Norfolk Southern (NSC) 8-K Norfolk Southern Reports Fourth-quarter and 2007 Results

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
($ millions except per share)
	Three Months Ended                    December 31,
	2007		2006
Railway operating revenues:
Coal	$	601	$	592
General merchandise (note 1)		1,357		1,234
Intermodal		496		493
Total railway operating revenues		2,454		2,319
Railway operating expenses (note 2):
Compensation and benefits		623		655
Purchased services and rents		396		401
Fuel		353		256
Depreciation		197		187
Materials and other		199		206
Total railway operating expenses		1,768		1,705
Income from railway operations		686		614
Other income - net		34		40
Interest expense on debt		108		115
Income before income taxes		612		539
Provision for income taxes:
Current		107		120
Deferred		106		34
Total income taxes		213		154
Net income	$	399	$	385
Earnings per share:
Basic	$	1.04	$	0.97
Diluted	$	1.02	$	0.95
Average shares outstanding (millions) (note 3):
Basic		381.6		396.0
Diluted		389.9		404.3

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
($ millions except per share)
	Years Ended                    December 31,
	2007		2006
Railway operating revenues:
Coal	$	2,315	$	2,330
General merchandise (note 1)		5,196		5,106
Intermodal		1,921		1,971
Total railway operating revenues		9,432		9,407
Railway operating expenses (note 2):
Compensation and benefits		2,552		2,637
Purchased services and rents		1,551		1,578
Fuel		1,169		1,095
Depreciation		775		738
Materials and other		800		802
Total railway operating expenses		6,847		6,850
Income from railway operations		2,585		2,557
Other income - net		93		149
Interest expense on debt		441		476
Income before income taxes		2,237		2,230
Provision for income taxes:
Current		648		757
Deferred		125		(8)
Total income taxes		773		749
Net income	$	1,464	$	1,481
Earnings per share:
Basic	$	3.74	$	3.63
Diluted	$	3.68	$	3.57
Average shares outstanding (millions) (note 3):
Basic		389.6		406.0
Diluted		397.8		414.7

 

Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
($ millions)
	As of December 31,
	2007		2006
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	206	$	918
Accounts receivable - net		942		992
Materials and supplies		176		151
Deferred income taxes		190		186
Other current assets		161		153
Total current assets		1,675		2,400
Investments		1,974		1,755
Properties less accumulated depreciation		21,583		21,098
Other assets		912		775
Total assets	$	26,144	$	26,028
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	1,139	$	1,181
Income and other taxes		203		205
Other current liabilities		237		216
Current maturities of long-term debt		369		491
Total current liabilities		1,948		2,093
Long-term debt		5,999		6,109
Other liabilities		2,039		1,767
Deferred income taxes		6,431		6,444
Total liabilities		16,417		16,413
Stockholders' equity:
Common stock $1.00 per share par value		400		418
Additional paid-in capital		1,466		1,303
Accumulated other comprehensive loss		(399)		(369)
Retained income		8,280		8,283
		9,747		9,635
Less treasury stock at cost, 20,683,686 and
20,780,638 shares, respectively		(20)		(20)
Total stockholders' equity		9,727		9,615
Total liabilities and stockholders' equity	$	26,144	$	26,028

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
($ millions)
	Years Ended                    December 31,
	2007		2006
Cash flows from operating activities:
Net income	$	1,464	$	1,481
Reconciliation of net income to net cash provided by
operating activities:
Depreciation		786		750
Deferred income taxes		125		(8)
Gains on properties and investments		(51)		(54)
Changes in assets and liabilities affecting operations:
Accounts receivable		30		(60)
Materials and supplies		(25)		(19)
Other current assets		(17)		(11)
Current liabilities other than debt		38		38
Other - net		(17)		89
Net cash provided by operating activities		2,333		2,206
Cash flows from investing activities:
Property additions		(1,341)		(1,178)
Property sales and other transactions		124		119
Investments, including short-term		(635)		(1,804)
Investment sales and other transactions		827		2,179
Net cash used for investing activities		(1,025)		(684)
Cash flows from financing activities:
Dividends		(377)		(278)
Common stock issued - net		183		297
Purchase and retirement of common stock (note 3)		(1,196)		(964)
Proceeds from borrowings		250		--
Debt repayments		(489)		(339)
Net cash used for financing activities		(1,629)		(1,284)
Net increase (decrease) in cash and cash equivalents		(321)		238
Cash and cash equivalents:
At beginning of year		527		289
At end of year		206		527
Short-term investments at end of year		--		391
Cash, cash equivalents and short-term investments at end of year	$	206	$	918
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amounts capitalized)	$	441	$	473
Income taxes (net of refunds)	$	603	$	692

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1.   CONTRACT SETTLEMENT

      Fourth quarter 2007 automotive revenue includes $26 million related to a contract settlement.

2.   RECLASSIFICATIONS

      Prior year amounts have been reclassified to conform to current year presentation.  Specifically, "Fuel" includes locomotive fuel and other fuel used in railway operations.  Material, casualties and other claims, and other railway expenses have been combined into "Materials and other."

3.   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 2007, NS purchased and retired 23.6 million shares of common stock at a cost of $1.2 billion.  Since inception of this program, NS has purchased and retired 45.3 million shares at a total cost of $2.2 billion.