NORFOLK SOUTHERN CORPORATION 
By NS set the following fourth-quarter records:
-- Railway operating revenues reached $2.5 billion, up 2 percent.
-- Income from railway operations rose 19 percent to $813 million.
-- Net income increased 13 percent to $452 million.
-- Diluted earnings per share rose 19 percent to $1.21.
-- The operating ratio improved by 4.5 percentage points to 67.5 percent.
NS set the following records for the year:
-- Railway operating revenues increased 13 percent to $10.7 billion.
-- Income from railway operations rose 19 percent to $3.1 billion.
-- Net income was $1.7 billion, up 17 percent.
-- Diluted earnings per share climbed 23 percent to $4.52.
-- The operating ratio improved by 1.5 percentage points to 71.1 percent.
Norfolk Southern Corporation (NYSE: NSC) today reported record fourth-quarter 2008 net income of
"Norfolk Southern delivered strong financial results in the fourth quarter, despite economic conditions that reduced freight volumes," said CEO Wick Moorman. "While it is unclear how long the downturn will last, long-term trends point to freight railroads as the preferred way to move goods and relieve highway congestion. We will continue to make investments in our company and, in 2009, plan to invest
Railway operating revenues were a fourth-quarter record
General merchandise revenues were
Coal revenues climbed 33 percent to
Intermodal revenues were
Railway operating expenses were
Income from railway operations set records for both the fourth quarter and the year, climbing 19 percent to
The fourth-quarter operating ratio reached a record 67.5 percent, a 4.5 percentage point improvement compared with the same period last year. For the year, the operating ratio improved by 1.5 percentage points to a record 71.1 percent compared with 2007.
Norfolk Southern Corporation is one of the nation's premier transportation companies. Its Norfolk Southern Railway subsidiary operates approximately 21,000 route miles in 22 states and the
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
($ millions except per share)
Three Months Ended Dec. 31,
2008 2007
---- ----
Railway operating revenues:
Coal $798 $601
General merchandise (note 2) 1,224 1,357
Intermodal 480 496
Total railway operating revenues 2,502 2,454
Railway operating expenses:
Compensation and benefits 609 623
Purchased services and rents 405 396
Fuel 269 353
Depreciation 206 197
Materials and other 200 199
Total railway operating expenses 1,689 1,768
Income from railway operations 813 686
Other income - net 18 34
Interest expense on debt 112 108
Income before income taxes 719 612
Provision for income taxes:
Current 158 107
Deferred 109 106
Total income taxes 267 213
Net income $452 $399
Earnings per share:
Basic $1.23 $1.04
Diluted $1.21 $1.02
Weighted average shares outstanding
(millions) (note 4):
Basic 365.8 381.6
Diluted 372.4 389.9
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
($ millions except per share)
Years Ended Dec. 31,
2008 2007
---- ----
Railway operating revenues:
Coal (note 1) $3,111 $2,315
General merchandise (note 2) 5,492 5,196
Intermodal 2,058 1,921
Total railway operating revenues 10,661 9,432
Railway operating expenses:
Compensation and benefits (note 3) 2,684 2,552
Purchased services and rents 1,599 1,551
Fuel 1,638 1,169
Depreciation 804 775
Materials and other 852 800
Total railway operating expenses 7,577 6,847
Income from railway operations 3,084 2,585
Other income - net 110 93
Interest expense on debt 444 441
Income before income taxes 2,750 2,237
Provision for income taxes:
Current 744 648
Deferred 290 125
Total income taxes 1,034 773
Net income $1,716 $1,464
Earnings per share:
Basic $4.60 $3.74
Diluted $4.52 $3.68
Weighted average shares outstanding
(millions) (note 4):
Basic 372.3 389.6
Diluted 380.0 397.8
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
($ millions)
As of Dec. 31,
2008 2007
---- ----
Assets
Current assets:
Cash and cash equivalents $618 $206
Accounts receivable - net 870 942
Materials and supplies 194 176
Deferred income taxes 149 190
Other current assets 168 161
Total current assets 1,999 1,675
Investments 1,779 1,974
Properties less accumulated depreciation 22,247 21,583
Other assets 272 912
Total assets $26,297 $26,144
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,140 $1,139
Income and other taxes 261 203
Other current liabilities 220 237
Current maturities of long-term debt 484 369
Total current liabilities 2,105 1,948
Long-term debt 6,183 5,999
Other liabilities 2,046 2,039
Deferred income taxes 6,366 6,431
Total liabilities 16,700 16,417
Stockholders' equity:
Common stock $1.00 per share par value,
1,350,000,000 shares authorized; outstanding
366,233,106 and 379,297,891 shares,
respectively, net of treasury shares 368 380
Additional paid-in capital 1,680 1,466
Accumulated other comprehensive loss (952) (399)
Retained income 8,501 8,280
Total stockholders' equity 9,597 9,727
Total liabilities and stockholders'
equity $26,297 $26,144
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
($ millions)
Years Ended Dec. 31,
2008 2007
---- ----
Cash flows from operating activities:
Net income $1,716 $1,464
Reconciliation of net income to net
cash provided by operating activities:
Depreciation 815 786
Deferred income taxes 290 125
Gains and losses on properties and
investments (29) (51)
Changes in assets and liabilities
affecting operations:
Accounts receivable 269 30
Materials and supplies (18) (25)
Other current assets (8) (17)
Current liabilities other than debt (262) 38
Other - net (58) (17)
Net cash provided by operating
activities 2,715 2,333
Cash flows from investing activities:
Property additions (1,558) (1,341)
Property sales and other transactions 109 124
Investments, including short-term (86) (635)
Investment sales and other transactions 307 827
Net cash used in investing
activities (1,228) (1,025)
Cash flows from financing activities:
Dividends (456) (377)
Common stock issued - net 229 183
Purchase and retirement of common
stock (note 4) (1,128) (1,196)
Proceeds from borrowings 1,425 250
Debt repayments (1,145) (489)
Net cash used in financing
activities (1,075) (1,629)
Net increase (decrease) in cash
and cash equivalents 412 (321)
Cash and cash equivalents:
At beginning of year 206 527
At end of year $618 $206
Supplemental disclosure of cash flow
information
Cash paid during the period for:
Interest (net of amounts capitalized) $421 $441
Income taxes (net of refunds) $615 $603
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1. COAL REVENUES
Third quarter 2008 includes $22 million related to a coal
customer's 2008 contracted volume shortfall and a
nonrecurring effect related to the implementation of
NS' new export coal billing system.
2. CONTRACT SETTLEMENT
Fourth quarter 2007 automotive revenue includes
$26 million related to a contract settlement.
3. LABOR AGREEMENT
2008 includes $31 million for lump-sum payments
(including payroll taxes) due under a new labor
agreement with the Brotherhood of Locomotive Engineers
and Trainmen (BLET).
4. STOCK REPURCHASE PROGRAM
In March 2007, NS' Board of Directors amended the stock
repurchase program that was authorized in November 2005 so
as to increase the number of shares of NS common stock
that may be repurchased from 50 million to 75 million. In
addition, the term of the program was shortened from
December 31, 2015 to December 31, 2010. During 2008, NS
purchased and retired 19.4 million shares of common stock
at a cost of $1.1 billion. Since inception of the stock
repurchase program in 2006, NS has repurchased and retired
64.7 million shares at a total cost of $3.3 billion.
SOURCE Norfolk Southern Corporation
