News Releases
Norfolk Southern reports third-quarter 2014 results

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 Program
    We 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

For further information: Norfolk Southern contacts: (Media) Frank Brown, 757-629-2710 (fsbrown@nscorp.com); (Investors) Katie Cook, 757-629-2861 (InvestorRelations@nscorp.com)