ANNUAL REPORT
N O R T H
C A R O L I N A
R A I L R O A D
COMPA N Y
2022
THE NORTH CAROLINA
RAILROAD COMPANY (NCRR)
owns and manages the 317-mile
rail corridor that stretches from
Charlotte to the Port Terminal in
Morehead City. Our rail corridor is
a rich asset and valuable business
franchise, which we proudly grow
and protect to benefit North
Carolina. NCRR is a private
business corporation with one
hundred percent of the stock
owned by the state of
North Carolina.
The North Carolina
Railroad Company’s
Ties to Progress
and Prosperity in
North Carolina
BUILDING A STRONG
FOUNDATION
MISSION
To benefit North Carolina
by aggressively leveraging the
unique strengths and capabilities
of the North Carolina Railroad Company.
VISION
A modernized railroad that meets the needs
of the future, expanding North Carolina’s
competitive advantage.
CORE VALUES
• Collaborate to forge meaningful partnerships
built on mutual respect and identifying solutions
• Earn trust by delivering, act with integrity
• Innovate through fostering growth, conscientious
listening, challenging assumptions and
encouraging new ideas
• Cultivate inclusivity by welcoming feedback,
removing barriers to success, and providing a safe
space for transparent communication
• Encourage diversity, creating strength by learning
from others and welcoming all points of view and
perspectives
• Constantly engage, centered around the well-being
of our employees and the protection & enhance-
ment of our resources as the company grows
As a representative for our Board of Directors and the
NCRR team, I am thrilled to report that 2022 was a highly
productive year for the North Carolina Railroad Company.
Building on the momentum of the previous year, we have
moved the needle toward our vision of a modernized and
competitive railroad company and an economic engine for
the state, one that meets and exceeds the expectations
of North Carolinians and continues to bring jobs and new
business into our state.
In 2022, our commitment to innovation and industrial
development, particularly in rural communities, continued
with the second year of our Build Ready Site (BRS)
program. This innovative program encourages local
economic growth and helps to attract new businesses
to our state by helping to reduce the risk of developing
rail served sites in North Carolina. The 2022 Award
Recipients include eight projects in seven counties and
an investment of $3.9 million for communities across
the state. Our economic development initiative, NCRR
Invests, has continued to support winning competitive
projects with significant investments in infrastructure
projects across the state.
These programs boost economic potential through job
creation and new business, and we are proud to support
the future prosperity of North Carolina.
In addition, NCRR made steady progress in 2022 bringing
new life to two significant railroad sites, the Raleigh Depot
in our state’s capital and the Former (1899) Passenger
Depot building in Greensboro. These properties bridge the
past and future in their communities and for the North
Carolina Railroad Company. We can’t wait to see both
properties realize their full potential as landmarks of
creativity and economic growth.
In closing, I would like to express my gratitude to the
dedicated NCRR team. Together, we are truly making a
dierence, and I have no doubt we will continue to bolster
economic opportunities across the state.
WILLIAM V. “BILL” BELL
CHAIRMAN
NORTH CAROLINA RAILROAD COMPANY
BOARD OF DIRECTORS
LETTER FROM
THE CHAIRMAN
Meet the
NORTH CAROLINA RAILROAD COMPANY
CARL WARREN
President & CEO
ROBERT DOBRONSKI
General Counsel
TRISH HAVER
Sr. Vice President of Business
Development & Head of Strategy
MICHELLE JENG
Chief Financial Ocer
CATHERINE KNUDSON
Chief of Sta
MASHAL AL KIRDASI
Systems Manager
DONALD ARANT, P.E.
Vice President, Engineering
JOANN BIAZZO-SMITH
Controller
MONIQUE BOOKER
Executive & HR Assistant
TEDDI BURNETT
Real Estate Representative
CONNOR CHRISTENSEN
Economic Development
Program Manager
TAELOR FIELDS
Real Estate Asset Manager
KRISTIAN FORSLIN, GISP, PLS
GIS and Survey Manager
HILARY KANUPP, C.A.
Archivist
DAVINA KILLINGSWORTH
Administrative Assistant
JUSTIN MADIGAN
Infrastructure Manager
NCRR TEAM
JASON MENDIETA
Director of Human Resources
JAMAR NIXON
Market Research Analyst
NANCY PICKETT
Business Process Specialist
JASMIN PRIDE-HARRIS
Paralegal & Contract Specialist
AMY SANDIDGE
Director of Sales & Commercial
Development
GLEDI SOFTA
Planning & Development Manager
JOE STALLINGS
Director of Economic Development
ILAN WAJSMAN
Vice President, Information
Technology
SUSAN WISNIEWSKI
Accounting Manager
EDWARD WU
Director of Engineering
In April 2022, Trish Haver joined the NCRR Leadership Team. Serving as Senior VP of Business Development
& Head of Strategy, Trish brings a wealth of executive experience in the transportation and maritime
industries, with previous roles as the CCO of Green Rock Distribution & Logistics in New Orleans, CEO of
Pyxis Associates, LLC, in New Orleans, and Vice President of Strategy and Industrial Development for the
Port of New Orleans and New Orleans Public Belt Railroad. After earning her BA in Linguistics and Marketing
from William & Mary, Trish started her career at Norfolk Southern Corporation, rising through the ranks
into several leadership roles in marketing, finance, and business development. During this time, she also
earned an MBA in Logistics and Ports Management from Old Dominion University, where she completed a
thesis analyzing the advantages of rail economics on global supply chains. Trish’s results-driven approach to
leadership helps her excel in business development, operations management, strategic planning, financial
analysis, and logistics management. We’re thankful to have her on the team and we look forward to her future
work bringing progress and prosperity to the state.
TRISH HAVER
Driving Growth and Innovation at the North Carolina Railroad Company
LEADERSHI P
SPOTLIGHT
PAGE 4
| NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022
NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022 |
PAGE 5
WILLIAM “BILL” V. BELL, Chairman
Durham
Executive Vice President/COO,
UDI Community Development
Corporation (UDI/CDC)
MICHAEL L. WEISEL
Vice Chairman
Raleigh
Managing Member, Capital Law
Group
JACOB F. ALEXANDER III
Salisbury
The Alexander Companies, Inc.
CHARLES BOWMAN
Charlotte
Retired, Bank of America
MICHAEL S. FOX
Greensboro
Partner, Tuggle Duggins, P.A.
MALCOMB COLEY
Charlotte
Central Region Private Leader &
Charlotte Managing Partner, EY
STEVE LERNER
Chapel Hill
Founder & Managing Partner, Blue
Hill Group
JAMES E. NANCE
Albemarle
Managing Member, North State
Acquisitions, LLC
TOMMY GLASGOW
Morehead City
Retired, Clancy & Theys
Construction Company
GEORGE ROUNTREE III
Wilmington
Attorney & Special Counsel,
Rountree Losee, LLP
FRANKLIN ROUSE
Leland
President, Rouse Insurance Agency,
Inc.
MICHAEL WALTERS
Fairmont
President, Claybourn Walters
Logging Co., Inc.
JORDAN WHICHARD
Raleigh
Chief Deputy Secretary, North
Carolina Department of Commerce
BOARD OF DIRECTORS
NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022 |
PAGE 5
Introduced in 2021 as a significant opportunity to invest in North Carolina’s communities,
the BRS program is designed to eliminate common roadblocks to economic advancement –
the availability of sites that are ready for development.
With an investment of $2.92 million from NCRR during its first year, the program
has proven to be a catalyst for growth by accelerating the available rail-served sites,
decreasing development risk, attracting new business to the state, and creating jobs.
The 2021 Build Ready Sites Award Recipients represent six North Carolina counties:
• Alexander County EDC Site in Taylorsville
(ALEXANDER COUNTY) $500,000 Award
• Butler Hill Site in Drexel
(BURKE COUNTY) $500,000 Award
• Eastfield Business Park in Selma
(JOHNSTON COUNTY) $750,000 Award
• Candor Property in Candor
(MONTGOMERY COUNTY) $500,000 Award
• Iron Horse Industrial Park in Aberdeen
(MOORE COUNTY) $167,670 Award
• Ayden Rail Site in Ayden
(PITT COUNTY) $500,000 Award
B U I L D
R E A D Y
SITES
2021
RECIPIENTS
PAGE 6
| NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022
BUILD READY SITES
Our Role in Building North Carolina’s Competitive Advantage
The North Carolina Railroad Company started the Build Ready Sites (BRS) program in 2021.
The program provides funding for potential rail-served sites to develop land and become “build
ready” to attract new businesses to the area. Award recipients must undergo a rigorous application
and site review process. Recipients can use BRS funds for land preparation (clearing/grading) and
critical water/sewer extension. This innovative program encourages business investment in the
state, fosters growth in local communities and expands North Carolina’s competitive edge.
Through this program, North Carolina is positioned for greater economic development opportunities
as rail-served sites are made build-ready without an upfront investment from a client. As a result,
communities can work proactively toward attracting new businesses.
12
COUNTY
RECIPIENTS
$6.82
MILLION
IN TOTAL
PROGRAM
AWARDS
NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022 |
PAGE 7
2022 marked the second year of success with the BRS program. The program had a 25%
increase in applications in its second year.
With even greater emphasis on establishing build-ready rail sites, we expect more
business development, available jobs, and prosperity in communities across the state.
In its second year, NCRR expanded the initiative with a $3.9 million investment in
eight projects across seven North Carolina counties for the 2022 Build Ready Sites
Award Recipients:
• Beaufort County Industrial Park
(BEAUFORT COUNTY) $500,000 Award
• Claremont International Rail Site
(CATAWBA COUNTY) $500,000 Award
• CAM Site
(CHATHAM COUNTY) $500,000 Award
• Midstate Development Center
(CHATHAM COUNTY) $500,000 Award
• Project Tin Cup
(IREDELL COUNTY) $500,000 Award
• Candor Downtown Site
(MONTGOMERY COUNTY) $500,000 Award
• 311 South Site
(RANDOLPH COUNTY) $500,000 Award
• Scotland Incubator Park
(SCOTLAND COUNTY) $400,000 Award
B U I L D
R E A D Y
SITES
2022
RECIPIENTS
NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022 |
PAGE 7
“We applaud the North Carolina Railroad Company and
its initiatives like the Build Ready Sites program that drive
greater economic potential across North Carolina. With this
innovative site readiness program, NCRR is accelerating the
development of rail-served sites, encouraging the creation of
new jobs, and bringing new business investment to our state.
Kudos to NCRR and to the successful applicants for this
latest round of funding awards.”
CHRISTOPHER CHUNG
CHIEF EXECUTIVE OFFICER
ECONOMIC DEVELOPMENT PARTNERSHIP OF NORTH CAROLINA
12
COUNTY
RECIPIENTS
14
TOTAL
PROJECTS
$6.82
IN TOTAL
PROGRAM
AWARDS
PAGE 8
| NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022
SUMITOMO FORESTRY
RAIL-SERVED SITE
NCRR is investing $200,000 to
help establish a rail-served site
in Archdale, where Sumitomo
Forestry America, a housing
and wood products company, is
building a manufacturing facility.
The new production facility will be
served by Norfolk Southern and
will increase yearly activity by 364
rail cars. This project will create
129 jobs in Randolph County with
an average salary of $45,782, over
$5,000 higher than the current
average wage in the area, and is
estimated to grow the state’s
economy by $308.3 million over
the next 12 years.
TECHNIMARK
Our $250,000 investment
will assist Technimark, a global
manufacturing provider for the
healthcare, consumer packaging,
and specialty industrial markets
with headquarters in Asheboro,
in expanding its operations in
Randolph County through the
construction of a new onsite rail
spur for Norfolk Southern. The
project will increase yearly activity
by 40 rail cars and create 220 new
jobs for the area with an average
salary of $44,290, nearly $4,000
more than the current average
wage in Randolph County.
NUCOR
NCRR is investing $750,000 to
assist Charlotte-based Nucor, the
largest producer of steel in the
United States, in building a new
micro mill steel plant in Lexington.
This addition will create 180 jobs
for skilled workers in Davidson
County, with an average salary of
$99,660, nearly double the current
average wage in the County. With
the expansion, Nucor expects to
produce 430,000 tons of rebar
annually made of nearly 100%
recycled material, a feat that
will establish the manufacturer
as a provider of the cleanest
sustainable steel globally.
NCRR INVESTS
Building a Foundation for North Carolina’s Economic Advancement
The NCRR Invests program evaluates requests for investments to address the freight rail infrastructure needs of
businesses considering North Carolina for locations or expansions. The goal of any NCRR investment is to drive job
creation, promote rail use, and support economic growth.
Since the creation of NCRR Invests in 2016, NCRR has committed over $17 million to help secure the new or
expanded locations of 18 manufacturing facilities, resulting in over 10,000 new jobs and local capital investment of
more than $11 billion by the companies locating to the state.
$2.8
MILLION
NCRR INVESTS
COMMITMENT
in 2022
NCRR INVESTS PROJECTS ANNOUNCED IN
2022
$2.8
MILLION
NCRR INVESTS
COMMITMENT
in 2022
“We look forward to partnering with North Carolina
Railroad Company on the development of this facility,
which will not only help builders and developers with
supply chain needs but will also contribute to the local
economy and community. We greatly appreciate the
support we received and will continue to share updates
as the project progresses.”
ATSUSHI IWASAKI
PRESIDENT
SUMITOMO FORESTRY AMERICA, INC.
VINFAST
NCRR is providing a significant
investment of $1 million to help
private auto manufacturer
VinFast establish an electric
vehicle assembly and battery
manufacturing facility in Chatham
County, the first for the company
in the United States. This project
will bring significant economic
growth to the area, including
7,500 new jobs, and the new
freight rail infrastructure serving
the facility will increase activity
by a minimum of 5,000
rail cars annually.
SERVICE OFFSITE SOLUTIONS
With an investment of $300,000,
NCRR is proud to be part of the
future of homebuilding with
the establishment of a new
manufacturing facility by Service
Osite Solutions, a supplier of
osite homebuilding solutions that
utilizes innovative processes and
high-tech equipment and tools.
This Sanford facility will be the
first home-building operation of
its kind to take advantage of this
groundbreaking approach in the
United States. The project will
increase activity by 150 rail cars
annually and will add 235 jobs
to Lee County, with an average
annual salary of $50,470 in an area
where the current average salary is
$42,516.
SHERWIN WILLIAMS
With a $300,000 investment
from NCRR, Sherwin Williams is
able to expand its current North
Carolina facility by 36,000
square feet and build a larger,
800,000-square-foot distribution
and fleet transportation center at
the Statesville site. This project
will create 183 jobs in Iredell
County, and the payroll impact
from these new positions will add
more than $10 million each year
to the local economy, as well as
increase rail activity by 600 rail
cars annually.
8,500
JOBS CREATED
in 2022
NEARLY
NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022 |
PAGE 9
ATTRACTING
OVER
$4.4
BILLION
IN PRIVATE
INVESTMENT
PAGE 10
| NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022
DOD/NS
FN
10
11
14
15
1
4
2
3
5
6
12
13
7
8
9 10
11
12
13
14
1
2
3
4
5
6
7
8
9
M
16
17
18
Company Jobs NCRR Company Date County
Created Invested Invested
1. Borealis Compounds 47 $225,000 $15 million May 2017 Alexander
2. Egger 770 $6.4 million $700 million Jul 2017 Davidson
3. JBB Packaging 50 $400,000 $11.9 million Nov 2018 Halifax
4. National Gypsum 51 $400,000 $25 million May 2017 New Hanover
5. Weitron 31 $467,000 $7 million Apr 2017 Martin
6. Edwards Wood Products 91 $450,000 $50 million Jul 2017 Scotland
7. Mountaire Farms 65
$650,000 $44 million Jan 2017 Scotland
8. Nestle Purina 300 $2.1 million $450 million Oct 2020 Rockingham
9. Charlotte Pipe and Foundry 400 $1.5 million $325 million June 2020 Stanly
10. Liberty Storage Solutions 50 $350,000 $8 million June 2021 Davie
11. Red Bull/Rauch/Ball 633 $700,000 $900 million July 2021 Cabarrus
12. Sherwin-Williams 183 $300,000 $324 million Feb 2022 Iredell
13. Service Offsite Solutions 235 $300,000 $18 million Mar 2022 Lee
14.
VinFast 7,500 $1 million $4 billion Mar 2022 Chatham
15. Nucor 180 $750,000 $350 million April 2022 Davidson
16. Technimark 220 $250,000 $62 million April 2022 Randolph
17. Sumitomo Forestry America, Inc 129 $200,000 $19.5 million Dec 2022 Randolph
18. Siemens Mobility 506 $1 million $220 million Mar 2023 Davidson
NCRR Invests
Company Jobs NCRR Company Date County
Created Invested Invested
Toyota 2,100 $35 million $3.79 billion Dec 2021 Randolph
Greensboro-Randolph Megasite
County NCRR Award Amount County NCRR Award Amount
Build Ready Sites
1. Alexander 2021 $500,000
2. Pitt 2021 $500,000
3. Johnston
2021 $750,000
4. Moore 2021 $167,000
5. Burke
2021 $500,000
6. Montgomery 2021 $500,000
7. Catawba
2022 $500,000
8. Iredell
2022 $500,000
9. Randolph 2022 $500,000
10. Chatham
2022 $500,000
11. Chatham 2022 $500,000
12. Montgomery
2022 $500,000
13. Scotland 2022 $400,000
14. Beaufort
2022 $500,000
NORTH CAROLINA
RAILROAD COMPANY
ECONOMIC DEVELOPMENT
NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022 |
PAGE 11
DOD/NS
FN
10
11
14
15
1
4
2
3
5
6
12
13
7
8
9 10
11
12
13
14
1
2
3
4
5
6
7
8
9
M
16
17
18
Company Jobs NCRR Company Date County
Created Invested Invested
1. Borealis Compounds 47 $225,000 $15 million May 2017 Alexander
2. Egger 770 $6.4 million $700 million Jul 2017 Davidson
3. JBB Packaging 50 $400,000 $11.9 million Nov 2018 Halifax
4. National Gypsum 51 $400,000 $25 million May 2017 New Hanover
5. Weitron 31 $467,000 $7 million Apr 2017 Martin
6. Edwards Wood Products 91 $450,000 $50 million Jul 2017 Scotland
7. Mountaire Farms 65
$650,000 $44 million Jan 2017 Scotland
8. Nestle Purina 300 $2.1 million $450 million Oct 2020 Rockingham
9. Charlotte Pipe and Foundry 400 $1.5 million $325 million June 2020 Stanly
10. Liberty Storage Solutions 50 $350,000 $8 million June 2021 Davie
11. Red Bull/Rauch/Ball 633 $700,000 $900 million July 2021 Cabarrus
12. Sherwin-Williams 183 $300,000 $324 million Feb 2022 Iredell
13. Service Offsite Solutions 235 $300,000 $18 million Mar 2022 Lee
14.
VinFast 7,500 $1 million $4 billion Mar 2022 Chatham
15. Nucor 180 $750,000 $350 million April 2022 Davidson
16. Technimark 220 $250,000 $62 million April 2022 Randolph
17. Sumitomo Forestry America, Inc 129 $200,000 $19.5 million Dec 2022 Randolph
18. Siemens Mobility 506 $1 million $220 million Mar 2023 Davidson
NCRR Invests
Company Jobs NCRR Company Date County
Created Invested Invested
Toyota 2,100 $35 million $3.79 billion Dec 2021 Randolph
Greensboro-Randolph Megasite
County NCRR Award Amount County NCRR Award Amount
Build Ready Sites
1. Alexander 2021 $500,000
2. Pitt 2021 $500,000
3. Johnston
2021 $750,000
4. Moore 2021 $167,000
5. Burke
2021 $500,000
6. Montgomery 2021 $500,000
7. Catawba
2022 $500,000
8. Iredell
2022 $500,000
9. Randolph 2022 $500,000
10. Chatham
2022 $500,000
11. Chatham 2022 $500,000
12. Montgomery
2022 $500,000
13. Scotland 2022 $400,000
14. Beaufort
2022 $500,000
PAGE 12
| NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022
More revitalization is coming to Lexington with a $220
million manufacturing facility built by Siemens Mobility,
a leading provider of sustainable and ecient transport
solutions with headquarters in Munich, Germany.
Based on work that began in 2022, and as part of our
economic development initiative NCRR Invests, the
North Carolina Railroad Company invested
$1 million in March of 2023 to help make
this project a reality. In partnership with
Davidson County, the City of Lexington,
the North Carolina Department
of Commerce, the North Carolina
Department of Transportation, the
North Carolina General Assembly,
and Norfolk Southern,
Siemens Mobility’s project
will establish this new east
coast manufacturing facility.
Siemens Mobility is a
global leader in
transportation solutions
and has over 39,000
employees worldwide. The facility will create a
substantial 506 new jobs for Davidson County, and
altogether, it’s estimated that these new jobs will pay
114% of the County’s current average annual wage.
NCRR’s investment will go toward the construction and
building materials for new on-site rail infrastructure
operations, an addition that will increase
annual rail activity by 264 rail cars. With the
creation of over 500 new jobs in the area
and a significant boost to the local and
state economy, this project is another
step toward positioning our state as a
nationwide leader in the rail industry.
This project is an excellent
example of how NCRR
contributes to NC’s
competitive advantage
through monetary
investments and its
strong rail expertise.
REACHING OUT FOR
PROSPERITY
114%
OF COUNTY’S
CURRENT AVERAGE
ANNUAL
WAGE
264
INCREASE
IN ANNUAL RAIL
ACTIVITY BY
RAIL CARS
506
NEW JOBS
CREATED
FOR DAVIDSON
COUNTY
REZONING FOR PROGRESS
In 2022, the North Carolina Railroad
Company completed a rezoning request
in Wake County to redevelop properties
located in downtown Raleigh’s Warehouse
District. This rezoning project and its benefit
for the local community was enthusiastically
passed by the Raleigh City Council in September 2022.
The newly rezoned properties are located at
320 W. Cabarrus Street and 327 West Davie Street.
This project will positively impact the community
for generations. The development will be walkable in
downtown Raleigh, close to the renovated Union Station
and continue to encourage economic prosperity in our
state’s capitol. The North Carolina Railroad Company is
thankful for our partnership with the City of
Raleigh to make this project a reality.
Our team is committed to helping
downtown Raleigh thrive. The Raleigh
Depot redevelopment project will
complement and support the revitalized
rail station in downtown Raleigh, which was
designed to spur new development as well as
encourage more passenger rail use. This Raleigh Depot
rezoning is a step toward realizing this community vision
of a re-energized downtown with more spaces to gather,
work, and live.
North Carolina Railroad continues to focus on community
revitalization with the new 1899 Depot Project in
Greensboro. Fostering partnership with the City of
Greensboro, the Preservation Greensboro Development
Fund, and Downtown Greensboro, Inc., NCRR will restore
a 123-year-old passenger depot located at 400 South Elm
Street in historic downtown Greensboro.
Built in 1899, the Richardsonian Romanesque landmark
originally boasted dormer windows with decorative
finials, elaborate brickwork with granite trim, a clay tile
roof, a canopy, and a three-story turret. A fire in 1927
damaged the roof and upper floor to such an extent that
the building was reduced to a utilitarian two-story flat
roof structure.
Vacant for more than a decade, the building sits at a
crossroads of usefulness. With a vision of restoration
over possible demolition, NCRR purchased the historic
structure from Norfolk Southern Railway in 2022. The
station was listed on the National Register of Historic
Places in April 1980 and is part of the Downtown
Greensboro Historic District; this makes it eligible to
receive historic-preservation tax credits from the state
and federal government. NCRR is currently working on
renovation designs and cost estimates and is eager to
begin work on the restoration, with input, support, and
coordination with local partners.
REVITALIZATION
IN GREENSBORO
PAGE 14
| NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022
This initial rendering by Clearscapes depicts
how the renovated building could appear.
NORTH CAROLINA RAILROAD COMPANY | ANNUAL REPORT 2022 |
PAGE 15
REVITALIZATION
IN GREENSBORO
c. 1909 view of the passenger station
on Elm Street in Greensboro, which was
built by Southern Railway in 1899.
The building as it appears today.
The top floor was damaged by fire in
1927 and refinished with a flat roof.
CORRIDOR MAP
DOD/NS
FN
Military Bases
Seaports
Airports
LOGISTICAL CENTERS
North Car
*Norfolk Southern Class I Freight Service
olina
Railroad Company
Norfolk Southern
CSX Transportation
Various Shortlines
FREIGHT ROUTES
Norfolk Southern
CSX Transportation
INTERMODAL TERMINALS
DOD/NS
FN
Military Bases
Seaports
Airports
LOGISTICAL CENTERS
North Car
*Norfolk Southern Class I Freight Service
olina
Railroad Company
Norfolk Southern
CSX Transportation
Various Shortlines
FREIGHT ROUTES
Norfolk Southern
CSX Transportation
INTERMODAL TERMINALS
NORTH CAROLINA
RAILROAD COMPANY
CORRIDOR
DOD/NS
FN
Military Bases
Seaports
Airports
LOGISTICAL CENTERS
North Car
*Norfolk Southern Class I Freight Service
olina
Railroad Company
Norfolk Southern
CSX Transportation
Various Shortlines
FREIGHT ROUTES
Norfolk Southern
CSX Transportation
INTERMODAL TERMINALS
The report accompanying these financial statements was issued by
BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of
BDO International Limited
,
a UK com
p
an
y
limited b
y
g
uarantee.
North Carolina Railroad Company
and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 2022 and 2021
North Carolina Railroad Company and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 2022 and 2021
North Carolina Railroad Company and Subsidiaries
Contents
Independent Auditor’s Report
3-4
Consolidated Financial Statements
Consolidated Balance Sheets 6-7
Consolidated Statements of Operations and Comprehensive Income 8
Consolidated Statements of Changes in Stockholder’s Equity 9
Consolidated Statements of Cash Flows 10
Notes to Consolidated Financial Statements 11-26
Tel: 919-754-9370
Fax: 919-754-9369
www.bdo.com
421 Fayetteville Street
Suite 300
Raleigh, NC 27601
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international
BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
3
Independent Auditor’s Report
Board of Directors and Stockholder
North Carolina Railroad Company and Subsidiaries
Raleigh, North Carolina
Opinion
We have audited the consolidated financial statements of North Carolina Railroad Company and
Subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 31,
2022 and 2021, and the related statements of operations and comprehensive income, changes in
stockholder’s equity, and cash flows for the years then ended, and the related notes to the
consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2022 and 2021, and the results
of its operations and its cash flows for the years then ended in accordance with accounting principles
generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United
States of America (“GAAS”). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the Company and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audits. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in the United States of
America, and for the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether
there are conditions or events, considered in the aggregate, that raise substantial doubt about the
Company’s ability to continue as a going concern within one year after the date that the
consolidated financial statements are issued or available to be issued.
4
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance
with GAAS will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. Misstatements are considered material if there is a substantial likelihood that, individually
or in the aggregate, they would influence the judgment made by a reasonable user based on the
consolidated financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, and design and perform audit procedures
responsive to those risks. Such procedures include examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control. Accordingly, no such
opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the consolidated financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the Company’s ability to continue as a going
concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit.
May 17, 2023
Consolidated Financial Statements
December 31, 2022 2021
Assets
Current assets:
Cash and cash equivalents 25,355,018$ 17,689,209$
Accounts receivable, net of allowance for doubtful accounts
of $102,022 and $74,516 for 2022 and 2021, respectively 337,191 704,450
Prepaid expenses 522,221 494,816
Total current assets 26,214,430 18,888,475
Property and equipment:
Roadway and land 7,848,742 7,848,742
Tracks, signals and bridges 415,167,718 415,167,718
Land 13,766,174 36,144,887
Buildings and improvements 19,555,091 19,570,087
Equipment and furniture 3,393,154 3,348,559
Construction in progress 9,468,080 9,226,824
469,198,959 491,306,817
Less accumulated depreciation
(279,143,658) (251,527,759)
Property and equipment, net 190,055,301 239,779,058
Other assets:
Investments reserved for capital projects 105,567,328 122,689,784
Long-term receivables 4,708,926 3,602,789
Other 47,384 66,037
Total other assets 110,323,638 126,358,610
Total Assets 326,593,369$ 385,026,143$
Consolidated Balance Sheets
North Carolina Railroad Company and Subsidiarie
s
6
December 31, 2022 2021
Liabilities and Stockholder's Equity
Current liabilities:
Accounts payable and accrued expenses 3,024,094$ 2,293,826$
Customer deposits 180,494 766,611
Current portion of unearned rent 200,455 200,455
Total current liabilities 3,405,043 3,260,892
Long-term liabilities:
Other liabilities 46,300 60,565
Deferred tax liability 471,405 497,294
Unearned rent, less current portion 9,421,363 9,621,818
Total long-term liabilities 9,939,068 10,179,677
Total liabilities 13,344,111 13,440,569
Stockholder's Equity:
Common stock, $0.50 par value; 10,000,000 shares authorized;
317 shares issued and outstanding 159 159
Additional paid-in capital 473,812,602 473,812,602
Accumulated deficit (159,287,159) (102,142,298)
Accumulated other comprehensive loss:
Unrealized loss on available-for-sale securities (1,276,344) (84,889)
Total stockholder's equity 313,249,258 371,585,574
Total Liabilites and Stockholder's Equity 326,593,369$ 385,026,143$
Consolidated Balance Sheets (continued)
North Carolina Railroad Company and Subsidiarie
s
See accompanying notes to consolidated financial statements.
7
Years Ended December 31, 2022 2021
Income:
Lease of roadway and land 16,929,447$ 16,723,415$
Other lease income 7,207,900 6,616,295
Total lease income 24,137,347 23,339,710
Expenses:
Wages and benefits 4,898,476 3,989,313
Professional fees 369,814 547,855
Contracted services 1,500,482 986,945
Franchise and property taxes 940,837 950,800
Insurance 352,101 320,204
Reporting and public relations 192,342 175,742
Depreciation 27,650,863 27,322,512
Engineering, surveying and mapping 239,316 762,919
Property and corridor management 423,911 304,848
Bad debt expense (recoveries) 14,492 (15,109)
General and administrative 1,206,185 1,469,506
Economic development 2,977,670 2,732,518
Total expenses 40,766,489 39,548,053
Operating loss (16,629,142) (16,208,343)
Other (Loss) Income:
Investment (loss) income, net of expenses (62,065) 5,482,242
Unrealized (loss) gain on marketable equity securities (15,672,819) 4,773,687
Other income 1,324,451 1,170,077
Project contributions (25,985,105) (25,000)
Other (loss) income, net (40,395,538) 11,401,006
Loss before income taxes (57,024,680) (4,807,337)
Income tax expense 120,181 113,384
Net Loss (57,144,861)$ (4,920,721)$
Other comprehensive (loss) income:
Unrealized (losses) gains on securities:
Unrealized holding losses (1,634,256)$ (888,440)$
Reclassification adjustments for unrealized holding gains
(losses) included in net loss 442,801 (143,403)
Other comprehensive loss (1,191,455) (1,031,843)
Comprehensive Loss (58,336,316)$ (5,952,564)$
Consolidated Statements of Operations and Comprehensive Income
North Carolina Railroad Company and Subsidiaries
See accompanying notes to consolidated financial statements.
8
Accumulated
Other Total
Additional Accumulated Comprehensive
Stockholder's
Shares Amount Paid-in Capital Deficit Income (Loss) Equity
Balance, December 31, 2020 317 159$ 462,774,353$ (97,221,577)$ 946,954$ 366,499,889$
Capital contributions - - 11,038,249 - - 11,038,249
Net loss and other comprehensive loss - - - (4,920,721) (1,031,843) (5,952,564)
Balance, December 31, 2021 317 159$ 473,812,602$ (102,142,298)$ (84,889)$ 371,585,574$
Net loss and other comprehensive loss - - - (57,144,861) (1,191,455) (58,336,316)
Balance, December 31, 2022 317 159$ 473,812,602$ (159,287,159)$ (1,276,344)$ 313,249,258$
North Carolina Railroad Company and Subsidiarie
s
Consolidated Statements of Changes in Stockholder's Equity
See accompanying notes to consolidated financial statements.
Common Stock
9
Accumulated
Other Total
Additional Accumulated Comprehensive
Stockholder's
Shares Amount Paid-in Capital Deficit Income (Loss) Equity
Balance, December 31, 2020 317 159$ 462,774,353$ (97,221,577)$ 946,954$ 366,499,889$
Capital contributions - - 11,038,249 - - 11,038,249
Net loss and other comprehensive loss - - - (4,920,721) (1,031,843) (5,952,564)
Balance, December 31, 2021 317 159$ 473,812,602$ (102,142,298)$ (84,889)$ 371,585,574$
Net loss and other comprehensive loss - - - (57,144,861) (1,191,455) (58,336,316)
Balance, December 31, 2022 317 159$ 473,812,602$ (159,287,159)$ (1,276,344)$ 313,249,258$
North Carolina Railroad Company and Subsidiarie
s
Consolidated Statements of Changes in Stockholder's Equity
See accompanying notes to consolidated financial statements.
Common Stock
9
Years Ended December 31, 2022 2021
Cash Flows from Operating Activities:
Net loss (57,144,861)$ (4,920,721)$
Adjustments to reconcile net loss to net cash and cash equivalents
provided by operating activities:
Bad debt expense (recoveries) 14,492 (15,109)
Depreciation 27,650,863 27,322,512
Loss on property and equipment contributed to projects 25,985,105 -
Deferred income tax benefit (25,889) (12,706)
Loss (income) from investments reserved for capital projects 15,734,884 (10,255,929)
Changes in operating assets and liabilities:
Accounts receivable 352,767 38,880
Prepaid expenses (27,405) (389,246)
Long-term receivable (1,106,137) (25,623)
Other assets 18,653 19,223
Accounts payable and accrued expenses 730,268 (6,725,460)
Customer deposits (586,117) 739,445
Unearned rent (200,455) (200,454)
Other liabilities (14,265) 2,705
Net cash and cash equivalents provided by operating activities 11,381,903 5,577,517
Cash Flows from Investing Activities:
Purchases of property and equipment (3,912,211) (1,843,401)
Maturity of certificate of deposit, net - 4,071,263
Transfer of unrestricted cash and cash equivalents to
investments reserved for capital projects - (5,000,015)
Purchases of investments (72,232,118)
(58,914,495)
Proceeds from sales of investments 72,428,235 58,905,873
Net cash and cash equivalents used in investing activities (3,716,094) (2,780,775)
Net increase in cash and cash equivalents 7,665,809 2,796,742
Cash and Cash Equivalents, at beginning of year 17,689,209 14,892,467
Cash and Cash Equivalents, at end of year 25,355,018$ 17,689,209$
Supplemental Disclosure of Cash Flows:
Cash paid for income taxes 202,092$ -$
Supplemental Disclosure of Non-Cash Transactions:
Property and equipment purchases in accounts payable -$ 654,333$
Non-cash capital contributions -$ 11,038,249$
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
North Carolina Railroad Company and Subsidiaries
10
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
11
1.
Organization and Nature of Business
The North Carolina Railroad Company and Subsidiaries, a North Carolina company (collectively
referred to as the “Company”), owns approximately 317 miles of continuous railroad line extending
from Charlotte, North Carolina to Morehead City, North Carolina. The Company’s railroad facilities
are operated by Norfolk Southern Railway Company (“NSR”). The State of North Carolina is the sole
owner of all the common stock of the Company.
N.C. Railroad, Inc. (“NCRI”), a wholly owned subsidiary of the North Carolina Railroad Company
(“NCRR”), was formed on December 15, 2006. NCRI conducts certain taxable activities, such as
leasing of commercial real estate, while NCRR conducts all tax-exempt activities, such as leasing of
railroad facilities and corridor management.
North Carolina Railroad Holdings I, LLC, a wholly owned subsidiary of NCRR, (“NCRR Holdings”) was
formed on April 5, 2016, for the purpose of acquiring real estate to be used in future economic
development projects of NCRR.
2.
Summary of Significant Accounting Policies
Basis of Accounting
The consolidated financial statements of the Company have been prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the United States of
America (“U.S. GAAP”).
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of NCRR and its wholly
owned subsidiaries, NCRI and NCRR Holdings. All intercompany transactions and balances have been
eliminated in consolidation.
Use of Estimates
In preparing its consolidated financial statements in conformity with U.S. GAAP, management is
required to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the consolidated balance sheet
date and the reported amounts of revenues and expenses during the reporting period. Significant
items subject to such estimates and assumptions include the useful lives of property and equipment.
Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or
less when purchased to be cash equivalents. Cash equivalents include money market funds. Cash
and cash equivalents that are restricted or designated by the Board of Directors for capital projects
are reported as investments reserved for capital projects in the accompanying consolidated balance
sheets. Cash and cash equivalents exclude amounts held in long-term investment portfolios as those
amounts are commingled with investments reserved for capital projects.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
12
At times, the Company places cash and cash equivalents and certificates of deposits with original
maturities of three months or more with financial institutions in amounts that are in excess of
Federal Deposit Insurance Company insurance limits. The Company has not experienced any losses
in such accounts. The financial condition of financial institutions is periodically reassessed, and the
Company believes the risk of any loss is minimal.
Certificate of Deposit
The Company purchased a certificate of deposit during the year ended December 31, 2020 that had
a maturity date between three and twelve months from the date of purchase. The certificate
matured during the year ended December 31, 2021.
Accounts Receivable
Accounts receivable are uncollateralized obligations due under lease agreements. The Company
provides an allowance for doubtful accounts equal to the estimated losses that are expected to be
incurred in their collection. The allowance is based on historical collection experience and
management’s review of the current status of the existing receivables. An account receivable is
considered to be past due if any portion of the receivable balance is outstanding for more than
30 days.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. The Company computes
depreciation using the straight-line method over the following estimated useful lives:
Estimated Useful Lives
(Years)
Buildings and improvements 25
Bridges 25
Tracks and signals 10
Equipment and furniture 3 - 7
Values of the properties included in Roadway and land approximate 1916 valuations by the Interstate
Commerce Commission. These properties represent fully depreciated roadway or undepreciated
land. The Company assesses long-lived assets for impairment whenever events or changes indicate
that the carrying amount of the assets may not be recovered based on estimated future
undiscounted cash flows. In the event such cash flows are not expected to be sufficient to recover
the carrying value of the assets, the useful lives of the assets are revised or the assets are written
down to their estimated fair values.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
13
Investments Reserved for Capital Projects
Investments reserved for capital projects consist of investments in marketable equity securities and
debt securities. The investments in debt securities are classified as available-for-sale and are
reported at fair value, with changes in net unrealized gains and losses included in other
comprehensive income, net of tax, if any. When debt securities are sold, gains and losses are
determined using the specific identification method. Marketable equity securities are reported at
fair value with all changes recorded through income. Realized and unrealized gains and losses are
determined by using the average cost method. Investments are classified as noncurrent due to the
board designations of investments for capital improvements. The Company reviews debt securities
when quoted market prices are less than cost to determine if the impairment is other than
temporary. Declines in the fair value of individual securities below their cost that are other than
temporary would result in write-downs of the individual securities to their fair value with such write
down being included in earnings as realized losses.
Long-Term Receivables
The Company’s long-term receivables primarily consist of receivables under tax credit revenue
agreements, plus accumulated interest.
Unearned Rent
The Company’s unearned rent consists of payments received in excess of the rent recognized on a
straight-line basis over the term of the underlying lease agreement.
Revenue Recognition
The Company’s operating income consists of the following and is recognized in accordance with the
Financial Accounting Standards Board’s (“FASB”) Topic 842, Leases:
Lease of roadway and land: Revenue received from property that is operated by NSR is
reflected in the consolidated statements of operations and comprehensive income on a
straight-line basis in accordance with the lease term in the Company’s lease arrangements.
Other lease income: The Company leases certain property that is not operated by NSR.
Revenue is reflected in the consolidated statements of operations and comprehensive
income on a straight-line basis in accordance with the lease term in the Company’s lease
arrangements. The Company also collects license fee revenue which is recognized in
accordance with the lease term. The Company defers recognition of contingent rentals until
the requirements are met.
Advertising
The Company incurred $32,870 and $70,782 in advertising costs in 2022 and 2021, respectively.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
14
Income Taxes
Pursuant to Section 11146 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act of
2005 (the “Act”), a substantial portion of the Company’s income is exempt from federal and state
income taxes. The activities that generate income which is not exempt from federal and state
income taxes pursuant to the Act are conducted in NCRI.
Deferred tax assets and liabilities are recognized by NCRI for the estimated future tax consequences
attributable to differences between the tax bases of assets and liabilities and their carrying amount
for financial reporting purposes. Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which the temporary differences are expected to be recovered or
settled. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that
the tax benefits will not be realized.
Recently Adopted Accounting Standards
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842)
(“ASU 2016-02”), which made certain targeted improvements to align, where necessary, lessor
accounting with the lessee accounting model and Topic 606, Revenue from Contracts with
Customers. However, lessor accounting remains largely consistent with the previous accounting
model under ASC Topic 840, Leases (“ASC 840”). The Company adopted ASU 2016-02 for the annual
period ending December 31, 2022 using the modified retrospective approach. Under this transition
provision, results for reporting period beginning on January 1, 2022 are presented under Topic 842
while prior period amounts continue to be reported and disclosed in accordance with the Company’s
historical accounting treatment under ASC 840. This guidance did not have a material impact on the
Company’s consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments, which is designed to provide financial
statement users with more information about the expected credit losses on financial instruments
and other commitments to extend credit held by a reporting entity at each reporting date. When
determining such expected credit losses, the guidance requires companies to apply a methodology
that reflects expected credit losses and requires consideration of a broader range of reasonable and
supportable information to inform credit loss estimates. This guidance is effective on a modified
retrospective basis for fiscal years beginning after December 15, 2022. The Company is currently
evaluating the impact this ASU will have on its consolidated financial statements.
3.
Fair Value Measurements
Accounting Standard Codification 820 (“ASC 820”), Fair Value Measurement, defines fair value as
the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction
between market participants at the measurement date.
ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure
fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize
the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
15
Level 1: Quoted market prices for identical assets or liabilities to which an entity has access
at the measurement date.
Level 2: Inputs and information other than quoted market indices included in Level 1 that are
observable for the asset or liability, either directly or indirectly. Level 2 inputs include:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets in markets that are not active;
Observable inputs other than quoted prices for the asset or liability; and
Inputs derived principally from, or corroborated by, observable market data by
correlation or by other means.
Level 3: Unobservable inputs for the asset or liability. Unobservable inputs should be used to
measure the fair value to the extent that observable inputs are not available.
Observable inputs reflect the assumptions market participants would use in pricing the asset or
liability developed from sources independent of the reporting entity; and unobservable inputs
reflect the reporting entity’s own assumptions about the assumptions market participants would use
in pricing the asset or liability developed based on the best information available in the
circumstances.
The following table summarizes the levels in the ASC 820 fair value hierarchy for the Company as
of:
December 31, 2022 Level 1 Level 2 Level 3 Total
Investments reserved for capital projects:
Cash and cash equivalents:
Board designated $ - $ - $ - $ -
Other 8,621,514 - - 8,621,514
Mutual funds:
Equity securities 57,391,940 - - 57,391,940
Fixed income
19,889,253 - - 19,889,253
Available for sale:
U.S Government and federal
agencies
- 5,999,636 - 5,999,636
Mortgage-backed securities
- 1,687,854 - 1,687,854
Collateralized mortgage obligations
- 3,101,103 - 3,101,103
Corporate debt securities
- 7,889,731 - 7,889,731
Foreign bonds
- 986,297 - 986,297
Total investments reserved for ca
p
ital
projects $ 85,902,707 $ 19,664,620 $ - $ 105,567,328
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
16
December 31, 2021 Level 1 Level 2 Level 3 Total
Investments reserved for capital projects:
Cash and cash equivalents:
Board designated $ 158,188 $ - $ - $ 158,188
Other 2,548,344 - - 2,548,344
Mutual funds:
Equity securities 62,608,029 - - 62,608,029
Fixed income 17,620,096 - - 17,620,096
Available for sale:
U.S Government and federal
agencies - 16,456,227 - 16,456,227
Mortgage-backed securities - 2,481,112 - 2,481,112
Collateralized mortgage obligations - 5,537,506 - 5,537,506
Corporate debt securities - 12,797,385 - 12,797,385
Foreign bonds - 2,482,897 - 2,482,897
Total investments reserved for capital
projects $ 82,934,657 $ 39,755,127 $ - $ 122,689,784
There were no purchases or sales of Level 3 investments nor any transfers into or out of Level 3
during the years ended December 31, 2022 and 2021.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and
accrued expenses, which qualify as financial assets and financial liabilities, approximate fair value
due to the relative terms and short maturity of these financial instruments. The carrying amount
for the long-term receivables approximates fair value primarily based on the terms of the underlying
tax credits receivable.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
17
4.
Investments Reserved for Capital Projects
The following is a summary of the investment portfolio by major classification included in
investments reserved for capital projects at:
Gross Gross
Amortized Unrealized Unrealized
December 31, 2022 Cost Gains Losses Fair Value
Cash and cash equivalents:
Board designated $ - $ - $ - $ -
Other
8,621,514 - - 8,621,514
Total Cash and cash equivalents 8,621,514 - - 8,621,514
Mutual funds:
Equity securities 59,800,664 141,298 (2,550,022) 57,391,940
Fixed income
22,998,190 - (3,108,937) 19,889,253
Total mutual funds 82,798,854 141,298 (5,658,959) 77,281,193
Available for sale:
U.S. government and federal
agencies 6,148,520 3,190 (152,074) 5,999,636
Mortgage-backed securities
1,817,707 - (129,853) 1,687,854
Collateralized mortgage
obligations
3,290,460 - (189,357) 3,101,103
Corporate debt securities
8,597,219 669 (708,157) 7,889,731
Foreign bonds
1,092,134 - (105,837) 986,297
Total available for sale
20,946,040 3,859 (1,285,278) 19,664,621
Total investments reserved for
capital projects $ 112,366,408 $ 145,157 $ (6,944,237) $ 105,567,328
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
18
Gross Gross
Amortized Unrealized Unrealized
December 31, 2021 Cost Gains Losses Fair Value
Cash and cash equivalents:
Board designated $ 158,188 $ - $ - $ 158,188
Other
2,548,344 - - 2,548,344
Total cash and cash equivalents 2,706,532 - - 2,706,532
Mutual funds:
Equity securities 52,037,318 10,799,108 (228,397) 62,608,029
Fixed income
18,035,873 391 (416,168)
17,620,096
Total mutual funds 70,073,191 10,799,499 (644,565) 80,228,125
Available for sale:
U.S. government and federal
agencies 16,524,204 72,081 (140,058) 16,456,227
Mortgage-backed securities 2,415,302 73,644 (7,834) 2,481,112
Collateralized mortgage
obligations 5,514,441 56,806 (33,741) 5,537,506
Corporate debt securities 12,872,364 70,283 (145,262) 12,797,385
Foreign bonds 2,375,378 147,664 (40,145) 2,482,897
Total available for sale 39,701,689 420,478 (367,040) 39,755,127
Total investments reserved for
capital projects $ 112,481,412 $ 11,219,977 $ (1,011,605) $ 122,689,784
Investment management fees, totaling $241,293 and $233,267, respectively, in 2022 and 2021, are
netted against investment (loss) income.
The Company recognized a net realized loss of $3,032,298 and a net realized gain of $3,233,399
during the years ended December 31, 2022 and 2021, respectively, on the sale of securities.
Accounting standards require management to evaluate certain investments whereby fair value is
below cost to determine when an investment is considered impaired, whether that impairment is
other-than-temporary, and the measurement of the impairment loss.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
19
The following table reflects the investments in an unrealized loss position as of December 31, 2022
and 2021 for which impairment loss has not been taken, aggregated by investment category and
length of time that the individual securities have been in a continuous loss position:
Less than 12 Months More than 12 Months Total
Unrealized Unrealized Unrealized
December 31, 2022 Fair Value Losses Fair Value Losses Fair Value Losses
U.S. government and
federal agencies
$3,196,650
$ (92,485) $1,957,998 $ (59,588) $5,154,648 $ (152,074)
Mortgage-backed securities 1,109,188 (46,347) 578,666 (83,506) 1,687,854 (129,853)
Collateralized mortgage
obligations 524,734 (41,372) 2,576,369 (147,985) 3,101,103 (189,357)
Corporate debt securities 2,796,257 (204,640) 5,007,805 (503,518) 7,804,062 (708,157)
Foreign bonds
- - 986,297 (105,837) 986,297 (105,837)
Total $ 7,626,829 $ (384,844) $11,107,134 $ (900,435) $18,733,963 $ (1,285,279)
Less than 12 Months More than 12 Months Total
Unrealized Unrealized Unrealized
December 31, 2021 Fair Value Losses Fair Value Losses Fair Value Losses
U.S. government and
federal agencies $11,548,823 $ (115,489) $ 871,265 $ (24,569) $12,420,088 $ (140,058)
Mortgage-backed securities 787,861 (7,834) - - 787,861 (7,834)
Collateralized mortgage
obligations 3,820,543 (33,741) - - 3,820,543 (33,741)
Corporate debt securities 8,636,108 (137,856) 205,529 (7,406) 8,841,637 (145,262)
Foreign bonds 2,052,535 (40,145) - - 2,052,535 (40,145)
Total $26,845,870 $ (335,065) $ 1,076,794 $ (31,975) $27,922,662 $ (367,040)
Management continually reviews the marketable securities portfolio and evaluates whether declines
in the fair value of securities should be considered other-than-temporary. Factored into this
evaluation are the general market conditions, the issuer’s financial condition and near-term
prospects, the recommendation of investment advisors and the length of time and extent to which
the market value has been less than cost and the Company’s ability and intent to hold the
investment until maturity. Any such losses are characterized in the period of determination as
investment loss and included in nonoperating income (loss).
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
20
Other-than-temporary does not mean permanent impairment. Management believes that the
securities that are in an unrealized loss position at December 31, 2022 and 2021 for which other-
than-temporary impairment was not taken will recover their losses. This assessment is based on the
length of time the securities have been in an unrealized loss position and the nature of the security
held. Management has determined that their available for sale securities are of high quality and the
Company has the intent and ability to hold these investments for a reasonable period of time
sufficient for a forecasted recovery of fair value.
The amortized cost and fair values of available for sale securities at December 31, 2022 and 2021
by contractual maturity are shown below. Actual expected maturities may differ from contractual
maturities because issuers may have the right to call or prepay obligations.
December 31, 2022
Amortized
Cost Fair Value
Available for sale:
Due within one year $ 3,348,245 $ 3,248,372
Due after one year through five years
15,099,249 14,109,792
Due after five years through ten years
1,434,421 1,361,595
Due after 10 years
1,064,126 944,860
Total $ 20,946,040 $ 19,664,620
December 31, 2021
Amortized
Cost Fair Value
Available for sale:
Due within one year $ 3,193,641 $ 3,188,427
Due after one year through five years 31,852,283 31,679,454
Due after five years through ten years 3,364,370 3,441,907
Due after 10 years 1,291,395 1,445,339
Total $ 39,701,689 $ 39,755,127
The Company’s investments reserved for capital projects were restricted as follows as of:
December 31, 2022 2021
Restricted under contracts $ 31,227,816 $ 27,951,220
Board designated funds 74,339,511 94,738,564
Investments reserved for capital projects $ 105,567,328 $ 122,689,784
See Note 6 below for discussion regarding the Company’s capital project commitments.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
21
5.
Trackage Rights Agreement and Leases on Roadway and Land
Prior to 1999, substantially all of the Company's assets were leased to NSR or its predecessors in two
leases originally dating back to 1895 and 1939. The terms of the leases did not require either the
Company or Norfolk Southern to renew the leases.
On August 10, 1999, the Board of Directors of the Company approved a Trackage Rights Agreement
("TRA”) concurrent with NSR terminating the original leases. The TRA's term is 15 years with two
15-year renewal options by NSR (45 years) for a base annual rental of $11,000,000 (minimum)
beginning January 1, 2000, with annual adjustments based upon an inflation index and a 4.5% annual
cap (arbitration of cap if it exceeds an average of 4.5% over any 7-year period). The TRA was
approved by the Surface Transportation Board on September 1, 1999. During 2012, NSR exercised
its option to renew the TRA for the 15-year period beginning January 1, 2015 and ending on
December 31, 2029.
The TRA grants exclusive freight trackage rights to NSR to conduct all freight operations over the
NCRR railroad line. Under federal law, the National Rail Passenger Corporation (“Amtrak”) operates
over NSR operated lines under agreements with NSR. NSR is obligated under the TRA to provide rail
service to all industries on the NCRR line. NSR is obligated to maintain the NCRR line and any
improvements made to the line by NSR for freight operations. Under the TRA, NSR does not have
financial responsibility for passenger improvements made by the Company, North Carolina
Department of Transportation (“NCDOT”), Amtrak, or other parties.
Under the TRA, approximately 38 parcels not used in railroad operations have been returned to the
Company for separate (non-NSR) management. These noncorridor properties are managed by the
Company after transition from NSR management. The TRA contains provisions for responsibility for
environmental matters by NSR and the Company.
NSR is responsible for any taxes on its freight operations. A Policy Planning Committee comprised
of NCRR and NSR representatives addresses all future planning issues, capital improvements, and
any disputes that arise under the TRA. In the event of any disagreements, NCRR and NSR are subject
to binding arbitration under the TRA.
A lease of certain properties in Charlotte, North Carolina to NSR (the “1968 Lease”) expires on
December 31, 2067 and provided for an annual rental of $81,319 through December 2018. The 1968
Lease provides that beginning on January 1, 2019, the annual rental for the remaining term of the
1968 Lease is 6% of the appraised value of the property on that date resulting in an annual payment
of $2,700,000. Under the terms of the 1968 Lease, all taxes connected with the property, except
income taxes, are paid by the lessee. The 1968 Lease was not affected by the TRA. During 2016, the
Company sold a portion of the property subject to the 1968 Lease. The 1968 Lease was not affected
by the sale.
Pursuant to agreements signed in each year since 2008, NCRR has assigned to NSR all of the NCRR
lines that constitute eligible railroad tracks solely for purposes of allowing NSR to qualify as an
eligible taxpayer with respect to such track and to claim tax credits under section 45G(a) for
qualified railroad track maintenance expenditures it pays or incurs during each year under
agreement with respect to such track. In exchange, NSR agrees to pay to NCRR fifty percent of the
tax credits NSR claims. Payment of the amount owed under the agreement is not due until the
amount of the allowable credit is not subject to further appeal, review or modification through
proceedings or otherwise.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
22
NSR Tax Credits
The Company’s long-term receivable balances primarily consist of tax credits and related accrued
interest receivable as follows:
December 31, 2022 2021
Tax credits receivable $ 4,270,000 $ 3,416,000
Accrued interest (interest rates of 3.5% to 4.5%) 275,381 159,330
Total tax credits and related accrued interest receivable $ 4,545,381 $ 3,575,330
The tax credits as of December 31, 2022 and 2021 were for the tax years 2018 to 2022 and tax years
2017 to 2021, respectively.
6.
Capital Commitments
Project Agreements and Contracts
As of December 31, 2022 and 2021, the Company has commitments under various individual project
agreements and other contracts totaling approximately $31 and 28 million, respectively. The
contractual commitments of the Company consist of capital improvement projects, American
Recovery and Reinvestment Act of 2009 (“ARRA”) and the Passenger Rail Investment and
Improvement Act of 2008 (“PRIIA”) High-Speed Passenger Rail improvement projects, and certain
economic development projects, including NCRR Invests projects. The commitments to ARRA/PRIIA
High-Speed Passenger Rail projects and NCRR Invests projects are described in more detail below.
The various individual projects, capital improvements and strategic investments to which capital is
committed are scheduled for completion between 2023 and 2026.
ARRA/PRIIA High-Speed Passenger Rail Projects
In 2011, the State of North Carolina was selected to receive certain federal grant awards through
ARRA and PRIIA for the capital funding of certain high speed intercity passenger rail projects, under
which NCDOT is the grantee of the awards. On December 15, 2010, the Company, the NCDOT, and
NSR entered into an Agreement on Principles (“AOP”), which outlined certain terms for capital
improvements within and along the NCRR corridor operated by NSR. On March 21, 2011, the
Company, NCDOT, NSR and Amtrak entered into a Definitive Service Outcomes Agreement (“DSOA”),
clarifying the individual parties’ responsibilities and further detailing the projects to be funded by
the grants to NCDOT. On March 21, 2012, the Company and the NCDOT entered into a Railroad
Corridor Property Acquisition Agreement (“RCPA”) regarding rail corridor property, including
acquisition of additional railroad corridor property needed in connection with certain projects
funded by the grants to NCDOT. Except as described below, as of December 31, 2017, substantially
all of the ARRA and PRIIA projects were completed. The Company has recorded capital contributions
and related assets for a portion of the improvements made by NCDOT.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
23
Under the AOP, DSOA, and RCPA, the Company has committed up to a total of $31,000,000 of capital
investment toward certain projects in order to assist in completion of certain track capacity
improvement projects and engineering. Out of its $31,000,000 commitment, the AOP and DSOA
provide that the Company reserve up to $10,000,000 for a Capital Reserve Fund, which is designated
by the Company for the purpose of making further capacity improvements to the NCRR line in the
future in order to improve passenger and freight train reliability caused by identified unacceptable
train delays. Investments by the Company under these agreements are ongoing and their costs are
to be applied against and reduce the Company’s commitment under the agreements. Through
December 31, 2022 and 2021, the Company has expended approximately $16.5 million and $16.4
million, respectively, of its commitments under these agreements. The Company also has committed
use of the Company’s rail corridor lands for such capacity and other related improvement projects.
NCRR Invests
NCRR Invests is an economic development initiative started in 2016 to create a competitive
advantage for the State of North Carolina in the recruitment of rail-served business and industry.
NCRR Invests works with economic development partners at the state and local level to provide
assistance to rail served companies that have committed to job creation in North Carolina. Through
December 31, 2022 and 2021, the Company has expended approximately $38.2 million and $11.6
million of its commitments under NCRR Invests project agreements, with an additional $8.2 million
and $9.9 million, respectively, committed. During fiscal year 2022, NCRR Invests conveyed
approximately 1,250 acres of land in northern Randolph County to Toyota as part of an economic
development project. The loss on the property contributed to the project totaled $25.9 million and
is reported as “Project contributions” within “Other (loss) income, net” on the accompanying
consolidated statements of operations and comprehensive income. NCRR Invests expenditures that
are not i) spent on NCRR property or ii) for the acquisition of NCRR owned assets, are expensed as
incurred and are reported as “Economic development” expenses on the accompanying consolidated
statements of operations and comprehensive income.
7.
Employee Benefit Plan and Deferred Compensation
The Company established a Safe Harbor 401(k) Plan effective January 1, 2012 to provide retirement
benefits for its employees. All full-time employees who meet certain eligibility requirements are
qualified to participate in the 401(k) Plan. Participants may make pre-tax deferrals up to 90% of
their compensation subject to Internal Revenue Service limitations. Participants are fully vested in
their contributions plus actual earnings thereon and any rollovers into their accounts. The Company
contributes 3% of the compensation of all eligible active participants. In addition, the Company may
elect each plan year whether to make a discretionary employer contribution on behalf of eligible
active participants. Employer contributions, including discretionary contributions, for the years
ended December 31, 2022 and 2021 were $202,465 and $133,150, respectively.
In 2013, the Company entered into a deferred compensation agreement with an officer. The
deferred compensation liability is fully vested at all times unless the officer is terminated for cause
as defined in the plan, at which time the deferred compensation balance would be forfeited in its
entirety. The plan requires annual employer contributions equal to a percentage of the officer’s
compensation plus an earnings component. The officer retired during 2020 and the full amount of
the deferred compensation liability outstanding at December 31, 2020 of $579,871 (included in
accounts payable and accrued expenses in the accompanying consolidated balance sheets) was paid
during the year ended December 31, 2021. The Company recognized $68,309 of expense related to
the plan during the year ended December 31, 2021.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
24
8.
Line of Credit
In July 2018, the Company executed a line of credit with a financial institution which provides
maximum borrowings of up to $5,000,000. The line of credit was renewed in May 2020 with a
maturity of July 2021 and has a variable interest rate at one-month LIBOR plus 0.85%, with a 1.0%
LIBOR floor, and is unsecured. The line of credit was renewed in July 2021, extending the term
through July 2023 at the same interest rate. There was no outstanding balance as of December 31,
2022 and 2021. The Company’s line of credit contains a restrictive covenant to maintain a minimum
liquidity. The Company was in compliance with respect to this covenant as of December 31, 2022.
9.
Future Minimum Lease Revenue
The Company derives income from leased commercial space and other property under non-
cancellable operating leases. Of the non-cancellable leases, one lease, described in Note 5,
comprises 70% of the lease income during the years ended December 31, 2022 and 2021. Rental
income received from this lease during 2022 and 2021 was approximately $16.9 million and $16.7
million, respectively. The remaining non-cancellable leases are related to the rental of commercial
space. Future minimum rent receipts, excluding renewal periods, on the non-cancellable operating
leases are as follows as of December 31, 2022:
Year ending December 31, Amount
2023 $ 20,590,185
2024 21,188,871
2025 21,160,177
2026 21,126,259
2027 22,287,983
Thereafter 150,058,753
Total $ 256,412,228
Minimum lease receipts do not include contingent rentals that may be received under certain leases.
The Company’s policy is to defer recognition of such contingent rentals until the requirements are
met. There was no contingent rental income during the years ended December 31, 2022 and 2021.
10.
City of Charlotte Lease Agreement
The Company and the City of Charlotte (“Charlotte”) entered into an agreement (“Lease
Agreement”) dated May 3, 2012, whereby Charlotte leased a segment of the North Carolina Railroad
corridor, approximately 2.7 miles in length parallel to the Company’s main line railroad tracks and
facilities, for the purpose of the extension of Charlotte’s LYNX Blue Line light rail transit system.
The Lease Agreement provides for a one time rent payment to be paid to the Company in the amount
of $11,760,000 for the 50 year lease term, all of which was received in full on October 16, 2013.
The Lease Agreement provides that Charlotte is responsible for all construction, operations,
maintenance, taxes, assessments and costs related to Charlotte’s use of the segment.
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
25
Coincident with the execution of the Lease Agreement, Charlotte entered into a Construction and
Reimbursement Agreement and an Operations Agreement with NSR related to Charlotte’s use of the
segment and the compatibility thereof with NSR’s operation and maintenance of the Company’s rail
line.
The Lease Agreement provides that design and construction is to be provided by Charlotte at its
expense, subject to the approval of the Company. The Lease Agreement is subject to early
termination, in which event a portion of the lease fee may be refundable. The Lease Agreement
contains one renewal term at a rate agreed upon by the parties, or in the absence of agreement,
based upon an appraised value.
The Company has recognized unearned rent liability as follows as of:
December 31, 2022 2021
Current portion $ 200,455 $ 200,455
Non-current portion 9,421,363 9,621,818
Total unearned rent liability $ 9,621,818 $ 9,822,273
11.
Income Taxes
The Company's loss before income taxes was as follows:
Years ended December 31, 2022 2021
Loss before income taxes:
Nontaxable entities $ (57,533,537) $ (5,297,629)
Taxable entity 508,857 490,292
Loss before income taxes $ (57,024,680) $ (4,807,337)
The difference between the federal income tax computed by the statutory federal income tax rate
of 21% and NCRI's income tax expense as reflected in the consolidated financial statements was as
follows:
Years ended December 31, 2022 2021
Income tax at statutory federal income tax rates $ 130,356 $ 111,430
(Decrease) increase attributable to:
State income tax, net of federal income tax benefit (7,949) 3,206
Other (2,226) (1,252)
Total $ 120,181 $ 113,384
North Carolina Railroad Company and Subsidiaries
Notes to Consolidated Financial Statements
26
The Company's taxable subsidiary, NCRI, has deferred income tax balances as follows at:
December 31, 2022 2021
Liability:
Property and equipment $ (471,405) $ (497,294)
Net deferred tax liability $ (471,405) $ (497,294)
The Company's total tax expense is summarized as follows:
Years ended December 31, 2022 2021
Current income tax expense $ 146,071 $ 126,090
Deferred income tax benefit (25,890) (12,706)
Total income tax expense $ 120,181 $ 113,384
12.
Commitments and Contingencies
The Company is subject to litigation in the ordinary course of business. Management believes that
any potential liability thereto is not material to the Company’s consolidated balance sheets and
results of operations.
13.
Subsequent Events
The Company has evaluated subsequent events and their potential effects on the accompanying
consolidated financial statements from December 31, 2022 (the date of the most recent
consolidated balance sheet presented) through May 17, 2023 (the date the accompanying
consolidated financial statements were available to be issued). No material recognizable events
were identified.
2809 HIGHWOODS BLVD
RALEIGH, NC 27604
WWW.NCRR.COM
@NCRAILROAD
NORTH CAROLINA RAILROAD COMPANY