Norfolk Southern (NSC) 8-K Norfolk Southern Reports 2008 Fourth-quarter and Full-year Results

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.