PAGE ONE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission file number 1-8339
NORFOLK SOUTHERN CORPORATION
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 52-1188014
- ---------------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Three Commercial Place
Norfolk, Virginia 23510-2191
- ---------------------------------------- -------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (804) 629-2680
-----------------------
No Change
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. (X) Yes ( ) No
The number of shares outstanding of each of the registrant's classes of
Common Stock, as of the last practicable date:
Class Outstanding as of April 30, 1996
----- --------------------------------
Common Stock (par value $1.00) 127,394,859 shares (excluding
7,252,634 shares held by
registrant's consolidated
subsidiaries)
<PAGE> PAGE 2
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)
INDEX
-----
Page
----
Part I. Financial Information:
Item 1. Financial Statements:
Consolidated Statements of Income
Three Months March 31, 1996 and 1995 3
Consolidated Balance Sheets
March 31, 1996, and December 31, 1995 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-12
Part II. Other Information:
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Index to Exhibits 15
<PAGE> PAGE 3
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
- ------ --------------------
<TABLE>
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In millions of dollars except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
-------- --------
<S> <C> <C>
TRANSPORTATION OPERATING REVENUES:
Railway (Note 6):
Coal $ 323.8 $ 306.9
General merchandise 574.1 577.6
Intermodal 118.8 114.7
-------- --------
Total railway 1,016.7 999.2
Motor carrier 144.8 139.5
-------- --------
Total transportation operating revenues 1,161.5 1,138.7
-------- --------
TRANSPORTATION OPERATING EXPENSES:
Railway:
Compensation and benefits 377.3 375.3
Materials, services and rents 151.9 163.1
Depreciation 100.3 94.4
Diesel fuel 55.4 48.7
Casualties and other claims 34.7 32.2
Other 35.2 35.5
-------- --------
Total railway 754.8 749.2
Motor carrier 145.7 140.4
-------- --------
Total transportation operating expenses 900.5 889.6
-------- --------
Income from operations 261.0 249.1
Other income (expense):
Interest income 5.8 6.2
Interest expense on debt (27.6) (28.3)
Other - net 27.6 49.5
-------- --------
Total other income 5.8 27.4
-------- --------
Income before income taxes 266.8 276.5
Provision for income taxes 98.7 105.8
-------- --------
NET INCOME $ 168.1 $ 170.7
======== ========
Per share amounts (Note 5):
Net income $ 1.31 $ 1.29
Dividends 0.56 0.52
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 4
Item 1. Financial Statements. (continued)
- ------ --------------------
<TABLE>
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In millions of dollars)
(Unaudited)
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 71.8 $ 67.7
Short-term investments 250.6 261.3
Accounts receivable - net 734.6 703.5
Materials and supplies 64.0 61.7
Deferred income taxes 146.6 144.7
Other current assets 101.1 103.9
--------- ---------
Total current assets 1,368.7 1,342.8
Investments 243.3 231.7
Properties less accumulated depreciation 9,372.7 9,258.8
Other assets 70.5 71.5
--------- ---------
TOTAL ASSETS $11,055.2 $10,904.8
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 46.3 $ 45.2
Accounts payable 732.7 732.8
Income and other taxes 258.8 190.8
Other current liabilities 140.4 151.3
Current maturities of long-term debt (Note 3) 86.9 85.7
--------- ---------
Total current liabilities 1,265.1 1,205.8
Long-term debt (Note 3) 1,613.8 1,553.3
Other liabilities 972.0 965.5
Minority interests 51.4 52.2
Deferred income taxes 2,314.7 2,299.0
--------- ---------
TOTAL LIABILITIES 6,217.0 6,075.8
--------- ---------
Stockholders' equity:
Common stock $1.00 per share par value 135.2 136.3
Other capital 451.1 430.9
Retained income 4,272.5 4,282.4
Less treasury stock at cost, 7,252,634 shares (20.6) (20.6)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 4,838.2 4,829.0
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,055.2 $10,904.8
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 5
Item 1. Financial Statements. (continued)
- ------ --------------------
<TABLE>
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In millions of dollars)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 168.1 $ 170.7
Reconciliation of net income to net cash
provided by operating activities:
Special charge payments (6.0) (2.8)
Depreciation 105.6 101.0
Deferred income taxes 13.9 12.7
Nonoperating gains and losses on properties
and investments (15.9) (40.8)
Changes in assets and liabilities affecting
operations:
Accounts receivable (31.1) 22.9
Materials and supplies (2.3) (5.1)
Other current assets 12.1 3.8
Current liabilities other than debt 67.7 68.3
Other - net 8.4 8.2
------- -------
Net cash provided by operating activities 320.5 338.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (Note 3) (163.0) (183.2)
Property sales and other transactions 24.0 31.4
Investments and loans (23.6) (24.3)
Investment sales and other transactions 12.7 23.8
Short-term investments - net 9.0 27.7
------- -------
Net cash used for investing activities (140.9) (124.6)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends (71.9) (69.0)
Common stock issued - net 11.2 1.9
Purchase and retirement of common stock (Note 4) (108.6) (71.9)
Proceeds from long-term borrowings (Note 3) 5.6 7.6
Debt repayments (11.8) (22.0)
------- -------
Net cash used for financing activities (175.5) (153.4)
------- -------
Net increase in cash and cash equivalents 4.1 60.9
CASH AND CASH EQUIVALENTS:*
At beginning of year 67.7 57.0
------- -------
At end of period $ 71.8 $ 117.9
======= =======
- ---------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts capitalized) $ 43.1 $ 39.7
Income taxes $ 2.7 $ 3.7
* Cash equivalents are highly liquid investments purchased three months or
less from maturity.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PAGE 6
Item 1. Financial Statements. (continued)
- ------ --------------------
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. In the opinion of Management, the accompanying unaudited interim
financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial
position as of March 31, 1996, and the results of operations and cash
flows for the three months ended March 31, 1996 and 1995.
While Management believes that the disclosures presented are adequate
to make the information not misleading, these consolidated financial
statements should be read in conjunction with the financial statements
and notes included in the Corporation's latest Annual Report on
Form 10-K.
2. Contingencies
There have been no significant changes since year-end 1995 in the
matters as discussed in Note 17, CONTINGENCIES, appearing in the NS
Annual Report on Form 10-K for 1995, Notes to Consolidated Financial
Statements, beginning on page 74.
An update of the status of certain legal proceedings is included in
Part II, Item 1, "Legal Proceedings," of this Form 10-Q Report.
3. Capital Lease Obligations
During the first quarters of 1996 and 1995, an NS rail subsidiary
entered into capital leases covering new locomotives. The related
capital lease obligations totaling $74.4 million in 1996 and
$104.5 million in 1995 were reflected in the Consolidated Balance
Sheets as debt and, because they were non-cash transactions, were
excluded from the Consolidated Statements of Cash Flows. The lease
obligations carry stated interest rates between 6.20 percent and
6.75 percent for those entered into in the first quarter of 1996, and
between 8.23 percent and 8.60 percent for those entered into in 1995.
All were converted to variable rate obligations using interest rate
swap agreements. The interest rates on these obligations are based
on the six-month London Interbank Offered Rate and are reset every six
months with realized gains or losses accounted for as an adjustment
of interest expense over the terms of the leases. As a result, NS is
exposed to the market risk associated with fluctuations in interest
rates. To date, the effects of the rate fluctuations have been
favorable. Counterparties to the interest rate swap agreements
are major financial institutions believed by Management to be
credit-worthy. NS' use of interest rate swaps has been limited
to those discussed above.
<PAGE> PAGE 7
Item 1. Financial Statements. (continued)
- ------ --------------------
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
4. Stock Purchase Programs
In January 1996, the Board of Directors authorized the purchase and
retirement of up to 30 million shares of common stock. NS completed
its purchases (45 million shares) under the 1989 authorization on
March 8, 1996. Combined with the initial program for 20 million
shares which began in 1987 and was completed in 1989, total shares
purchased and retired under the closed programs totaled 65 million
shares. The new program is expected to be completed by the end of
the year 2000. Since the first purchases in December 1987 through
March 31, 1996, NS has purchased and retired 65,317,300 shares of its
common stock at a cost of $3.0 billion. Future purchases are
dependent on market conditions, the economy, cash needs and
alternative investment opportunities.
5. Earnings Per Share
<TABLE>
"Earnings per share" is computed by dividing net income by the
weighted average number of common shares outstanding as follows:
<CAPTION>
Three Months Ended
March 31,
1996 1995
-------- --------
(In thousands)
<S> <C> <C>
Average number of shares outstanding 128,215 132,494
</TABLE>
Recent decreases in the average number of shares outstanding of NS
Common Stock are the result of the stock purchase programs described
in Note 4.
6. Reclassification of Railway Revenues
Beginning in 1996, revenues previously reported as "Other railway
revenues" (principally switching and demurrage) are included in each
of the respective commodity groups. 1995 revenues have been
reclassified to conform with the current presentation.
<PAGE> PAGE 8
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations.
-------------------------
RESULTS OF OPERATIONS
Net Income
- ----------
"Net income" for the first quarter of 1996 was $168.1 million, a
$2.6 million, or 2 percent, decline, compared with 1995's record
first-quarter earnings of $170.7 million, which included a substantial
gain on the partial redemption of a partnership interest (see "Other
income (expense)" discussion on page 10). Income from railway operations
was up $11.9 million, or 5 percent, compared with first-quarter 1995.
<TABLE>
Railway Operating Revenues
- --------------------------
First-quarter "Railway operating revenues" were $1.02 billion, a
$17.5 million, or 2 percent, increase, compared with the same period last
year, and a quarterly record. The increase in operating revenues was due
to:
<CAPTION>
First Quarter
1996 vs. 1995
Increase (Decrease)
------------------
(In millions of dollars)
<S> <C>
Traffic volume (carloads) $ (16.4)
Revenue per unit 33.9
-------
$ 17.5
=======
</TABLE>
<TABLE>
The principal revenue commodity groups and carloads were as follows (see
Note 6 on page 7 for a discussion of revenue reclassifications):
<CAPTION>
Revenues Carloads
1996 1995 1996 1995
---- ---- ---- ----
($ in millions) (in thousands)
<S> <C> <C> <C> <C>
Coal $ 323.8 $ 306.9 319.6 318.4
Paper/forest 129.7 133.5 109.8 116.0
Chemicals 140.4 140.6 95.5 95.3
Automotive 118.3 119.7 83.8 86.7
Agriculture 101.6 97.2 93.1 98.5
Metals/construction 84.1 86.6 83.8 90.0
-------- -------- ------- -------
General merchandise 574.1 577.6 466.0 486.5
Intermodal 118.8 114.7 319.2 306.9
-------- -------- ------- -------
Total $1,016.7 $ 999.2 1,104.8 1,111.8
======== ======== ======= =======
</TABLE>
<PAGE> PAGE 9
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
Coal
- ----
First-quarter coal revenues increased $16.9 million, or 6 percent,
compared with the same period last year primarily due to an increase in
export coal volume. Total coal carloads were slightly ahead of last
year, led by export coal, which has a significantly longer haul. This
increase, combined with a strengthened industrial coal market, more than
offset declines in the utility and domestic steel sectors, which are
shorter-haul traffic. While utility traffic was down early in the
quarter (due to the effect of the severe winter weather), March traffic
volume showed improvement, and continuing high demand for utility coal is
expected as customers rebuild their stockpiles.
For the remainder of the year, the encouraging volume trends in both the
export and the domestic utility markets are expected to continue.
General merchandise
- -------------------
First-quarter general merchandise revenues decreased $3.5 million, or
1 percent, compared with the same period last year as carloadings were
down or even in all of the general merchandise market groups. Soft
market conditions and severe winter weather early in the quarter were
primarily responsible for the unfavorable comparisons. Automotive
revenues, which had been up for the first two months of the year, ended
the quarter down $1.4 million, or 1 percent, due to the effects of the
16-day GM strike.
Looking ahead, if the weather normalizes and the GM strike does not
resume, general merchandise revenues are expected to strengthen. In
addition, several major automotive plants, which had been down for
retooling in 1995, have resumed production.
Intermodal
- ----------
First-quarter intermodal revenues increased $4.1 million, or 4 percent,
compared with the same period last year. Carloadings rose 4 percent,
with most of the improvement related to container business.
For the remainder of the year, we expect to see solid intermodal traffic
growth, but at about half the 1995 growth rate.
Railway Operating Expenses
- --------------------------
First-quarter "Railway operating expenses" were $754.8 million, a
$5.6 million, or 1 percent, increase, compared with the same period last
year.
The largest increase was in "Diesel fuel," up $6.7 million, or
14 percent. This was almost entirely due to price per gallon, which was
nearly 7 cents higher than in the first quarter of 1995. Diesel fuel
prices averaged about 63 cents per gallon in the first quarter, and
reached 65 cents per gallon in March, the highest level since 1991, when
fuel prices were impacted by the Persian Gulf crisis. For the years 1994
and 1995, diesel fuel prices averaged about 57 cents per gallon.
<PAGE> PAGE 10
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
"Depreciation" increased $5.9 million, or 6 percent, due to additional
investment in plant and equipment, coupled with higher overall
depreciation rates resulting from a recent depreciation study.
Regulations established by the former Interstate Commerce Commission
and currently monitored by the Surface Transportation Board of the
U.S. Department of Transportation (DOT) require periodic formal studies
of ultimate service lives for all railroad assets. Resulting service
life estimates are subject to review and approval by the DOT.
"Casualties and other claims" were up $2.5 million, or 8 percent. This
increase was attributable to an accrual for a specific environmental
remediation site.
The only large decline was in "Materials, services and rents" which was
down $11.2 million, or 7 percent. This favorable experience stems largely
from: (1) lower locomotive maintenance costs resulting from older
locomotives being replaced with new units; (2) Norfolk Southern's
benchmark maintenance procedures which consistently produce more gross ton
miles per dollar of locomotive maintenance cost than any other major U.S.
railroad; and (3) lower freight car maintenance costs, reflecting fewer
cars in the fleet and the reengineering of freight car maintenance
practices.
Motor Carrier Operating Revenues
- --------------------------------
First-quarter "Motor carrier operating revenues" were $144.8 million, an
increase of $5.3 million, or 4 percent, compared with the same period
last year. Most of the improvement was in the logistics and European
markets.
Motor Carrier Operating Expenses
- --------------------------------
First-quarter "Motor carrier operating expenses" were $145.7 million, a
$5.3 million, or 4 percent, increase compared with the same period last
year. Most of the increase was due to higher transportation costs
resulting from increased volume and poor weather.
Other Income (Expense)
- ----------------------
First-quarter "Other-net" was $27.6 million, a $21.9 million decline
compared with the same period last year. The decline was due to a
$30.5 million ($18.8 million after-tax) gain recorded in first-quarter 1995
resulting from the partial redemption of a real estate partnership
interest.
<PAGE> PAGE 11
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
<TABLE>
FINANCIAL CONDITION AND LIQUIDITY
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
(Dollars in millions)
<S> <C> <C>
Cash and short-term investments $322.4 $329.0
Working capital $103.6 $137.0
Current assets to current liabilities 1.1 1.1
Debt to total capitalization 26.5% 25.9%
</TABLE>
CASH PROVIDED BY OPERATING ACTIVITIES is NS' principal source of
liquidity and was sufficient to cover cash outflows for dividends, debt
repayments and capital spending (see Consolidated Statements of Cash
Flows on page 5). The use of cash in accounts receivable was primarily
attributable to higher rail freight receivables commensurate with the
increase in railway operating revenues.
CASH USED FOR INVESTING ACTIVITIES was affected principally by capital
spending for property additions, which included $23 million and
$30 million in 1996 and 1995, respectively, related to locomotives under
capital leases (see Note 3). "Investments and loans" consists primarily
of premium payments related to corporate-owned life insurance (COLI),
while "Investment sales and other transactions" principally reflects
borrowing on COLI.
CASH USED FOR FINANCING ACTIVITIES primarily reflects uses of cash with
the largest amount having been spent on the stock purchase program (see
Note 4). "Common stock issued" in the first quarter of 1996 reflects
substantially higher-than-usual stock option exercises. "Proceeds from
long-term borrowings" represents amounts received in connection with
capital lease transactions (see Note 3).
LABOR NEGOTIATIONS
In May 1996, arbitrators selected by the National Carriers Conference
Committee (Committee) and the United Transportation Union (UTU), which
represents the largest number of employees in the railroad industry,
imposed a five-year contract on the parties, the terms of which are
identical to those in the agreement that had been negotiated by the
Committee and the UTU leadership and thereafter rejected by the
UTU rank and file. Negotiations with other rail unions are continuing.
<PAGE> PAGE 12
Item 2. Management's Discussion and Analysis of Financial Condition
- ------ -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------
NEW ACCOUNTING PRONOUNCEMENT
Effective January 1, 1996, NS adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121).
This standard establishes the accounting and reporting requirements for
recognizing and measuring impairment of long-lived assets to be either
held and used or held for disposal. SFAS 121 did not have a material
effect on NS' financial statements.
ENVIRONMENTAL MATTERS
During 1995, the EPA alleged that The Alabama Great Southern Railroad
Company ("AGS"), a subsidiary of NS' rail subsidiary, was responsible,
along with several other entities believed to be financially solvent, for
past and future clean-up and monitoring costs at the Bayou Bonfouca NPL
Superfund site located in Slidell, Louisiana. The site was owned by the
parent of an AGS predecessor from 1882 until 1902. Bridge timbers used in
the 1882 construction of the predecessor's bridge across Lake
Pontchartrain were treated at the site. The United States and the state
of Louisiana filed suit to recover all costs incurred (estimated in the
complaint at around $100 million) and unspecified amounts to be incurred.
Defendants in that suit include AGS and some--but not all--the entities
the EPA earlier identified as potentially responsible parties. AGS
believes it never owned, operated or had any other culpable connection to
the site and denies responsibility; however, because the amount of
liability, if any, that ultimately may be assessed against NS or AGS
cannot be estimated reliably at this time, the materiality of such amount
to NS' financial position, results of operation or liquidity in a
particular quarter or year cannot be evaluated.
<PAGE> PAGE 13
PART II. OTHER INFORMATION
----------------------------
Item 1. Legal Proceedings.
- ------ -----------------
North Carolina - Fiber Optic Cable. In October 1995, two
individuals, on behalf of themselves and all others similarly situated,
instituted an action in the United States District Court for the Western
District of North Carolina against Sprint Communications Company, L. P. and
Norfolk Southern Railway Company (NSR). Plaintiffs allege they sustained
RICO, conversion and trespass damages in the amount of $100 million
(trebled) as a result of the defendants' installing, pursuant to an
agreement, fiber optic cable on property in which the plaintiffs further
allege that NSR's only property right was an easement for railway
operations.
On April 16, 1996, the court granted the defendants' motions to
dismiss the RICO and conversion claims, and it allowed the parties to
submit additional evidence concerning a statute of limitations defense to
the conspiracy to trespass claim. Management, after consulting with its
legal counsel, is of the opinion that (1) the court's rulings on the
motions to dismiss should be sustained, (2) NSR has meritorious defenses to
the conspiracy to trespass claim, and (3) if the conspiracy to trespass
claim is allowed to proceed and the defendants are found liable, the amount
of damages that reasonably could be awarded will not materially affect the
consolidated financial position of NS.
Because, following the court's April 16, 1996, ruling, the amount
of damages to which NSR could be subject is immaterial in amount,
Management anticipates this is the last report concerning the proceeding.
The matter has been previously reported by Norfolk Southern Corporation in
Part I, Item 3, of its Annual Report on Form 10-K for the year ended
December 31, 1995.
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibits:
Computation of Per Share Earnings
Financial Data Schedule
(b) Reports on Form 8-K:
A report on Form 8-K dated January 23, 1996 (date of earliest
event reported) was filed on January 24, 1996, reporting that
the Board of Directors had authorized the purchase of up to
30 million shares of NS Common Stock. The authorization is
in addition to the 20 and 45 million shares of common stock
the Corporation's board approved for purchase in 1987 and
1989, respectively.
<PAGE> PAGE 14
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NORFOLK SOUTHERN CORPORATION
-----------------------------------------
(Registrant)
Date: May 10, 1996 /s/ Dezora M. Martin
------------------- -----------------------------------------
Dezora M. Martin
Corporate Secretary (Signature)
Date: May 10, 1996 /s/ John P. Rathbone
------------------- -----------------------------------------
John P. Rathbone
Vice President and Controller
(Principal Accounting Officer) (Signature)
<PAGE> PAGE 15
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
-----------------
Electronic
Submission
Exhibit
Number Description Page Number
- ----------- ---------------------------------------------- -----------
11 Statement re Computation of Per Share Earnings 16-17
27 Financial Data Schedule
(This exhibit is required to be submitted
electronically pursuant to the rules
and regulations of the Securities and Exchange
Commission and shall not be deemed filed for
purposes of Section 11 of the Securities Act
of 1933 or Section 18 of the Securities
Exchange Act of 1934.) 18
<PAGE> PAGE 16
<TABLE>
EXHIBIT 11, Page 1 of 2
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Computation of Per Share Earnings
(In millions except per share amounts)
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
COMPUTATION FOR STATEMENTS OF INCOME
Net income per statements of income $ 168.1 $ 170.7
------- -------
Weighted average number of shares outstanding 128.2 132.5
------- -------
Primary earnings per share $ 1.31 $ 1.29
======= =======
ADDITIONAL PRIMARY COMPUTATION
Net income per statements of income $ 168.1 $ 170.7
------- -------
Adjustment to weighted average number
of shares outstanding:
Weighted average number of shares outstanding
per primary computation above 128.2 132.5
Dilutive effect of outstanding options,
stock appreciation rights (SARs) and
performance share units (PSUs) (as
determined by the application of the
treasury stock method)(1) 1.4 1.2
------- -------
Weighted average number of shares
outstanding, as adjusted 129.6 133.7
======= =======
Primary earnings per share, as adjusted(2): $ 1.30 $ 1.28
======= =======
(1) See Note 12 of Notes to Consolidated Financial Statements in Norfolk
Southern's 1995 Annual Report on Form 10-K for a description of the
Long-Term Incentive Plan.
(2) These calculations are submitted in accordance with Regulation S-K
item 601(b)(11) although not required by footnote 2 to paragraph 14
of APB Opinion No. 15 because they result in dilution of less than
3 percent.
</TABLE>
<PAGE> PAGE 17
<TABLE>
EXHIBIT 11, Page 2 of 2
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Computation of Per Share Earnings
(In millions except per share amounts)
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
FULLY DILUTED COMPUTATION
Net income per statements of income $ 168.1 $ 170.7
Adjustment to increase earnings to requisite
level to earn maximum PSUs, net of tax effect 16.8 12.4
------- -------
Net income, as adjusted $ 184.9 $ 183.1
======= =======
Adjustment to weighted average number
of shares outstanding, as adjusted for
additional primary calculation:
Weighted average number of shares
outstanding, as adjusted per additional
primary computation on page 1 129.6 133.7
Additional dilutive effect of outstanding
options and SARs (as determined by
the application of the treasury stock
method using period end market price) 0.1 0.1
Additional shares issuable at maximum
level for PSUs 0.1 0.1
------- -------
Weighted average number of
shares, as adjusted 129.8 133.9
======= =======
Fully diluted earnings per share(3): $ 1.42 $ 1.37
======= =======
(3) These calculations are submitted in accordance with Regulation S-K
item 601(b)(11) although they are contrary to paragraph 40 of
APB Opinion No. 15 because they produce an anti-dilutive result.
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<PERIOD-END> MAR-31-1996
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0
0
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