Norfolk Southern Reports First-Quarter 2010 Results
For first-quarter 2010 vs. first-quarter 2009:
-- Railway operating revenues increased 15 percent to $2.2 billion.
-- Income from railway operations rose 45 percent to $555 million.
-- Net income increased 45 percent to $257 million.
-- Diluted earnings per share rose 45 percent to $0.68.
-- The railway operating ratio improved by 5.1 percentage points to 75.2 percent.
NORFOLK, Va., April 27 /PRNewswire-FirstCall/ -- For the first quarter of 2010, Norfolk Southern Corporation (NYSE: NSC) reported net income of $257 million, or $0.68 per diluted share, 45 percent higher compared with $177 million, or $0.47 per diluted share, for the first quarter of 2009.
First-quarter 2010 results were impacted by a $27 million, or $0.07 per diluted share, deferred tax charge resulting from the enactment of recent healthcare legislation, which, effective in 2013, eliminates the tax deduction available for prescription drug expenses reimbursed under the Medicare Part D retiree drug subsidy program.
"Norfolk Southern delivered strong financial performance during the first quarter, reflecting positive trends in the economy," said Norfolk Southern CEO Wick Moorman. "Demand for rail transportation continues to grow in most sectors of our business. We remain confident that many of the cost efficiencies we have achieved will remain in place as we continue to invest in key projects and new business opportunities."
First-quarter railway operating revenues improved 15 percent to $2.2 billion, compared with the first-quarter of 2009, primarily as the result of a 9 percent increase in traffic volume.
General merchandise revenues were $1.2 billion, 23 percent higher compared with the same period last year. Coal revenues increased 4 percent to $629 million compared with first-quarter 2009 results. Intermodal revenues were $410 million, up 12 percent compared with the first quarter of last year.
Railway operating expenses for the quarter were $1.7 billion, up 8 percent compared with first-quarter 2009, primarily a result of higher fuel expenses, which rose by $95 million or 60 percent, largely related to increased prices.
Income from railway operations for the quarter improved by 45 percent to $555 million compared with the same period of 2009.
The railway operating ratio improved by 5.1 percentage points to a post-Conrail transaction first-quarter record of 75.2 percent, compared with 80.3 percent in first quarter 2009.
Norfolk Southern Corporation (NYSE: NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway subsidiary operates approximately 21,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal and industrial products.
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Norfolk Southern Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) |
||||||
Three Months Ended March 31, |
||||||
2010 |
2009 |
|||||
($ in millions, except earnings per share) |
||||||
Railway operating revenues: |
||||||
Coal |
$ |
629 |
$ |
602 |
||
General Merchandise |
1,199 |
975 |
||||
Intermodal |
410 |
366 |
||||
Total railway operating revenues |
2,238 |
1,943 |
||||
Railway operating expenses: |
||||||
Compensation and benefits |
699 |
639 |
||||
Purchased services and rents |
335 |
355 |
||||
Fuel |
254 |
159 |
||||
Depreciation |
204 |
207 |
||||
Materials and other |
191 |
200 |
||||
Total railway operating expenses |
1,683 |
1,560 |
||||
Income from railway operations |
555 |
383 |
||||
Other income – net |
20 |
17 |
||||
Interest expense on debt |
119 |
117 |
||||
Income before income taxes |
456 |
283 |
||||
Provision for income taxes: |
||||||
Current |
159 |
90 |
||||
Deferred (note 1) |
40 |
16 |
||||
Total income taxes |
199 |
106 |
||||
Net income |
$ |
257 |
$ |
177 |
||
Earnings per share (note 2): |
||||||
Basic |
$ |
0.69 |
$ |
0.48 |
||
Diluted |
$ |
0.68 |
$ |
0.47 |
||
Weighted average shares outstanding (millions) (note 2): |
||||||
Basic |
369.5 |
366.2 |
||||
Diluted |
374.9 |
371.1 |
||||
Norfolk Southern Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) |
|||||
March 31, |
December 31, |
||||
2010 |
2009 |
||||
($ in millions) |
|||||
Assets |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ |
1,161 |
$ |
996 |
|
Short-term investments |
225 |
90 |
|||
Accounts receivable – net |
867 |
766 |
|||
Materials and supplies |
180 |
164 |
|||
Deferred income taxes |
145 |
142 |
|||
Other current assets |
68 |
88 |
|||
Total current assets |
2,646 |
2,246 |
|||
Investments |
2,166 |
2,164 |
|||
Properties less accumulated depreciation |
22,697 |
22,643 |
|||
Other assets |
221 |
316 |
|||
Total assets |
$ |
27,730 |
$ |
27,369 |
|
Liabilities and stockholders' equity |
|||||
Current liabilities: |
|||||
Accounts payable |
$ |
987 |
$ |
974 |
|
Short-term debt |
- |
100 |
|||
Income and other taxes |
252 |
109 |
|||
Other current liabilities |
306 |
232 |
|||
Current maturities of long-term debt |
648 |
374 |
|||
Total current liabilities |
2,193 |
1,789 |
|||
Long-term debt |
6,379 |
6,679 |
|||
Other liabilities |
1,794 |
1,801 |
|||
Deferred income taxes |
6,800 |
6,747 |
|||
Total liabilities |
17,166 |
17,016 |
|||
Stockholders' equity: |
|||||
Common stock $1.00 per share par value, 1,350,000,000 shares |
|||||
authorized; outstanding 370,055,972 and 369,019,990 shares, |
|||||
respectively, net of treasury shares |
371 |
370 |
|||
Additional paid-in capital |
1,871 |
1,809 |
|||
Accumulated other comprehensive loss |
(834) |
(853) |
|||
Retained income |
9,156 |
9,027 |
|||
Total stockholders' equity |
10,564 |
10,353 |
|||
Total liabilities and stockholders' equity |
$ |
27,730 |
$ |
27,369 |
|
Norfolk Southern Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) |
|||||
Three Months Ended March 31, |
|||||
2010 |
2009 |
||||
($ in millions) |
|||||
Cash flows from operating activities: |
|||||
Net income |
$ |
257 |
$ |
177 |
|
Reconciliation of net income to net cash provided |
|||||
by operating activities: |
|||||
Depreciation |
206 |
209 |
|||
Deferred income taxes |
40 |
16 |
|||
Gains and losses on properties |
(1) |
(2) |
|||
Changes in assets and liabilities affecting operations: |
|||||
Accounts receivable |
(101) |
39 |
|||
Materials and supplies |
(16) |
3 |
|||
Other current assets |
17 |
35 |
|||
Current liabilities other than debt |
209 |
(107) |
|||
Other – net |
147 |
(16) |
|||
Net cash provided by operating activities |
758 |
354 |
|||
Cash flows from investing activities: |
|||||
Property additions |
(256) |
(243) |
|||
Property sales and other transactions |
- |
1 |
|||
Investments, including short-term |
(155) |
- |
|||
Investment sales and other transactions |
51 |
(2) |
|||
Net cash used in investing activities |
(360) |
(244) |
|||
Cash flows from financing activities: |
|||||
Dividends |
(126) |
(125) |
|||
Common stock issued – net |
21 |
6 |
|||
Proceeds from borrowings |
- |
500 |
|||
Debt repayments |
(128) |
(225) |
|||
Net cash provided by (used in) financing activities |
(233) |
156 |
|||
Net increase in cash and cash equivalents |
165 |
266 |
|||
Cash and cash equivalents: |
|||||
At beginning of year |
996 |
618 |
|||
At end of period |
$ |
1,161 |
$ |
884 |
|
Supplemental disclosure of cash flow information |
|||||
Cash paid during the period for: |
|||||
Interest (net of amounts capitalized) |
$ |
50 |
$ |
49 |
|
Income taxes (net of refunds) |
$ |
- |
$ |
23 |
|
. |
|||||
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1. 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 enacted and signed into law. Provisions of these Acts eliminate, after 2012, the tax deduction available for reimbursed prescription drug expenses under the Medicare Part D retiree drug subsidy program. As a result, NS recorded a $27 million charge to deferred tax expense.
2. earnings per share
As required under the provisions of ASC 260-10, "Earnings Per Share", for basic earnings per share, income available to common stockholders for the first quarters of 2010 and 2009 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 quarters of 2010 and 2009, diluted earnings per share were 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, in both periods, for dividend equivalent payments
SOURCE Norfolk Southern Corporation
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