EX-99.2 3 e24421_ex99-2.htm

Exhibit 99.2

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

   Third Quarter  First Nine Months
   2024  2023  2024  2023
   (in millions, except per share amounts)
Railway operating revenues                    
Merchandise  $1,861   $1,800   $5,628   $5,504 
Intermodal   763    737    2,250    2,296 
Coal   427    434    1,221    1,283 
Total railway operating revenues   3,051    2,971    9,099    9,083 
                     
Railway operating expenses                    
Compensation and benefits   690    715    2,126    2,098 
Purchased services and rents   497    517    1,541    1,519 
Fuel   216    289    757    867 
Depreciation   339    326    1,011    968 
Materials and other   (188)   205    200    622 
Restructuring and other charges   60    —      156    —   
Eastern Ohio incident   (159)   163    368    966 
Total railway operating expenses   1,455    2,215    6,159    7,040 
                     
Income from railway operations   1,596    756    2,940    2,043 
                     
Other income – net   34    40    69    153 
Interest expense on debt   203    182    608    527 
                     
Income before income taxes   1,427    614    2,401    1,669 
                     
Income taxes   328    136    512    369 
                     
Net income  $1,099   $478   $1,889   $1,300 
                     
Earnings per share – diluted  $4.85   $2.10   $8.34   $5.70 
                     
Weighted average shares outstanding – diluted   226.5    227.0    226.3    227.8 

 

See accompanying notes to consolidated financial statements. 

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

   September 30,  December 31,
   2024  2023
   ($ in millions)
Assets      
Current assets:          
Cash and cash equivalents  $975   $1,568 
Accounts receivable – net   1,302    1,147 
Materials and supplies   288    264 
Other current assets   125    292 
Total current assets   2,690    3,271 
           
Investments   3,968    3,839 
Properties less accumulated depreciation of $13,855 and $13,265, respectively   35,390    33,326 
Other assets   1,207    1,216 
           
Total assets  $43,255   $41,652 
           
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable  $1,614   $1,638 
Income and other taxes   179    262 
Other current liabilities   1,329    728 
Current maturities of long-term debt   555    4 
Total current liabilities   3,677    2,632 
           
Long-term debt   16,644    17,175 
Other liabilities   1,786    1,839 
Deferred income taxes   7,363    7,225 
           
Total liabilities   29,470    28,871 
           
Stockholders’ equity:          
Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 226,239,662 and 225,681,254 shares, respectively, net of treasury shares   228    227 
Additional paid-in capital   2,223    2,179 
Accumulated other comprehensive loss   (332)   (320)
Retained income   11,666    10,695 
           
Total stockholders’ equity   13,785    12,781 
           
Total liabilities and stockholders’ equity  $43,255   $41,652 

 

See accompanying notes to consolidated financial statements. 

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

   First Nine Months
   2024  2023
   ($ in millions)
Cash flows from operating activities          
Net income  $1,889   $1,300 
Reconciliation of net income to net cash provided by operating activities:          
Depreciation   1,011    968 
Deferred income taxes   141    (53)
Gains and losses on properties   (425)   (34)
Changes in assets and liabilities affecting operations:          
Accounts receivable   (156)   (65)
Materials and supplies   (24)   (50)
Other current assets   80    37 
Current liabilities other than debt   774    538 
Other – net   (189)   (135)
           
Net cash provided by operating activities   3,101    2,506 
           
Cash flows from investing activities          
Property additions   (1,706)   (1,491)
Acquisition of assets of CSR   (1,643)   (5)
Property sales and other transactions   527    62 
Investment purchases   (318)   (120)
Investment sales and other transactions   349    160 
           
Net cash used in investing activities   (2,791)   (1,394)
           
Cash flows from financing activities          
Dividends   (915)   (920)
Common stock transactions   15    (9)
Purchase and retirement of common stock   —      (503)
Proceeds from borrowings   1,051    2,303 
Debt repayments   (1,054)   (933)
           
Net cash used in financing activities   (903)   (62)
           
Net increase (decrease) in cash and cash equivalents   (593)   1,050 
           
Cash and cash equivalents          
At beginning of year   1,568    456 
           
At end of period  $975   $1,506 
           
Supplemental disclosures of cash flow information          
Cash paid during the period for:          
Interest (net of amounts capitalized)  $571   $451 
Income taxes (net of refunds)   284    521 

 

See accompanying notes to consolidated financial statements. 

 

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1. Sales of Railway Lines

 

During the third quarter of 2024, we completed sales of two railway lines in the states of Virginia and North Carolina resulting in gains of $380 million on operating property sales included in “Materials and other” expense. The gains from these transactions are reflected in “Gains and losses on properties” and cash proceeds of $389 million are included in “Property sales and other transactions” on the Consolidated Statement of Cash Flows.

 

2. Restructuring and Other Charges

 

We recognized $60 million in the third quarter of 2024 related to expenses associated with the rationalization of certain software development projects that had not been placed into service and reflecting certain equipment at its net realizable value in advance of the planned disposition of that asset class. The $156 million recognized during first nine months of 2024, also includes $96 million of costs associated with our voluntary and involuntary separation programs that reduced our management workforce and costs associated with the appointment of our chief operating officer. Additionally, “Other income – net” for the first nine months includes a $20 million curtailment gain on our other postretirement benefit plan resulting from the restructuring, recorded in the second quarter of 2024.

 

3. Eastern Ohio Incident

 

On February 3, 2023, a train operated by us derailed in East Palestine, Ohio (the Incident). We recognized expenses of $368 million and $966 million during the first nine months of 2024 and 2023, respectively, for costs related to the Incident. Insurance recoveries exceeded expenses by $159 million in the third quarter of 2024 compared to expenses of $163 million in the third quarter of 2023. The total expense recognized in the first nine months of 2024 includes the impact of $552 million in insurance recoveries, of which $288 million was recognized in the third quarter 2024. During the first nine months of 2023, $25 million in recoveries were recorded. 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.

 

4. Shareholder Advisory Costs

 

“Other income – net” includes costs associated with shareholder advisory matters, which amounted to $1 million and $51 million during the third quarter and first nine months of 2024, respectively.

 

5. Deferred Income Taxes

 

During the first nine months of 2024, we recorded a $27 million reduction to deferred income taxes, the result of a subsidiary restructuring that reduced our estimated deferred state income tax rate.

 

6. Stock Repurchase Program

 

We did not repurchase shares of common stock under our stock repurchase program in the first nine months of 2024, while we repurchased and retired 2.2 million shares of common stock at a cost of $508 million in the first nine months of 2023, inclusive of excise taxes.