Norfolk Southern (NSC) 8-K Norfolk Southern reports fourth-quarter and full-year 2019 results

Exhibit 99.2 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Fourth Quarter				Years Ended December 31,
	2019		2018		2019		2018
	($ in millions, except per share amounts)
Railway operating revenues
Merchandise	$	1,630	$	1,684	$	6,803	$	6,744
Intermodal		697		755		2,824		2,893
Coal		363		457		1,669		1,821
Total railway operating revenues		2,690		2,896		11,296		11,458
Railway operating expenses
Compensation and benefits		630		757		2,751		2,925
Purchased services and rents		460		449		1,725		1,730
Fuel		223		275		953		1,087
Depreciation		285		281		1,138		1,102
Materials and other		130		56		740		655
Total railway operating expenses		1,728		1,818		7,307		7,499
Income from railway operations		962		1,078		3,989		3,959
Other income – net		18		—		106		67
Interest expense on debt		152		148		604		557
Income before income taxes		828		930		3,491		3,469
Income taxes
Current		57		193		439		630
Deferred		105		35		330		173
Total income taxes		162		228		769		803
Net income	$	666	$	702	$	2,722	$	2,666
Earnings per share – diluted	$	2.55	$	2.57	$	10.25	$	9.51
Weighted average shares outstanding – diluted		261.6		273.5		265.6		280.2

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	At December 31,
	2019			2018
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	580		$	358
Accounts receivable – net		920			1,009
Materials and supplies		244			207
Other current assets		337			288
Total current assets		2,081			1,862
Investments		3,428			3,109
Properties less accumulated depreciation of $11,982 and
$12,374, respectively		31,614			31,091
Other assets		800			177
Total assets	$	37,923		$	36,239
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,428		$	1,505
Income and other taxes		229			255
Other current liabilities		327			246
Current maturities of long-term debt		316			585
Total current liabilities		2,300			2,591
Long-term debt		11,880			10,560
Other liabilities		1,744			1,266
Deferred income taxes		6,815			6,460
Total liabilities		22,739			20,877
Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 257,904,956 and 268,098,472 shares, respectively, net of treasury shares		259			269
Additional paid-in capital		2,209			2,216
Accumulated other comprehensive loss		(491	)		(563	)
Retained income		13,207			13,440
Total stockholders’ equity		15,184			15,362
Total liabilities and stockholders’ equity	$	37,923		$	36,239

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Years Ended December 31,
	2019			2018
	($ in millions)
Cash flows from operating activities
Net income	$	2,722		$	2,666
Reconciliation of net income to net cash provided by operating activities:
Depreciation		1,139			1,104
Deferred income taxes		330			173
Gains and losses on properties		(42	)		(171	)
Changes in assets and liabilities affecting operations:
Accounts receivable		87			(70	)
Materials and supplies		(37	)		15
Other current assets		(4	)		(46	)
Current liabilities other than debt		(185	)		223
Other – net		(118	)		(168	)
Net cash provided by operating activities		3,892			3,726
Cash flows from investing activities
Property additions		(2,019	)		(1,951	)
Property sales and other transactions		377			204
Investment purchases		(18	)		(10	)
Investment sales and other transactions		(104	)		99
Net cash used in investing activities		(1,764	)		(1,658	)
Cash flows from financing activities
Dividends		(949	)		(844	)
Common stock transactions		27			40
Purchase and retirement of common stock		(2,099	)		(2,781	)
Proceeds from borrowings – net of issuance costs		2,192			2,023
Debt repayments		(1,188	)		(750	)
Other		23			—
Net cash used in financing activities		(1,994	)		(2,312	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		134			(244	)
Cash, cash equivalents, and restricted cash
At beginning of year		446			690
At end of year	$	580		$	446
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amounts capitalized)	$	555		$	496
Income taxes (net of refunds)		543			519

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1. Stock Repurchase Programs

Under our stock repurchase programs, we repurchased and retired 11.3 million and 17.1 million (7.0 million under an accelerated share repurchase program and 10.1 million shares under our ongoing open-market program) shares of common stock in 2019 and 2018, respectively, at a cost of $2.1 billion and $2.8 billion, respectively. Since the beginning of 2006, we have repurchased and retired 196.9 million shares at a total cost of $16.2 billion.

2. Leases

On January 1, 2019, we adopted Financial Accounting Standards Board Accounting Standards Update 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 Sheets at December 31, 2019 includes the recognition of ROU assets of $539 million included in “Other assets,” current lease liabilities of $97 million included in “Other current liabilities,” and non-current lease liabilities of $441 million included in “Other liabilities.”

3. Restricted Cash

The “Cash, cash equivalents, and restricted cash” line item on the Consolidated Statement of Cash Flows includes restricted cash of $88 million at both January 1, 2019 and December 31, 2018, which reflects deposits held by a third-party bond agent as collateral for certain debt obligations, which matured on October 1, 2019. The restricted cash balance is included as part of “Other current assets” on the Consolidated Balance Sheets at December 31, 2018.