Norfolk Southern Reports Third-Quarter 2007 Results
NORFOLK, Va., Oct. 24 /PRNewswire-FirstCall/ — Norfolk Southern Corporation reported third-quarter 2007 net income of $386 million, or $0.97 per diluted share, compared with $416 million, or $1.02 per diluted share, for the same period of 2006. Results included the effects of Illinois tax legislation enacted during the third quarter of 2007 that reduced net income by $19 million, or $0.05 per diluted share.
“Norfolk Southern continued to deliver solid results in the third quarter,” said CEO Wick Moorman. “Softness in certain segments of the economy resulted in reduced traffic volumes, which we were substantially able to offset through pricing gains and cost control. We remain confident in the overall strength of our franchise, and we continue to take a long-term perspective as we plan new traffic corridors, improve technology, and support our workforce with the tools necessary to provide superior service.”
Third-quarter railway operating revenues were $2.35 billion, down 2 percent compared with the same period a year earlier. Fewer intermodal and coal shipments as well as continued weakness in the automotive-related and housing industries contributed to a 4 percent reduction in traffic volume during the quarter compared with the third quarter of 2006.
General merchandise revenues were $1.29 billion, a third-quarter record and an increase of 1 percent compared with the same period last year, despite a 3 percent decline in volume.
Coal revenues declined 3 percent to $578 million in the quarter compared with the same period of 2006. Traffic volume was down 2 percent for the quarter.
Intermodal revenues were $484 million, down 6 percent compared with the same period of 2006. Volume decreased by more than 51,000 units, or 6 percent, in the third quarter compared with the same quarter a year earlier.
Railway operating expenses were $1.67 billion for the quarter, about even compared with third-quarter 2006.
The railway operating ratio for the quarter increased 1 percentage point to 71.1 percent.
Norfolk Southern Corporation is one of the nation’s premier transportation companies. Its Norfolk Southern Railway subsidiary operates 21,000 route miles in 22 states, the District of Columbia and Ontario, Canada, serving every major container port in the eastern United States and providing superior connections to western rail carriers. NS operates the most extensive intermodal network in the East and is North America’s largest rail carrier of metals and automotive products.
Norfolk Southern Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) ($ millions except per share) Three Months Ended September 30, 2007 2006 Railway operating revenues: Coal $578 $595 General merchandise 1,291 1,283 Intermodal 484 515 Total railway operating revenues 2,353 2,393 Railway operating expenses: Compensation and benefits 619 624 Materials, services and rents 505 502 Depreciation 194 186 Diesel fuel 258 257 Casualties and other claims 33 50 Other 63 59 Total railway operating expenses 1,672 1,678 Income from railway operations 681 715 Other income – net 31 41 Interest expense on debt 107 120 Income before income taxes 605 636 Provision for income taxes: Current 178 235 Deferred 41 (15) Total income taxes 219 220 Net income $386 $416 Earnings per share: Basic $0.99 $1.04 Diluted $0.97 $1.02 Average shares outstanding (millions): Basic 389.0 402.0 Diluted 397.4 409.9 Norfolk Southern Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) ($ millions except per share) Nine Months Ended September 30, 2007 2006 Railway operating revenues: Coal $1,714 $1,738 General merchandise 3,839 3,872 Intermodal 1,425 1,478 Total railway operating revenues 6,978 7,088 Railway operating expenses: Compensation and benefits 1,929 1,982 Materials, services and rents 1,498 1,507 Depreciation 578 551 Diesel fuel 726 748 Casualties and other claims 131 168 Other 217 189 Total railway operating expenses 5,079 5,145 Income from railway operations 1,899 1,943 Other income – net 59 109 Interest expense on debt 333 361 Income before income taxes 1,625 1,691 Provision for income taxes: Current 541 637 Deferred 19 (42) Total income taxes 560 595 Net income $1,065 $1,096 Earnings per share: Basic $2.71 $2.68 Diluted $2.66 $2.62 Average shares outstanding (millions): Basic 392.3 409.3 Diluted 400.5 418.2 Norfolk Southern Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) ($ millions) September 30, December 31, 2007 2006 Assets Current assets: Cash, cash equivalents and short-term investments $418 $918 Accounts receivable – net 1,013 992 Materials and supplies 173 151 Deferred income taxes 188 186 Other current assets 59 153 Total current assets 1,851 2,400 Investments 1,934 1,755 Properties less accumulated depreciation 21,345 21,098 Other assets 830 775 Total assets $25,960 $26,028 Liabilities and stockholders’ equity Current liabilities: Accounts payable $1,127 $1,181 Income and other taxes 245 205 Other current liabilities 267 216 Current maturities of long-term debt 383 491 Total current liabilities 2,022 2,093 Long-term debt 5,764 6,109 Other liabilities 1,930 1,767 Deferred income taxes 6,365 6,444 Total liabilities 16,081 16,413 Stockholders’ equity: Common stock $1.00 per share par value 408 418 Additional paid-in capital 1,471 1,303 Accumulated other comprehensive loss (353) (369) Retained income 8,373 8,283 9,899 9,635 Less treasury stock at cost, 20,683,686 and 20,780,638 shares, respectively (20) (20) Total stockholders’ equity 9,879 9,615 Total liabilities and stockholders’ equity $25,960 $26,028 Norfolk Southern Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) ($ millions) Nine Months Ended September 30, 2007 2006 Cash flows from operating activities: Net income $1,065 $1,096 Reconciliation of net income to net cash provided by operating activities: Depreciation 587 560 Deferred income taxes 19 (42) Gains on properties and investments (36) (40) Changes in assets and liabilities affecting operations: Accounts receivable (21) (96) Materials and supplies (22) (26) Other current assets 80 84 Current liabilities other than debt 67 146 Other – net 72 35 Net cash provided by operating activities 1,811 1,717 Cash flows from investing activities: Property additions (895) (862) Property sales and other transactions 105 86 Investments, including short-term (568) (1,504) Investment sales and other transactions 758 1,739 Net cash used for investing activities (600) (541) Cash flows from financing activities: Dividends (276) (207) Common stock issued – net 166 240 Purchase and retirement of common stock (note 1) (769) (916) Debt repayments (454) (312) Net cash used for financing activities (1,333) (1,195) Net decrease in cash and cash equivalents (122) (19) Cash and cash equivalents: At beginning of year 527 289 At end of period 405 270 Short-term investments at end of period 13 533 Cash, cash equivalents and short-term investments at end of period $418 $803 Supplemental disclosures of cash flow information Cash paid during the period for: Interest (net of amounts capitalized) $279 $300 Income taxes (net of refunds) $386 $483 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS: 1. STOCK REPURCHASE PROGRAM – In March 2007, NS’ Board of Directors amended the stock repurchase program that was authorized in November 2005 to increase the number of shares of NS common stock that may be repurchased from 50 million to 75 million. In addition, the authorization term was shortened from December 31, 2015 to December 31, 2010. During the first nine months of 2007, NS purchased and retired 15.1 million shares of common stock at a cost of $769 million. Since inception, NS has purchased and retired 36.9 million shares at a total cost of $1.7 billion under this program.
Norfolk Southern Corporation
CONTACT: Media, Frank Brown, +1-757-629-2714, frank.brown@nscorp.com ,Susan Terpay, +1-757-823-5204, susan.terpay@nscorp.com , or Investors,Leanne Marilley, +1-757-629-2781, leanne.marilley@nscorp.com , all of NorfolkSouthern
Web site: http://www.nscorp.com/
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