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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

 

(X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended SEPTEMBER 30, 2013

 

(  )    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ___________ to___________

 

Commission file number 1-8339

 

 

NORFOLK SOUTHERN CORPORATION

(Exact name of registrant as specified in its charter)

 

Virginia

(State or other jurisdiction of incorporation)

52-1188014

(IRS Employer Identification No.)

Three Commercial Place

Norfolk, Virginia

(Address of principal executive offices)

23510-2191

(Zip Code)

(757) 629-2680

(Registrant’s telephone number, including area code)

No Change

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer [X] Accelerated filer [  ]  Non-accelerated filer [  ]  Smaller reporting company [   ] 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at September 30, 2013

Common Stock ($1.00 par value per share)

 

308,910,328 (excluding 20,320,777 shares held by the registrant’s consolidated subsidiaries)


 


 

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)

 

 

 

 

 

 

 

 

 

 

 

Page

Part I.

Financial Information:

 

Item 1.

Financial Statements:

 

 

 

 

Consolidated Statements of Income

Third Quarters and First Nine Months of 2013 and 2012

 

3

 

 

 

Consolidated Statements of Comprehensive Income

Third Quarters and First Nine Months of 2013 and 2012

 

4

 

 

 

Consolidated Balance Sheets

At September 30, 2013 and December 31, 2012

 

5

 

 

 

Consolidated Statements of Cash Flows

First Nine Months of 2013 and 2012

 

6

 

 

 

Notes to Consolidated Financial Statements

 

7

 

 

Report of Independent Registered Public Accounting Firm

 

18

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

29

 

Item 4.

Controls and Procedures

 

29

Part II.

Other Information:

 

 

 

Item 1.

Legal Proceedings

 

30

 

Item 1A.

Risk Factors

 

30

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

31

 

Item 6.

Exhibits

 

31

Signatures

 

 

32

 

 

 

 

 

Exhibit Index

 

 

33

 

 

 

 

 


 


PART 1. FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

 

Third Quarter

 

First Nine Months

 

2013

 

2012

 

2013

 

2012

 

($ in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

Railway operating revenues

$

2,824 

 

$

2,693 

 

$

8,364 

 

$

8,356 

 

 

 

 

 

 

 

 

 

 

 

 

Railway operating expenses

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

735 

 

 

724 

 

 

2,241 

 

 

2,234 

Purchased services and rents

 

420 

 

 

403 

 

 

1,223 

 

 

1,186 

Fuel

 

390 

 

 

379 

 

 

1,210 

 

 

1,182 

Depreciation

 

230 

 

 

230 

 

 

683 

 

 

683 

Materials and other

 

200 

 

 

226 

 

 

631 

 

 

661 

 

 

 

 

 

 

 

 

 

 

 

 

Total railway operating expenses

 

1,975 

 

 

1,962 

 

 

5,988 

 

 

5,946 

 

 

 

 

 

 

 

 

 

 

 

 

Income from railway operations

 

849 

 

 

731 

 

 

2,376 

 

 

2,410 

 

 

 

 

 

 

 

 

 

 

 

 

Other income – net

 

30 

 

 

33 

 

 

194 

 

 

93 

Interest expense on debt

 

131 

 

 

124 

 

 

388 

 

 

366 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

748 

 

 

640 

 

 

2,182 

 

 

2,137 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

266 

 

 

238 

 

 

785 

 

 

801 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

482 

 

$

402 

 

$

1,397 

 

$

1,336 

 

 

 

 

 

 

 

 

 

 

 

 

Per share amounts

 

 

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.55 

 

$

1.26 

 

$

4.45 

 

$

4.12 

Diluted

 

1.53 

 

 

1.24 

 

 

4.40 

 

 

4.07 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

 

0.52 

 

 

0.50 

 

 

1.52 

 

 

1.44 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.


 


Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

 

Third Quarter

 

First Nine Months

 

2013

 

2012

 

2013

 

2012

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

482 

 

$

402 

 

$

1,397 

 

$

1,336 

Other comprehensive income, before tax:

 

 

 

 

 

 

 

 

 

 

 

Pension and other postretirement benefits

 

38 

 

 

33 

 

 

110 

 

 

97 

Other comprehensive income (loss) of

 

 

 

 

 

 

 

 

 

 

 

    equity investees

 

- 

 

 

- 

 

 

2 

 

 

(4)

Other comprehensive income, before tax

 

38 

 

 

33 

 

 

112 

 

 

93 

Income tax expense related to items of other   

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

(15)

 

 

(13)

 

 

(43)

 

 

(38)

Other comprehensive income, net of tax

 

23 

 

 

20 

 

 

69 

 

 

55 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

$

505 

 

$

422 

 

$

1,466 

 

$

1,391 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.




Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

 

September 30,

 

December 31,

 

2013

 

2012

 

($ in millions)

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

984 

 

 

$

653 

Short-term investments

 

 

20 

 

 

 

15 

Accounts receivable – net

 

 

1,083 

 

 

 

1,109 

Materials and supplies

 

 

224 

 

 

 

216 

Deferred income taxes

 

 

149 

 

 

 

167 

Other current assets

 

 

34 

 

 

 

82 

Total current assets

 

 

2,494 

 

 

 

2,242 

 

 

 

 

 

 

 

 

Investments

 

 

2,395 

 

 

 

2,300 

Properties less accumulated depreciation of $10,271 and

 

 

 

 

 

 

 

$9,922, respectively

 

 

26,413 

 

 

 

25,736 

Other assets

 

 

63 

 

 

 

64 

 

 

 

 

 

 

 

 

Total assets

 

$

31,365 

 

 

$

30,342 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

1,267 

 

 

$

1,362 

Short-term debt

 

 

- 

 

 

 

200 

Income and other taxes

 

 

241 

 

 

 

206 

Other current liabilities

 

 

377 

 

 

 

263 

Current maturities of long-term debt

 

 

447 

 

 

 

50 

Total current liabilities

 

 

2,332 

 

 

 

2,081 

 

 

 

 

 

 

 

 

Long-term debt

 

 

8,499 

 

 

 

8,432 

Other liabilities

 

 

2,166 

 

 

 

2,237 

Deferred income taxes

 

 

8,074 

 

 

 

7,832 

          Total liabilities

 

 

21,071 

 

 

 

20,582 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock $1.00 per share par value, 1,350,000,000 shares

 

 

 

 

 

 

 

authorized; outstanding 308,910,328 and 314,034,174 shares,

 

 

 

 

 

 

 

respectively, net of treasury shares

 

 

310 

 

 

 

315 

Additional paid-in capital

 

 

1,979 

 

 

 

1,911 

Accumulated other comprehensive loss

 

 

(1,040)

 

 

 

(1,109)

Retained income

 

 

9,045 

 

 

 

8,643 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

10,294 

 

 

 

9,760 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

31,365 

 

 

$

30,342 

 

See accompanying notes to consolidated financial statements.




Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

First Nine Months

 

2013

 

2012

 

($ in millions)

Cash flows from operating activities

 

 

 

 

 

Net income

$

1,397 

 

$

1,336 

Reconciliation of net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

687 

 

 

688 

Deferred income taxes

 

215 

 

 

279 

Gains and losses on properties and investments

 

(100)

 

 

(4)

Changes in assets and liabilities affecting operations:

 

 

 

 

 

Accounts receivable

 

26 

 

 

(56)

Materials and supplies

 

(8)

 

 

(27)

Other current assets

 

48 

 

 

43 

Current liabilities other than debt

 

121 

 

 

183 

Other – net

 

18 

 

 

34 

Net cash provided by operating activities

 

2,404 

 

 

2,476 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Property additions

 

(1,470)

 

 

(1,522)

Property sales and other transactions

 

109 

 

 

47 

Investments, including short-term

 

(29)

 

 

(14)

Investment sales and other transactions

 

21 

 

 

37 

Net cash used in investing activities

 

(1,369)

 

 

(1,452)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Dividends

 

(476)

 

 

(467)

Common stock issued – net

 

92 

 

 

77 

Purchase and retirement of common stock

 

(564)

 

 

(1,150)

Proceeds from borrowings – net

 

492 

 

 

1,291 

Debt repayments

 

(248)

 

 

(358)

Net cash used in financing activities

 

(704)

 

 

(607)

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

331 

 

 

417 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

At beginning of period

 

653 

 

 

276 

 

 

 

 

 

 

At end of period

$

984 

 

$

693 

 

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest (net of amounts capitalized)

$

305 

 

$

297 

Income taxes (net of refunds)

 

485 

 

 

536 

 

See accompanying notes to consolidated financial statements.




Norfolk Southern Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

 

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly Norfolk Southern Corporation (Norfolk Southern) and subsidiaries’ (collectively, NS, we, us, and our) financial condition at September 30, 2013, and December 31, 2012, our results of operations and comprehensive income for the third quarters and first nine months of 2013 and 2012, and our cash flows for the first nine months of 2013 and 2012 in conformity with U.S. generally accepted accounting principles (GAAP).

 

These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our latest Annual Report on Form 10-K.

 

1.  Stock-Based Compensation

 

During the first quarter of 2013, a committee of non-employee directors of our Board of Directors granted stock options, restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP) and granted stock options pursuant to the Thoroughbred Stock Option Plan (TSOP) as discussed below. Stock-based compensation was an expense of $4 million during the third quarter of 2013 and a benefit of less than $1 million during the third quarter of 2012. For the first nine months of 2013 and 2012, stock-based compensation expense was $47 million and $41 million, respectively. The total tax effects recognized in income in relation to stock-based compensation were a net benefit of $2 million and a net expense of $1 million for the third quarters of 2013 and 2012, respectively, and net benefits of $16 million and $13 million for the first nine months of 2013 and 2012, respectively.

 

Stock Options

 

In the first quarter of 2013, 748,200 options were granted under LTIP and 268,500 options were granted under TSOP. In each case, the grant price was $69.83, which was the greater of the average fair market value of Norfolk Southern common stock (Common Stock) or the closing price of Common Stock on the effective date of the grant, and the options have a term of ten years. The options granted under LTIP and TSOP in 2013 may not be exercised prior to the fourth and third anniversaries of the date of grant, respectively. Holders of the 2013 options granted under LTIP who remain actively employed receive cash dividend equivalent payments for four years in an amount equal to the regular quarterly dividends paid on Common Stock. Dividend equivalent payments are not made on TSOP options.

 

The fair value of each option award in 2013 was measured on the date of grant using a lattice-based option valuation model. Expected volatilities are based on implied volatilities from traded options on and historical volatility of Common Stock. Historical data is used to estimate option exercises and employee terminations within the valuation model. The average expected option life is derived from the output of the valuation model and represents the period of time that options granted are expected to be outstanding. The average risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. For options granted that include dividend equivalent payments, a dividend yield of zero was used. A dividend yield of 2.86% was used for LTIP options for periods where no dividend equivalent payments are made as well as for TSOP options, which do not receive dividend equivalents.

 



The assumptions for the 2013 LTIP and TSOP grants are shown in the following table:

 

Expected volatility range

24% - 30%

Average expected volatility

26%

Average risk-free interest rate

1.88%

Average expected option term LTIP

9.0 years

Per-share grant-date fair value LTIP

$20.40

Average expected option term TSOP

8.9 years

Per-share grant-date fair value TSOP

$15.84

 

For the third quarter of 2013, options relating to 207,233 shares were exercised, yielding $9 million of cash proceeds and $2 million of tax benefit recognized as additional paid-in capital. For the third quarter of 2012, options relating to 703,231 shares were exercised, yielding $19 million of cash proceeds and $12 million of tax benefit recognized as additional paid-in capital.

 

For the first nine months of 2013, options relating to 1,778,733 shares were exercised, yielding $62 million of cash proceeds and $22 million of tax benefit recognized as additional paid-in capital. For the first nine months of 2012, options relating to 1,476,527 shares were exercised, yielding $40 million of cash proceeds and $24 million of tax benefit recognized as additional paid-in capital.

 

Restricted Stock Units

 

There were 162,000 RSUs granted in 2013, with an average grant-date fair value of $69.83 and a five-year restriction period. The RSUs granted in 2013 will be settled through the issuance of shares of Common Stock.

 

No RSUs were earned or paid out in the third quarters of 2013 or 2012. During the first nine months of 2013, 298,400 of the RSUs granted in 2008 vested, with 178,250 shares of Common Stock issued net of withholding taxes.  For the first nine months of 2012, 311,900 of the RSUs granted in 2007 vested, with 191,875 shares of Common Stock issued net of withholding taxes.  The total related tax benefits recognized as additional paid-in capital were $1 million and less than $1 million for the third quarters of 2013 and 2012, respectively, and $3 million for the first nine months of both 2013 and 2012.

 

Performance Share Units

 

PSUs provide for awards based on achievement of certain predetermined corporate performance goals (total shareholder return, return on average invested capital, and operating ratio) at the end of a three-year cycle and are paid in the form of shares of Common Stock. During the first quarter of 2013, there were 550,800 PSUs granted with a grant-date fair value of $69.83.

 

No PSUs were earned or paid out in the third quarters of 2013 and 2012. During the first nine months of 2013, 577,585 of the PSUs granted in 2010 were earned, with 348,189 shares of Common Stock issued net of withholding taxes.  For the first nine months of 2012, 782,889 of the PSUs granted in 2009 were earned, with 488,957 shares of Common Stock issued net of withholding taxes. The total related tax benefits recognized as additional paid-in capital were $5 million and $11 million for the first nine months of 2013 and 2012, respectively.




2.  Income Taxes

 

There have been no material changes to the balance of unrecognized tax benefits reported at December 31, 2012.  IRS examinations have been completed for all years prior to 2011.  We expect the IRS could begin auditing our 2011 and 2012 consolidated income tax returns in early 2014.

 

3.  Earnings Per Share

 

 

Basic

 

Diluted

 

Third Quarter

 

2013

 

2012

 

2013

 

2012

 

($ in millions except per share amounts,

 

shares in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

482 

 

$

402 

 

$

482 

 

$

402 

Dividend equivalent payments

 

(2)

 

 

(3)

 

 

(1)

 

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

Income available to common stockholders

 

480 

 

 

399 

 

 

481 

 

 

401 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding

 

310.4 

 

 

317.7 

 

 

310.4 

 

 

317.7 

Dilutive effect of outstanding options

 

 

 

 

 

 

 

 

 

 

 

    and share-settled awards

 

 

 

 

 

 

 

3.5 

 

 

4.1 

Adjusted weighted-average shares outstanding

 

 

 

 

 

 

 

313.9 

 

 

321.8 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

$

1.55 

 

$

1.26 

 

$

1.53 

 

$

1.24 

 

 

 

Basic

 

Diluted

 

First Nine Months

 

2013

 

2012

 

2013

 

2012

 

($ in millions except per share amounts,

 

shares in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

1,397 

 

$

1,336 

 

$

1,397 

 

$

1,336 

Dividend equivalent payments

 

(5)

 

 

(7)

 

 

(3)

 

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

Income available to common stockholders

 

1,392 

 

 

1,329 

 

 

1,394 

 

 

1,333 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding

 

313.0 

 

 

322.9 

 

 

313.0 

 

 

322.9 

Dilutive effect of outstanding options

 

 

 

 

 

 

 

 

 

 

 

    and share-settled awards

 

 

 

 

 

 

 

3.6 

 

 

4.5 

Adjusted weighted-average shares outstanding

 

 

 

 

 

 

 

316.6 

 

 

327.4 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

$

4.45 

 

$

4.12 

 

$

4.40 

 

$

4.07 

 

 




During the third quarters and first nine months of 2013 and 2012, dividend equivalent payments were made to holders of options and RSUs. For purposes of computing basic earnings per share, dividend equivalent payments made to holders of options and RSUs were deducted from net income to determine income available to common stockholders. For purposes of computing diluted earnings per share, we evaluate on a grant-by-grant basis those options and RSUs receiving dividend equivalent payments under the two-class and treasury stock methods to determine which method is the more dilutive for each grant. For those grants for which the two-class method was more dilutive, net income was reduced by dividend equivalent payments to determine income available to common stockholders. The diluted calculations exclude options having exercise prices exceeding the average market price of Common Stock of 0.8 million in both 2013 and 2012.

 

4.  Stockholders’ Equity

 

Common Stock

 

Common Stock is reported net of shares held by our consolidated subsidiaries (Treasury Shares). Treasury Shares at September 30, 2013 and December 31, 2012, amounted to 20,320,777 shares, with a cost of $19 million at both dates.

 

Accumulated Other Comprehensive Loss

 

“Accumulated other comprehensive loss” reported in the Consolidated Balance Sheets consisted of the following:

 

 

 

 

Accumulated

 

 

 

Pensions

 

Other

 

Accumulated

 

and Other

 

Comprehensive

 

Other

 

Postretirement

 

Loss of Equity

 

Comprehensive

 

Benefits

 

Investees

 

Loss

 

($ in millions)

Third Quarter

 

 

 

 

 

 

 

 

June 30, 2013

$

(955)

 

$

(108)

 

$

(1,063)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

  Amounts reclassified into net income

 

38 

(1)

 

- 

 

 

38 

  Tax expense

 

(15)

 

 

- 

 

 

(15)

      Other comprehensive income

 

23 

 

 

- 

 

 

23 

 

 

 

 

 

 

 

 

 

September 30, 2013

$

(932)

 

$

(108)

 

$

(1,040)

 

 

 

 

 

 

 

 

 

First Nine Months

 

 

 

 

 

 

 

 

December 31, 2012

$

(999)

 

$

(110)

 

$

(1,109)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

  Amounts reclassified into net income

 

110 

(1)

 

- 

 

 

110 

  Net gain

 

- 

 

 

2 

 

 

2 

  Tax expense

 

(43)

 

 

- 

 

 

(43)

      Other comprehensive income

 

67 

 

 

2 

 

 

69 

 

 

 

 

 

 

 

 

 

September 30, 2013

$

(932)

 

$

(108)

 

$

(1,040)

 

(1)    These items are included in the computation of net periodic pension and postretirement benefit costs. See Note 8, “Pensions and Other Postretirement Benefits” for additional information.




5.  Stock Repurchase Program

 

We repurchased and retired 7.5 million and 16.5 million shares of Common Stock in the first nine months of 2013 and 2012, respectively, at a cost of $564 million and $1.2 billion. 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 135.9 million shares at a total cost of $8.1 billion.

 

6.  Investment in Conrail

 

Through a limited liability company, we and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC). We have a 58% economic and 50% voting interest in the jointly owned entity, and CSX has the remainder of the economic and voting interests. Our investment in Conrail was $1.0 billion at September 30, 2013, and $996 million at December 31, 2012.

 

CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of Norfolk Southern Railway Company (NSR) and CSX Transportation, Inc. (CSXT). The costs of operating the Shared Assets Areas are borne by NSR and CSXT based on usage. In addition, NSR and CSXT pay CRC a fee for access to the Shared Assets Areas. “Purchased services and rents” and “Fuel” include expenses for the use of the Shared Assets Areas totaling $42 million and $33 million for the third quarters of 2013 and 2012, respectively, and $115 million and $99 million for the first nine months of 2013 and 2012, respectively. Our equity in the earnings of Conrail, net of amortization, included in “Other income – net” was $9 million and $8 million for the third quarters of 2013 and 2012, respectively, and $27 million and $23 million for the first nine months of 2013 and 2012, respectively.

 

“Accounts payable” includes $188 million at September 30, 2013, and $178 million at December 31, 2012, due to Conrail for the operation of the Shared Assets Areas. In addition, “Other liabilities” includes $133 million at both September 30, 2013 and December 31, 2012, for long-term advances from Conrail, maturing 2035, that bear interest at an average rate of 4.40%.

 

7.  Debt

 

In the first quarter of 2013, we repaid $200 million under our accounts receivable securitization facility.  At September 30, 2013 and December 31, 2012, the amounts outstanding under the facility were $100 million (at an average variable interest rate of 1.22%) and $300 million (at an average variable interest rate of 1.28%), respectively.  In October 2013, we renewed our accounts receivable securitization facility with a 364-day term to run until October 2014.

 

During the third quarter of 2013, we issued $500 million of 4.80% senior notes due 2043.

 

During the first quarter of 2012, we issued $600 million of 3.00% senior notes due 2022.

 

During the third quarter of 2012, we issued $600 million of senior notes at 2.90% due 2023 and paid $115 million of premium in exchange for $521 million of our previously issued notes ($156 million at 7.25% due 2031, $140 million at 5.64% due 2029, $115 million at 5.59% due 2025, $72 million at 7.80% due 2027, and $38 million at 7.05% due 2037).  The premium is reflected as a reduction of debt in the Consolidated Balance Sheet and within “Debt repayments” in the Statement of Cash Flows and will be amortized as additional interest expense over the term of the new debt.  No gain or loss was recognized as a result of the debt exchange.  Also during the third quarter of 2012, we issued $600 million of 3.95% senior notes due 2042.

 

We have authority from our Board of Directors to issue an additional $1.2 billion of debt or equity securities through public or private sale.




8.  Pensions and Other Postretirement Benefits

 

We have both funded and unfunded defined benefit pension plans covering principally salaried employees. We also provide specified health care and death benefits to eligible retired employees and their dependents; these plans can be amended or terminated at our option.  Under our health care plans, a defined percentage of health care expenses is covered, reduced by any deductibles, co-payments, Medicare payments and, in some cases, coverage provided under other group insurance policies.

 

 

 

 

Other Postretirement

 

Pension Benefits

 

Benefits

 

Third Quarter

 

2013

 

2012

 

2013

 

2012

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$

11 

 

$

8 

 

$

4 

 

$

3 

Interest cost

 

20 

 

 

22 

 

 

12 

 

 

14 

Expected return on plan assets

 

(35)

 

 

(34)

 

 

(4)

 

 

(4)

Amortization of net losses

 

22 

 

 

19 

 

 

16 

 

 

14 

 

 

 

 

 

 

 

 

 

 

 

 

   Net cost

$

18 

 

$

15 

 

$

28 

 

$

27 

 

 

 

 

Other Postretirement

 

Pension Benefits

 

Benefits

 

First Nine Months

 

2013

 

2012

 

2013

 

2012

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$

31 

 

$

25 

 

$

12 

 

$

11 

Interest cost

 

61 

 

 

66 

 

 

37 

 

 

41 

Expected return on plan assets

 

(106)

 

 

(103)

 

 

(12)

 

 

(11)

Amortization of net losses

 

66 

 

 

57 

 

 

44 

 

 

40 

 

 

 

 

 

 

 

 

 

 

 

 

   Net cost

$

52 

 

$

45 

 

$

81 

 

$

81 




9.  Fair Value

 

Fair Value Measurements

 

The Financial Accounting Standards Board (FASB) Accounting Standards Codifications (ASC) 820-10, “Fair Value Measurements,” established a framework for measuring fair value and a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:

 

Level 1

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.

 

 

Level 2

Inputs to the valuation methodology include:

 

         Quoted prices for similar assets or liabilities in active markets;

         Quoted prices for identical or similar assets or liabilities in inactive markets;

         Inputs other than quoted prices that are observable for the asset or liability;

         Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

 

 

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

 

 

Level 3

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The asset’s or liability’s fair value measurement level is based on the lowest level of any input that is significant to the fair value measurement. Other than those assets and liabilities described below that approximate fair value, there were no assets or liabilities measured at fair value on a recurring basis at September 30, 2013 or December 31, 2012.

 

Fair Values of Financial Instruments

 

We have evaluated the fair values of financial instruments and methods used to determine those fair values. The fair values of “Cash and cash equivalents,” “Short-term investments,” “Accounts receivable,” “Accounts payable,” and “Short-term debt” approximate carrying values because of the short maturity of these financial instruments. The carrying value of corporate-owned life insurance is recorded at cash surrender value and, accordingly, approximates fair value. The carrying amounts and estimated fair values for the remaining financial instruments, excluding investments accounted for under the equity method, consisted of the following:

 

 

September 30, 2013

 

December 31, 2012

 

Carrying

 

Fair

 

Carrying

 

Fair

 

Amount

 

Value

 

Amount

 

Value

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Long-term investments

$

145 

 

$

176 

 

$

139 

 

$

174 

Long-term debt, including current maturities

 

(8,946)

 

 

(10,317)

 

 

(8,482)

 

 

(10,734)

 



Underlying net assets were used to estimate the fair value of investments with the exception of notes receivable, which are based on future discounted cash flows. The fair values of long-term debt were estimated based on quoted market prices or discounted cash flows using current interest rates for debt with similar terms, company rating, and remaining maturity.

 

The following table sets forth the fair value of long-term investment and long-term debt balances disclosed above by valuation technique level, within the fair value hierarchy (there were no level 3 valued assets or liabilities).

 

 

Level 1

 

Level 2

 

Total

 

($ in millions)

September 30, 2013

 

 

 

 

 

 

 

 

Long-term investments

$

45 

 

$

131 

 

$

176 

Long-term debt, including current maturities

 

(10,087)

 

 

(230)

 

 

(10,317)

 

 

 

 

 

 

 

 

 

December 31, 2012

 

 

 

 

 

 

 

 

Long-term investments

$

41 

 

$

133 

 

$

174 

Long-term debt, including current maturities

 

(10,450)

 

 

(284)

 

 

(10,734)

 

10.  Commitments and Contingencies

 

Lawsuits

 

We and/or certain subsidiaries are defendants in numerous lawsuits and other claims relating principally to railroad operations.  When we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings.  While the ultimate amount of liability incurred in any of these lawsuits and claims is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payment of such liability and claims.  However, the final outcome of any of these lawsuits and claims cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter.  Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments are known.

 

One of our customers, DuPont, has a rate reasonableness complaint pending before the STB alleging that our tariff rates for transportation of regulated movements are unreasonable.  We dispute this allegation.  Since June 1, 2009, we have been billing and collecting from DuPont amounts based on the challenged tariff rates.  We presently expect resolution of the DuPont case to occur in 2014 and believe the estimate of reasonably possible loss will not have a material effect on our financial position, results of operations, or liquidity.  With regard to rate cases, we record adjustments to revenues in the periods, if and when, such adjustments are probable and estimable.

 

On November 6, 2007, various antitrust class actions filed against us and other Class I railroads in various Federal district courts regarding fuel surcharges were consolidated in the District of Columbia by the Judicial Panel on Multidistrict Litigation.  On June 21, 2012, the court certified the case as a class action.  The defendant railroads appealed this certification, and on August 9, 2013, the Court of Appeals for the District of Columbia vacated the District Court’s decision and remanded the case for further consideration.  We believe the allegations in the complaints are without merit and intend to vigorously defend the cases.  We do not believe the outcome of these proceedings will have a material effect on our financial position, results of operations, or liquidity.  A lawsuit containing similar allegations against us and four other major railroads that was filed on March 25, 2008, in the U.S. District Court for the District of Minnesota was voluntarily dismissed by the plaintiff subject to a tolling agreement entered into in August 2008.

 



Casualty Claims

 

Casualty claims include employee personal injury and occupational claims as well as third-party claims, all exclusive of legal costs.  To aid in valuing our personal injury liability and determining the amount to accrue with respect to such claims during the year, we utilize studies prepared by an independent consulting actuarial firm.  Job-related accidental injury and occupational claims are subject to the Federal Employers’ Liability Act (FELA), which is applicable only to railroads.  FELA’s fault-based system produces results that are unpredictable and inconsistent as compared with a no-fault workers’ compensation system.  The variability inherent in this system could result in actual costs being different from the liability recorded.  While the ultimate amount of claims incurred is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payments of claims and is supported by the most recent actuarial study.  In all cases, we record a liability when the expected loss for the claim is both probable and estimable.

 

Employee personal injury claims – The largest component of casualties and other claims expense is employee personal injury costs.  The independent actuarial firm engaged by us provides quarterly studies to aid in valuing our employee personal injury liability and estimating personal injury expense.  The actuarial firm studies our historical patterns of reserving for claims and subsequent settlements, taking into account relevant outside influences.  The actuarial firm uses the results of these analyses to estimate the ultimate amount of liability, which includes amounts for incurred but unasserted claims. We adjust the liability quarterly based upon our assessment and the results of the study. Our estimate of loss liabilities is subject to inherent limitation given the difficulty of predicting future events such as jury decisions, court interpretations, or legislative changes and as such the actual loss may vary from the estimated liability recorded.

 

Occupational claims – Occupational claims (including asbestosis and other respiratory diseases, as well as conditions allegedly related to repetitive motion) are often not caused by a specific accident or event but rather allegedly result from a claimed exposure over time.  Many such claims are being asserted by former or retired employees, some of whom have not been employed in the rail industry for decades.  The independent actuarial firm provides an estimate of the occupational claims liability based upon our history of claim filings, severity, payments, and other pertinent facts.  The liability is dependent upon judgments we make as to the specific case reserves as well as judgments of the actuarial firm in the quarterly studies.  The actuarial firm’s estimate of ultimate loss includes a provision for those claims that have been incurred but not reported.  This provision is derived by analyzing industry data and projecting our experience into the future as far as can be reasonably determined.  We adjust the liability quarterly based upon our assessment and the results of the study.  However, it is possible that the recorded liability may not be adequate to cover the future payment of claims.  Adjustments to the recorded liability are reflected in operating expenses in the periods in which such adjustments become known.

 

Third-party claimsWe record a liability for third-party claims including those for highway crossing accidents, trespasser and other injuries, automobile liability, property damage, and lading damage.  The actuarial firm assists us with the calculation of potential liability for third-party claims, except lading damage, based upon our experience including the number and timing of incidents, amount of payments, settlement rates, number of open claims, and legal defenses. The actuarial estimate includes a provision for claims that have been incurred but not reported. We adjust the liability quarterly based upon our assessment and the results of the study.  Given the inherent uncertainty in regard to the ultimate outcome of third-party claims, it is possible that the actual loss may differ from the estimated liability recorded.

 



Environmental Matters

 

We are subject to various jurisdictions’ environmental laws and regulations.  We record a liability where such liability or loss is probable and its amount can be estimated reasonably.  Claims, if any, against third parties, for recovery of cleanup costs we have incurred are reflected as receivables (when collection is probable) in the Consolidated Balance Sheets and are not netted against the associated liability.  Environmental engineers regularly participate in ongoing evaluations of all known sites and in determining any necessary adjustments to liability estimates.  We have an Environmental Policy Council, composed of senior managers, to oversee and interpret our environmental policy.

 

Our Consolidated Balance Sheets include liabilities for environmental exposures of $59 million at September 30, 2013, and $42 million at December 31, 2012 (of which $12 million is classified as a current liability at the end of each period). At both September 30, 2013 and December 31, 2012, the liability represents our estimate of the probable cleanup, investigation, and remediation costs based on available information at 146 known locations and projects. At September 30, 2013, ten sites accounted for $28 million of the liability, and no individual site was considered to be material. We anticipate that much of this liability will be paid out over five years; however, some costs will be paid out over a longer period.

 

At 15 locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or comparable state statutes that impose joint and several liability for cleanup costs.  We calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not solely on the basis of the potential for joint liability.

 

With respect to known environmental sites (whether identified by us or by the Environmental Protection Agency (EPA) or comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the aggregate for all such sites are necessarily imprecise because of the widely varying costs of currently available cleanup techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies, the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to bear it), and evolving statutory and regulatory standards governing liability.

 

The risk of incurring environmental liability – for acts and omissions, past, present, and future – is inherent in the railroad business.  Some of the commodities in our traffic mix, particularly those classified as hazardous materials, pose special risks that we work diligently to minimize.  In addition, several of our subsidiaries own, or have owned, land used as operating property, or which is leased and operated by others, or held for sale.  Because environmental problems that are latent or undisclosed may exist on these properties, there can be no assurance that we will not incur environmental liabilities or costs with respect to one or more of them, the amount and materiality of which cannot be estimated reliably at this time.  Moreover, lawsuits and claims involving these and potentially other unidentified environmental sites and matters are likely to arise from time to time.  The resulting liabilities could have a significant effect on our financial position, results of operations, or liquidity in a particular year or quarter.

 

Based on our assessment of the facts and circumstances now known, we believe we have recorded the probable and reasonably estimable costs for dealing with those environmental matters of which we are aware.  Further, we believe that it is unlikely that any known matters, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, or liquidity.

 



Insurance

 

We obtain on behalf of ourself and our subsidiaries insurance for potential losses for third-party liability and first-party property damages.  We are currently self-insured up to $50 million and above $1.1 billion per occurrence for bodily injury and property damage to third parties and up to $25 million and above $175 million per occurrence for property owned by us or in our care, custody, or control.

 

Purchase Commitments

 

At September 30, 2013, we had outstanding purchase commitments totaling approximately $340 million for track and yard expansion projects, locomotives, track material, freight cars, and vehicle fleet additions, in connection with our capital programs through 2016.

 

11.  New Accounting Pronouncement

 

In the first quarter of 2013, we prospectively adopted Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.”  This update requires the disclosure of the effects of reclassifications out of Accumulated Other Comprehensive Loss on the respective line items in our Consolidated Statements of Income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, we are required to cross-reference other required GAAP disclosures to provide additional detail about those amounts.  These disclosures can be made on the face of the financial statement that reports net income or in the notes, provided all the information is disclosed in a single location.  However, an entity is prohibited from providing this information on the face of the statement that reports net income if it has items that are not reclassified in their entirety into net income.  This update does not change the requirement to present the components of net income and other comprehensive income in either a single continuous statement or two separate consecutive statements, nor does it change the items currently reported in other comprehensive income.




Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Norfolk Southern Corporation:

 

We have reviewed the accompanying consolidated balance sheet of Norfolk Southern Corporation and subsidiaries as of September 30, 2013, the related consolidated statements of income and comprehensive income for the three-month and nine-month periods ended September 30, 2013 and 2012 and the related consolidated statements of cash flows for the ninemonth periods ended September 30, 2013 and 2012. These consolidated financial statements are the responsibility of the Company’s management.

 

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

 

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Norfolk Southern Corporation and subsidiaries as of December 31, 2012, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated February 15, 2013, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2012, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

 

/s/KPMG LLP

KPMG LLP

Norfolk, Virginia
October 23, 2013




Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Norfolk Southern Corporation and Subsidiaries

 

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes.

 

OVERVIEW

 

We are one of the nation’s premier transportation companies.  Our Norfolk Southern Railway Company subsidiary operates approximately 20,000 miles of road 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.  We operate the most extensive intermodal network in the East and are a major transporter of coal, automotive, and industrial products. 

 

Our net income increased 20% in the third quarter of 2013, compared with the same period of 2012, and earnings per share improved 23%, as our financial results were positively impacted by higher operating revenues aided by growth from energy-related shipments (crude oil and materials used in natural gas drilling), combined with increased revenue from other industrial products, intermodal, and automotive.

 

Cash provided by operating activities for the first nine months of 2013 totaled $2.4 billion, which along with cash on hand allowed for property additions, share repurchases, dividends, and debt repayments. In the first nine months of 2013, we repurchased approximately 7.5 million shares of Norfolk Southern common stock (Common Stock) at a total cost of $564 million. Since inception of our stock repurchase program in 2006, we have repurchased and retired 135.9 million shares of Common Stock at a total cost of $8.1 billion. At September 30, 2013, cash, cash equivalents, and short-term investments totaled $1.0 billion.

 

SUMMARIZED RESULTS OF OPERATIONS

 

Third quarter 2013 net income was $482 million, up $80 million, or 20%, compared with the same period last year. The improvement resulted from a $118 million increase in income from railway operations, offset in part by higher income taxes.  The increase in income from railway operations reflected $131 million, or 5%, of growth in railway operating revenues, as expansion in our general merchandise and intermodal businesses outweighed the softness in our coal markets.  The railway operating ratio (a measure of the amount of operating revenues consumed by operating expenses) improved to 69.9% for the third quarter of 2013, compared with 72.9% for the third quarter of 2012.

 

For the first nine months of 2013, net income was $1.4 billion, up $61 million, or 5%, compared with the same period last year, driven by the favorable impact of the recognition of the gain from the sale of certain assets to the Michigan Department of Transportation, which benefited net income by $60 million and earnings per share by $0.19. 

 

Oil prices affect our results of operations in a variety of ways and can have an overall favorable or unfavorable impact in any particular period. In addition to the impact of oil prices on general economic conditions, volume, and supplier costs, oil prices directly affect our revenues through market-based fuel surcharges and contract escalators (see “Railway Operating Revenues”) and also affect fuel costs (see “Railway Operating Expenses”).  For the third quarter, excluding the impact of increased consumption, the increase in fuel surcharge revenue exceeded the increase in fuel expense.  For the first nine months of 2013, excluding the impact of increased consumption, fuel surcharge revenue decreased while fuel expense increased. Future changes in oil prices may cause volatility in operating results that could be material to a particular year or quarter.




DETAILED RESULTS OF OPERATIONS

 

Railway Operating Revenues

 

Third quarter railway operating revenues were $2.8 billion in 2013, up $131 million, or 5%, compared with the third quarter of 2012.  For the first nine months of 2013, railway operating revenues were $8.4 billion, up $8 million compared with the same period last year. As shown in the following table, the increase for the quarter resulted from higher volume and improved average revenue per unit (which includes the effects of fuel surcharges).  The increase for the first nine months resulted from higher volume, largely offset by lower average revenue per unit.  Fuel surcharge revenue totaled $321 million and $286 million for the third quarters of 2013 and 2012, respectively, and $901 million and $976 million for the first nine months of 2013 and 2012, respectively.

 

 

Third Quarter

 

First Nine Months

 

2013 vs. 2012

 

2013 vs. 2012

 

Increase (Decrease)

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

Volume (units)

 

$

109 

 

 

 

$

258 

 

Revenue per unit

 

 

22 

 

 

 

 

(250)

 

 

 

 

 

 

 

 

 

 

 

  Total

 

$

131 

 

 

 

$

8 

 

 

Many of our negotiated fuel surcharges for coal and general merchandise shipments are based on the monthly average price of West Texas Intermediate Crude Oil (WTI Average Price). These surcharges are reset the first day of each calendar month based on the WTI Average Price for the second preceding calendar month. This two-month lag in applying WTI Average Price decreased fuel surcharge revenue by approximately $41 million for the third quarter and $68 million for the first nine months of 2013.  This two-month lag decreased fuel surcharge revenue by approximately $21 million for the third quarter of 2012, but increased fuel surcharge revenue by approximately $14 million for the first nine months of 2012.

 

One of our customers, DuPont, has a rate reasonableness complaint pending before the Surface Transportation Board (STB) alleging that our tariff rates for transportation of regulated movements are unreasonable.  We dispute this allegation.  Since June 1, 2009, we have been billing and collecting from DuPont amounts based on the challenged tariff rates.  We presently expect resolution of the DuPont case to occur in 2014 and believe the estimate of reasonably possible loss will not have a material effect on our financial position, results of operations, or liquidity.  With regard to rate cases, we record adjustments to revenues in the periods, if and when, such adjustments are probable and estimable.



 

Revenues, units, and average revenue per unit for our market groups were as follows:

 

 

Third Quarter

 

Revenues

 

Units

 

Revenue per Unit

 

2013

 

2012

 

2013

 

2012

 

2013

 

2012

 

($ in millions)

 

(in thousands)

 

($ per unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

$

641 

 

$

701 

 

339.9 

 

348.2 

 

$

1,885 

 

$

2,014 

General merchandise:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Chemicals

 

429 

 

 

370 

 

113.1 

 

99.0 

 

 

3,787 

 

 

3,739 

  Agriculture/consumer/gov’t

 

346 

 

 

344 

 

138.0 

 

142.6 

 

 

2,504 

 

 

2,415 

  Metals and construction

 

372 

 

 

314 

 

180.5 

 

165.6 

 

 

2,060 

 

 

1,897 

  Automotive

 

227 

 

 

203 

 

93.3 

 

85.8 

 

 

2,441 

 

 

2,363 

  Paper/clay/forest

 

204 

 

 

194 

 

79.4 

 

76.7 

 

 

2,575 

 

 

2,530 

General merchandise

 

1,578 

 

 

1,425 

 

604.3 

 

569.7 

 

 

2,611 

 

 

2,502 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intermodal

 

605 

 

 

567 

 

912.9 

 

867.1 

 

 

663 

 

 

653 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Total

$

2,824 

 

$

2,693 

 

1,857.1 

 

1,785.0 

 

 

1,521 

 

 

1,509 

 

 

First Nine Months

 

Revenues

 

Units

 

Revenue per Unit

 

2013

 

2012

 

2013

 

2012

 

2013

 

2012

 

($ in millions)

 

(in thousands)

 

($ per unit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

$

1,902 

 

$

2,222 

 

1,024.5 

 

1,062.0 

 

$

1,856 

 

$

2,092 

General merchandise:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Chemicals

 

1,238 

 

 

1,111 

 

333.1 

 

293.5 

 

 

3,716 

 

 

3,785 

  Agriculture/consumer/gov’t

 

1,073 

 

 

1,084 

 

433.8 

 

445.0 

 

 

2,473 

 

 

2,436 

  Metals and construction

 

1,058 

 

 

1,025 

 

506.4 

 

511.3 

 

 

2,089 

 

 

2,005 

  Automotive

 

732 

 

 

668 

 

298.4 

 

280.5 

 

 

2,455 

 

 

2,381 

  Paper/clay/forest

 

595 

 

 

589 

 

232.4 

 

230.3 

 

 

2,561 

 

 

2,559 

General merchandise

 

4,696 

 

 

4,477 

 

1,804.1 

 

1,760.6 

 

 

2,603 

 

 

2,543 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intermodal

 

1,766 

 

 

1,657 

 

2,650.3 

 

2,492.5 

 

 

666 

 

 

665 

 

 

 

 

 

 

 

 

 

 

 

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