10-KPeriod: FY2007

NORFOLK SOUTHERN CORP Annual Report, Year Ended Dec 31, 2007

Filed February 15, 2008For Securities:NSC

Summary

Norfolk Southern Corporation (NSC) reported revenues of $9.4 billion for the fiscal year ended December 31, 2007. Despite a slight decrease in traffic volumes due to economic softness, the company managed to maintain its revenue levels through improved average revenue per unit. Operating expenses remained stable, resulting in a slightly improved operating ratio of 72.6%. The company generated strong operating cash flow, which, along with a reduction in cash and short-term investments, funded significant capital expenditures, share repurchases totaling $1.2 billion, and increased dividend payouts. Looking ahead to 2008, Norfolk Southern anticipates continued revenue growth driven by higher pricing and a modest increase in traffic volume, contingent on economic improvement. The company plans to continue investing in its infrastructure, with a capital expenditure budget of $1.43 billion, focusing on rail, track upgrades, and equipment modernization. Shareholder returns were also a focus, with the company continuing its share repurchase program and returning capital through dividends.

Financial Highlights

26 data points
Beta

Revenue

$9.43B

Net Income

$1.46B

15.5% Net Margin

EPS (Diluted)

$3.68

Cash & Equivalents

$206.00M

Free Cash Flow

$992.00M

Financial Statements
Beta
Revenue$9.43B
Operating Expenses$6.85B
Operating Income$2.58B
Interest Expense$441.00M
Net Income$1.46B
EPS (Basic)$3.73
EPS (Diluted)$3.68

Key Highlights

  • 1In 2007, Norfolk Southern reported railway operating revenues of $9.4 billion, matching the previous year's performance despite a slight decline in traffic volume.
  • 2The company maintained a solid operating ratio of 72.6%, showing a slight improvement from 72.8% in 2006.
  • 3Cash flow from operating activities exceeded $2 billion for the third consecutive year, demonstrating strong operational cash generation.
  • 4Norfolk Southern repurchased approximately 23.6 million shares of common stock for $1.2 billion in 2007, continuing its commitment to returning capital to shareholders.
  • 5Capital expenditures for 2007 totaled $1.34 billion, with a planned increase to $1.43 billion for 2008, signaling continued investment in infrastructure and equipment.
  • 6The company's revenue from coal, its largest commodity group, represented 25% of total railway operating revenues in 2007.

Frequently Asked Questions

Norfolk Southern reported total railway operating revenues of $9.4 billion for the fiscal year ended December 31, 2007.

Railway operating expenses remained approximately even in 2007 compared to 2006, decreasing slightly by $3 million. This was primarily due to lower volume-related expenses which offset higher fuel expenses. The operating ratio improved slightly to 72.6%.

Looking ahead, Norfolk Southern expects revenues to continue to grow, reflecting higher average revenue per unit and modestly higher traffic volume, particularly in the latter half of 2008, assuming economic improvement. The company has budgeted $1.43 billion for capital expenditures in 2008, focusing on infrastructure, rail, track upgrades, and equipment.

In 2007, Norfolk Southern repurchased approximately 23.6 million shares of common stock for $1.2 billion under its share repurchase program. Additionally, dividends per share increased from $0.68 in 2006 to $0.96 in 2007, reflecting a commitment to shareholder returns.