Norfolk Southern (NSC) 8-K Norfolk Southern reports fourth-quarter and full-year 2020 results

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Fourth Quarter				Years Ended December 31,
	2020		2019		2020		2019
	(in millions, except per share amounts)
Railway operating revenues
Merchandise	$	1,553	$	1,630	$	6,088	$	6,803
Intermodal		730		697		2,654		2,824
Coal		290		363		1,047		1,669
Total railway operating revenues		2,573		2,690		9,789		11,296
Railway operating expenses
Compensation and benefits		587		630		2,373		2,751
Purchased services and rents		426		460		1,687		1,725
Fuel		136		223		535		953
Depreciation		287		285		1,154		1,138
Materials and other		153		130		653		740
Loss on asset disposal		—		—		385		—
Total railway operating expenses		1,589		1,728		6,787		7,307
Income from railway operations		984		962		3,002		3,989
Other income – net		43		18		153		106
Interest expense on debt		160		152		625		604
Income before income taxes		867		828		2,530		3,491
Income taxes
Current		132		57		375		439
Deferred		64		105		142		330
Total income taxes		196		162		517		769
Net income	$	671	$	666	$	2,013	$	2,722
Earnings per share – diluted	$	2.64	$	2.55	$	7.84	$	10.25
Weighted average shares outstanding – diluted		254.7		261.6		256.6		265.6

See accompanying notes to consolidated financial statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	At December 31,
	2020			2019
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	1,115		$	580
Accounts receivable – net		848			920
Materials and supplies		221			244
Other current assets		134			337
Total current assets		2,318			2,081
Investments		3,590			3,428
Properties less accumulated depreciation of $11,985 and $11,982, respectively		31,345			31,614
Other assets		709			800
Total assets	$	37,962		$	37,923
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,016		$	1,428
Income and other taxes		263			229
Other current liabilities		302			327
Current maturities of long-term debt		579			316
Total current liabilities		2,160			2,300
Long-term debt		12,102			11,880
Other liabilities		1,987			1,744
Deferred income taxes		6,922			6,815
Total liabilities		23,171			22,739
Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 252,095,082 and 257,904,956 shares, respectively, net of treasury shares		254			259
Additional paid-in capital		2,248			2,209
Accumulated other comprehensive loss		(594	)		(491	)
Retained income		12,883			13,207
Total stockholders’ equity		14,791			15,184
Total liabilities and stockholders’ equity	$	37,962		$	37,923

See accompanying notes to consolidated financial statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Years Ended December 31,
	2020			2019
	($ in millions)
Cash flows from operating activities
Net income	$	2,013		$	2,722
Reconciliation of net income to net cash provided by operating activities:
Depreciation		1,154			1,139
Deferred income taxes		142			330
Gains and losses on properties		(39	)		(42	)
Loss on asset disposal		385			—
Impairment of investment		99			—
Changes in assets and liabilities affecting operations:
Accounts receivable		71			87
Materials and supplies		23			(37	)
Other current assets		3			(4	)
Current liabilities other than debt		34			(185	)
Other – net		(248	)		(118	)
Net cash provided by operating activities		3,637			3,892
Cash flows from investing activities
Property additions		(1,494	)		(2,019	)
Property sales and other transactions		333			377
Investment purchases		(13	)		(18	)
Investment sales and other transactions		(1	)		(104	)
Net cash used in investing activities		(1,175	)		(1,764	)
Cash flows from financing activities
Dividends		(960	)		(949	)
Common stock transactions		69			27
Purchase and retirement of common stock		(1,439	)		(2,099	)
Proceeds from borrowings – net of issuance costs		784			2,192
Debt repayments		(381	)		(1,188	)
Other		—			23
Net cash used in financing activities		(1,927	)		(1,994	)
Net increase in cash, cash equivalents, and restricted cash		535			134
Cash, cash equivalents, and restricted cash
At beginning of year		580			446
At end of year	$	1,115		$	580
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amounts capitalized)	$	577		$	555
Income taxes (net of refunds)		311			543

See accompanying notes to consolidated financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1. Impairment of Investment

In 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 Statement of Income and had a $74 million impact on net income.

2. Loss on Asset Disposal

In 2020, we sold 703 locomotives deemed excess and no longer needed for railroad operations. Accordingly, we recorded a $385 million loss to adjust their carrying amount to their estimated fair value.

3. Stock Repurchase Program

We repurchased and retired 7.4 million and 11.3 million shares of common stock under our stock repurchase programs in 2020 and 2019, respectively, at a cost of $1.4 billion and $2.1 billion, respectively. 

4. Restricted Cash

The “Cash, cash equivalents, and restricted cash” line item on the Consolidated Statement of Cash Flows at January 1, 2019 includes restricted cash of $88 million, which reflects deposits held by a third-party bond agent as collateral for certain debt obligations which matured on October 1, 2019.