in the quarter.

Coal revenues were $641 million, 2 percent lower compared with the fourth
quarter of 2012, the result of an 8 percent decline in volumes.

Intermodal revenues increased to $618 million, a 6 percent increase over 2012.
Growth in domestic and international business pushed traffic volume up 6
percent in the quarter compared with the same period of 2012.

Railway operating expenses were $2 billion, 2 percent higher than in the same
period of 2012. The operating ratio was 69.4 percent, a 5 percent improvement
over the same quarter in 2012. Income from railway operations was $881
million, 23 percent higher compared with fourth-quarter 2012.

2013 Summary

  o Net income was $1.9 billion, or $6.04 per diluted share, 9 percent higher
    compared with $1.7 billion or $5.37 per diluted share in 2012.
  o Railway operating revenues reached $11.2 million, 2 percent higher
    compared with 2012, driven by a 3 percent increase in traffic volume.
  o General merchandise revenues rose 7 percent, and traffic volume increased
    by 4 percent.
  o Coal revenues declined 12 percent to $2.5 billion, due to a 5 percent
    decline in traffic volume compared with the same period of 2012.
  o Intermodal revenues increased to $2.4 billion, up 6 percent compared with
    2012. Growth in domestic and international intermodal business drove
    traffic volume 6 percent higher for 2013 compared with the same period of
    2012.
  o Railway operating expenses were $8 billion, up 1 percent compared with
    2012.
  o The operating ratio for the year was 71.0 percent, a 1 percent improvement
    over 2012.
  o Income from railway operations was $3.3 billion for 2013, 4 percent higher
    compared with 2012.

Norfolk Southern Corporation is one of the nation's premier transportation
companies. Its Norfolk Southern Railway 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)
                                    Fourth Quarter    Years ended December 31,
                                    2013     2012     2013          2012
                                    (in millions, except per share amounts)
Railway operating revenues
    Coal                            $ 641    $ 657    $   2,543     $  2,879
    General merchandise               1,622    1,443      6,318        5,920
    Intermodal                        618      584        2,384        2,241
        Total railway operating       2,881    2,684      11,245       11,040
revenues
Railway operating expenses
    Compensation and benefits         761      726        3,002        2,960
    Purchased services and rents      406      418        1,629        1,604
    Fuel                              403      395        1,613        1,577
    Depreciation                      233      233        916          916
    Materials and other               197      198        828          859
       Total railway operating        2,000    1,970      7,988        7,916
expenses
       Income from railway            881      714        3,257        3,124
operations
Other income – net (note 1)           39       36         233          129
Interest expense on debt              137      129        525          495
    Income before income taxes        783      621        2,965        2,758
Provision for income taxes
    Current                           223      121        793          643
    Deferred                          47       87         262          366
        Total income taxes            270      208        1,055        1,009
       Net income                   $ 513    $ 413    $   1,910     $  1,749
Earnings per share (notes 1 & 2)
    Basic                           $ 1.66   $ 1.31   $   6.10      $  5.42
    Diluted                           1.64     1.30       6.04         5.37
Weighted average shares outstanding
(note 3)
 Basic                                308.7    314.8      311.9        320.9
 Diluted                              312.3    318.6      315.5        325.2
See accompanying notes to consolidated financial statements.

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)
                                    Fourth Quarter    Years ended December 31,
                                    2013     2012     2013           2012
                                    ($ in millions)
Net income                          $ 513    $ 413    $   1,910      $  1,749
Other comprehensive income (loss),
before tax:
    Pension and other                 1,012    (211)      1,122         (114)
postretirement benefits
    Other comprehensive income        40       (9)        42            (13)
(loss) of equity investees
Other comprehensive income (loss),    1,052    (220)      1,164         (127)
before tax
Income tax benefit (expense)
related to items of other   
  comprehensive income (loss)         (393)    82         (436)         44
Other comprehensive income (loss),    659      (138)      728           (83)
net of tax
        Total comprehensive income  $ 1,172  $ 275    $   2,638      $  1,666
See accompanying notes to consolidated financial statements.

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)
                                                    December 31,  December 31,
                                                    2013          2012
                                                    ($ in millions)
Assets
Current assets:
    Cash and cash equivalents                         $  1,443      $  653
    Short-term investments                               118           15
    Accounts receivable - net                            1,024         1,109
    Materials and supplies                               223           216
    Deferred income taxes                                180           167
    Other current assets                                 87            82
        Total current assets                             3,075         2,242
Investments                                              2,439         2,300
Properties less accumulated depreciation of $10,387
and
  $9,922, respectively                                   26,645        25,736
Other assets                                             324           64
        Total assets                                  $  32,483     $  30,342
Liabilities and stockholders' equity
Current liabilities:
    Accounts payable                                  $  1,265      $  1,362
    Short-term debt                                      100           200
    Income and other taxes                               225           206
    Other current liabilities                            270           263
    Current maturities of long-term debt                 445           50
        Total current liabilities                        2,305         2,081
Long-term debt                                           8,903         8,432
Other liabilities                                        1,444         2,237
Deferred income taxes                                    8,542         7,832
        Total liabilities                                21,194        20,582
Stockholders' equity:
    Common stock $1.00 per share par value,
1,350,000,000 shares
     authorized; outstanding 308,878,402 and
314,034,174 shares,
     respectively, net of treasury shares                310           315
    Additional paid-in capital                           2,021         1,911
    Accumulated other comprehensive loss                 (381)         (1,109)
    Retained income                                      9,339         8,643
        Total stockholders' equity                       11,289        9,760
       Total liabilities and stockholders' equity     $  32,483     $  30,342
See accompanying notes to consolidated financial statements.

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)
                                                      Years ended December 31,
                                                      2013          2012
                                                      ($ in millions)
Cash flows from operating activities
    Net income                                        $  1,910      $  1,749
    Reconciliation of net income to net cash provided
by operating activities:
        Depreciation                                     922           922
        Deferred income taxes                            262           366
        Gains and losses on properties and               (104)         (6)
investments (note 1)
        Changes in assets and liabilities affecting
operations:
            Accounts receivable                          85            (64)
            Materials and supplies                       (7)           (7)
            Other current assets                         (5)           (6)
            Current liabilities other than debt          5             82
     Other – net                                         10            29
             Net cash provided by operating              3,078         3,065
activities
Cash flows from investing activities
    Property additions                                   (1,971)       (2,241)
    Property sales and other transactions                144           192
    Investments, including short-term                    (130)         (23)
    Investment sales and other transactions              63            78
            Net cash used in investing activities        (1,894)       (1,994)
Cash flows from financing activities
    Dividends                                            (637)         (624)
    Common stock issued – net                            131           89
    Purchase and retirement of common stock (note 3)     (627)         (1,288)
    Proceeds from borrowings – net                       989           1,491
    Debt repayments                                      (250)         (362)
          Net cash used in financing activities          (394)         (694)
          Net increase in cash and cash equivalents      790           377
Cash and cash equivalents
    At beginning of year                                 653           276
    At end of year                                    $  1,443      $  653
Supplemental disclosures of cash flow information
    Cash paid during the period for:
      Interest (net of amounts capitalized)           $  492        $  473
      Income taxes (net of refunds)                      735           618
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 fourth quarter,
$2 million in both 2013 and 2012; and for the year, $7 million in 2013 and $9
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
fourth quarter, $1 million in 2013 and 2012; and for the year, $4 million in
2013 and 2012.

3. Stock Repurchase Program
We repurchased and retired 8.3 million shares of common stock in 2013, at a
cost of $627 million, and 18.8 million shares at a cost of $1.3 billion in
2012.  We have remaining authorization from our Board of Directors to
repurchase up to 38.3 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
136.7 million shares at a total cost of $8.1 billion

Connect with NS
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http://www.nscorp.com/nscportal/nscorp/RSS/rss.html

 

SOURCE Norfolk Southern Corporation

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