NORFOLK SOUTHERN CORP - FORM 8-K - EX-99

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8-K - NORFOLK SOUTHERN CORP	8-K.htm
EX-99 - NORFOLK SOUTHERN CORP	PressRelease.htm

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Second Quarter				First Six Months
	2013		2012		2013		2012
	(in millions, except per share amounts)

Railway operating revenues
Coal	$	626	$	755	$	1,261	$	1,521
General merchandise		1,588		1,556		3,118		3,052
Intermodal		588		563		1,161		1,090
Total railway operating revenues		2,802		2,874		5,540		5,663

Railway operating expenses
Compensation and benefits		726		724		1,506		1,510
Purchased services and rents		410		392		803		783
Fuel		391		390		820		803
Depreciation		226		229		453		453
Materials and other		213		205		431		435
Total railway operating expenses		1,966		1,940		4,013		3,984

Income from railway operations		836		934		1,527		1,679

Other income – net (note 1)		29		31		164		60
Interest expense on debt		128		122		257		242

Income before income taxes		737		843		1,434		1,497

Provision for income taxes
Current		203		269		376		425
Deferred		69		50		143		138
Total income taxes		272		319		519		563

Net income	$	465	$	524	$	915	$	934

Earnings per share (notes 1 & 2)
Basic	$	1.47	$	1.62	$	2.90	$	2.86
Diluted		1.46		1.60		2.87		2.82

Weighted average shares outstanding (note 3)
Basic		314.1		322.7		314.3		325.5
Diluted		317.8		327.5		317.9		330.2

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

	Second Quarter				First Six Months
	2013		2012		2013		2012
	($ in millions)

Net income	$	465	$	524	$	915	$	934
Other comprehensive income, before tax:
Pension and other postretirement benefits		36		32		72		64
Other comprehensive income (loss) of equity investees		1		-		2		(4)
Other comprehensive income, before tax		37		32		74		60
Income tax expense related to items of other
comprehensive income		(14)		(13)		(28)		(25)
Other comprehensive income, net of tax		23		19		46		35

Total comprehensive income	$	488	$	543	$	961	$	969

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	June 30,			December 31,
	2013			2012
	($ in millions)
Assets
Current assets:
Cash and cash equivalents		$	587		$	653
Short-term investments			-			15
Accounts receivable - net			1,072			1,109
Materials and supplies			228			216
Deferred income taxes			137			167
Other current assets			54			82
Total current assets			2,078			2,242

Investments			2,366			2,300
Properties less accumulated depreciation of $10,152 and
$9,922, respectively			26,098			25,736
Other assets			63			64

Total assets		$	30,605		$	30,342

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	1,180		$	1,362
Short-term debt			-			200
Income and other taxes			284			206
Other current liabilities			304			263
Current maturities of long-term debt			47			50
Total current liabilities			1,815			2,081

Long-term debt			8,430			8,432
Other liabilities			2,198			2,237
Deferred income taxes			7,974			7,832
Total liabilities			20,417			20,582

Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 311,952,780 and 314,034,174 shares,
respectively, net of treasury shares			313			315
Additional paid-in capital			1,984			1,911
Accumulated other comprehensive loss			(1,063)			(1,109)
Retained income			8,954			8,643

Total stockholders’ equity			10,188			9,760

Total liabilities and stockholders’ equity		$	30,605		$	30,342

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	First Six Months
	2013		2012
	($ in millions)
Cash flows from operating activities
Net income	$	915	$	934
Reconciliation of net income to net cash provided by operating activities:
Depreciation		456		456
Deferred income taxes		143		138
Gains on properties (note 1)		(99)		(2)
Changes in assets and liabilities affecting operations:
Accounts receivable		37		(64)
Materials and supplies		(12)		(33)
Other current assets		28		23
Current liabilities other than debt		6		162
Other – net		32		49
Net cash provided by operating activities		1,506		1,663

Cash flows from investing activities
Property additions		(884)		(968)
Property sales and other transactions		68		15
Investments, including short-term		(7)		(12)
Investment sales and other transactions		16		33
Net cash used in investing activities		(807)		(932)

Cash flows from financing activities
Dividends		(315)		(308)
Common stock issued – net		80		47
Purchase and retirement of common stock (note 3)		(314)		(850)
Proceeds from borrowings – net		-		696
Debt repayments		(216)		(236)
Net cash used in financing activities		(765)		(651)

Net increase (decrease) in cash and cash equivalents		(66)		80

Cash and cash equivalents
At beginning of period		653		276

At end of period	$	587	$	356

Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)	$	244	$	232
Income taxes (net of refunds)		238		264

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1. OTHER INCOME — NET

In first quarter 2013, we recognized a $97 million gain on a land sale, which increased net income by $60 million or $0.19 per share.

2. 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 second quarter, $1 million in 2013 and $2 million in 2012; and for the first six months, $3 million in 2013 and $4 million in 2012.

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 stock units as follows: for the second quarter, $1 million in 2013 and less than $1 million in 2012; and for the first six months, $2 million in both 2013 and 2012.

3. STOCK REPURCHASE PROGRAM

We repurchased and retired 4.2 million shares of common stock in the first six months of 2013, at a cost of $314 million, and 12.3 million shares at a cost of $850 million for the same period of 2012. On August 1, 2012, our Board of Directors authorized the repurchase of up to an additional 50 million shares of common stock through December 31, 2017. The timing and volume of purchases is guided by our 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 the beginning of 2006, we have repurchased and retired 132.6 million shares at a total cost of $7.8 billion.

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