Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (X) No ( )
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ( ) No (X)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 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. Yes (X) No ( )
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( )
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer (X) Accelerated filer ( ) Non-accelerated filer ( ) Smaller reporting company ( )
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ( ) No (X)
The aggregate market value of the voting common equity held by non-affiliates as of June 30, 2009, was $13,820,960,718 (based on the closing price as quoted on the New York Stock Exchange on that date.)
The number of shares outstanding of each of the registrant's classes of common stock, as of January 31, 2010: 369,655,129 (excluding 20,434,078 shares held by the registrant's consolidated subsidiaries)
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's definitive proxy statement to be filed electronically pursuant to Regulation 14A not later than 120 days after the end of the fiscal year, are incorporated herein by reference in Part III.
TABLE OF CONTENTS
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)
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Part I. |
Items 1 and 2. |
Business and Properties |
K3 |
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Item 1A. |
Risk Factors |
K13 |
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Item 1B. |
Unresolved Staff Comments |
K15 |
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Item 3. |
Legal Proceedings |
K16 |
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Item 4. |
Submission of Matters to a Vote of Security Holders |
K16 |
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Executive Officers of the Registrant |
K17 |
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Part II. |
Item 5. |
Market for Registrant's Common Equity, Related Stockholder |
K18 |
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Matters and Issuer Purchases of Equity Securities |
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Item 6. |
Selected Financial Data |
K19 |
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Item 7. |
Management's Discussion and Analysis of Financial Condition |
K20 |
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and Results of Operations |
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Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
K37 |
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Item 8. |
Financial Statements and Supplementary Data |
K38 |
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Item 9. |
Changes in and Disagreements with Accountants on Accounting |
K76 |
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and Financial Disclosure |
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Item 9A. |
Controls and Procedures |
K76 |
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Item 9B. |
Other Information |
K76 |
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Part III. |
Item 10. |
Directors, Executive Officers and Corporate Governance |
K77 |
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Item 11. |
Executive Compensation |
K77 |
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Item 12. |
Security Ownership of Certain Beneficial Owners and Management |
K77 |
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and Related Stockholder Matters |
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Item 13. |
Certain Relationships and Related Transactions, and Director |
K80 |
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Independence |
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Item 14. |
Principal Accountant Fees and Services |
K80 |
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Part IV. |
Item 15. |
Exhibits and Financial Statements Schedules |
K81 |
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Power of Attorney |
K94 |
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Signatures |
K94 |
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PART I
Item 1. Business and Item 2. Properties
GENERAL - Norfolk Southern Corporation (Norfolk Southern) is a Norfolk, Virginia based company that controls a major freight railroad, Norfolk Southern Railway Company. Norfolk Southern Railway Company is primarily engaged in the rail transportation of raw materials, intermediate products, and finished goods primarily in the Southeast, East, and Midwest and, via interchange with rail carriers, to and from the rest of the United States. Norfolk Southern also transports overseas freight through several Atlantic and Gulf Coast ports. Norfolk Southern provides comprehensive logistics services and offers the most extensive intermodal network in the eastern half of the United States. The common stock of Norfolk Southern is listed on the New York Stock Exchange (NYSE) under the symbol "NSC."
Norfolk Southern was incorporated on July 23, 1980, under the laws of the Commonwealth of Virginia. On June 1, 1982, Norfolk Southern acquired control of two major operating railroads, Norfolk and Western Railway Company (NW) and Southern Railway Company (Southern) in accordance with an Agreement of Merger and Reorganization dated as of July 31, 1980, and with the approval of the transaction by the Interstate Commerce Commission (now the Surface Transportation Board [STB]). Effective December 31, 1990, Norfolk Southern transferred all the common stock of NW to Southern and Southern's name was changed to Norfolk Southern Railway Company (Norfolk Southern Railway or NSR). Effective September 1, 1998, NW was merged with and into Norfolk Southern Railway. As of December 31, 2009, all the common stock of Norfolk Southern Railway was owned directly by Norfolk Southern.
Through a limited liability company, Norfolk Southern and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC). Norfolk Southern has a 58% economic and 50% voting interest in the jointly owned entity, and CSX has the remainder of the economic and voting interests. CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of NSR and CSX Transportation Inc. (CSXT) (see Note 5 to the Consolidated Financial Statements).
Norfolk Southern makes available free of charge through its website, www.nscorp.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC). In addition, the following documents are available on the company's website and in print to any shareholder who requests them:
Unless otherwise indicated, Norfolk Southern and its subsidiaries are referred to collectively as NS.
RAILROAD OPERATIONS - As of December 31, 2009, NS' railroads operated approximately 21,000 route miles in 22 states and the District of Columbia.
The system's lines reach many individual industries, electric generating facilities, mines (in western Virginia, eastern Kentucky, southern and northern West Virginia, and western Pennsylvania), distribution centers, transload facilities, and other businesses located in smaller communities in its service area.
Corridors with heaviest freight volume:
New York City area to Chicago (via Allentown and Pittsburgh)
Chicago to Macon (via Cincinnati, Chattanooga, and Atlanta)
Appalachian coal fields of Virginia, West Virginia, and Kentucky to Norfolk and Sandusky, Ohio
Cleveland to Kansas City
Birmingham to Meridian
Memphis to Chattanooga
The miles operated, which include major leased lines between Cincinnati, Ohio, and Chattanooga, Tennessee, and trackage rights over property owned by North Carolina Railway Company, were as follows:
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Mileage Operated as of December 31, 2009 |
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Passing |
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Track, |
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Miles |
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Second and |
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Crossovers |
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Way and |
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of |
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Other Main |
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and |
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Yard |
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Road |
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Track |
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Turnouts |
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Switching |
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Total |
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Owned |
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15,676 |
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2,819 |
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1,997 |
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8,353 |
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28,845 |
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Operated under lease, |
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contract or trackage rights |
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4,948 |
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1,977 |
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414 |
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965 |
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8,304 |
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Total |
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20,624 |
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4,796 |
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2,411 |
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9,318 |
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37,149 |
Triple Crown Operations - Triple Crown Services Company (Triple Crown), an NS subsidiary, provides bimodal, truckload transportation service utilizing RoadRailer® trailers, a hybrid technology that facilitates both over-the-road and on-the-rail transportation utilizing enclosed trailers that are pulled over the highways in tractor-trailer configuration and over the rails by locomotives. Triple Crown provides service in the eastern two-thirds of the United States as well as Ontario and Quebec through a network of terminals strategically located in 13 cities.
The following table sets forth certain statistics relating to NS' railroads' operations for the past 5 years:
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Years Ended December 31, |
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2009 |
2008 |
2007 |
2006 |
2005 |
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Revenue ton miles (billions) |
159 |
195 |
196 |
204 |
203 |
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Freight train miles traveled (millions) |
67.5 |
80.0 |
81.9 |
84.2 |
81.2 |
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Revenue per ton mile |
$0.0503 |
$0.0546 |
$0.0481 |
$0.0462 |
$0.0421 |
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Revenue ton miles per man-hour worked |
2,900 |
3,075 |
3,066 |
3,196 |
3,146 |
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Percentage ratio of railway operating |
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expenses to railway operating revenues |
75.4% |
71.1% |
72.6% |
72.8% |
75.2% |
RAILWAY OPERATING REVENUES - NS' total railway operating revenues were $8.0 billion in 2009. See the financial information by traffic segment in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."
COAL TRAFFIC - Coal, coke, and iron ore - most of which is bituminous coal - is NS' railroads' largest commodity group as measured by revenues. The railroads handled a total of 157.5 million tons in 2009, most of which originated on NS' lines in West Virginia, Virginia, Pennsylvania, and Kentucky. Revenues from coal, coke, and iron ore accounted for about 29% of NS' total railway operating revenues in 2009.
Total coal handled through all system ports in 2009 was 29.8 million tons. Of this total, 14.9 million tons (including coastwise traffic) moved through Norfolk, Virginia, 3.8 million tons (including coastwise traffic) moved through the Baltimore Terminal, 7.5 million tons moved to various docks on the Ohio River, and 3.6 million tons moved to various Lake Erie ports. Other than coal for export, virtually all coal handled by NS' railroads was terminated in states east of the Mississippi River.
See the discussion of coal traffic, by type of coal, in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."
GENERAL MERCHANDISE TRAFFIC - General merchandise traffic is composed of five major commodity groupings: automotive; chemicals; metals and construction; agriculture, consumer products and government; and paper, clay and forest products. The automotive group includes finished vehicles for BMW, Chrysler, Ford Motor Company, General Motors, Honda, Isuzu, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Subaru, Suzuki, Toyota, and Volkswagen, and auto parts for Ford Motor Company, General Motors, and Chrysler. The chemicals group includes sulfur and related chemicals, petroleum products, chlorine and bleaching compounds, plastics, rubber, industrial chemicals, chemical wastes, and municipal wastes. The metals and construction group includes steel, aluminum products, machinery, scrap metals, cement, aggregates, bricks, and minerals. The agriculture, consumer products, and government group includes soybeans, wheat, corn, fertilizer, animal and poultry feed, food oils, flour, beverages, canned goods, sweeteners, consumer products, ethanol, and items for the military. The paper, clay and forest products group includes lumber and wood products, pulp board and paper products, wood fibers, wood pulp, scrap paper, and clay.
In 2009, 105 million tons of general merchandise freight, or approximately 65% of total general merchandise tonnage handled by NS, originated online. The balance of general merchandise traffic was received from connecting carriers at interterritorial gateways. The principal interchange points for NS-received traffic included Chicago, Memphis, New Orleans, Cincinnati, Kansas City, Detroit, Hagerstown, St. Louis/East St. Louis, and Louisville. General merchandise carloads handled in 2009 were 2.0 million, the revenues from which accounted for 52% of NS' total railway operating revenues in 2009.
See the discussion of general merchandise rail traffic by commodity group in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."
INTERMODAL TRAFFIC - The intermodal market consists of shipments moving in trailers, domestic and international containers, and RoadRailer® equipment. These shipments are handled on behalf of intermodal marketing companies, international steamship lines, truckers, and other shippers. Intermodal units handled in 2009 were 2.5 million, the revenues from which accounted for 19% of NS' total railway operating revenues for the year.
See the discussion of intermodal traffic in Part II, Item 7, "Management's Discussion and Analysis of Financial Conditions and Results of Operations."