| Consolidated Statements of Income (Unaudited) (USD $) | ||||
| In Millions, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Railway operating revenues | $2,063 | $2,894 | $5,863 | $8,159 |
| Railway operating expenses: | ||||
| Compensation and benefits | 598 | 708 | 1,788 | 2,075 |
| Purchased services and rents | 352 | 419 | 1,041 | 1,194 |
| Fuel | 192 | 474 | 504 | 1,369 |
| Depreciation | 210 | 201 | 624 | 598 |
| Materials and other | 149 | 198 | 493 | 652 |
| Total railway operating expenses | 1,501 | 2,000 | 4,450 | 5,888 |
| Income from railway operations | 562 | 894 | 1,413 | 2,271 |
| Other income,net | 37 | 39 | 90 | 92 |
| Interest expense on debt | 118 | 111 | 348 | 332 |
| Income before income taxes | 481 | 822 | 1,155 | 2,031 |
| Provision for income taxes | 178 | 302 | 428 | 767 |
| Net income | $303 | $520 | $727 | $1,264 |
| Per share amounts | ||||
| Basic | 0.82 | 1.39 | 1.97 | 3.36 |
| Diluted | 0.81 | 1.37 | 1.94 | 3.3 |
| Dividends | 0.34 | 0.32 | 1.02 | 0.9 |
| Consolidated Balance Sheets (Unaudited) (USD $) | ||
| In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
| Assets | ||
| Cash and cash equivalents | $999 | $618 |
| Accounts receivable, net | 855 | 870 |
| Materials and supplies | 172 | 194 |
| Deferred income taxes | 152 | 149 |
| Other current assets | 55 | 168 |
| Total current assets | 2,233 | 1,999 |
| Investments | 2,067 | 1,779 |
| Properties less accumulated depreciation | 22,490 | 22,247 |
| Other assets | 285 | 272 |
| Total assets | 27,075 | 26,297 |
| Liabilities and stockholders' equity | ||
| Accounts payable | 980 | 1,140 |
| Income and other taxes | 219 | 261 |
| Other current liabilities | 287 | 220 |
| Current maturities of long-term debt | 380 | 484 |
| Total current liabilities | 1,866 | 2,105 |
| Long-term debt | 6,685 | 6,183 |
| Other liabilities | 1,892 | 2,030 |
| Deferred income taxes | 6,566 | 6,372 |
| Total liabilities | 17,009 | 16,690 |
| Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 367,893,915 and 366,233,106 shares, respectively, net of treasury shares | 369 | 368 |
| Additional paid-in capital | 1,761 | 1,680 |
| Accumulated other comprehensive loss | (912) | (942) |
| Retained income | 8,848 | 8,501 |
| Total stockholders' equity | 10,066 | 9,607 |
| Total liabilities and stockholders' equity | $27,075 | $26,297 |
| Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $) | ||
| Sep. 30, 2009
| Dec. 31, 2008
| |
| Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
| Common Stock, Par or Stated Value Per Share | 1 | 1 |
| Common Stock, Shares Authorized | 1,350,000,000 | 1,350,000,000 |
| Common Stock, Shares, Outstanding, net of treasury shares | 367,893,915 | 366,233,106 |
| Consolidated Statements of Cash Flows (Unaudited) (USD $) | ||
| In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Cash flows from operating activities | ||
| Net income | $727 | $1,264 |
| Reconciliation of net income to net cash provided by operating activities: | ||
| Depreciation | 630 | 606 |
| Deferred income taxes | 173 | 181 |
| Gains and losses on properties | (13) | (24) |
| Changes in assets and liabilities affecting operations: | ||
| Accounts receivable | (26) | 63 |
| Materials and supplies | 22 | (34) |
| Other current assets | 111 | 93 |
| Current liabilities other than debt | (184) | (80) |
| Other, net | (65) | 6 |
| Net cash provided by operating activities | 1,375 | 2,075 |
| Cash flows from investing activities | ||
| Property additions | (919) | (1,104) |
| Property sales and other transactions | 61 | 74 |
| Investments, including short-term | (119) | (34) |
| Investment sales and other transactions | 10 | 254 |
| Net cash used in investing activities | (967) | (810) |
| Cash flows from financing activities | ||
| Dividends | (374) | (338) |
| Common stock issued, net | 32 | 224 |
| Purchase and retirement of common stock | 0 | (899) |
| Proceeds from borrowings, net | 990 | 1,225 |
| Debt repayments | (675) | (1,126) |
| Net cash used in financing activities | (27) | (914) |
| Net increase in cash and cash equivalents | 381 | 351 |
| Cash and cash equivalents | ||
| At beginning of year | 618 | 206 |
| At end of period | 999 | 557 |
| Supplemental disclosure of cash flow information | ||
| Interest (net of amounts capitalized) | 288 | 254 |
| Income taxes (net of refunds) | $234 | $401 |
| Stock-based Compensation (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Stock-based Compensation (Unaudited) [Abstract] | |
| Stock-based Compensation | 1. Stock-based Compensation In the first quarter of 2009, a committee of non-employee directors of Norfolk Southerns Board of Directors granted stock options, restricted stock units and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP) and granted stock options pursuant to the Thoroughbred Stock Option Plan (TSOP) as discussed below. Stock-based compensation expense was $19million during the third quarter of 2009 and $23million during the same period of 2008. For the first nine months of 2009 and 2008, stock-based compensation expense was $34million and $118million, respectively. The total tax effect recognized in income in relation to stock-based compensation were benefits of $7million and $8million for the quarters ended September 30, 2009 and 2008, respectively, and benefits of $9million and $40million for the first nine months of 2009 and 2008, respectively. Stock Options In the first quarter of 2009, 1,209,700 options were granted under the LTIP and 251,200 options were granted under the TSOP. In each case, the grant price was $38.71, which was the average fair market value of Norfolk Southern common stock (Common Stock) on the effective date of the grant, and the options have a term of ten years. The options granted under the LTIP and TSOP in 2009 may not be exercised prior to the fourth and third anniversaries of the date of grant, respectively. Holders of the options granted under the LTIP who remain actively employed receive cash dividend equivalent payments for four years in an amount equal to the regular quarterly dividends paid on Common Stock. The fair value of each option award in 2009 was measured on the date of grant using a lattice-based option valuation model. Expected volatilities are based on implied volatilities from traded options on Common Stock and historical volatility of Common Stock. NS uses historical data to estimate option exercises and employee terminations within the valuation model. The average expected option life is derived from the output of the valuation model and represents the period of time that options granted are expected to be outstanding. The average risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. For options granted that include dividend equivalent payments, a dividend yield of zero was used. The assumptions for the 2009 LTIP grant are shown in the following table: 2009 Expected volatility rate 28% - 53% Average expected volatility 43% Average expected option life 6.5 years Average risk-free interest rate 2.87% Per-share grant-date fair value $18.18 The grant-date fair value of the 2009 TSOP grant was $15.41 using the same assumptions as the 2009 LTIP grant, except the average expected option life was 9.2years and a dividend yield of 2.40% was used because no dividend equivalent payments are made on these options. During the third quarter of 2009, options relating to 241,754 shares were exercised, yielding $6million in cash proceeds and $3million of tax benefits recognized as additional paid-in capital. During the third quarter of 2008, options relati |
| Income Taxes (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Income Taxes (Unaudited) [Abstract] | |
| Income Taxes | 2. Income Taxes There have been no material changes to the balance of unrecognized tax benefits reported at December 31, 2008. NS anticipates that the IRS will complete its examination of NS 2006 and 2007 federal income tax returns by the end of 2009. |
| Earnings Per Share (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Earnings Per Share (Unaudited) [Abstract] | |
| Earnings Per Share | 3. Earnings Per Share The following tables set forth the calculations of basic and diluted earnings per share: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 ($ in millions except per share, shares in millions) Basic earnings per share: Income available to common stockholders $ 301 $ 517 $ 721 $ 1,257 Weighted-average shares outstanding 367.3 372.5 366.8 374.4 Basic earnings per share $ 0.82 $ 1.39 $ 1.97 $ 3.36 In the first quarter of 2009, NS adopted the provisions of the Financial Accounting Standards Board Staff Position (FSP) EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (Accounting Standards Codification (ASC) 260-10), which requires the treatment of unvested stock options receiving dividend equivalents as participating securities in computing earnings per share under the two-class method. NS has retrospectively applied the provisions of this FSP and accordingly, income available to common stockholders for the third quarter 2009 and 2008 reflects a $2million and $3million reduction, respectively, and for the first nine months of 2009 and 2008 a $6million and $7million reduction, respectively, from net income for the effect of dividend equivalent payments made to holders of stock options, which had the effect of reducing the previously reported basic earnings per share for the nine months ended September30, 2008, from $3.37 to $3.36. Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 ($ in millions except per share, shares in millions) Diluted earnings per share: Income available to stockholders $ 301 $ 520 $ 721 $ 1,264 Weighted-average shares outstanding per above 367.3 372.5 366.8 374.4 Dilutive effect of outstanding options, PSUs and restricted shares 5.2 8.0 4.9 8.2 Adjusted weighted-average shares outstanding 372.5 380.5 371.7 382.6 Diluted earnings per share $ 0.81 $ 1.37 $ 1.94 $ 3.30 As required under the provisions of FSP EITF No. 03-6-1 (ASC 260-10), diluted earnings per share for the three and nine months ended September 30, 2009, were calculated under the more dilutive two-class method (as compared to the treasury stock method) and accordingly, income available to common stockholders for 2009 reflects a $2million and $6million reduction, respectively, from net income for dividend equivalent payments. The diluted calculations exclude options having exercise prices exceeding the average market price of Common Stock as follows: in 2009, 4.1million in the third quarter, 5.6million in both the second and first quarters, and none in 2008. |
| Stockholders' Equity (Unaudited) | |
| 1/1/2009 - 9/30/2009
USD / shares | |
| Stockholders' Equity (Unaudited) [Abstract] | |
| Stockholders' Equity | 4. Stockholders Equity Common stock is reported net of shares held by consolidated subsidiaries of Norfolk Southern, which at September 30, 2009, and December 31, 2008, amounted to 20,473,569 and 20,579,088 shares, respectively, with a cost of $19million for both periods. |
| Stock Repurchase Program (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Stock Repurchase Program (Unaudited) [Abstract] | |
| Stock Repurchase Program | 5. Stock Repurchase Program In March 2007, NS Board of Directors amended NS share repurchase program, increasing the authorized amount of share repurchases from 50million to 75million shares and shortening the term of the program from 2015 to 2010. The timing and volume of purchases is guided by managements assessment of market conditions and other pertinent facts. Any near-term purchases under the program are expected to be made with internally generated cash or proceeds from borrowings. There were no shares repurchased under this program in the first nine months of 2009. NS repurchased and retired 15.2million shares in the first nine months of 2008, at a cost of $899million. Since inception of this program in 2006, NS has repurchased and retired 64.7million shares of common stock at a total cost of $3.3billion. |
| Investments (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Investments [Abstract] | |
| Investments | 6. Investments Investment in Conrail, Inc. Through a limited liability company, Norfolk Southern and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC). NS has a 58% economic and 50% voting interest in the jointly owned entity, and CSX has the remainder of the economic and voting interests. NS investment in Conrail was $892million at September 30, 2009, and $868million at December 31, 2008. CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of Norfolk Southern Railway Company (NSR) and CSX Transportation, Inc. (CSXT). The costs of operating the Shared Assets Areas are borne by NSR and CSXT based on usage. In addition, NSR and CSXT pay CRC a fee for access to the Shared Assets Areas. Purchased services and rents and Fuel include expenses for the use of the Shared Assets Areas totaling $32million and $34million in the third quarters of 2009 and 2008, respectively, and $92million and $98million for the first nine months of 2009 and 2008, respectively. NS equity in earnings of Conrail, net of amortization, included in Other income net was $7million and $8million in the third quarters of 2009 and 2008, respectively, and $24million and $23million for the first nine months of 2009 and 2008, respectively. Accounts payable includes $98million at September 30, 2009, and $82million at December 31, 2008, due to Conrail for the operation of the Shared Assets Areas. In addition, Other liabilities includes $133million at both September 30, 2009, and December 31, 2008, for long-term advances from Conrail, maturing 2035, that bear interest at an average rate of 4.4%. Investment in Pan Am Southern LLC During the second quarter of 2009, NS and Pan Am Railways, Inc. (Pan Am) formed a joint venture, Pan Am Southern LLC (PAS), a railroad company in which each has a 50% equity interest. Pan Am contributed to PAS a 155-mile main line track that runs between Mechanicville, New York and Ayer, Massachusetts, along with 281 miles of secondary and branch lines, including trackage rights in New York, Connecticut, Massachusetts, New Hampshire, and Vermont (collectively, the PAS Lines), and as of September 30, 2009, NS has contributed cash and other property with a combined value of approximately $63million and has committed to contribute an additional $77million in cash and other property over the next three years, $75million of which is evidenced by notes payable to PAS. A significant portion of NS contributions will be used for capital improvements to the PAS Lines and the related construction of new intermodal and automotive terminals in the Albany, New York and the Ayer, Massachusetts areas. PAS is jointly controlled by NS and Pan Am; accordingly, NS accounts for its interest in PAS using the equity method of accounting. |
| Long-term Debt (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Long-term Debt (Unaudited) [Abstract] | |
| Long-term Debt | 7. Long-term Debt In the first nine months of 2009, NS repaid $200million under its accounts receivable securitization facility. At September 30, 2009, and December31, 2008, the amounts outstanding under the facility were $100million (at an average variable interest rate of 1.47%) and $300million (at an average variable interest rate of 3.01%), respectively. In October 2009, NS renewed and amended its accounts receivable securitization facility, with a new 364-day term to run until October 2010. NS reduced the total amount that can be borrowed from $500million to $350million to more closely match its liquidity requirements and receivables profile. During the second quarter of 2009, NS issued $500million of unsecured notes at 5.90% due 2019 pursuant to its automatic shelf registration statement described below. The net proceeds from the offering were $496million after deducting the purchase discount and expenses. NS also issued a total of $75million in non-interest bearing notes payable with maturity dates beginning in 2010 and ending in 2012 as part of its total investment in Pan Am Southern LLC. During the first quarter of 2009, NS issued $500million of unsecured notes at 5.75% due 2016 in a private offering. The net proceeds from the offering were approximately $494million after deducting the purchase discount and expenses. During the third quarter of 2009, NS offered to exchange these unregistered securities with essentially identical securities registered under the Securities Act of 1933. NS has authority from its Board of Directors to issue an additional $500million of debt or equity securities through public or private sale. During the first quarter of 2009, NS filed a Form S-3 automatic shelf registration statement for well-known seasoned issuers under which, as of September 30, 2009, up to $500million could be issued under this authority. |
| Pension and Other Postretirement Benefits (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Pension and Other Postretirement Benefits (Unaudited) [Abstract] | |
| Pension and Other Postretirement Benefits | 8. Pensions and Other Postretirement Benefits Norfolk Southern and certain subsidiaries have both funded and unfunded defined benefit pension plans covering principally salaried employees. Norfolk Southern and certain subsidiaries also provide specified health care and death benefits to eligible retired employees and their dependents. Under the present plans, which may be amended or terminated at NS option, a defined percentage of health care expenses is covered, reduced by any deductibles, co-payments, Medicare payments and, in some cases, coverage provided under other group insurance policies. Pension and Other Postretirement Benefit Cost Components Three months ended September 30, 2009 2008 2009 2008 Pension Benefits Other Benefits ($ in millions) Service cost $ 7 $ 6 $ 4 $ 4 Interest cost 26 25 15 13 Expected return on plan assets (39) (43) (4) (4) Amortization of prior service cost (benefit) -- 1 -- (2) Amortization of net losses 6 1 8 6 Net (benefit) cost $ -- $ (10) $ 23 $ 17 Nine months ended September 30, 2009 2008 2009 2008 Pension Benefits Other Benefits ($ in millions) Service cost $ 20 $ 18 $ 12 $ 12 Interest cost 76 75 43 38 Expected return on plan assets (116) (129) (11) (11) Amortization of prior service cost (benefit) 2 2 (1) (7) Amortization of net losses 19 5 26 19 Net (benefit) cost $ 1 $ (29) $ 69 $ 51 The estimated amortization of certain items from accumulated comprehensive income (loss) into periodic benefit cost in 2009 is as follows: Nine Months Fourth Year Ended Quarter of Ending September 30, 2009 2009 December 31, 2009 ($ in millions) Defined benefit pension plans: Prior service cost $ 2 $ 1 $ 3 Estimated net losses $ 19 $ 6 $ 25 Defined benefit post retirement plans: Prior service benefit $ (1) $ (1) $ (2) Estimated net losses $ 26 $ 9 $ 35 |
| Comprehensive Income (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Comprehensive Income (Unaudited) [Abstract] | |
| Comprehensive Income | 9. Comprehensive Income NS total comprehensive income was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 ($ in millions) Net income $ 303 $ 520 $ 727 $ 1,264 Other comprehensive income 10 3 30 10 Total comprehensive income $ 313 $ 523 $ 757 $ 1,274 Other comprehensive income in 2009 and 2008 reflects primarily, net of tax, the amortization of the actuarial net losses and prior service costs (benefits) for the pension and other postretirement benefit plans and unrealized gains and losses on available-for-sale securities. |
| Fair Value of Financial Instruments (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Fair Value of Financial Instruments (Unaudited) [Abstract] | |
| Fair Value of Financial Instruments | 10. Fair Value of Financial Instruments The fair values of Cash and cash equivalents, Accounts receivable and Accounts payable approximate carrying values because of the short maturity of these financial instruments. The carrying value of corporate-owned life insurance is recorded at cash surrender value and, accordingly, approximates fair value. The carrying amounts and estimated fair values for the remaining financial instruments, excluding derivatives and investments accounted for under the equity method, consisted of the following at September 30, 2009, and December 31, 2008: September 30, 2009 December 31, 2008 Carrying Fair Carrying Fair Amount Value Amount Value ($ in millions) Investments $ 239 $ 267 $ 187 $ 202 Long-term debt $ (7,065) $ (8,065) $ (6,667) $ (6,885) Underlying net assets were used to estimate the fair value of investments with the exception of notes receivable which are based on discounted future cash flows. The fair values of debt were estimated based on quoted market prices or discounted cash flows using current interest rates for debt with similar terms, company rating and remaining maturity. Carrying amounts of marketable securities reflect unrealized holding gains of zero on September 30, 2009 and December 31, 2008. Sales of available-for-sale securities were immaterial for the three and nine months ended September 30, 2009 and 2008. |
| Commitments and Contingencies (Unaudited) | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Commitments and Contingencies (Unaudited) [Abstract] | |
| Commitments and Contingencies | 11. Commitments and Contingencies Lawsuits Norfolk Southern and/or certain subsidiaries are defendants in numerous lawsuits and other claims relating principally to railroad operations. When management concludes that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings. While the ultimate amount of liability incurred in any of these lawsuits and claims is dependent on future developments, in managements opinion, the recorded liability is adequate to cover the future payment of such liability and claims. However, the final outcome of any of these lawsuits and claims cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments are known. Casualty Claims Casualty claims include employee personal injury and occupational claims as well as third-party claims, all exclusive of legal costs. To aid in valuing its personal injury liability and determining the amount to accrue with respect to such claims during the year, NS management utilizes studies prepared by an independent consulting actuarial firm. Job-related accidental injury and occupational claims are subject to the Federal Employers Liability Act (FELA), which is applicable only to railroads. FELAs fault-based system produces results that are unpredictable and inconsistent as compared with a no-fault workers compensation system. The variability inherent in this system could result in actual costs being different from the liability recorded. While the ultimate amount of claims incurred is dependent on future developments, in managements opinion, the recorded liability is adequate to cover the future payments of claims and is supported by the most recent actuarial study. In all cases, NS records a liability when the expected loss for the claim is both probable and estimable. In April 2008, NS settled the lawsuit brought by Avondale Mills for claims associated with the January 6, 2005, derailment in Graniteville, SC. A portion of the settlement was not reimbursed by insurance and was included in first quarter 2008 expenses. The total liability related to the derailment represents NS best estimate based on current facts and circumstances. The estimate includes amounts related to business property damage and other economic losses, personal injury and individual property damage claims, as well as third-party response costs. NS commercial insurance policies are expected to cover substantially all expenses related to this derailment above the unreimbursed portion and NS self-insured retention, including NS response costs and legal fees. The Consolidated Balance Sheets reflect long-term receivables for estimated recoveries from NS insurance carriers. NS is engaged in arbitration with one of its insurance carriers that failed to respond to an insurance claim submitted by NS. NS believes these expenses are covered by the insurance policy and t |
| Document Information | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Document Information [Line Items] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Document Period End Date | 2009-09-30 |
| Entity Information (USD $) | |
| 9 Months Ended
Sep. 30, 2009 | |
| Entity Information [Line Items] | |
| Entity Registrant Name | Norfolk Southern Corporation |
| Entity Central Index Key | 0000702165 |
| Current Fiscal Year End Date | --12-31 |
| Entity Filer Category | Large Accelerated Filer |
| Entity Listings [Line Items] | |
| Entity Common Stock, Shares Outstanding | 367,893,915 |
