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Published: 2020-10-28 08:03:31 ET
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EX-99.2 3 e40553_ex99-2.htm

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

   Third Quarter  First Nine Months
   2020  2019  2020  2019
   (in millions, except per share amounts)
Railway operating revenues                    
   Merchandise  $1,556   $1,731   $4,535   $5,173 
   Intermodal   700    707    1,924    2,127 
   Coal   250    403    757    1,306 
          Total railway operating revenues   2,506    2,841    7,216    8,606 
                     
Railway operating expenses                    
   Compensation and benefits   578    682    1,786    2,121 
   Purchased services and rents   486    423    1,261    1,265 
   Fuel   126    226    399    730 
   Depreciation   293    286    867    853 
   Materials and other   183    228    500    610 
   Loss on asset disposal   —      —      385    —   
          Total railway operating expenses   1,666    1,845    5,198    5,579 
                     
          Income from railway operations   840    996    2,018    3,027 
                     
Other income – net   39    22    110    88 
Interest expense on debt   155    150    465    452 
                     
   Income before income taxes   724    868    1,663    2,663 
                     
Income taxes                    
   Current   133    119    243    382 
   Deferred   22    92    78    225 
          Total income taxes   155    211    321    607 
                     
          Net income  $569   $657   $1,342   $2,056 
                     
Earnings per share – diluted  $2.22   $2.49   $5.21   $7.70 
                     
Weighted average shares outstanding – diluted   256.1    264.3    257.2    266.9 

 

See accompanying notes to consolidated financial statements

 

   

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

   September 30,  December 31,
   2020  2019
   ($ in millions)
Assets      
Current assets:          
   Cash and cash equivalents  $1,359   $580 
   Accounts receivable – net   883    920 
   Materials and supplies   247    244 
   Other current assets   90    337 
          Total current assets   2,579    2,081 
           
Investments   3,566    3,428 
Properties less accumulated depreciation of $11,873 and $11,982, respectively   31,239    31,614 
Other assets   795    800 
           
          Total assets  $38,179   $37,923 
           
Liabilities and stockholders’ equity          
Current liabilities:          
   Accounts payable  $1,273   $1,428 
   Income and other taxes   257    229 
   Other current liabilities   386    327 
   Current maturities of long-term debt   89    316 
          Total current liabilities   2,005    2,300 
           
Long-term debt   12,634    11,880 
Other liabilities   1,701    1,744 
Deferred income taxes   6,898    6,815 
           
          Total liabilities   23,238    22,739 
           
Stockholders’ equity:          
Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 253,985,338 and 257,904,956 shares, respectively, net of treasury shares   255    259 
   Additional paid-in capital   2,246    2,209 
   Accumulated other comprehensive loss   (471)   (491)
   Retained income   12,911    13,207 
           
          Total stockholders’ equity   14,941    15,184 
           
          Total liabilities and stockholders’ equity  $38,179   $37,923 

 

See accompanying notes to consolidated financial statements

 

   

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

   First Nine Months
   2020  2019
   ($ in millions)
Cash flows from operating activities          
   Net income  $1,342   $2,056 
   Reconciliation of net income to net cash provided by operating activities:          
      Depreciation   867    854 
      Deferred income taxes   78    225 
      Gains and losses on properties   (14)   (4)
      Loss on asset disposal   385    —   
      Impairment of investment   99    —   
      Changes in assets and liabilities affecting operations:          
            Accounts receivable   36    34 
            Materials and supplies   (3)   (59)
            Other current assets   55    40 
            Current liabilities other than debt   104    (72)
      Other – net   (182)   (77)
           
                  Net cash provided by operating activities   2,767    2,997 
           
Cash flows from investing activities          
   Property additions   (1,053)   (1,494)
   Property sales and other transactions   291    282 
   Investment purchases   (6)   (12)
   Investment sales and other transactions   (50)   (99)
           
                  Net cash used in investing activities   (818)   (1,323)
           
Cash flows from financing activities          
   Dividends   (722)   (705)
   Common stock transactions   53    21 
   Purchase and retirement of common stock   (960)   (1,550)
   Proceeds from borrowings – net of issuance costs   784    1,404 
   Debt repayments   (325)   (750)
           
                  Net cash used in financing activities   (1,170)   (1,580)
           
                  Net increase in cash, cash equivalents, and restricted cash   779    94 
           
Cash, cash equivalents, and restricted cash          
   At beginning of year   580    446 
           
   At end of period  $1,359   $540 
           
Supplemental disclosures of cash flow information          
   Cash paid during the period for:          
      Interest (net of amounts capitalized)  $395   $392 
      Income taxes (net of refunds)   118    404 

 

See accompanying notes to consolidated financial statements

 

   

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

 

1. Impairment of Investment

During the third quarter of 2020, we recorded an other-than-temporary impairment of $99 million related to the carrying value of an equity method investment. This non-cash impairment charge is recorded in "Purchased services and rents" on the Consolidated Statements of Income and had a $74 million impact on net income for the third quarter and the first nine months of 2020.

 

2. Loss on Asset Disposal

In the first quarter of 2020, we committed to a plan to dispose of certain locomotives deemed excess and no longer needed for railroad operations. Specifically, during the first nine months of 2020, the Company recorded a charge related to the loss on the sale of 574 locomotives disposed of in the first nine months, and a write-down of 129 additional locomotives that we are actively marketing to sell. Accordingly, a $385 million loss was recorded to adjust their carrying amount to their estimated fair value.

 

3. Stock Repurchase Program

We repurchased and retired 5.3 million and 8.4 million shares of common stock under our stock repurchase program during the first nine months of 2020 and 2019, respectively, at a cost of $960 million and $1.6 billion, respectively.

 

4. Restricted Cash

The "Cash, cash equivalents, and restricted cash" line item on the Consolidated Statements of Cash Flows includes restricted cash of $88 million in 2019, reflecting deposits held by a third-party bond agent as collateral for certain debt obligations which matured on October 1, 2019.