NORFOLK, Va., July 28 /PRNewswire-FirstCall/ -- For the second quarter of 2009, Norfolk Southern Corporation (NYSE: NSC) reported net income of $247 million, or $0.66 per diluted share, compared with $453 million, or $1.18 per diluted share, for the second quarter of 2008.
"Second-quarter results obviously reflect the impact of the recession," said Norfolk Southern CEO Wick Moorman. "However, the measures we are taking to control expenses while maintaining our industry-leading service levels have enabled us to post solid second-quarter results, while at the same time we continue to invest in projects that position us for the eventual economic recovery."
Second-quarter railway operating revenues were $1.9 billion, down 33 percent, compared with the second quarter of 2008, primarily the result of a 26 percent reduction in traffic volume and lower fuel-related revenues.
General merchandise revenues were $978 million, 33 percent lower compared with the same period last year. Coal revenues declined 34 percent to $511 million compared with second-quarter 2008 results. Intermodal revenues decreased 31 percent to $368 million compared with the second quarter of last year.
Railway operating expenses for the quarter were $1.4 billion, a decrease of 29 percent over the same period of 2008.
The railway operating ratio was 74.8 percent, compared with 71.1 percent during second-quarter 2008.
Norfolk Southern Corporation is a leading North American transportation provider. Its Norfolk Southern Railway subsidiary operates approximately 21,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal and industrial products.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
($ in millions, except per share amounts)
Railway operating revenues:
Coal $511 $775 $1,113 $1,437
General merchandise 978 1,458 1,953 2,810
Intermodal 368 532 734 1,018
--- --- --- -----
Total railway operating revenues 1,857 2,765 3,800 5,265
----- ----- ----- -----
Railway operating expenses:
Compensation and benefits 551 662 1,190 1,367
Purchased services and rents 334 400 689 775
Fuel 153 491 312 895
Depreciation 207 199 414 397
Materials and other (note 1) 144 214 344 454
--- --- --- ---
Total railway operating expenses 1,389 1,966 2,949 3,888
----- ----- ----- -----
Income from railway operations 468 799 851 1,377
Other income - net 36 46 53 53
Interest expense on debt 113 112 230 221
--- --- --- ---
Income before income taxes 391 733 674 1,209
Provision for income taxes:
Current 85 242 175 402
Deferred 59 38 75 63
-- -- -- --
Total income taxes 144 280 250 465
--- --- --- ---
Net income $247 $453 $424 $744
=== === === ===
Earnings per share (note 3):
Basic $0.67 $1.20 $1.14 $1.97
Diluted $0.66 $1.18 $1.13 $1.94
Weighted average shares outstanding
(millions) (notes 2 & 3):
Basic 366.8 375.4 366.5 375.6
Diluted 371.4 383.5 371.3 383.7
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2009 2008
---- ----
($ in millions)
Assets
Current assets:
Cash and cash equivalents $722 $618
Accounts receivable - net 800 870
Materials and supplies 188 194
Deferred income taxes 136 149
Other current assets 90 168
-- ---
Total current assets 1,936 1,999
Investments 2,027 1,779
Properties less accumulated depreciation 22,375 22,247
Other assets 295 272
--- ---
Total assets $26,633 $26,297
====== ======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $945 $1,140
Income and other taxes 159 261
Other current liabilities 240 220
Current maturities of long-term debt 394 484
--- ---
Total current liabilities 1,738 2,105
Long-term debt 6,688 6,183
Other liabilities 1,902 2,030
Deferred income taxes 6,446 6,372
----- -----
Total liabilities 16,774 16,690
------ ------
Stockholders' equity:
Common stock $1.00 per share par value,
1,350,000,000 shares authorized; outstanding
367,636,640 and 366,233,106 shares,
respectively, net of treasury shares 369 368
Additional paid-in capital 1,741 1,680
Accumulated other comprehensive loss (922) (942)
Retained income 8,671 8,501
----- -----
Total stockholders' equity 9,859 9,607
----- -----
Total liabilities and stockholders' equity $26,633 $26,297
====== ======
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2009 2008
---- ----
($ in millions)
Cash flows from operating activities:
Net income $424 $744
Reconciliation of net income to net cash
provided by operating activities:
Depreciation 418 402
Deferred income taxes 75 63
Gains and losses on properties (4) (22)
Changes in assets and liabilities affecting
operations:
Accounts receivable 29 55
Materials and supplies 6 (27)
Other current assets 75 34
Current liabilities other than debt (319) (245)
Other - net (61) 54
--- --
Net cash provided by operating activities 643 1,058
Cash flows from investing activities:
Property additions (566) (676)
Property sales and other transactions 27 66
Investments, including short-term (119) (34)
Investment sales and other transactions 9 251
- ---
Net cash used in investing activities (649) (393)
Cash flows from financing activities:
Dividends (250) (218)
Common stock issued - net 24 177
Purchase and retirement of common stock
(note 2) - (494)
Proceeds from borrowings - net 990 1,225
Debt repayments (654) (1,107)
---- ------
Net cash provided by (used in) financing
activities 110 (417)
--- ----
Net increase in cash and cash equivalents 104 248
Cash and cash equivalents:
At beginning of year 618 206
--- ---
At end of period $722 $454
=== ===
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized) $224 $208
Income taxes (net of refunds) $222 $235
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1. Materials and Other
Second quarter 2009 includes a $21 million favorable adjustment related to settlement of a multi-year state tax dispute.
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 six 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.
3. 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 the second quarter 2009 and 2008 reflects a $2 million reduction and for the first six months of 2009 and 2008 a $4 million reduction from net income for the effect of dividend equivalent payments made to holders of stock options. In addition, for the second quarter and first six 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 $4 million reduction, respectively, from net income for dividend equivalent payments.
