NORFOLK SOUTHERN CORPORATION 
By NORFOLK, Va., Jan. 24, 2012 /PRNewswire/ --
For 2011 vs. 2010:
NS set the following fourth-quarter records:
-- Railway operating revenues reached $2.8 billion, up 17 percent.
-- Net income increased 19 percent to $480 million.
-- Diluted earnings per share rose 30 percent to $1.42.
NS set the following records for the year:
-- Railway operating revenues reached $11.2 billion, up 17 percent.
-- Income from railway operations climbed 20 percent to $3.2 billion.
-- Net income was $1.9 billion, up 28 percent.
-- Diluted earnings per share increased 36 percent to $5.45.
Norfolk Southern Corporation (NYSE: NSC) today reported record fourth-quarter net income of $480 million, 19 percent higher compared with $402 million for the same quarter of 2010. Diluted earnings per share were a record $1.42, up 30 percent compared with the $1.09 per diluted share earned in the same period a year earlier.
For 2011, net income increased to an all-time record $1.9 billion, 28 percent higher compared with $1.5 billion for 2010. Diluted earnings per share for the year increased 36 percent, or $1.45, to a record $5.45, compared with 2010.
"Norfolk Southern achieved all-time records for revenues, operating income, net income, and earnings per share during 2011, and set fourth-quarter records for revenues, net income, and earnings per share," said Norfolk Southern CEO Wick Moorman. "In 2012 we will remain committed to enhancing our service product, maintaining the safety and quality of our rail network, improving operational efficiency, and supporting growth."
"Our strong capital program of $2.4 billion will include substantial investments along our Crescent Corridor, a public-private partnership to create a high-capacity, truck-competitive intermodal freight rail route between the Gulf Coast and Northeast," Moorman said. "As part of this program of projects, we plan to open intermodal terminals in Alabama, Pennsylvania, and Tennessee later in the year. Facilities such as these relieve congested freight lines and highways, and are proven centers for creating jobs and economic development."
Railway operating revenues increased to $2.8 billion, a fourth-quarter record, up 17 percent compared with the same period a year earlier. For 2011, railway operating revenues set an all-time record $11.2 billion, 17 percent higher compared with 2010. The improvements were the result of increases in revenue per unit of 11 percent for the quarter and 12 percent for the year and higher volumes that were up 6 percent for the quarter and 5 percent for the year.
General merchandise revenues rose to $1.4 billion, up 13 percent compared with fourth-quarter 2010. For 2011, general merchandise revenues increased to $5.6 billion, 12 percent higher compared with 2010. Traffic volume increased 1 percent in the quarter and was even for the year compared with the same periods of 2010.
Coal revenues in the fourth quarter were $850 million, up 24 percent compared with the same period last year. For 2011, coal revenues were $3.5 billion, 27 percent higher compared with 2010. Traffic volume increased 3 percent in the quarter and 4 percent for the year compared with the same periods of 2010.
Intermodal revenues were $554 million, up 18 percent compared with fourth-quarter 2010. For the year, intermodal revenues were $2.1 billion, up 19 percent compared with 2010. Traffic volume increased by 11 percent in the quarter and 10 percent for 2011 compared with the same periods of 2010.
Railway operating expenses were $2 billion for the fourth quarter, 14 percent higher compared with the same period a year earlier. For 2011, railway operating expenses were $8 billion, up 16 percent compared with 2010. The increases were primarily driven by fuel expenses, which rose by $95 million in the fourth quarter and $510 million for the year, and higher costs associated with increased traffic volumes.
Income from railway operations increased 25 percent for the quarter to $800 million and improved 20 percent to a record $3.2 billion for the year, compared with the same periods of 2010.
Fourth-quarter 2011 results included $11 million in deferred income tax benefits attributable to state tax law changes. The year included $68 million of favorable, non-recurring income tax benefits.
The fourth-quarter railway operating ratio improved by 2 percent to 71.4 percent compared with the same period last year. For 2011, the railway operating ratio improved by 1 percent to 71.2 percent compared with 2010.
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 and industrial products.
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Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
(in millions, except per share amounts)
Railway
operating
revenues:
Coal $850 $685 $3,458 $2,719
General
merchandise 1,393 1,236 5,584 5,001
Intermodal 554 471 2,130 1,796
--- --- ----- -----
Total railway
operating
revenues 2,797 2,392 11,172 9,516
----- ----- ------ -----
Railway
operating
expenses:
Compensation
and benefits 734 659 2,974 2,708
Purchased
services and
rents 419 391 1,610 1,477
Fuel 403 308 1,589 1,079
Depreciation 221 207 862 819
Materials and
other (note
1) 220 185 924 757
--- --- --- ---
Total railway
operating
expenses 1,997 1,750 7,959 6,840
----- ----- ----- -----
Income from
railway
operations 800 642 3,213 2,676
Other income
- net 39 35 160 153
Interest
expense on
debt 116 115 455 462
--- --- --- ---
Income before
income taxes 723 562 2,918 2,367
Provision for
income
taxes:
Current 130 20 475 559
Deferred 113 140 527 312
--- --- --- ---
Total income
taxes (note
2) 243 160 1,002 871
Net income $480 $402 $1,916 $1,496
Earnings per
share (note
3):
Basic $1.44 $1.11 $5.52 $4.06
Diluted $1.42 $1.09 $5.45 $4.00
Weighted
average
shares
outstanding
(note 4):
Basic 332.8 360.7 345.5 366.5
Diluted 338.6 365.7 351.3 371.8
See accompanying notes to consolidated financial
statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
As of December 31,
2011 2010
---- ----
($ in millions)
Assets
Current assets:
Cash and cash equivalents $276 $827
Short-term investments 25 283
Accounts receivable - net 1,022 807
Materials and supplies 209 169
Deferred income taxes 143 145
Other current assets 76 240
Total current assets 1,751 2,471
Investments 2,234 2,193
Properties less accumulated
depreciation of 24,469 23,231
$9,464 and $9,262, respectively
Other assets 84 304
Total assets $28,538 $28,199
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $1,092 $1,181
Short-term debt 100 100
Income and other taxes 207 199
Other current liabilities 252 244
Current maturities of long-term
debt 50 358
Total current liabilities 1,701 2,082
Long-term debt 7,390 6,567
Other liabilities 2,050 1,793
Deferred income taxes 7,486 7,088
Total liabilities 18,627 17,530
Stockholders' equity:
Common stock $1.00 per share par
value, 332 358
1,350,000,000 shares authorized;
outstanding 330,386,089 and
357,362,604
shares, respectively, net of
treasury shares
Additional paid-in capital 1,912 1,892
Accumulated other comprehensive
loss (1,026) (805)
Retained income 8,693 9,224
Total stockholders' equity 9,911 10,669
Total liabilities and
stockholders' equity $28,538 $28,199
See accompanying notes to consolidated financial
statements.
------------------------------------------------
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Years Ended December 31,
2011 2010
---- ----
($ in millions)
Cash flows from
operating activities:
Net income $1,916 $1,496
Reconciliation of net
income to net cash
provided
by operating activities:
Depreciation 869 826
Deferred income taxes 527 312
Gains and losses on
properties and
investments (32) (42)
Changes in assets and
liabilities affecting
operations:
Accounts receivable (215) (41)
Materials and supplies (40) (5)
Other current assets 14 (1)
Current liabilities
other than debt 68 126
Other - net 120 43
--- ---
Net cash provided by
operating activities 3,227 2,714
Cash flows from
investing activities:
Property additions (2,160) (1,470)
Property sales and other
transactions 84 97
Investments, including
short-term (135) (504)
Investment sales and
other transactions 439 421
--- ---
Net cash used in
investing activities (1,772) (1,456)
Cash flows from
financing activities:
Dividends (576) (514)
Common stock issued -
net 120 89
Purchase and retirement
of common stock (note
4) (2,051) (863)
Proceeds from borrowings
- net 1,101 350
Debt repayments (600) (489)
---- ----
Net cash used in
financing activities (2,006) (1,427)
------ ------
Net decrease in cash and
cash equivalents (551) (169)
Cash and cash
equivalents:
At beginning of year 827 996
--- ---
At end of year $276 $827
Supplemental disclosure
of cash flow
information
Cash paid during the
year for:
Interest (net of
amounts capitalized) $435 $453
Income taxes (net of
refunds) $289 $602
See accompanying notes to consolidated financial
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1. MATERIALS AND OTHER
During the first quarter of 2011, NS received an unfavorable ruling for an arbitration claim with an insurance carrier that failed to respond to insurance claims submitted by NS, related to the January 6, 2005 derailment in Graniteville, SC. As a result, NS recorded a $43 million charge for the receivables associated with the contested portion of the claim and a $15 million charge for other receivables affected by the ruling for which recovery is no longer probable.
2. INCOME TAXES
During the second quarter of 2011, the Internal Revenue Service (IRS) completed its examination of NS' 2008 tax return and review of certain claims for refund for prior years that resulted in a decrease in income tax expense of $40 million. Also during the second quarter, three states enacted tax law changes that decreased deferred income tax expense by $19 million.
During the fourth quarter of 2010, NS recognized a $34 million non-recurring benefit resulting from a change in estimate for deferred taxes. During the first quarter of 2010, the Patient Protection and Affordable Care Act, and the Health Care and Education Reconciliation Act of 2010 were signed into law. Provisions of the Acts eliminated, after 2012, the tax deduction available for reimbursed prescription drug expenses under the Medicare Part D retiree drug subsidy program. Accordingly, NS recorded a $27 million charge to deferred tax expense in the first quarter of 2010.
3. 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, $3 million in 2011 and $2 million in 2010; and for the year, $9 million in 2011 and $8 million in 2010.
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 units as follows: for the fourth quarter, less than $1 million in 2011 and $2 million in 2010; and for the year $2 million for 2011 and $8 million for 2010.
4. STOCK REPURCHASE PROGRAM
During 2011, NS repurchased and retired 30.2 million shares of Common Stock at a cost of $2.1 billion and 14.7 million shares at a cost of $863 million for the same period of 2010. The timing and volume of purchases is guided by management's 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 2005, NS has repurchased and retired 109.6 million shares at a total cost of $6.2 billion.
SOURCE Norfolk Southern Corporation
