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

Attached files

file	filename
8-K - NORFOLK SOUTHERN CORP	earnings4q118k1.htm
EX-99 - NORFOLK SOUTHERN CORP	pressrelease4qrtr11.htm

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

			Three Months Ended						Years Ended
			December 31,						December 31,
			2011		2010				2011									2010
			(in millions, except per share amounts)

	Railway operating revenues:
	Coal		$	850	$		685			$		3,458							$	2,719
	General merchandise			1,393			1,236					5,584								5,001
	Intermodal			554			471					2,130								1,796
	Total railway operating revenues			2,797			2,392					11,172								9,516

	Railway operating expenses:
	Compensation and benefits			734			659					2,974								2,708
	Purchased services and rents			419			391					1,610								1,477
	Fuel			403			308					1,589								1,079
	Depreciation			221			207					862								819
	Materials and other (note 1)			220			185					924								757
	Total railway operating expenses			1,997			1,750					7,959								6,840

	Income from railway operations			800			642					3,213								2,676

	Other income - net			39			35					160								153
	Interest expense on debt			116			115					455								462

	Income before income taxes			723			562					2,918								2,367

	Provision for income taxes:
	Current			130			20					475								559
	Deferred			113			140					527								312
	Total income taxes (note 2)			243			160					1,002								871

	Net income		$	480	$		402			$		1,916							$	1,496

	Earnings per share (note 3):
	Basic		$	1.44	$		1.11			$		5.52							$	4.06
	Diluted		$	1.42	$		1.09			$		5.45							$	4.00

	Weighted average shares outstanding (note 4):
	Basic			332.8			360.7					345.5								366.5
	Diluted			338.6			365.7					351.3								371.8
	See accompanying notes to consolidated financial statements.
	Norfolk Southern Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited)
								As of December 31,
								2011			2010
								($ in millions)
		Assets
		Current assets:
		Cash and cash equivalents				$		276						$			827
		Short-term investments						25									283
		Accounts receivable - net						1,022									807
		Materials and supplies						209									169
		Deferred income taxes						143									145
		Other current assets						76									240
		Total current assets						1,751									2,471

		Investments						2,234									2,193

		Properties less accumulated depreciation of $9,464 and $9,262, respectively						24,469									23,231

		Other assets						84									304

		Total assets				$		28,538						$			28,199

		Liabilities and stockholders' equity
		Current liabilities:
		Accounts payable				$		1,092						$			1,181
		Short-term debt						100									100
		Income and other taxes						207									199
		Other current liabilities						252									244
		Current maturities of long-term debt						50									358
		Total current liabilities						1,701									2,082

		Long-term debt						7,390									6,567

		Other liabilities						2,050									1,793

		Deferred income taxes						7,486									7,088
		Total liabilities						18,627									17,530

		Stockholders' equity:
		Common stock $1.00 per share par value, 1,350,000,000 shares
		authorized; outstanding 330,386,089 and 357,362,604 shares,
		respectively, net of treasury shares						332									358
		Additional paid-in capital						1,912									1,892
		Accumulated other comprehensive loss						(1,026)									(805)
		Retained income						8,693									9,224
		Total stockholders' equity						9,911									10,669

		Total liabilities and stockholders' equity				$		28,538						$			28,199

		See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)

						Years Ended December 31,
						2011									2010
						($ in millions)
Cash flows from operating activities:
Net income						$		1,916					$			1,496
Reconciliation of net income to net cash provided
by operating activities:
Depreciation								869								826
Deferred income taxes								527								312
Gains and losses on properties and investments								(32)								(42)
Changes in assets and liabilities affecting operations:
Accounts receivable								(215)								(41)
Materials and supplies								(40)								(5)
Other current assets								14								(1)
Current liabilities other than debt								68								126
Other - net								120								43
Net cash provided by operating activities								3,227								2,714

Cash flows from investing activities:
Property additions								(2,160)								(1,470)
Property sales and other transactions								84								97
Investments, including short-term								(135)								(504)
Investment sales and other transactions								439								421
Net cash used in investing activities								(1,772)								(1,456)

Cash flows from financing activities:
Dividends								(576)								(514)
Common stock issued - net								120								89
Purchase and retirement of common stock (note 4)								(2,051)								(863)
Proceeds from borrowings - net								1,101								350
Debt repayments								(600)								(489)
Net cash used in financing activities								(2,006)								(1,427)

Net decrease in cash and cash equivalents								(551)								(169)

Cash and cash equivalents:
At beginning of year								827								996

At end of year						$		276					$			827

Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest (net of amounts capitalized)						$		435					$			453
Income taxes (net of refunds)						$		289					$			602

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1. MATERIALS AND OTHER

During the first quarter of 2011, NS received an unfavorable ruling for an arbitration claim with an insurance carrier that failed to respond to insurance claims submitted by NS, related to the January 6, 2005 derailment in Graniteville, SC. As a result, NS recorded a $43 million charge for the receivables associated with the contested portion of the claim and a $15 million charge for other receivables affected by the ruling for which recovery is no longer probable.

2. INCOME TAXES

During the second quarter of 2011, the Internal Revenue Service (IRS) completed its examination of NS' 2008 tax return and review of certain claims for refund for prior years that resulted in a decrease in income tax expense of $40 million. Also during the second quarter, three states enacted tax law changes that decreased deferred income tax expense by $19 million.

During the fourth quarter of 2010, NS recognized a $34 million non-recurring benefit resulting from a change in estimate for 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 signed into law. Provisions of the Acts eliminated, after 2012, the tax deduction available for reimbursed prescription drug expenses under the Medicare Part D retiree drug subsidy program. Accordingly, NS recorded a $27 million charge to deferred tax expense in the first quarter of 2010.

3. 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 fourth quarter, $3 million in 2011 and $2 million in 2010; and for the year, $9 million in 2011 and $8 million in 2010.

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 units as follows: for the fourth quarter, less than $1 million in 2011 and $2 million in 2010; and for the year $2 million for 2011 and $8 million for 2010.

4. STOCK REPURCHASE PROGRAM

During 2011, NS repurchased and retired 30.2 million shares of Common Stock at a cost of $2.1 billion and 14.7 million shares at a cost of $863 million for the same period of 2010. The timing and volume of purchases is guided by management's 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 2005, NS has repurchased and retired 109.6 million shares at a total cost of $6.2 billion.

Attached files

Stock widget

Investing forum

NORFOLK SOUTHERN CORP Reports