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Please be advised that any forward-looking statements made during the course of this presentation represent our best good faith judgment as to what may occur in the future. Statements that are forward-looking can be identified by use of words such as believe, expect, anticipate and project. Our actual results may differ materially from those projected and will be subject to a number of risks and uncertainties, some of which may be outside of our control. Please refer to our annual and quarterly reports filed with the SEC for discussions of those risks and uncertainties we view as most important. Additionally, keep in mind that all references to reported results excluding certain adjustments have been reconciled on our website at nscorp.com in the Investors section.Now it is my pleasure to introduce Norfolk Southern Chairman, President and CEO, Wick Moorman. Charles Moorman Thank you, Leanne, and good afternoon, everyone. It's my pleasure to welcome all of you to our Second Quarter 2010 Earnings Conference Call. I'm joined today by several members of our senior management team, Don Seale, our Chief Marketing Officer; Mark Manion, our Chief Operating Officer; and Jim Squires, our Chief Financial Officer, all of whom you will be hearing from. In the second quarter, Norfolk Southern continued to build on the last four quarters' momentum as we delivered significant double-digit growth in top line revenue, profitability and bottom line results. Our focus on operating leverage produced a record second quarter operating ratio of 69.8%, which represented a 500-basis point year-over-year improvement. Net income of $392 million was up 59% as a 31% improvement in revenues more than offset a 22% increase in operating expenses. Importantly, second quarter volumes improved not only 22% year-over-year, but also 9% sequentially from the first quarter and represented the fourth consecutive quarter of sequential volume improvement. We also posted 52-week highs in several commodity groups, and Don will provide more detail in a few moments.
Operationally, we continue to make significant strides in productivity as we safely and reliably ramped up to meet business demands. Against a 22% volume increase, crew starts were up only 10%, locomotive fuel consumption only 18% and equipment rents only 8%.We have seen unprecedented swings in traffic levels over the past 18 months, and our operations planning systems are continuing to pay dividends in the form of stronger yet more flexible operating plans. Mark will review our operating results in a few minutes and then Jim will provide you with a rundown of our expenses and our cost control efforts. I'm pleased with a cohesive way all areas of our company have responded to the traffic surge. Securing the business, moving it efficiently and managing the costs led to the substantial improvement at Norfolk Southern's operating results, which has also strengthened our cash position and increased our financial flexibility. We are making strategic long-term investments that differentiate Norfolk Southern and uniquely positioned our franchise for future growth. Additionally, we are returning value to our owners. We resumed our share repurchase program during the second quarter, buying back 2 million shares through June 30. As an indication of confidence in our future, our board today not only increased our quarterly dividend 6%, or $0.02 per share, but also authorized an additional 50 million shares for repurchase through 2014. I'll now turn the program over to Don, Mark and Jim, and then I'll wrap up with some closing comments before we take your questions. Don? Donald Seale Thank you, Wick, and get afternoon, everyone. We're pleased that an improving manufacturing and retail economy along with strong project of driving increased volumes in majority of the markets that we serve. Higher volumes combined with increased revenue per unit generated revenue of $2.4 billion for the quarter, up $573 million or 31%. Approximately 70% of this gain was driven by increased shipments, which represented $404 million. Improved revenue yield contributed $169 million of the increase as we continue to match market value with our strong service product.
With respect to yield as shown on Slide 3, revenue per unit was $1,413, up $98 or 7% over last year. Record automotive RPU was driven by successful contract renegotiations, while coal’s strong result was driven by re-pricing in the export market and price escalators contained in selected utility contracts.Read the rest of this transcript for free on seekingalpha.com