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

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

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Second Quarter				First Six Months
	2014		2013		2014		2013
	(in millions, except per share amounts)

Railway operating revenues
Coal	$	672	$	626	$	1,213	$	1,261
General merchandise		1,720		1,588		3,272		3,118
Intermodal		650		588		1,246		1,161
Total railway operating revenues		3,042		2,802		5,731		5,540

Railway operating expenses
Compensation and benefits		715		726		1,455		1,506
Purchased services and rents		414		410		806		803
Fuel		408		391		840		820
Depreciation		238		226		475		453
Materials and other		248		213		469		431
Total railway operating expenses		2,023		1,966		4,045		4,013

Income from railway operations		1,019		836		1,686		1,527

Other income – net (note 1)		18		29		44		164
Interest expense on debt		139		128		278		257

Income before income taxes		898		737		1,452		1,434

Provision for income taxes
Current		311		203		505		376
Deferred		25		69		17		143
Total income taxes		336		272		522		519

Net income	$	562	$	465	$	930	$	915

Earnings per share (note 1)
Basic	$	1.81	$	1.47	$	2.99	$	2.90
Diluted		1.79		1.46		2.97		2.87

Weighted average shares outstanding (note 2)
Basic		309.5		314.1		309.5		314.3
Diluted		312.8		317.8		312.7		317.9

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)

	Second Quarter				First Six Months
	2014		2013		2014		2013
	($ in millions)

Net income	$	562	$	465	$	930	$	915
Other comprehensive income, before tax:
Pension and other postretirement benefits		7		36		306		72
Other comprehensive income of equity investees		7		1		10		2
Other comprehensive income, before tax		14		37		316		74
Income tax expense related to items of other
comprehensive income		(4)		(14)		(118)		(28)
Other comprehensive income, net of tax		10		23		198		46

Total comprehensive income	$	572	$	488	$	1,128	$	961

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)

	June 30,			December 31,
	2014			2013
	($ in millions)
Assets
Current assets:
Cash and cash equivalents		$	1,667		$	1,443
Short-term investments			-			118
Accounts receivable - net			1,122			1,024
Materials and supplies			251			223
Deferred income taxes			161			180
Other current assets			65			87
Total current assets			3,266			3,075

Investments			2,505			2,439
Properties less accumulated depreciation of $10,634 and
$10,387, respectively			26,927			26,645
Other assets			342			324

Total assets		$	33,040		$	32,483

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	1,245		$	1,265
Short-term debt			-			100
Income and other taxes			359			225
Other current liabilities			331			270
Current maturities of long-term debt			433			445
Total current liabilities			2,368			2,305

Long-term debt			8,814			8,903
Other liabilities			1,122			1,444
Deferred income taxes			8,659			8,542
Total liabilities			20,963			21,194

Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 309,515,208 and 308,878,402 shares,
respectively, net of treasury shares			311			310
Additional paid-in capital			2,113			2,021
Accumulated other comprehensive loss			(183)			(381)
Retained income			9,836			9,339

Total stockholders’ equity			12,077			11,289

Total liabilities and stockholders’ equity		$	33,040		$	32,483

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)


	First Six Months
	2014		2013
	($ in millions)
Cash flows from operating activities
Net income	$	930	$	915
Reconciliation of net income to net cash provided by operating activities:
Depreciation		478		456
Deferred income taxes		17		143
Gains and losses on properties and investments (note 1)		(3)		(99)
Changes in assets and liabilities affecting operations:
Accounts receivable		(98)		37
Materials and supplies		(28)		(12)
Other current assets		30		28
Current liabilities other than debt		144		6
Other – net		(33)		32
Net cash provided by operating activities		1,437		1,506

Cash flows from investing activities
Property additions		(809)		(884)
Property sales and other transactions		44		68
Investments, including short-term		(3)		(7)
Investment sales and other transactions		121		16
Net cash used in investing activities		(647)		(807)

Cash flows from financing activities
Dividends		(335)		(315)
Common stock issued – net		82		80
Purchase and retirement of common stock (note 2)		(100)		(314)
Debt repayments		(213)		(216)
Net cash used in financing activities		(566)		(765)

Net increase (decrease) in cash and cash equivalents		224		(66)

Cash and cash equivalents
At beginning of period		1,443		653

At end of period	$	1,667	$	587

Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)	$	255	$	244
Income taxes (net of refunds)		313		238

See accompanying notes to consolidated financial statements.

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. Stock Repurchase Program

We repurchased 1.0 million shares of common stock in the first six months of 2014, totaling

$100 million, and 4.2 million shares at a cost of $314 million for the same period of 2013. We have remaining authorization from our Board of Directors to repurchase up to 37.2 million shares 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 137.8 million shares at a total cost of $8.2 billion.

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