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Rail News: Financials

Voluntary separation program takes a bite out of NS' fourth-quarter, annual financial results

Norfolk Southern Corp.'s voluntary separation program helped trim the Class I's workforce by more than 500 last fall, but the program also reduced the railroad's fourth-quarter and annual earnings.

On Jan. 28, NS reported quarterly net income of $52 million, which was impacted by a $66 million after-tax charge for the program and $53 million after-tax charge for depreciating telecommunications assets. Excluding those charges, the railroad's fourth-quarter net income would have been $171 million compared with $129 million during the same 2002 period.

NS posted record fourth-quarter revenue of $1.68 billion — driven by general merchandise and intermodal revenue of $956 million and $335 million, respectively — which rose 6 percent compared with fourth-quarter 2002.

However, quarterly operating expenses of $1.5 billion increased 12 percent, primarily because of a $107 million voluntary separation program charge, and NS' quarterly operating ratio rose 4.8 points to 86.6. Without the program's impact, the railroad's fourth-quarter ratio would have been 80.3.

"We are pleased with fourth-quarter results, which were substantially better than a year ago, demonstrating success at growing our revenue base and improving productivity," said NS Chairman, President and Chief Executive Officer David Goode in a prepared statement.

For all of 2003, NS earned net income of $535 million and record revenue of $6.5 billion compared with $460 million and $6.3 billion, respectively, in 2002.

The railroad's annual operating expenses of $5.4 billion increased 6 percent and annual operating ratio of 83.5 worsened 2.0 points compared with 2002. Excluding the voluntary separation program's costs, NS' annual operating ratio would have been 81.9.

Contact Progressive Railroading editorial staff.

More News from 1/28/2004