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"While our third-quarter results reflect the continuing weak economy, they also show Norfolk Southern's resilience and the strength of our franchise," said Norfolk Southern CEO Wick Moorman. "By controlling costs and maintaining service levels, we are managing through this economic downturn and will emerge an even stronger company."
Third-quarter railway operating revenues were $2.1 billion, down 29 percent, compared with the third quarter of 2008, primarily the result of a 20 percent reduction in traffic volume and lower fuel-related revenues.
General merchandise revenues were $1.1 billion, 24 percent lower compared with the same period last year. Coal revenues declined 35 percent to $571 million compared with third-quarter 2008 results. Intermodal revenues decreased 31 percent to $389 million compared with the third quarter of last year.
Railway operating expenses for the quarter were $1.5 billion, a decrease of 25 percent over the same period of 2008.
The railway operating ratio was 72.8 percent, compared with 69.1 percent during third-quarter 2008.
Norfolk Southern Corporation is a leading North American transportation provider. Its Norfolk Southern Railway subsidiary operates approximately 21,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal and industrial products.
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
($in millions, except per share amounts)
Railway operating
revenues:
Coal (note 1) $571 $876 $1,684 $2,313
General merchandise 1,103 1,458 3,056 4,268
Intermodal 389 560 1,123 1,578
----- ----- ----- -----
Total railway operating
revenues 2,063 2,894 5,863 8,159
----- ----- ----- -----
Railway operating expenses:
Compensation and
benefits (note 2) 598 708 1,788 2,075
Purchased services and
rents 352 419 1,041 1,194
Fuel 192 474 504 1,369
Depreciation 210 201 624 598
Materials and
other (note 3) 149 198 493 652
----- ----- ----- -----
Total railway
operating expenses 1,501 2,000 4,450 5,888
----- ----- ----- -----
Income from
railway
operations 562 894 1,413 2,271
Other income - net 37 39 90 92
Interest expense on debt 118 111 348 332
--- --- --- ---
Income before
income taxes 481 822 1,155 2,031
Provision for income taxes:
Current 80 184 255 586
Deferred 98 118 173 181
--- --- --- ---
Total income taxes 178 302 428 767
--- --- --- ---
Net income $303 $520 $727 $1,264
==== ==== ==== ======
Earnings per Share
(note 4):
Basic $0.82 $1.39 $1.97 $3.36
Diluted $0.81 $1.37 $1.94 $3.30
Weighted average shares
outstanding (millions)
(notes 4 & 5):
Basic 367.3 372.5 366.8 374.4
Diluted 372.5 380.5 371.7 382.6
See accompanying notes to consolidated financial statements.
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2009 2008
($in millions)
Assets
Current assets:
Cash and cash equivalents $999 $618
Accounts receivable - net 855 870
Materials and supplies 172 194
Deferred income taxes 152 149
Other current assets 55 168
----- -----
Total current assets 2,233 1,999
Investments 2,067 1,779
Properties less accumulated
depreciation 22,490 22,247
Other assets 285 272
------- -------
Total assets $27,075 $26,297
======= =======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $980 $1,140
Income and other taxes 219 261
Other current liabilities 287 220
Current maturities of long-term debt 380 484
----- -----
Total current liabilities 1,866 2,105
Long-term debt 6,685 6,183
Other liabilities 1,892 2,030
Deferred income taxes 6,566 6,372
------ ------
Total liabilities 17,009 16,690
------ ------
Stockholders' equity:
Common stock $1.00 per share par
value, 1,350,000,000 shares
authorized; outstanding
367,893,915 and 366,233,106
shares, respectively, net of
treasury shares 369 368
Additional paid-in capital 1,761 1,680
Accumulated other comprehensive
loss (912) (942)
Retained income 8,848 8,501
------ -----
Total stockholders' equity 10,066 9,607
------ -----
Total liabilities and
stockholders' equity $27,075 $26,297
======= =======
See accompanying notes to consolidated financial statements.
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2009 2008
($in millions)
Cash flows from operating activities:
Net income $727 $1,264
Reconciliation of net income to net cash
provided by operating activities:
Depreciation 630 606
Deferred income taxes 173 181
Gains and losses on properties (13) (24)
Changes in assets and liabilities
affecting operations:
Accounts receivable (26) 63
Materials and supplies 22 (34)
Other current assets 111 93
Current liabilities other than debt (184) (80)
Other - net (65) 6
----- -----
Net cash provided by operating
activities 1,375 2,075
Cash flows from investing activities:
Property additions (919) (1,104)
Property sales and other transactions 61 74
Investments, including short-term (119) (34)
Investment sales and other transactions 10 254
---- ----
Net cash used in investing
activities (967) (810)
Cash flows from financing activities:
Dividends (374) (338)
Common stock issued - net 32 224
Purchase and retirement of common Stock
(note 5) - (899)
Proceeds from borrowings - net 990 1,225
Debt repayments (675) (1,126)
---- ------
Net cash used in financing
activities (27) (914)
--- ----
Net increase in cash and cash
equivalents 381 351
Cash and cash equivalents:
At beginning of year 618 206
---- ----
At end of period $999 $557
==== ====
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized) $288 $254
Income taxes (net of refunds) $234 $401
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1. Coal Revenues
Third quarter 2008 includes $22 million related to a coal customer's
2008 contracted volume shortfall and a nonrecurring effect related to
the implementation of NS' new export coal billing system.
2. Labor Agreement
Third quarter 2008 includes $28 million for lump-sum payments
(including payroll taxes) due under a new labor agreement with the
Brotherhood of Locomotive Engineers and Trainmen (BLET).
3. Materials and Other
Second quarter 2009 includes a $21 million favorable adjustment
related to settlement of a multi-year state tax dispute.
4. Earnings Per Share
In the first quarter of 2009, NS adopted the provisions of the
Financial Accounting Standards Board Staff Position (FSP) EITF
No. 03-6-1, "Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities"
(Accounting Standards Codification (ASC) 260-10), which requires
the treatment of unvested stock options receiving dividend
equivalents as participating securities in computing earnings
per share under the two-class method. NS has retrospectively
applied the provisions of this FSP. Accordingly, for basic
earnings per share, income available to common stockholders for
the third quarter 2009 and 2008 reflects a $2 million and $3
million reduction, respectively, and for the first nine months
of 2009 and 2008 a $6 million and $7 million reduction,
respectively, from net income for the effect of dividend
equivalent payments made to holders of stock options. In addition,
for the third quarter and first nine months of 2009, diluted
earnings per share was calculated under the more dilutive two-class
method (as compared to the treasury stock method) and income
available to common stockholders reflects a $2 million and $6
million reduction, respectively, from net income for dividend
equivalent payments.
5. Stock Repurchase Program
In March 2007, NS' Board of Directors amended the stock repurchase
program that was authorized in November 2005 so as to increase the
number of shares of NS common stock that may be repurchased from 50
million to 75 million. In addition, the term of the program was
shortened from December 31, 2015 to December 31, 2010. During the
first nine months of 2009, NS did not repurchase any shares of common
stock. Since inception of the stock repurchase program in 2006, NS
has repurchased and retired 64.7 million shares at a total cost of
$3.3 billion.
SOURCE Norfolk Southern Corporation
http://www.nscorp.com
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