EX-99.2 3 ns2q2019financials.htm 2Q 2019 FINANCIAL DATA Exhibit


Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)

 
Second Quarter
 
First Six Months
 
2019
 
2018
 
2019
 
2018
 
($ in millions, except per share amounts)
 
 
 
 
 
 
 
 
Railway operating revenues
 
 
 
 
 
 
 
Merchandise
$
1,756

 
$
1,718

 
$
3,442

 
$
3,323

Intermodal
701

 
714

 
1,420

 
1,392

Coal
468

 
466

 
903

 
900

Total railway operating revenues
2,925

 
2,898

 
5,765

 
5,615

 
 
 
 
 
 
 
 
Railway operating expenses
 
 
 
 
 
 
 
Compensation and benefits
712

 
706

 
1,439

 
1,443

Purchased services and rents
418

 
430

 
842

 
831

Fuel
254

 
272

 
504

 
538

Depreciation
284

 
273

 
567

 
545

Materials and other
192

 
191

 
382

 
397

Total railway operating expenses
1,860

 
1,872

 
3,734

 
3,754

 
 
 
 
 
 
 
 
Income from railway operations
1,065

 
1,026

 
2,031

 
1,861

 
 
 
 
 
 
 
 
Other income – net
22

 
29

 
66

 
37

Interest expense on debt
153

 
131

 
302

 
267

 
 
 
 
 
 
 
 
Income before income taxes
934

 
924

 
1,795

 
1,631

 
 
 
 
 
 
 
 
Income taxes
 
 
 
 
 
 
 
Current
136

 
170

 
263

 
280

Deferred
76

 
44

 
133

 
89

Total income taxes
212

 
214

 
396

 
369

 
 
 
 
 
 
 
 
Net income
$
722

 
$
710

 
$
1,399

 
$
1,262

 
 
 
 
 
 
 
 
Earnings per share - diluted
$
2.70

 
$
2.50

 
$
5.21

 
$
4.43

 
 
 
 
 
 
 
 
Weighted average shares outstanding - diluted
267.1

 
283.7

 
268.3

 
284.8

See accompanying notes to consolidated financial statements.




Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
 
Second Quarter
 
First Six Months
 
2019
 
2018
 
2019
 
2018
 
($ in millions)
 
 
 
 
 
 
 
 
Net income
$
722

 
$
710

 
$
1,399

 
$
1,262

Other comprehensive income, before tax:
 
 
 
 
 
 
 
Pension and other postretirement benefits
5

 
8

 
10

 
1

Other comprehensive income (loss) of
 
 
 
 
 
 
 
equity investees
—

 
1

 
(1
)
 
2

Other comprehensive income, before tax
5

 
9

 
9

 
3

 
 
 
 
 
 
 
 
Income tax expense related to items of
 
 
 
 
 
 
 
other comprehensive income
(2
)
 
(2
)
 
(3
)
 
—

 
 
 
 
 
 
 
 
Other comprehensive income, net of tax
3

 
7

 
6

 
3

 
 
 
 
 
 
 
 
Total comprehensive income
$
725

 
$
717

 
$
1,405

 
$
1,265


See accompanying notes to consolidated financial statements.




Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 
June 30,
 
December 31,
 
2019
 
2018
 
($ in millions)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
274

 
$
358

Accounts receivable – net
1,039

 
1,009

Materials and supplies
256

 
207

Other current assets
345

 
288

Total current assets
1,914

 
1,862

 
 
 
 
Investments
3,301

 
3,109

Properties less accumulated depreciation of $12,372
 
 
 
and $12,374, respectively
31,201

 
31,091

Other assets
756

 
177

 
 
 
 
Total assets
$
37,172

 
$
36,239

 
 
 
 
Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
1,407

 
$
1,505

Income and other taxes
270

 
255

Other current liabilities
373

 
246

Current maturities of long-term debt
401

 
585

Total current liabilities
2,451

 
2,591

 
 
 
 
Long-term debt
11,076

 
10,560

Other liabilities
1,738

 
1,266

Deferred income taxes
6,596

 
6,460

 
 
 
 
Total liabilities
21,861

 
20,877

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock $1.00 per share par value, 1,350,000,000 shares
 
 
 
  authorized; outstanding 263,406,773 and 268,098,472 shares,
 
 
 
  respectively, net of treasury shares
265

 
269

Additional paid-in capital
2,226

 
2,216

Accumulated other comprehensive loss
(557
)
 
(563
)
Retained income
13,377

 
13,440

 
 
 
 
Total stockholders’ equity
15,311

 
15,362

 
 
 
 
Total liabilities and stockholders’ equity
$
37,172

 
$
36,239

See accompanying notes to consolidated financial statements.




Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
First Six Months
 
2019
 
2018
 
($ in millions)
Cash flows from operating activities
 
 
 
Net income
$
1,399

 
$
1,262

Reconciliation of net income to net cash provided by operating activities:
 
 
 
Depreciation
567

 
546

Deferred income taxes
133

 
89

Gains and losses on properties
(7
)
 
(14
)
Changes in assets and liabilities affecting operations:
 
 
 
Accounts receivable
(30
)
 
(92
)
Materials and supplies
(49
)
 
(38
)
Other current assets
55

 
19

Current liabilities other than debt
(30
)
 
134

Other – net
(86
)
 
(80
)
 
 
 
 
Net cash provided by operating activities
1,952

 
1,826

 
 
 
 
Cash flows from investing activities
 
 
 
Property additions
(979
)
 
(836
)
Property sales and other transactions
214

 
48

Investment purchases
(12
)
 
(4
)
Investment sales and other transactions
(75
)
 
6

 
 
 
 
Net cash used in investing activities
(852
)
 
(786
)
 
 
 
 
Cash flows from financing activities
 
 
 
Dividends
(458
)
 
(408
)
Common stock transactions
18

 
15

Purchase and retirement of common stock
(1,050
)
 
(700
)
Proceeds from borrowings – net of issuance costs
1,054

 
543

Debt repayments
(750
)
 
(750
)
 
 
 
 
Net cash used in financing activities
(1,186
)
 
(1,300
)
 
 
 
 
Net decrease in cash, cash equivalents, and restricted cash
(86
)
 
(260
)
 
 
 
 
Cash, cash equivalents, and restricted cash
 
 
 
At beginning of year
446

 
690

 
 
 
 
At end of period
$
360

 
$
430

 
 
 
 
Supplemental disclosures of cash flow information
 
 
 
Cash paid during the period for:
 
 
 
Interest (net of amounts capitalized)
$
271

 
$
246

Income taxes (net of refunds)
215

 
126


See accompanying notes to consolidated financial statements.




Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

 
Common
Stock
 
Additional
Paid-in
Capital
 
Accum. Other
Comprehensive
Loss
 
Retained
Income
 
Total
 
($ in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
$
269

 
$
2,216

 
$
(563
)
 
$
13,440

 
$
15,362

 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
677

 
677

Other comprehensive income
 
 
 
 
3

 
 
 
3

Total comprehensive income
 
 
 
 
 
 
 
 
680

Dividends on common stock,
 
 
 
 
 
 
 
 
 
$0.86 per share
 
 
 
 
 
 
(230
)
 
(230
)
Share repurchases
(3
)
 
(22
)
 
 
 
(475
)
 
(500
)
Stock-based compensation
1

 
19

 
 
 
(1
)
 
19

 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2019
267

 
2,213

 
(560
)
 
13,411

 
15,331

 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
722

 
722

Other comprehensive income
 
 
 
 
3

 
 
 
3

Total comprehensive income
 
 
 
 
 
 
 
 
725

Dividends on common stock,
 
 
 
 
 
 
 
 
 
$0.86 per share
 
 
 
 
 
 
(228
)
 
(228
)
Share repurchases
(2
)

(22
)
 
 
 
(526
)
 
(550
)
Stock-based compensation
 
 
35

 
 
 
(2
)
 
33

 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2019
$
265

 
$
2,226

 
$
(557
)
 
$
13,377

 
$
15,311

 
 
 
 
 
 
 
 
 
 

See accompanying notes to consolidated financial statements.






Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

 
Common
Stock
 
Additional
Paid-in
Capital
 
Accum. Other
Comprehensive
Loss
 
Retained
Income
 
Total
 
($ in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017
$
285

 
$
2,254

 
$
(356
)
 
$
14,176

 
$
16,359

 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
552

 
552

Other comprehensive loss
 
 
 
 
(4
)
 
 
 
(4
)
Total comprehensive income
 
 
 
 
 
 
 
 
548

Dividends on common stock,
 
 
 
 
 
 
 
 
 
$0.72 per share
 
 
 
 
 
 
(205
)
 
(205
)
Share repurchases
(2
)
 
(16
)
 
 
 
(282
)
 
(300
)
Stock-based compensation
1

 
17

 
 
 
(2
)
 
16

Reclassification of stranded
 
 
 
 
 
 
 
 
 
tax effects
 
 
 
 
(88
)
 
88

 
—

 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2018
284

 
2,255

 
(448
)
 
14,327

 
16,418

 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
710

 
710

Other comprehensive income
 
 
 
 
7

 
 
 
7

Total comprehensive income
 
 
 
 
 
 
 
 
717

Dividends on common stock,
 
 
 
 
 
 
 
 
 
$0.72 per share
 
 
 
 
 
 
(203
)
 
(203
)
Share repurchases
(3
)
 
(20
)
 
 
 
(377
)
 
(400
)
Stock-based compensation
 
 
28

 
 
 
(1
)
 
27

 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2018
$
281

 
$
2,263

 
$
(441
)
 
$
14,456

 
$
16,559



See accompanying notes to consolidated financial statements.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1.     Stock Repurchase Program
We repurchased and retired 5.7 million shares and 4.8 million shares of common stock under our stock repurchase program in the first six months of 2019 and 2018, respectively, at a cost of $1.1 billion and $700 million, respectively. Since the beginning of 2006, we have repurchased and retired 191.3 million shares at a total cost of $15.2 billion.


2.     Leases
On January 1, 2019, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, "Leases (Topic 842)" which requires lessees to recognize right-of-use (ROU) assets and lease liabilities on the balance sheet for leases greater than twelve months. As a result of the adoption, the Consolidated Balance Sheet at June 30, 2019 includes the recognition of ROU assets of $586 million included in "Other assets," current lease liabilities of $98 million included in "Other current liabilities," and non-current lease liabilities of $488 million included in "Other liabilities."


3. Restricted Cash
The "Cash, cash equivalents, and restricted cash" line item in the Consolidated Statements of Cash Flows includes restricted cash of $86 million at June 30, 2019 and $88 million at December 31, 2018, reflecting deposits held by a third-party bond agent as collateral for certain debt obligations maturing in 2019. The restricted cash balance is included as part of "Other current assets" on the Consolidated Balance Sheets in both periods.


4. Reclassification of Stranded Tax Effects
In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." We adopted the provisions of ASU 2018-02 in the first quarter of 2018 resulting in an increase to "Accumulated other comprehensive loss" of $88 million and a corresponding increase to "Retained income," with no impact on "Total stockholders' equity."