EXHIBIT 99.3
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
| First Quarter | ||||||||
| 2024 | 2023 | |||||||
| (in millions, except per share amounts) | ||||||||
| Railway operating revenues | ||||||||
| Merchandise | $ | 1,863 | $ | 1,878 | ||||
| Intermodal | 745 | 814 | ||||||
| Coal | 396 | 440 | ||||||
| Total railway operating revenues | 3,004 | 3,132 | ||||||
| Railway operating expenses | ||||||||
| Compensation and benefits | 736 | 690 | ||||||
| Purchased services and rents | 528 | 496 | ||||||
| Fuel | 284 | 315 | ||||||
| Depreciation | 337 | 321 | ||||||
| Materials and other | 215 | 212 | ||||||
| Restructuring and other charges | 99 | — | ||||||
| Eastern Ohio incident | 592 | 387 | ||||||
| Total railway operating expenses | 2,791 | 2,421 | ||||||
| Income from railway operations | 213 | 711 | ||||||
| Other income – net | 18 | 56 | ||||||
| Interest expense on debt | 201 | 175 | ||||||
| Income before income taxes | 30 | 592 | ||||||
| Income taxes | (23 | ) | 126 | |||||
| Net income | $ | 53 | $ | 466 | ||||
| Earnings per share – diluted | $ | 0.23 | $ | 2.04 | ||||
| Weighted average shares outstanding – diluted | 226.2 | 228.3 | ||||||
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ($ in millions) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 652 | $ | 1,568 | ||||
| Accounts receivable – net | 1,198 | 1,147 | ||||||
| Materials and supplies | 270 | 264 | ||||||
| Other current assets | 236 | 292 | ||||||
| Total current assets | 2,356 | 3,271 | ||||||
| Investments | 3,570 | 3,839 | ||||||
| Properties less accumulated depreciation of $13,462 and $13,265, respectively | 35,051 | 33,326 | ||||||
| Other assets | 1,151 | 1,216 | ||||||
| Total assets | $ | 42,128 | $ | 41,652 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,506 | $ | 1,638 | ||||
| Short-term debt | 400 | — | ||||||
| Income and other taxes | 222 | 262 | ||||||
| Other current liabilities | 1,315 | 728 | ||||||
| Current maturities of long-term debt | 4 | 4 | ||||||
| Total current liabilities | 3,447 | 2,632 | ||||||
| Long-term debt | 17,179 | 17,175 | ||||||
| Other liabilities | 1,767 | 1,839 | ||||||
| Deferred income taxes | 7,199 | 7,225 | ||||||
| Total liabilities | 29,592 | 28,871 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 225,914,028 and 225,681,254 shares, respectively, net of treasury shares | 227 | 227 | ||||||
| Additional paid-in capital | 2,188 | 2,179 | ||||||
| Accumulated other comprehensive loss | (322 | ) | (320 | ) | ||||
| Retained income | 10,443 | 10,695 | ||||||
| Total stockholders’ equity | 12,536 | 12,781 | ||||||
| Total liabilities and stockholders’ equity | $ | 42,128 | $ | 41,652 | ||||
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| First Three Months | ||||||||
| 2024 | 2023 | |||||||
| ($ in millions) | ||||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 53 | $ | 466 | ||||
| Reconciliation of net income to net cash provided by operating activities: | ||||||||
| Depreciation | 337 | 321 | ||||||
| Deferred income taxes | (26 | ) | (15 | ) | ||||
| Gains and losses on properties | (1 | ) | (4 | ) | ||||
| Changes in assets and liabilities affecting operations: | ||||||||
| Accounts receivable | (51 | ) | (22 | ) | ||||
| Materials and supplies | (6 | ) | (9 | ) | ||||
| Other current assets | 33 | 12 | ||||||
| Current liabilities other than debt | 560 | 480 | ||||||
| Other – net | (60 | ) | (56 | ) | ||||
| Net cash provided by operating activities | 839 | 1,173 | ||||||
| Cash flows from investing activities | ||||||||
| Property additions | (557 | ) | (428 | ) | ||||
| Acquisition of assets of CSR | (1,642 | ) | — | |||||
| Property sales and other transactions | 32 | 20 | ||||||
| Investment purchases | (1 | ) | — | |||||
| Investment sales and other transactions | 324 | 17 | ||||||
| Net cash used in investing activities | (1,844 | ) | (391 | ) | ||||
| Cash flows from financing activities | ||||||||
| Dividends | (305 | ) | (307 | ) | ||||
| Common stock transactions | (6 | ) | (10 | ) | ||||
| Purchase and retirement of common stock | — | (163 | ) | |||||
| Proceeds from borrowings | 400 | 594 | ||||||
| Debt repayments | — | (800 | ) | |||||
| Net cash provided by (used in) financing activities | 89 | (686 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | (916 | ) | 96 | |||||
| Cash and cash equivalents | ||||||||
| At beginning of year | 1,568 | 456 | ||||||
| At end of period | $ | 652 | $ | 552 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest (net of amounts capitalized) | $ | 182 | $ | 129 | ||||
| Income taxes (net of refunds) | (2 | ) | (1 | ) | ||||
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Eastern Ohio Incident
On February 3, 2023, a train operated by Norfolk Southern derailed in East Palestine, Ohio (the Incident). We recognized $592 million and $387 million of expense during the first quarters of 2024 and 2023, respectively, for costs related to the Incident. The total expense recognized in the first quarter 2024 includes the impact of $108 million in insurance recoveries, while no insurance recoveries were recorded in the first quarter of 2023. Any additional amounts recoverable under our insurance policies or from third parties will be reflected in future periods in which recovery is considered probable. No amounts have been recorded related to potential third-party recoveries, which may reduce amounts payable by our insurers under applicable insurance coverage.
2. Restructuring and Other Charges
During the first quarter of 2024, the Company executed a voluntary and an involuntary separation program that will result in a reduction of approximately 350 nonagreement employees by May 2024. “Restructuring and other charges” includes $64 million of costs related to these programs, which primarily consists of separation payments to the impacted nonagreement employees. Additionally, the Company incurred $35 million of costs associated with the March 2024 appointment of our chief operating officer.
3. Shareholder Advisory Costs
During the first quarter of 2024, the Company recorded $21 million in costs associated with shareholder advisory matters and which are included in “Other income – net.”
4. Deferred Tax Adjustment
In the first quarter of 2024, we recorded a $27 million deferred income tax benefit, the result of a subsidiary restructuring that reduced our estimated deferred state income tax rate.
5. Stock Repurchase Program
We did not repurchase shares of common stock under our stock repurchase program in the first three months of 2024, while we repurchased and retired 0.6 million shares of common stock at a cost of $163 million in the first three months of 2023, inclusive of excise taxes.