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.