CSX (NYSE: CSX), a railway company whose peers include Burlington Northern Santa Fe (NYSE: BNI), Union Pacific Corp. (NYSE: UNP) and Norfolk Southern Corp. (NYSE: NSC), reported earnings for the second quarter on Monday after the bell. Net sales declined 25%, and earnings from continuing operations declined 24% to 72 cents per share.

Declines are never nice, but for a company like CSX, it's only to be expected. The recession continues to have an impact on operations. Management said that volumes decreased; it also mentioned how CSX is doing its best to run as efficiently as possible to combat the dropping top line. Maybe it's working out, because according to Reuters, the company beat Wall Street estimates by 10 cents.

Railroad giant Norfolk Southern Corporation (NYSE: NSC) was up 10% in just the last week, based in large measure on super 4Q and FY2007 earnings released a week ago, January 22. Fourth quarter operating revenue increased 6% to $2.5 billion, and net income increased 4% to $399 million. What makes these numbers even more impressive is that Norfolk Southern posted revenue increases at the same time it faced significantly higher fuel costs and a measurable reduction in shipments by volume. Coal shipments dropped 2% by volume, while general merchandise shipments dropped a hefty 10% by volume.

The story is the same for FY2007 results. Revenue increased while shipments by volume decreased. And the railroad still made money. The stock closed at $45.07 on January 21, but closed at $52.00 on January 28. Very nice capital appreciation for a week. The company increased its dividend payout by 12% to $0.29 per share, a 32% increase over the last year, and the 102nd consecutive quarter of dividend payout. Clearly, Norfolk Southern is a stock for the very long haul.

Recently our own Sheldon Liber has posted several very insightful columns summarizing U.S. Class 1 railroads. Here's a bit of follow up information. Winter 2006-2007 was not kind to the railroads. Burlington Northern Santa Fe (NYSE: BCI) has stated it will take an $80 million charge in first quarter 2007, approximately 14 cents per share, due to an increase in environmental compliance costs, $65 million, and the write-off of a technology system, $15 million. These charges against profits will reduce EPS to $0.96, compared to EPS of $1.09 in first quarter 2006. BNSF operates 32,000 miles of rail in 28 states and parts of Canada. It hauls more grain than any other Class 1 railroad, and hauls enough low-sulfur coal to supply 10% of total US electricity generated. Despite recent wintery problems, Warren Buffett, the Oracle of Omaha, thinks BNSF is a good bet. Berkshire Hathaway (NYSE: BRK-A) owns 40 million shares of BNSF, approximately 11% of the total shares. BNSF stock closed at $87.99, down $0.09.

Norfolk Southern (NYSE: NSC) also reported winter problems that will have a negative impact on earnings. Operating 21,000 miles of track in 22 Eastern states, Norfolk Southern saw a 4.4% decline in shipping volume in first quarter 2007 from first quarter 2006. This will result in 3% lower EPS than forecast. Norfolk Southern plans to release first quarter earnings on 25 April 2007. The stock closed at $52.74, down $0.15.