Norfolk Southern Corp 8-K, filed Jan 29, 2020
Norfolk Southern Corp (NSC)
About this 8-K
Norfolk Southern Corp filed this 8-K on January 29, 2020.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM
CURRENT REPORT
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Item 2.02 Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
On January 29, 2020, the Registrant issued a Press Release, attached hereto as Exhibit 99.1, reporting fourth quarter results for 2019. Quarterly financial data is attached hereto as Exhibit 99.2. These documents are available on the Registrant’s website, www.norfolksouthern.com, in the “Invest in NS” section, under “Financial Reports.”
The accompanying unaudited financial information and summary of certain notes to the consolidated financial statements should be read in conjunction with: (a) the consolidated financial statements and notes included in the Registrant's latest Annual Report on Form 10-K and in subsequent Quarterly Reports on Form 10-Q; and (b) any Current Reports on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are filed as part of this Current Report on Form 8-K:
| Exhibit Number | Description |
| 99.1 | Press Release |
| 99.2 | 2019 4Q Financial Data |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SIGNATURES | |
| NORFOLK SOUTHERN CORPORATION | |
| (Registrant) | |
| /s/ Denise W. Hutson | |
| Name: Denise W. Hutson | |
| Title: Corporate Secretary |
Date: January 29, 2020
Exhibit 99.1
FOR IMMEDIATE RELEASE
Norfolk Southern reports fourth-quarter and full-year 2019 results
Fourth consecutive year of record operating ratio
NORFOLK, Va., January 29, 2020 – Norfolk Southern Corporation (NYSE: NSC) today reported fourth-quarter and full-year 2019 financial results.
Net income was $666 million and diluted earnings per share were $2.55 for the fourth quarter and $2,722 million and $10.25, respectively, for the full year. During the first year of a three-year strategic plan, Norfolk Southern produced a record operating ratio of 64.7% while managing the headwinds of a 5% decline in carload volumes.
“Norfolk Southern’s strong financial performance in a year of macroeconomic headwinds is underpinned by the hard work of our team to expeditiously implement productivity initiatives throughout the year,” said James A. Squires, Norfolk Southern chairman, president and CEO. “With efficiency-related cost savings gaining steam in the third quarter and increasing in the fourth quarter, we achieved a record full-year operating ratio while also producing all-time best delivery performance for customers. This was the result of extensive systemwide planning integrated with customer communications during the first half of the year that created a foundation for the flawless execution of the initial two phases of our PSR-based operating plan, TOP21, in the second half. The momentum we’re carrying into 2020 will support continued value creation as we remain dedicated to the operational transformation of our business while ensuring we have a platform for growth as we look beyond the current freight cycle.”
Fourth-quarter summary
| · | Railway operating revenues of $2.7 billion decreased 7 percent compared with fourth-quarter 2018, driven by a 9 percent decline in total volume. |
| · | Railway operating expenses were $1.7 billion, a decrease of $90 million compared with the same period last year. Lower compensation and benefits, fuel costs, equipment rents, and materials usage were partially offset by lower gains on operating property sales and increased purchased services expense. |
| · | Income from railway operations was $1.0 billion, a decrease of $116 million year-over-year. The railway operating ratio was 64.2 percent. |
2019 summary
| · | Railway operating revenues of $11.3 billion declined 1 percent as overall volumes were down 5 percent, reflecting carload declines in all major commodity categories. |
| · | Railway operating expenses of $7.3 billion decreased $192 million, or 3 percent, compared with last year. Lower compensation and benefits, fuel costs, equipment rents, and materials costs were partially offset by lower gains on operating property sales as well as increased purchased services and depreciation expense. |
| · | Income from railway operations was $4.0 billion, a 1 percent increase year-over-year, and an all-time record. |
| · | The railway operating ratio was a record 64.7 percent. |
About Norfolk Southern
Norfolk Southern Corporation (NYSE: NSC) is one of the nation’s premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 19,500 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern is a major transporter of industrial products, including chemicals, agriculture, and metals and construction materials. In addition, the railroad operates the most extensive intermodal network in the East and is a principal carrier of coal, automobiles, and automotive parts.
Forward-looking statements
This news release contains forward-looking statements that may be identified by the use of words like “believe,” “expect,” “anticipate,” “estimate,” “plan,” “consider,” “project,” and similar references to the future. Forward-looking statements reflect our good-faith evaluation of information currently available. These forward-looking statements are subject to a number of risks and uncertainties, and our actual results may differ materially from those projected. Please refer to our annual and quarterly reports filed with the SEC for a full discussion of those risks and uncertainties we view as most important. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements.
Media Inquiries:
Media Relations, 404-420-4444 (media.relations@nscorp.com)
Investor Inquiries:
Pete Sharbel, 470-867-4807 (peter.sharbel@nscorp.com)
http://www.norfolksouthern.com
###
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.