Norfolk Southern reports first-quarter 2014 results

             Norfolk Southern reports first-quarter 2014 results

PR Newswire

NORFOLK, Va., April 23, 2014

NORFOLK, Va., April 23, 2014 /PRNewswire/ -- Norfolk Southern (NYSE: NSC)
reported first-quarter net income of $368 million, or $1.17 per diluted share,
compared with $450 million, or $1.41 per diluted share, earned in the same
period of 2013. First-quarter 2013 net income included a $60 million, or $0.19
per diluted share, gain from a land sale.

First-Quarter 2014 Results

  oRailway operating revenues totaled $2.7 billion.
  oIncome from railway operations was $667 million.
  oNet income totaled $368 million.
  oDiluted earnings per share of $1.17.
  oThe railway operating ratio was 75.2 percent.

"Following the extreme winter weather across the U.S. rail network which
impacted first-quarter results, we are seeing a rebound in shipments across
all of our business," said Norfolk Southern CEO Wick Moorman. "Our people
responded admirably to meet the challenges of the harsh conditions, and we
remain focused on delivering superior service to our customers."

Railway operating revenues were $2.7 billion, 2 percent lower compared with
first-quarter 2013, and shipment volumes decreased 1 percent.

First-Quarter Revenue by Commodity

  oChemicals, up 12 percent.
  oIntermodal, up 4 percent.
  oAgriculture, even.
  oMetals/Construction, down 1 percent.
  oPaper/Forest, down 3 percent.
  oAutomotive, down 7 percent
  oCoal, down 15 percent.

For the first quarter, general merchandise revenues were $1.6 billion, 1
percent higher than the same period last year, despite overall volume
declining 1 percent. Increased crude and liquefied petroleum gas shipments
were offset by declines in automotive, metals/construction, and paper/forest
shipments.

Intermodal revenues improved 4 percent, to $596 million, compared with
first-quarter 2013. Growth primarily in domestic business pushed traffic
volume up 3 percent in the quarter compared with the same period of 2013.

First-quarter coal revenues were $541 million, 15 percent lower compared with
the same quarter of 2013, the result of a 13 percent volume decrease due
primarily to lower utility and export shipments.

Railway operating expenses for the first quarter were $2 billion, 1 percent
lower than in the same period of 2013.

Income from railway operations was $667 million, 3 percent lower compared with
first-quarter 2013.

The quarterly railway operating ratio, or operating expenses as a percentage
of revenue, was 75.2 percent versus 74.8 percent in 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.

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Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
                                             First Quarter
                                             2014               2013
                                             ($ in millions, except per share
                                             amounts)
Railway operating revenues
 Coal                                      $     541          $    635
 General merchandise                             1,552             1,530
 Intermodal                                      596               573
Total railway operating revenues                2,689             2,738
Railway operating expenses
 Compensation and benefits                       740               780
 Purchased services and rents                    392               393
 Fuel                                            432               429
 Depreciation                                    237               227
 Materials and other                             221               218
 Total railway operating expenses             2,022             2,047
 Income from railway operations               667               691
Other income – net (note 1)                        26                135
Interest expense on debt                           139               129
 Income before income taxes                      554               697
Provision for income taxes
 Current                                         194               173
 Deferred                                        (8)               74
 Total income taxes                          186               247
 Net income                              $     368          $    450
Earnings per share (note 1)
 Basic                                     $     1.18         $    1.43
 Diluted                                         1.17              1.41
Weighted average shares outstanding (note 2)
 Basic                                           309.5             314.5
 Diluted                                         312.6             318.1

See accompanying notes to consolidated financial statements.





Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
                                                    First Quarter
                                                    2014     2013
                                                    ($ in millions)
Net income                                          $ 368    $ 450
Other comprehensive income, before tax:
 Pension and other postretirement benefits        299      36
 Other comprehensive income of equity investees   3        1
Other comprehensive income, before tax                302      37
Income tax expense related to items of other
 comprehensive income                             (114)    (14)
 Other comprehensive income, net of tax           188      23
  Total comprehensive income               $ 556    $ 473

See accompanying notes to consolidated financial statements.





Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
                                                       March 31,  December 31,
                                                       2014       2013
                                                       ($ in millions)
Assets
Current assets:
 Cash and cash equivalents                           $  1,522   $    1,443
 Short-term investments                                 10           118
 Accounts receivable – net                              1,109        1,024
 Materials and supplies                                 240          223
 Deferred income taxes                                  179          180
 Other current assets                                   70           87
 Total current assets                                   3,130        3,075
Investments                                               2,466        2,439
Properties less accumulated depreciation of $10,512
and $10,387,
 respectively                                           26,768       26,645
Other assets                                              336          324
 Total assets                                     $  32,700  $    32,483
Liabilities and stockholders' equity
Current liabilities:
 Accounts payable                                    $  1,194   $    1,265
 Short-term debt                                        -            100
 Income and other taxes                                 323          225
 Other current liabilities                              359          270
 Current maturities of long-term debt                   445          445
 Total current liabilities                           2,321        2,305
Long-term debt                                            8,909        8,903
Other liabilities                                         1,130        1,444
Deferred income taxes                                     8,647        8,542
Total liabilities                                   21,007       21,194
Stockholders' equity:
 Common stock $1.00 per share par value,
1,350,000,000 shares
 authorized; outstanding 309,646,086 and
308,878,402 shares,
 respectively, net of treasury shares                311          310
 Additional paid-in capital                             2,085        2,021
 Accumulated other comprehensive loss                   (193)        (381)
 Retained income                                        9,490        9,339
Total stockholders' equity                           11,693       11,289
Total liabilities and stockholders' equity        $  32,700  $    32,483

See accompanying notes to consolidated financial statements.





Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
                                                              First Quarter
                                                              2014     2013
                                                              ($ in millions)
Cash flows from operating activities
 Net income                                                 $ 368    $ 450
 Reconciliation of net income to net cash provided by
operating activities:
 Depreciation                                                 238      228
 Deferred income taxes                                        (8)      74
 Gains and losses on properties and investments (note 1)      (2)      (99)
 Changes in assets and liabilities affecting operations:
 Accounts receivable                                          (85)     (49)
 Materials and supplies                                       (17)     (30)
 Other current assets                                         17       17
 Current liabilities other than debt                          86       96
 Other – net                                                  (9)      36
 Net cash provided by operating activities                    588      723
Cash flows from investing activities
 Property additions                                           (381)    (379)
 Property sales and other transactions                        22       19
 Investments, including short-term                            (3)      (5)
 Investment sales and other transactions                      108      (1)
 Net cash used in investing activities                        (254)    (366)
Cash flows from financing activities
 Dividends                                                    (167)    (157)
 Common stock issued – net                                    62       55
 Purchase and retirement of common stock (note 2)             (50)     (33)
 Debt repayments                                              (100)    (203)
 Net cash used in financing activities                        (255)    (338)
 Net increase in cash and cash equivalents                    79       19
Cash and cash equivalents
 At beginning of period                                       1,443    653
 At end of period                                           $ 1,522  $ 672
Supplemental disclosures of cash flow information
 Cash paid during the period for:
 Interest (net of amounts capitalized)                      $ 75     $ 62
 Income taxes (net of refunds)                                60       23

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
    In each of the first quarters of 2014 and 2013, we repurchased
    0.5 million shares of common stock, totaling $50 million and $33 million,
    respectively. We have remaining authorization from our Board of Directors
    to repurchase up to 37.7 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 137.3 million shares at a total cost of $8.2
    billion.

SOURCE Norfolk Southern Corporation

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