01—Abstract
Summary
Summary of the 10-K filed February 15, 2012. Cited figures are marked; the original filing is the authoritative source.
Norfolk Southern Corporation's (NSC) 2011 10-K filing highlights a strong financial performance, driven by a 17% increase in railway operating revenues to $11.2 billiona.
This growth was attributed to higher average revenue per unit, boosted by fuel surcharges and rate increases, coupled with increased traffic volume across most commodity groups. Net income saw a significant 28% rise to $1.9 billionb, or $5.45 per diluted share, reflecting improved operating results and a lower effective tax rate. NSC continued its strategic investments in infrastructure and network enhancements, with property additions totaling $2.16 billion.
Key initiatives included the Crescent Corridor, MidAmerica Corridor, and Heartland Corridor, aimed at improving capacity and service. The company also demonstrated a commitment to shareholder returns through significant share repurchases totaling $2.1 billionc during the year. Looking ahead to 2012, NSC anticipates continued revenue growth, albeit at a more moderate pace, supported by ongoing focus on safety, service, and operational efficiency.
02—Key points
Key Highlights
- Railway operating revenues increased 17% to $11.2 billion in 2011, driven by higher pricing, fuel surcharges, and increased traffic volume.
- Net income rose 28% to $1.9 billion ($5.45 per diluted share), benefiting from improved operating income and a lower effective tax rate.
- The company invested $2.16 billion in property additions, focusing on infrastructure and capacity improvements like the Crescent Corridor.
- NSC repurchased $2.1 billion of its common stock in 2011, underscoring its commitment to returning capital to shareholders.
- The operating ratio improved to 71.2% in 2011, indicating enhanced operational efficiency compared to 71.9% in 2010.
- Coal remained the largest commodity group, accounting for 31% of total railway operating revenues, with export coal showing a significant 25% tonnage increase.
- NSC expects continued revenue growth in 2012, though at a more moderate pace, with a focus on safety, service, and operational efficiency.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 15, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $11.17B$9.52B | +17.4% |
| Operating Expenses | $7.96B$6.84B | +16.4% |
| Operating Income | $3.21B$2.68B | +20.1% |
| Interest Expense | $455.00M$462.00M | −1.5% |
| Net Income | $1.92B$1.50B | +28.1% |
| EPS (Basic) | $5.52$4.06 | +36.0% |
| EPS (Diluted) | $5.45$4.00 | +36.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of Norfolk Southern's revenue growth in 2011?
Norfolk Southern's revenue growth in 2011 was primarily driven by a 17% increase in railway operating revenues to $11.2 billion. This was due to higher average revenue per unit, influenced by rate increases and fuel surcharges, and an increase in traffic volume across most commodity groups, notably coal and intermodal.
How did Norfolk Southern manage its operational expenses in 2011?
Railway operating expenses increased by 16% to $8.0 billion, largely due to higher fuel prices and increased volume-related expenses. Despite this increase, the railway operating ratio improved to 71.2% in 2011, down from 71.9% in 2010, indicating improved operational efficiency relative to revenue.
What are Norfolk Southern's key capital investment priorities for 2012?
For 2012, Norfolk Southern budgeted $2.4 billion for property additions. Key areas of investment include roadway assets ($840 million), equipment ($588 million), facilities and terminals ($322 million, including Crescent Corridor), positive train control implementation ($247 million initially, with significant future investment expected), infrastructure improvements ($134 million for corridors), and technology ($92 million).
How is Norfolk Southern addressing potential risks and regulations?
Norfolk Southern faces significant risks related to government legislation and regulation, including potential re-imposition of economic regulation. The company is also subject to safety and security regulations, requiring substantial investment in systems like Positive Train Control (PTC) by 2015. Environmental liabilities and compliance with environmental laws are ongoing considerations. The company actively engages with regulators and industry groups to manage these risks.
06—Continue