nsc-20210630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended JUNE 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to___________

Commission File Number: 1-8339

NORFOLK SOUTHERN CORPORATION

(Exact name of registrant as specified in its charter)


Virginia		52-1188014
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Three Commercial Place		23510-2191
Norfolk,	Virginia
(Address of principal executive offices)		(Zip Code)
(757)		629-2680
(Registrant’s telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed since last report)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class	Outstanding at June 30, 2021
Common Stock ($1.00 par value per share)	246,972,217	(excluding 20,320,777 shares held by the registrant’s
	consolidated subsidiaries)

TABLE OF CONTENTS

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES


		Page
Part I.	Financial Information:
	Item 1.	Financial Statements:
		Consolidated Statements of Income Second Quarter and First Six Months of 2021 and 2020	3
		Consolidated Statements of Comprehensive Income Second Quarter and First Six Months of 2021 and 2020	4
		Consolidated Balance Sheets At June 30, 2021 and December 31, 2020	5
		Consolidated Statements of Cash Flows First Six Months of 2021 and 2020	6
		Consolidated Statements of Changes in Stockholders’ Equity Second Quarter and First Six Months of 2021 and 2020	7
		Notes to Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 4.	Controls and Procedures	28

Part II.	Other Information:
	Item 1.	Legal Proceedings	29
	Item 1A.	Risk Factors	29
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 6.	Exhibits	30

		Signatures	31

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)


	Second Quarter				First Six Months
	2021		2020		2021		2020
	($ in millions, except per share amounts)

Railway operating revenues	$	2,799	$	2,085	$	5,438	$	4,710

Railway operating expenses
Compensation and benefits	624		586		1,235		1,208
Purchased services and rents	429		372		822		775
Fuel	188		84		365		273
Depreciation	294		282		586		574
Materials and other	97		151		248		317
Loss on asset disposal	—		—		—		385

Total railway operating expenses	1,632		1,475		3,256		3,532

Income from railway operations	1,167		610		2,182		1,178

Other income – net	35		49		42		71
Interest expense on debt	161		156		317		310

Income before income taxes	1,041		503		1,907		939

Income taxes	222		111		415		166

Net income	$	819	$	392	$	1,492	$	773

Earnings per share
Basic	$	3.29	$	1.53	$	5.96	$	3.01
Diluted	3.28		1.53		5.94		3.00

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)


	Second Quarter				First Six Months
	2021		2020		2021		2020
	($ in millions)

Net income	$	819	$	392	$	1,492	$	773
Other comprehensive income, before tax:
Pension and other postretirement benefits	10		6		21		13
Other comprehensive income of equity investees	—		1		—		6

Other comprehensive income, before tax	10		7		21		19
Income tax expense related to items of other
comprehensive income	(2)		(1)		(5)		(3)

Other comprehensive income, net of tax	8		6		16		16

Total comprehensive income	$	827	$	398	$	1,508	$	789

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)


	June 30, 2021		December 31, 2020
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	1,670	$	1,115

Accounts receivable – net	941		848
Materials and supplies	246		221
Other current assets	155		134
Total current assets	3,012		2,318

Investments	3,658		3,590
Properties less accumulated depreciation of $11,777
and $11,985, respectively	31,355		31,345
Other assets	729		709

Total assets	$	38,754	$	37,962

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,116	$	1,016

Income and other taxes	302		263
Other current liabilities	330		302
Current maturities of long-term debt	1,048		579
Total current liabilities	2,796		2,160

Long-term debt	12,669		12,102
Other liabilities	1,937		1,987
Deferred income taxes	7,035		6,922

Total liabilities	24,437		23,171

Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 246,972,217 and 252,095,082 shares,
respectively, net of treasury shares	248		254
Additional paid-in capital	2,240		2,248
Accumulated other comprehensive loss	(578)		(594)
Retained income	12,407		12,883

Total stockholders’ equity	14,317		14,791

Total liabilities and stockholders’ equity	$	38,754	$	37,962

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)


		First Six Months
		2021		2020
		($ in millions)
Cash flows from operating activities
	Net income	$	1,492	$	773
	Reconciliation of net income to net cash provided by operating activities:
	Depreciation	586		574
	Deferred income taxes	107		56
	Gains and losses on properties	(75)		(11)
	Loss on asset disposal	—		385

	Changes in assets and liabilities affecting operations:
	Accounts receivable	(96)		98
	Materials and supplies	(25)		(13)
	Other current assets	30		30
	Current liabilities other than debt	170		—
	Other – net	(92)		(134)

	Net cash provided by operating activities	2,097		1,758

Cash flows from investing activities
	Property additions	(627)		(735)
	Property sales and other transactions	66		258
	Investment purchases	(5)		(5)
	Investment sales and other transactions	37		(58)

	Net cash used in investing activities	(529)		(540)

Cash flows from financing activities
	Dividends	(496)		(482)
	Common stock transactions	6		26
	Purchase and retirement of common stock	(1,525)		(669)
	Proceeds from borrowings	1,087		784
	Debt repayments	(85)		(314)

	Net cash used in financing activities	(1,013)		(655)

	Net increase in cash and cash equivalents	555		563

Cash and cash equivalents
	At beginning of year	1,115		580

	At end of period	$	1,670	$	1,143

Supplemental disclosures of cash flow information
	Cash paid during the period for:
	Interest (net of amounts capitalized)	$	281	$	287
	Income taxes (net of refunds)	249		1

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)


	Common Stock		Additional Paid-in Capital		Accum. Other Comprehensive Loss		Retained Income		Total
	($ in millions, except per share amounts)

Balance at December 31, 2020	$	254	$	2,248	$	(594)	$	12,883	$	14,791

Comprehensive income:
Net income							673		673

SEC Form 10-Q filed by Norfolk Southern Corporation