10-KPeriod: FY2011

NORFOLK SOUTHERN CORP Annual Report, Year Ended Dec 31, 2011

Filed February 15, 2012For Securities:NSC

Summary

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 billion. 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 billion, 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 billion 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.

Financial Highlights

47 data points
Beta

Revenue

$11.17B

Net Income

$1.92B

17.2% Net Margin

EPS (Diluted)

$5.45

Total Assets

$28.54B

Cash & Equivalents

$276.00M

Free Cash Flow

$1.07B

Financial Statements
Beta
Revenue$11.17B
Operating Expenses$7.96B
Operating Income$3.21B
Interest Expense$455.00M
Net Income$1.92B
EPS (Basic)$5.52
EPS (Diluted)$5.45

Key Highlights

  • 1Railway operating revenues increased 17% to $11.2 billion in 2011, driven by higher pricing, fuel surcharges, and increased traffic volume.
  • 2Net income rose 28% to $1.9 billion ($5.45 per diluted share), benefiting from improved operating income and a lower effective tax rate.
  • 3The company invested $2.16 billion in property additions, focusing on infrastructure and capacity improvements like the Crescent Corridor.
  • 4NSC repurchased $2.1 billion of its common stock in 2011, underscoring its commitment to returning capital to shareholders.
  • 5The operating ratio improved to 71.2% in 2011, indicating enhanced operational efficiency compared to 71.9% in 2010.
  • 6Coal remained the largest commodity group, accounting for 31% of total railway operating revenues, with export coal showing a significant 25% tonnage increase.
  • 7NSC expects continued revenue growth in 2012, though at a more moderate pace, with a focus on safety, service, and operational efficiency.

Frequently Asked Questions

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.

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.

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).

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.