Norfolk Southern (NSC) 8-K Norfolk Southern reports third-quarter 2021 results

Exhibit 99.2

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Third Quarter				First Nine Months
	2021		2020		2021		2020
	(in millions, except per share amounts)
Railway operating revenues
Merchandise	$	1,710	$	1,556	$	4,998	$	4,535
Intermodal		812		700		2,332		1,924
Coal		330		250		960		757
Total railway operating revenues		2,852		2,506		8,290		7,216
Railway operating expenses
Compensation and benefits		609		578		1,844		1,786
Purchased services and rents		432		486		1,254		1,261
Fuel		208		126		573		399
Depreciation		297		293		883		867
Materials and other		170		183		418		500
Loss on asset disposal		—		—		—		385
Total railway operating expenses		1,716		1,666		4,972		5,198
Income from railway operations		1,136		840		3,318		2,018
Other income – net		14		39		56		110
Interest expense on debt		164		155		481		465
Income before income taxes		986		724		2,893		1,663
Income taxes
Current		182		133		490		243
Deferred		51		22		158		78
Total income taxes		233		155		648		321
Net income	$	753	$	569	$	2,245	$	1,342
Earnings per share – diluted	$	3.06	$	2.22	$	8.99	$	5.21
Weighted average shares outstanding – diluted		246.4		256.1		249.7		257.2

See accompanying notes to consolidated financial statements. 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
	2021			2020
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	1,465		$	1,115
Accounts receivable – net		945			848
Materials and supplies		235			221
Other current assets		77			134
Total current assets		2,722			2,318
Investments		3,684			3,590
Properties less accumulated depreciation of $11,867 and $11,985, respectively		31,429			31,345
Other assets		769			709
Total assets	$	38,604		$	37,962
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,196		$	1,016
Income and other taxes		272			263
Other current liabilities		384			302
Current maturities of long-term debt		558			579
Total current liabilities		2,410			2,160
Long-term debt		13,274			12,102
Other liabilities		1,944			1,987
Deferred income taxes		7,089			6,922
Total liabilities		24,717			23,171
Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 243,344,509 and 252,095,082 shares, respectively, net of treasury shares		244			254
Additional paid-in capital		2,224			2,248
Accumulated other comprehensive loss		(571	)		(594	)
Retained income		11,990			12,883
Total stockholders’ equity		13,887			14,791
Total liabilities and stockholders’ equity	$	38,604		$	37,962

See accompanying notes to consolidated financial statements. 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	First Nine Months
	2021			2020
	($ in millions)
Cash flows from operating activities
Net income	$	2,245		$	1,342
Reconciliation of net income to net cash provided by operating activities:
Depreciation		883			867
Deferred income taxes		158			78
Gains and losses on properties		(80	)		(14	)
Loss on asset disposal		—			385
Impairment of investment		—			99
Changes in assets and liabilities affecting operations:
Accounts receivable		(102	)		36
Materials and supplies		(14	)		(3	)
Other current assets		57			55
Current liabilities other than debt		294			104
Other – net		(128	)		(182	)
Net cash provided by operating activities		3,313			2,767
Cash flows from investing activities
Property additions		(1,025	)		(1,053	)
Property sales and other transactions		135			291
Investment purchases		(5	)		(6	)
Investment sales and other transactions		48			(50	)
Net cash used in investing activities		(847	)		(818	)
Cash flows from financing activities
Dividends		(764	)		(722	)
Common stock transactions		8			53
Purchase and retirement of common stock		(2,460	)		(960	)
Proceeds from borrowings		1,676			784
Debt repayments		(576	)		(325	)
Net cash used in financing activities		(2,116	)		(1,170	)
Net increase in cash and cash equivalents		350			779
Cash and cash equivalents
At beginning of year		1,115			580
At end of period	$	1,465		$	1,359
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)	$	391		$	395
Income taxes (net of refunds)		468			118

See accompanying notes to consolidated financial statements. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Impairment of Investment

During 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 first nine months of 2020.

2. Loss on Asset Disposal

In 2020, we sold 703 locomotives deemed excess and no longer needed for railroad operations. We evaluated these locomotive retirements and concluded they were abnormal. Accordingly, we recorded a $385 million loss to adjust their carrying amount to their estimated fair value, which resulted in a $97 million tax benefit.

3. Stock Repurchase Program

We repurchased and retired 9.4 million and 5.3 million shares of common stock under our stock repurchase program during the first nine months of 2021 and 2020, respectively, at a cost of $2.5 billion and $960 million, respectively.