UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

April 29, 2020 (April 29, 2020)

________________________________

soaring nameunderblacklg

NORFOLK SOUTHERN CORPORATION

(Exact name of registrant as specified in its charter)

______________________________________

Virginia	1-8339	52-1188014
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

Three Commercial Place		757-629-2680
Norfolk, Virginia 23510-9241		(Registrant's telephone number, including area code)
(Address of principal executive offices, including zip code)

No Change
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange

on which registered

Norfolk Southern Corporation Common Stock (Par Value $1.00)

NSC

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition

Item 7.01. Regulation FD Disclosure

On April 29, 2020, the Registrant issued a Press Release, attached hereto as Exhibit 99.1, reporting first quarter results for 2020. 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 8.01 Other Events

On April 29, 2020, the Registrant furnished the 2018 & 2019 Railway Operating Revenues Analysis for its revenue commodity groups (“Railway Operating Revenues Analysis”), attached hereto as Exhibit 99.3. During the first quarter of 2020, the Registrant re-categorized certain commodities within the Merchandise major commodity groups to better align with how it internally manages these commodities. The Railway Operating Revenues Analysis re-categorizes these commodities within Merchandise revenues for full year 2018 and 2019 and each quarter therein to conform to the current categorization and for purposes of comparison of upcoming quarterly Merchandise revenue to the corresponding periods in 2018 and 2019.

The re-categorization does not have any net impact on previously reported overall Merchandise revenues or total railway operating revenues for 2018 or 2019.

The Railway Operating Revenues Analysis should be read in conjunction with the consolidated financial statements and notes thereto included in the Registrant’s latest Annual Report on Form 10-K and in subsequent Quarterly Reports on Form 10-Q.

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 dated April 29, 2020
99.2	2020 1Q Financial Data
99.3	2018 & 2019 Railway Operating Revenues Analysis
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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: April 29, 2020

FOR IMMEDIATE RELEASE

Norfolk Southern reports first-quarter 2020 results, non-cash asset rationalization charge related to PSR implementation

NORFOLK, Va., April 29, 2020 – Norfolk Southern Corporation (NYSE: NSC) today reported first-quarter financial results of net income equal to $381 million, diluted earnings per share of $1.47, and an operating ratio of 78.4%. These results include a $385 million non-cash locomotive rationalization charge related to the ongoing disposition and marketing of excess locomotives not required for future operations due to the successful introduction of Precision Scheduled Railroading. Excluding the effects of the asset rationalization charge, adjusted first-quarter net income was $669 million, adjusted diluted earnings per share were $2.58, and the adjusted operating ratio improved by 230 basis points compared with first-quarter 2019 to 63.7%.

“During the first quarter, Norfolk Southern’s determination to transform our operations once again produced all-time best service delivery levels accompanied by productivity improvements, despite volumes being impacted by weak energy prices and the onset of the COVID-19 pandemic,” said James A. Squires, Norfolk Southern chairman, president and CEO. “While it is unclear how long economic activity will remain suppressed, we are dedicated to serving our customers and keeping our employees healthy and safe while navigating the downturn so that we can emerge strong and resilient for our shareholders. I am extremely proud of the commitment and strength the Norfolk Southern team has displayed by keeping our nation’s freight moving during this challenging start to 2020 while also enhancing our financial position.”

First-quarter summary

Railway operating revenues of $2.6 billion decreased 8% compared with first-quarter 2019, driven by an 11% decline in total volume.

Railway operating expenses were $2.1 billion, including a $385 million non-cash locomotive rationalization charge related to locomotives marketed for sale and/or disposed of as a result of productivity gains achieved through the successful introduction of Precision Scheduled Railroading.

◦

Excluding the locomotive rationalization charge, adjusted operating expenses declined $202 million, or 11%, driven by lower compensation and benefits, fuel, purchased services, and materials.

Income from railway operations was $568 million and the operating ratio was 78.4%.

◦

Adjusted income from railway operations of $953 million declined by 1%, while the adjusted operating ratio improved to 63.7% versus the first-quarter record of 66.0% set in 2019.

Guidance update

Second-quarter volumes have continued to decline across all of Norfolk Southern’s commodity segments, down 30% quarter-to-date, setting up for a very soft revenue outlook. With uncertainty on both the cadence of reopening the U.S. economy and the slope of recovery, we withdraw the previously-issued outlook for flat full year revenue.

As a result of the current volume environment, we also withdraw core operating ratio guidance for 2020.

“While the COVID-19 pandemic will effect business volumes for the year, the PSR implementation that our team is executing upon will generate significant operating expense savings in 2020,” said Chief Financial Officer Mark R. George. “In this challenging environment our team is doubling down on examination of our structural cost opportunities to ensure that we remain positioned to drive enhanced profitability for the long term.”

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.

Non-GAAP Financial Measures

This news release includes certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures is provided in the table below, entitled “Reconciliation of Non-GAAP Financial Measures.”

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. Additional risks include the impact of the COVID-19 pandemic on us, our customers, our supply chain and our operations. 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 ([email protected])

Investor Inquiries:

Pete Sharbel, 470-867-4807 ([email protected])

http://www.norfolksouthern.com

Reconciliation of Non-GAAP Financial Measures

Information included within this press release includes non-GAAP financial measures, as defined by SEC Regulation G. Non-GAAP financial measures should be considered in addition to, not as a substitute for, the financial measures reported in accordance with U.S. generally accepted accounting principles (GAAP).

GAAP financial results are adjusted to exclude the effects of a non-cash charge in the first quarter of 2020 related to the disposal of approximately 300 locomotives and the designation of an additional 400 locomotives as held for sale. The introduction of precision scheduled railroading in 2019 continues to provide significant benefits to the network operations and has resulted in excess capacity resulting in the sidelining of these locomotives.

The Company uses these non-GAAP financial measures internally and believes this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding the locomotive disposal charge. While the Company believes that these non-GAAP financial measures are useful in evaluating the Company’s business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.

($ in millions except per share amounts)	First Quarter 2020
Railway operating expenses	$	2,057
Effect of locomotive charge		(385	)
Adjusted railway operating expenses	$	1,672

Income from railway operations	$	568
Effect of locomotive charge		385
Adjusted income from railway operations	$	953

Operating ratio (%)		78.4
Effect of locomotive charge (%)		(14.7	)
Adjusted operating ratio (%)		63.7

Net income	$	381
Effect of locomotive charge		288
Adjusted net income	$	669

Diluted earnings per share	$	1.47
Effect of locomotive charge		1.11
Adjusted diluted earnings per share	$	2.58

###

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	First Quarter
	2020		2019
	(in millions, except per share amounts)
Railway operating revenues
Merchandise	$	1,672	$	1,686
Intermodal		655		719
Coal		298		435
Total railway operating revenues		2,625		2,840
Railway operating expenses
Compensation and benefits		622		727
Purchased services and rents		403		424
Fuel		189		250
Depreciation		292		283
Materials and other		166		190
Loss on asset disposal		385		—
Total railway operating expenses		2,057		1,874
Income from railway operations		568		966
Other income – net		22		44
Interest expense on debt		154		149
Income before income taxes		436		861
Income taxes
Current		44		127
Deferred		11		57
Total income taxes		55		184
Net income	$	381	$	677
Earnings per share – diluted	$	1.47	$	2.51
Weighted average shares outstanding – diluted		258.7		269.4

See accompanying notes to consolidated financial statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
	2020			2019
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	608		$	580
Accounts receivable – net		889			920
Materials and supplies		265			244
Other current assets		240			337
Total current assets		2,002			2,081
Investments		3,470			3,428
Properties less accumulated depreciation of $11,794
and $11,982, respectively		31,179			31,614
Other assets		787			800
Total assets	$	37,438		$	37,923
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,284		$	1,428
Income and other taxes		200			229
Other current liabilities		352			327
Current maturities of long-term debt		400			316
Total current liabilities		2,236			2,300
Long-term debt		11,807			11,880
Other liabilities		1,683			1,744
Deferred income taxes		6,828			6,815
Total liabilities		22,554			22,739
Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 256,179,130 and 257,904,956 shares,
respectively, net of treasury shares		258			259
Additional paid-in capital		2,205			2,209
Accumulated other comprehensive loss		(481	)		(491	)
Retained income		12,902			13,207
Total stockholders’ equity		14,884			15,184
Total liabilities and stockholders’ equity	$	37,438		$	37,923

See accompanying notes to consolidated financial statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	First Three Months
	2020			2019
	($ in millions)
Cash flows from operating activities
Net income	$	381		$	677
Reconciliation of net income to net cash provided by operating activities:
Depreciation		292			283
Deferred income taxes		11			57
Gains and losses on properties		(8	)		(18	)
Loss on asset disposal		385			—
Changes in assets and liabilities affecting operations:
Accounts receivable		32			(39	)
Materials and supplies		(21	)		(21	)
Other current assets		(33	)		12
Current liabilities other than debt		(40	)		(27	)
Other – net		(44	)		(43	)
Net cash provided by operating activities		955			881
Cash flows from investing activities
Property additions		(366	)		(467	)
Property sales and other transactions		158			152
Investment purchases		—			(2	)
Investment sales and other transactions		(25	)		(33	)
Net cash used in investing activities		(233	)		(350	)
Cash flows from financing activities
Dividends		(242	)		(230	)
Common stock transactions		14			2
Purchase and retirement of common stock		(466	)		(500	)
Proceeds from borrowings		—			250
Net cash used in financing activities		(694	)		(478	)
Net increase in cash, cash equivalents, and restricted cash		28			53
Cash, cash equivalents, and restricted cash
At beginning of year		580			446
At end of period	$	608		$	499
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)	$	121		$	112
Income taxes (net of refunds)		16			9

See accompanying notes to consolidated financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1. Loss on Asset Disposal

In the first quarter of 2020, we committed to a plan to dispose of certain locomotives deemed excess and no longer needed for railroad operations. Specifically, during the first quarter of 2020, the Company recorded a charge related to the loss on the sale of approximately 300 locomotives disposed of in the first quarter, and a write-down of approximately 400 additional locomotives that we are actively marketing to sell. Accordingly, a $385 million loss was recorded to adjust their carrying amount to their estimated fair value. The loss on asset disposal reduced "Earnings per share – diluted" by $1.11.

2. Stock Repurchase Program

We repurchased and retired 2.6 million and 2.9 million shares of common stock under our stock repurchase program during the first three months of 2020 and 2019, respectively, at a cost of $466 million and $500 million, respectively.

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 in 2019, reflecting deposits held by a third-party bond agent as collateral for certain debt obligations which matured on October 1, 2019.

Railway Operating Revenues Analysis

	Revenues				Units				Revenue per Unit
			($ in millions)				(in thousands)				($ per unit)

Commodity and Period	2019		2018		2019		2018		2019		2018

First Quarter
Agriculture, forest and consumer products	$	558	$	594		190.7		211.2	$	2,927	$	2,811
Chemicals		507		400		145.0		106.5		3,495		3,751
Metals and construction		370		368		164.4		185.6		2,255		1,985
Automotive		251		243		98.1		102.8		2,557		2,362
Merchandise		1,686		1,605		598.2		606.1		2,819		2,647
Intermodal		719		678		1,071.0		1,049.2		671		647
Coal		435		434		236.3		249.1		1,839		1,743
Total	$	2,840	$	2,717		1,905.5		1,904.4		1,490		1,427

Second Quarter
Agriculture, forest and consumer products	$	577	$	629		200.6		221.7	$	2,875	$	2,839
Chemicals		544		396		153.7		108.1		3,541		3,670
Metals and construction		384		440		182.1		221.0		2,104		1,986
Automotive		251		253		101.8		104.7		2,471		2,421
Merchandise		1,756		1,718		638.2		655.5		2,751		2,621
Intermodal		701		714		1,048.5		1,091.8		668		654
Coal		468		466		258.3		273.6		1,815		1,704
Total	$	2,925	$	2,898		1,945.0		2,020.9		1,504		1,434

Third Quarter
Agriculture, forest and consumer products	$	572	$	653		191.7		223.2	$	2,984	$	2,926
Chemicals		535		426		148.2		114.6		3,609		3,719
Metals and construction		377		413		182.5		209.6		2,066		1,972
Automotive		247		245		99.5		98.4		2,480		2,486
Merchandise		1,731		1,737		621.9		645.8		2,783		2,690
Intermodal		707		746		1,059.9		1,116.2		668		669
Coal		403		464		218.7		255.8		1,842		1,812
Total	$	2,841	$	2,947		1,900.5		2,017.8		1,495		1,461

Fourth Quarter
Agriculture, forest and consumer products	$	549	$	647		180.7		217.6	$	3,036	$	2,974
Chemicals		506		412		142.0		112.7		3,565		3,652
Metals and construction		330		375		156.1		183.4		2,119		2,044
Automotive		245		250		95.3		98.0		2,563		2,550
Merchandise		1,630		1,684		574.1		611.7		2,839		2,752
Intermodal		697		755		1,027.8		1,118.5		678		675
Coal		363		457		200.7		255.0		1,811		1,792
Total	$	2,690	$	2,896		1,802.6		1,985.2		1,492		1,458

Year
Agriculture, forest and consumer products	$	2,256	$	2,523		763.7		873.7	$	2,953	$	2,888
Chemicals		2,092		1,634		588.9		441.9		3,553		3,697
Metals and construction		1,461		1,596		685.1		799.6		2,133		1,996
Automotive		994		991		394.7		403.9		2,517		2,453
Merchandise		6,803		6,744		2,432.4		2,519.1		2,797		2,677
Intermodal		2,824		2,893		4,207.2		4,375.7		671		661
Coal		1,669		1,821		914.0		1,033.5		1,826		1,762
Total	$	11,296	$	11,458		7,553.6		7,928.3		1,495		1,445