For first-quarter 2009:
* Railway operating revenues were $1.9 billion.
* Income from railway operations was $383 million.
* Net income was $177 million.
* Diluted earnings per share were $0.47.
* The railway operating ratio was 80.3 percent.
NORFOLK, Va., April 21 /PRNewswire-FirstCall/ -- For the first quarter of 2009, Norfolk Southern Corporation (NYSE: NSC) reported net income of $177 million, or $0.47 per diluted share, compared with $291 million, or $0.76 per diluted share, for the first quarter of 2008.
"Current economic conditions were clearly reflected in Norfolk Southern's first-quarter results," said Norfolk Southern CEO Wick Moorman. "We are responding by aggressively controlling costs, while enhancing our service and continuing to invest in projects that will drive future growth. This approach will position us to participate in the economy's eventual recovery as we tightly manage the company in the face of an ongoing reduction in railway traffic volumes."
First-quarter railway operating revenues were $1.9 billion, down 22 percent, compared with the first-quarter of 2008, primarily as the result of a 20 percent reduction in traffic volume and lower fuel-related revenues.
General merchandise revenues were $975 million, 28 percent lower compared with the same period last year. Coal revenues declined 9 percent to $602 million compared with first-quarter 2008 results. Intermodal revenues decreased 25 percent to $366 million compared with the first quarter of last year.
Railway operating expenses for the quarter were $1.6 billion, a decrease of 19 percent over the same period of 2008.
The railway operating ratio was 80.3 percent, compared with 76.9 percent during first-quarter 2008.
Norfolk Southern Corporation is one of the nation's premier transportation companies. Its Norfolk Southern Railway subsidiary operates approximately 21,000 route miles in 22 states and the District of Columbia, serving every major container port in the eastern United States and providing superior connections to western rail carriers. NS operates the most extensive intermodal network in the East and is North America's largest rail carrier of metals and automotive products.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
2009 2008
($in millions,
except earnings per share)
Railway operating revenues:
Coal $602 $662
General merchandise 975 1,352
Intermodal 366 486
Total railway operating revenues 1,943 2,500
Railway operating expenses:
Compensation and benefits 639 705
Purchased services and rents 355 375
Fuel 159 404
Depreciation 207 198
Materials and other 200 240
Total railway operating expenses 1,560 1,922
Income from railway operations 383 578
Other income - net 17 7
Interest expense on debt 117 109
Income before income taxes 283 476
Provision for income taxes
Current 90 160
Deferred 16 25
Total income taxes 106 185
Net income $177 $291
Earnings per share (note 1):
Basic $0.48 $0.77
Diluted $0.47 $0.76
Weighted average shares outstanding
(millions) (notes 1 & 2):
Basic 366.2 375.7
Diluted 371.1 383.9
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
2009 2008
($in millions)
Assets
Current assets:
Cash and cash equivalents $884 $618
Accounts receivable - net 831 870
Materials and supplies 191 194
Deferred income taxes 161 149
Other current assets 127 168
Total current assets 2,194 1,999
Investments 1,806 1,779
Properties less accumulated depreciation 22,292 22,247
Other assets 254 272
Total assets $26,546 $26,297
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $952 $1,140
Income and other taxes 311 261
Other current liabilities 287 220
Current maturities of long-term debt 468 484
Total current liabilities 2,018 2,105
Long-term debt 6,467 6,183
Other liabilities 1,945 2,030
Deferred income taxes 6,406 6,372
Total liabilities 16,836 16,690
Stockholders' equity:
Common stock $1.00 per share par value,
1,350,000,000 shares authorized;
outstanding 367,037,849 and 366,233,106
shares, respectively, net of treasury shares 369 368
Additional paid-in capital 1,723 1,680
Accumulated other comprehensive loss (933) (942)
Retained income 8,551 8,501
Total stockholders' equity 9,710 9,607
Total liabilities and stockholders'
equity $26,546 $26,297
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2009 2008
($in millions)
Cash flows from operating activities:
Net income $177 $291
Reconciliation of net income to net
cash provided by operating activities:
Depreciation 209 200
Deferred income taxes 16 25
Gains and losses on properties and
investments (2) (5)
Changes in assets and liabilities
affecting operations:
Accounts receivable 39 (37)
Materials and supplies 3 (18)
Other current assets 35 30
Current liabilities other than debt (107) 75
Other - net (16) 43
Net cash provided by operating
activities 354 604
Cash flows from investing activities:
Property additions (243) (304)
Property sales and other transactions 1 3
Investment sales and other transactions (2) 54
Net cash used in investing
activities (244) (247)
Cash flows from financing activities:
Dividends (125) (109)
Common stock issued - net 6 71
Purchase and retirement of common
stock (note 2) -- (276)
Proceeds from borrowings 500 525
Debt repayments (225) (410)
Net cash provided by (used in)
financing activities 156 (199)
Net increase in cash and cash
equivalents 266 158
Cash and cash equivalents:
At beginning of year 618 206
At end of period $884 $364
Supplemental disclosure of cash
flow information
Cash paid during the period for:
Interest (net of amounts capitalized) $49 $54
Income taxes (net of refunds) $23 $7
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1. 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," 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 both 2009 and 2008 reflects a $2 million reduction from net income for the effect of dividend equivalent payments made to holders of stock options. In addition, for the first quarter 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 reduction from net income for dividend equivalent payments.
2. 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 three 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.
