News Releases
Norfolk Southern reports fourth-quarter and full-year 2014 results

NORFOLK, Va., Jan. 26, 2015 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported financial results for fourth-quarter and full-year 2014.

Net income for the quarter was $511 million, or $1.64 per diluted share, compared with $513 million, or $1.64 per diluted share, earned in fourth-quarter 2013. For the year, net income increased to a record $2.0 billion, 5 percent higher compared with $1.9 billion for 2013. Diluted earnings per share for 2014 were a record $6.39, up 6 percent compared with $6.04 per diluted share for 2013.

FOURTH-QUARTER 2014 RESULTS

  • Railway operating revenues totaled $2.9 billion.
  • Income from railway operations was $891 million.
  • Net income totaled $511 million.
  • Diluted earnings per share were $1.64.
  • The railway operating ratio was 69.0 percent.

2014 RESULTS SET RECORDS

  • Railway operating revenues reached $11.6 billion.
  • Income from railway operations was $3.6 billion.
  • Net income totaled $2.0 billion.
  • Diluted earnings per share were $6.39.
  • The railway operating ratio was 69.2 percent.

"Norfolk Southern delivered another solid quarter of financial performance, capping a record-setting year during which our company achieved its best results for revenues, operating income, net income, earnings per share, and operating ratio," said CEO Wick Moorman. "For 2015, we plan to invest $2.4 billion in capital investments to maintain the safety and quality of our rail network, enhance service, improve operational efficiency, and support growth opportunities."

FOURTH-QUARTER SUMMARY

  • Operating revenues were $2.9 billion, about even compared with fourth-quarter 2013, with gains in merchandise and intermodal revenues offsetting weaker coal revenues. Total volume was up 4 percent, or about 66,000 units, due to gains in intermodal and merchandise traffic.
  • General merchandise revenues were $1.7 billion, 3 percent higher than the same period last year. Volume grew by 5 percent, led by increases in shipments of chemicals and metals and construction. The five commodity groups reported mixed revenue results on a year-over-year basis:
    • Chemicals: $477 million, up 11 percent
    • Agriculture: $387 million, down 2 percent
    • Metals/Construction: $366 million, up 5 percent
    • Automotive: $253 million, even
    • Paper/Forest: $195 million, down 3 percent
  • Intermodal revenues increased to $649 million, 5 percent higher compared with fourth-quarter 2013. Growth in international and domestic business pushed traffic volume up 6 percent in the quarter compared with the same period of 2013.
  • Coal revenues were $543 million, 15 percent lower compared with the fourth quarter of 2013. A weak global export market and fewer shipments of coal to utilities combined to decrease volume by 6 percent.
  • Railway operating expenses were $2.0 billion, down 1 percent compared with the same period of 2013.
  • Income from railway operations was $891 million, a fourth-quarter record and 1 percent higher compared with fourth-quarter 2013.
  • The operating ratio, or operating expenses as a percentage of revenue, improved 1 percent to 69.0 percent, compared with the same quarter in 2013.

2014 SUMMARY

  • Railway operating revenues reached a record $11.6 billion, 3 percent higher compared with 2013, driven by a 5 percent increase in traffic volume.
  • General merchandise revenues rose 6 percent to $6.7 billion, and traffic volume increased 5 percent compared with the prior year.
  • Intermodal revenues increased to $2.6 billion, up 7 percent compared with 2013. Traffic volume was 8 percent higher for 2014 compared with 2013.
  • Coal revenues were $2.4 billion, down 6 percent, due to a 5 percent decline in traffic volume compared with 2013.
  • Railway operating expenses were $8 billion, up 1 percent compared with 2013.
  • Income from railway operations was a record $3.6 billion, 10 percent higher compared with 2013.
  • The operating ratio for the year was a record 69.2 percent, a 3 percent improvement compared with 71.0 percent in 2013.

About Norfolk Southern
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,


2014


2013


2014


2013


(in millions, except per share amounts)













Railway operating revenues












Coal

$

543


$

641


$

2,382


$

2,543

General merchandise


1,678



1,622



6,680



6,318

Intermodal


649



618



2,562



2,384

Total railway operating revenues


2,870



2,881



11,624



11,245













Railway operating expenses












Compensation and benefits


714



761



2,897



3,002

Purchased services and rents


452



406



1,687



1,629

Fuel


347



403



1,574



1,613

Depreciation


240



233



951



916

Materials and other


226



197



940



828

Total railway operating expenses


1,979



2,000



8,049



7,988













Income from railway operations


891



881



3,575



3,257













Other income – net (note 1)


28



39



104



233

Interest expense on debt


129



137



545



525













Income before income taxes


790



783



3,134



2,965













Provision for income taxes












Current


6



223



840



793

Deferred


273



47



294



262

Total income taxes


279



270



1,134



1,055













Net income

$

511


$

513


$

2,000


$

1,910













Earnings per share (note 1)












Basic

$

1.65


$

1.66


$

6.44


$

6.10

Diluted


1.64



1.64



6.39



6.04













Weighted average shares outstanding (note 2)












Basic


309.0



308.7



309.4



311.9

Diluted


312.0



312.3



312.5



315.5

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)



Fourth Quarter


Years ended December 31,


2014


2013


2014


2013


($ in millions)













Net income

$

511


$

513


$

2,000


$

1,910

Other comprehensive income (loss), before tax:












Pension and other postretirement benefits


(329)



1,012



(15)



1,122

Other comprehensive income (loss) of equity
    investees


(18)



40



(8)



42

Other comprehensive income (loss), before tax


(347)



1,052



(23)



1,164

Income tax benefit (expense) related to items of other   












comprehensive income (loss)


127



(393)



6



(436)

Other comprehensive income (loss), net of tax


(220)



659



(17)



728













Total comprehensive income

$

291


$

1,172


$

1,983


$

2,638

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)



December 31,


December 31,


2014


2013


($ in millions)

Assets








Current assets:








Cash and cash equivalents


$

973



$

1,443

Short-term investments



-




118

Accounts receivable - net



1,055




1,024

Materials and supplies



236




223

Deferred income taxes



167




180

Other current assets



347




87

Total current assets



2,778




3,075









Investments



2,679




2,439

Properties less accumulated depreciation of $10,814 and








$10,387, respectively



27,694




26,645

Other assets



90




324









Total assets


$

33,241



$

32,483









Liabilities and stockholders' equity








Current liabilities:








Accounts payable


$

1,233



$

1,265

Short-term debt



100




100

Income and other taxes



217




225

Other current liabilities



228




270

Current maturities of long-term debt



2




445

Total current liabilities



1,780




2,305









Long-term debt



8,924




8,903

Other liabilities



1,312




1,444

Deferred income taxes



8,817




8,542

Total liabilities



20,833




21,194









Stockholders' equity:








Common stock $1.00 per share par value, 1,350,000,000 shares








authorized; outstanding 308,240,130 and 308,878,402 shares,








respectively, net of treasury shares



310




310

Additional paid-in capital



2,148




2,021

Accumulated other comprehensive loss



(398)




(381)

Retained income



10,348




9,339









Total stockholders' equity



12,408




11,289









Total liabilities and stockholders' equity


$

33,241



$

32,483

 


Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)




Years ended December 31,


2014


2013


($ in millions)

Cash flows from operating activities






Net income

$

2,000


$

1,910

Reconciliation of net income to net cash provided by operating activities:






Depreciation


956



922

Deferred income taxes


294



262

Gains and losses on properties and investments (note 1)


(13)



(104)

Changes in assets and liabilities affecting operations:






Accounts receivable


(31)



85

Materials and supplies


(13)



(7)

Other current assets


(260)



(5)

Current liabilities other than debt


53



5

Other – net


(134)



10

Net cash provided by operating activities


2,852



3,078







Cash flows from investing activities






Property additions


(2,118)



(1,971)

Property sales and other transactions


114



144

Investments, including short-term


(104)



(130)

Investment sales and other transactions


106



63

Net cash used in investing activities


(2,002)



(1,894)







Cash flows from financing activities






Dividends


(687)



(637)

Common stock issued – net


130



131

Purchase and retirement of common stock (note 2)


(318)



(627)

Proceeds from borrowings – net


200



989

Debt repayments


(645)



(250)

Net cash used in financing activities


(1,320)



(394)







Net increase (decrease) in cash and cash equivalents


(470)



790







Cash and cash equivalents






At beginning of year


1,443



653







At end of year

$

973


$

1,443







Supplemental disclosures of cash flow information






Cash paid during the year for:






Interest (net of amounts capitalized)

$

522


$

492

Income taxes (net of refunds)


1,102



735

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 3.1 million shares of common stock in 2014, totaling $318 million, and 8.3 million shares at a cost of $627 million for 2013.  We have remaining authorization from our Board of Directors to repurchase up to 35.2 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 139.8 million shares at a total cost of $8.4 billion.

 

 

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SOURCE Norfolk Southern Corporation

For further information: Media Inquiries: Frank Brown, 757-629-2710, fsbrown@nscorp.com; or Investor Inquiries: Katie Cook, 757-629-2861, InvestorRelations@nscorp.com