Norfolk Southern (NSC) 8-K Results of Operations and Financial Condition

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
($ millions except per share)
	Three Months Ended September 30,
	2007		2006
Railway operating revenues:
Coal	$	578	$	595
General merchandise		1,291		1,283
Intermodal		484		515
Total railway operating revenues		2,353		2,393
Railway operating expenses:
Compensation and benefits		619		624
Materials, services and rents		505		502
Depreciation		194		186
Diesel fuel		258		257
Casualties and other claims		33		50
Other		63		59
Total railway operating expenses		1,672		1,678
Income from railway operations		681		715
Other income - net		31		41
Interest expense on debt		107		120
Income before income taxes		605		636
Provision for income taxes:
Current		178		235
Deferred		41		(15)
Total income taxes		219		220
Net income	$	386	$	416
Earnings per share:
Basic	$	0.99	$	1.04
Diluted	$	0.97	$	1.02
Average shares outstanding (millions):
Basic		389.0		402.0
Diluted		397.4		409.9

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
($ millions except per share)
	Nine Months Ended September 30,
	2007		2006
Railway operating revenues:
Coal	$	1,714	$	1,738
General merchandise		3,839		3,872
Intermodal		1,425		1,478
Total railway operating revenues		6,978		7,088
Railway operating expenses:
Compensation and benefits		1,929		1,982
Materials, services and rents		1,498		1,507
Depreciation		578		551
Diesel fuel		726		748
Casualties and other claims		131		168
Other		217		189
Total railway operating expenses		5,079		5,145
Income from railway operations		1,899		1,943
Other income - net		59		109
Interest expense on debt		333		361
Income before income taxes		1,625		1,691
Provision for income taxes:
Current		541		637
Deferred		19		(42)
Total income taxes		560		595
Net income	$	1,065	$	1,096
Earnings per share:
Basic	$	2.71	$	2.68
Diluted	$	2.66	$	2.62
Average shares outstanding (millions):
Basic		392.3		409.3
Diluted		400.5		418.2

 

Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
($ millions)
	September 30,		December 31,
	2007		2006
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	418	$	918
Accounts receivable - net		1,013		992
Materials and supplies		173		151
Deferred income taxes		188		186
Other current assets		59		153
Total current assets		1,851		2,400
Investments		1,934		1,755
Properties less accumulated depreciation		21,345		21,098
Other assets		830		775
Total assets	$	25,960	$	26,028
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	1,127	$	1,181
Income and other taxes		245		205
Other current liabilities		267		216
Current maturities of long-term debt		383		491
Total current liabilities		2,022		2,093
Long-term debt		5,764		6,109
Other liabilities		1,930		1,767
Deferred income taxes		6,365		6,444
Total liabilities		16,081		16,413
Stockholders' equity:
Common stock $1.00 per share par value		408		418
Additional paid-in capital		1,471		1,303
Accumulated other comprehensive loss		(353)		(369)
Retained income		8,373		8,283
		9,899		9,635
Less treasury stock at cost, 20,683,686 and
20,780,638 shares, respectively		(20)		(20)
Total stockholders' equity		9,879		9,615
Total liabilities and stockholders' equity	$	25,960	$	26,028

 

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
($ millions)
	Nine Months Ended September 30,
	2007		2006
Cash flows from operating activities:
Net income	$	1,065	$	1,096
Reconciliation of net income to net cash provided by
operating activities:
Depreciation		587		560
Deferred income taxes		19		(42)
Gains on properties and investments		(36)		(40)
Changes in assets and liabilities affecting operations:
Accounts receivable		(21)		(96)
Materials and supplies		(22)		(26)
Other current assets		80		84
Current liabilities other than debt		67		146
Other - net		72		35
Net cash provided by operating activities		1,811		1,717
Cash flows from investing activities:
Property additions		(895)		(862)
Property sales and other transactions		105		86
Investments, including short-term		(568)		(1,504)
Investment sales and other transactions		758		1,739
Net cash used for investing activities		(600)		(541)
Cash flows from financing activities:
Dividends		(276)		(207)
Common stock issued - net		166		240
Purchase and retirement of common stock (note 1)		(769)		(916)
Debt repayments		(454)		(312)
Net cash used for financing activities		(1,333)		(1,195)
Net decrease in cash and cash equivalents		(122)		(19)
Cash and cash equivalents:
At beginning of year		527		289
At end of period		405		270
Short-term investments at end of period		13		533
Cash, cash equivalents and short-term investments at end of period	$	418	$	803
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)	$	279	$	300
Income taxes (net of refunds)	$	386	$	483

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1.   STOCK REPURCHASE PROGRAM -

In March 2007, NS' Board of Directors amended the stock repurchase program that was authorized in November 2005 to increase the number of shares of NS common stock that may be repurchased from 50 million to 75 million.  In addition, the authorization term was shortened from December 31, 2015 to December 31, 2010.  During the first nine months of 2007, NS purchased and retired 15.1 million shares of common stock at a cost of $769 million.  Since inception, NS has purchased and retired 36.9 million shares at a total cost of $1.7 billion under this program.