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Welcome Norfolk Southern Corp. to the Second-Quarter Record-Breakers Club.

“This was a great quarter for the company as we set a number of financial records,” said NS Chairman and Chief Executive Officer David Goode in a prepared statement. “We recorded the highest railway operating revenues in our history. We posted our best-ever income from railway operations, exceeding the half-billion-dollar mark for the first time in any quarter. And we continue to improve our margins, posting a significantly better quarterly operating ratio.”

To be specific: NS reported record net income of $424 million – a 99 percent increase compared with net income of $213 million for the same 2004 period. The hike could have been higher: The 2Q total includes the effects of Ohio tax legislation and two coal rate-case settlements, which totaled $120 million. Excluding these items, net income would have been $304 million -- the highest income before accounting changes for any quarter in NS history, the railroad says. Railway operating revenue of $2.15 billion – a 19 percent increase compared with $1.81 billion for the same 2004 period – also was the highest of any quarter in NS history.

Coal led the revenue charge. For the quarter, NS reported record coal revenue of $578 million, a 36 percent increase compared with the same 2004 period. The gain was the result of higher average revenues; fuel surcharges; heightened demand for utility coal, and domestic and international metallurgical coal; and the aforementioned rate-case settlements. NS handled 47.3 million tons of coal, coke and iron ore during the period, setting a second-quarter volume record.

NS also had another strong intermodal quarter, recording revenue of $428 million, an 18 percent increase compared with 2Q 2004. More international business and higher average revenue (once again, including higher fuel surcharges) helped, NS says. Container volume also increased by more than 51,000 units, a 10 percent hike compared with second-quarter 2004.

Meanwhile, the railroad’s general merchandise revenues rose 12 percent to a record $1.15 billion; all merchandise market groups reached record quarterly levels primarily due to higher average revenues, including fuel surcharges, NS says.

For the quarter, NS’s railway operating expenses were $1.56 billion, up 13 percent compared with second-quarter 2004. Higher diesel fuel prices and costs associated with increased traffic volume, including expenses related to hiring additional train-and-engine service employees and maintenance activities, drove the increases, NS says.

At 72. 5, NS’s second-quarter operating ratio represented a 4.1 percentage-point improvement compared with the same period a year earlier. The rate-case settlements alone contributed 1.2 percentage points to the improvement, NS says.