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 MARCH 31, ~~2021~~2022

☐ 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~~650 West Peachtree Street NW		~~23510-2191~~30308-1925
~~Norfolk,~~Atlanta,	~~Virginia~~Georgia
(Address of principal executive offices)		(Zip Code)
~~(757)~~(855)		~~629-2680~~667-3655
(Registrant’s telephone number, including area code)


No ~~Change~~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 March 31, ~~2021~~2022
Common Stock ($1.00 par value per share)	~~250,241,009~~238,332,514	(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 First Quarter of ~~2021~~2022 and ~~2020~~2021	3
		Consolidated Statements of Comprehensive Income First Quarter of ~~2021~~2022 and ~~2020~~2021	4
		Consolidated Balance Sheets At March 31, ~~2021~~2022 and December 31, ~~2020~~2021	5
		Consolidated Statements of Cash Flows First Three Months of ~~2021~~2022 and ~~2020~~2021	6
		Consolidated Statements of Changes in Stockholders’ Equity First Quarter of ~~2021~~2022 and ~~2020~~2021	7
		Notes to Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2524
	Item 4.	Controls and Procedures	2524

Part II.	Other Information:
	Item 1.	Legal Proceedings	2625
	Item 1A.	Risk Factors	2625
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
	Item 3.	Defaults Upon Senior Securities	25
	Item 4.	Mine Safety Disclosures	25
	Item 5.	Other Information	26
	Item 6.	Exhibits	27

		Signatures	28

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

First Quarter
2021 2020
($ in millions, except per share amounts)
Railway operating revenues $ 2,639 $ 2,625
Railway operating expenses
Compensation and benefits 611 622
Purchased services and rents 393 403
Fuel 177 189
Depreciation 292 292
Materials and other 151 166
Loss on asset disposal 0 385
Total railway operating expenses 1,624 2,057
Income from railway operations 1,015 568
Other income – net 7 22
Interest expense on debt 156 154
Income before income taxes 866 436
Income taxes 193 55
Net income $ 673 $ 381
Earnings per share
Basic $ 2.67 $ 1.48
Diluted 2.66 1.47


	First Quarter
	2022		2021
	($ in millions, except per share amounts)

Railway operating revenues	$	2,915	$	2,639

Railway operating expenses
Compensation and benefits	619		611
Purchased services and rents	437		393
Fuel	301		177
Depreciation	302		292
Materials and other	171		151

Total railway operating expenses	1,830		1,624

Income from railway operations	1,085		1,015

Other income (expense) – net	(5)		7
Interest expense on debt	168		156

Income before income taxes	912		866

Income taxes	209		193

Net income	$	703	$	673

Earnings per share
Basic	$	2.94	$	2.67
Diluted	2.93		2.66

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

First Quarter
2021 2020
($ in millions)
Net income $ 673 $ 381
Other comprehensive income, before tax:
Pension and other postretirement benefits 11 7
Other comprehensive income of equity investees 0 5
Other comprehensive income, before tax 11 12
Income tax expense related to items of other comprehensive income (3) (2)
Other comprehensive income, net of tax 8 10
Total comprehensive income $ 681 $ 391


	First Quarter
	2022		2021
	($ in millions)

Net income	$	703	$	673
Other comprehensive income, before tax:
Pension and other postretirement benefits	6		11
Other comprehensive income of equity investees	6		—

Other comprehensive income, before tax	12		11
Income tax expense related to items of other comprehensive income	(4)		(3)

Other comprehensive income, net of tax	8		8

Total comprehensive income	$	711	$	681

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

March 31,
2021 December 31,
2020
($ in millions)
Assets
Current assets:
Cash and cash equivalents $ 998 $ 1,115
Accounts receivable – net 944 848
Materials and supplies 241 221
Other current assets 120 134
Total current assets 2,303 2,318
Investments 3,604 3,590
Properties less accumulated depreciation of $11,672
and $11,985, respectively 31,312 31,345
Other assets 718 709
Total assets $ 37,937 $ 37,962
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 1,043 $ 1,016
Income and other taxes 361 263
Other current liabilities 344 302
Current maturities of long-term debt 501 579
Total current liabilities 2,249 2,160
Long-term debt 12,116 12,102
Other liabilities 1,952 1,987
Deferred income taxes 6,977 6,922
Total liabilities 23,294 23,171
Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 250,241,009 and 252,095,082 shares,
respectively, net of treasury shares 251 254
Additional paid-in capital 2,241 2,248
Accumulated other comprehensive loss (586) (594)
Retained income 12,737 12,883
Total stockholders’ equity 14,643 14,791
Total liabilities and stockholders’ equity $ 37,937 $ 37,962


	March 31, 2022		December 31, 2021
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	1,571	$	839

Accounts receivable – net	1,070		976
Materials and supplies	264		218
Other current assets	110		134
Total current assets	3,015		2,167

Investments	3,697		3,707
Properties less accumulated depreciation of $12,123
and $12,031, respectively	31,657		31,653
Other assets	992		966

Total assets	$	39,361	$	38,493

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,181	$	1,351

Income and other taxes	443		305
Other current liabilities	370		312
Current maturities of long-term debt	1,153		553
Total current liabilities	3,147		2,521

Long-term debt	13,691		13,287
Other liabilities	1,845		1,879
Deferred income taxes	7,217		7,165

Total liabilities	25,900		24,852

Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 238,332,514 and 240,162,790 shares,
respectively, net of treasury shares	240		242
Additional paid-in capital	2,203		2,215
Accumulated other comprehensive loss	(394)		(402)
Retained income	11,412		11,586

Total stockholders’ equity	13,461		13,641

Total liabilities and stockholders’ equity	$	39,361	$	38,493

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

First Three Months
2021 2020
($ in millions)
Cash flows from operating activities
Net income $ 673 $ 381
Reconciliation of net income to net cash provided by operating activities:
Depreciation 292 292
Deferred income taxes 52 11
Gains and losses on properties (8) (8)
Loss on asset disposal 0 385
Changes in assets and liabilities affecting operations:
Accounts receivable (95) 32
Materials and supplies (20) (21)
Other current assets 9 (33)
Current liabilities other than debt 158 (40)
Other – net (46) (44)
Net cash provided by operating activities 1,015 955
Cash flows from investing activities
Property additions (265) (366)
Property sales and other transactions 37 158
Investment sales and other transactions 26 (25)
Net cash used in investing activities (202) (233)
Cash flows from financing activities
Dividends (249) (242)
Common stock transactions (6) 14
Purchase and retirement of common stock (591) (466)
Debt repayments (84) 0
Net cash used in financing activities (930) (694)
Net increase (decrease) in cash and cash equivalents (117) 28
Cash and cash equivalents
At beginning of year 1,115 580
At end of period $ 998 $ 608
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized) $ 110 $ 121
Income taxes (net of refunds) 27 16


		First Three Months
		2022		2021
		($ in millions)
Cash flows from operating activities
	Net income	$	703	$	673
	Reconciliation of net income to net cash provided by operating activities:
	Depreciation	302		292
	Deferred income taxes	48		52
	Gains and losses on properties	(6)		(8)
	Changes in assets and liabilities affecting operations:
	Accounts receivable	(94)		(95)
	Materials and supplies	(46)		(20)
	Other current assets	21		9
	Current liabilities other than debt	83		158
	Other – net	(17)		(46)

	Net cash provided by operating activities	994		1,015

Cash flows from investing activities
	Property additions	(389)		(265)
	Property sales and other transactions	36		37
	Investment purchases	(1)		—
	Investment sales and other transactions	19		26

	Net cash used in investing activities	(335)		(202)

Cash flows from financing activities
	Dividends	(297)		(249)
	Common stock transactions	(18)		(6)
	Purchase and retirement of common stock	(600)		(591)
	Proceeds from borrowings	989		—
	Debt repayments	(1)		(84)

	Net cash provided by (used in) financing activities	73		(930)

	Net increase (decrease) in cash and cash equivalents	732		(117)

Cash and cash equivalents
	At beginning of year	839		1,115

	At end of period	$	1,571	$	998

Supplemental disclosures of cash flow information
	Cash paid during the period for:
	Interest (net of amounts capitalized)	$	114	$	110
	Income taxes (net of refunds)	9		27

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

Balance at December 31, 2020		$	254	$	2,248	$	(594)	$	12,883	$	14,791
Balance at December 31, 2021												Balance at December 31, 2021	$	242	$	2,215	$	(402)	$	11,586	$	13,641

Comprehensive income:	Comprehensive income:											Comprehensive income:
Net income	Net income							673		673		Net income							703		703
Other comprehensive income	Other comprehensive income					8				8		Other comprehensive income					8				8
Total comprehensive income	Total comprehensive income									681		Total comprehensive income									711
Dividends on common stock,	Dividends on common stock,											Dividends on common stock,
$0.99 per share								(249)		(249)
$1.24 per share												$1.24 per share							(297)		(297)
Share repurchases	Share repurchases	(3)		(19)				(569)		(591)		Share repurchases	(2)		(19)				(579)		(600)
Stock-based compensation	Stock-based compensation			12				(1)		11		Stock-based compensation			7				(1)		6

Balance at March 31, 2021		$	251	$	2,241	$	(586)	$	12,737	$	14,643
Balance at March 31, 2022												Balance at March 31, 2022	$	240	$	2,203	$	(394)	$	11,412	$	13,461


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

Balance at December 31, 2019		$	259	$	2,209	$	(491)	$	13,207	$	15,184
Balance at December 31, 2020												Balance at December 31, 2020	$	254	$	2,248	$	(594)	$	12,883	$	14,791

Comprehensive income:	Comprehensive income:											Comprehensive income:
Net income	Net income							381		381		Net income							673		673
Other comprehensive income	Other comprehensive income					10				10		Other comprehensive income					8				8
Total comprehensive income	Total comprehensive income									391		Total comprehensive income									681
Dividends on common stock,	Dividends on common stock,											Dividends on common stock,
$0.94 per share								(242)		(242)
$0.99 per share												$0.99 per share							(249)		(249)
Share repurchases	Share repurchases	(2)		(21)				(443)		(466)		Share repurchases	(3)		(19)				(569)		(591)
Stock-based compensation	Stock-based compensation	1		17				(1)		17		Stock-based compensation			12				(1)		11

Balance at March 31, 2020		$	258	$	2,205	$	(481)	$	12,902	$	14,884
Balance at March 31, 2021												Balance at March 31, 2021	$	251	$	2,241	$	(586)	$	12,737	$	14,643

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly Norfolk Southern Corporation (Norfolk Southern) and subsidiaries’ (collectively, NS, we, us, and our) financial position at March 31, ~~2021,~~2022 and December 31, ~~2020,~~2021, our results of operations, comprehensive income and changes in stockholders’ equity for the first quarters of ~~2021~~2022 and ~~2020,~~2021, and our cash flows for the first three months of ~~2021~~2022 and ~~2020~~2021 in conformity with U.S. generally accepted accounting principles (GAAP).

These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our latest Annual Report on Form 10-K.

1. Railway Operating Revenues

The following table disaggregates our revenues by major commodity group:

First Quarter
2021 2020
($ in millions)
Merchandise:
Agriculture, forest and consumer products $ 539 $ 551
Chemicals 459 520
Metals and construction 370 367
Automotive 240 234
Merchandise 1,608 1,672
Intermodal 719 655
Coal 312 298
Total $ 2,639 $ 2,625


	First Quarter
	2022		2021
	($ in millions)
Merchandise:
Agriculture, forest and consumer products	$	573	$	539
Chemicals	498		459
Metals and construction	375		370
Automotive	226		240
Merchandise	1,672		1,608
Intermodal	854		719
Coal	389		312

Total	$	2,915	$	2,639

We recognize the amount of revenues to which we expect to be entitled for the transfer of promised goods or services to customers. A performance obligation is created when a customer under a transportation contract or public tariff submits a bill of lading to us for the transport of goods. These performance obligations are satisfied as the shipments move from origin to destination. As such, transportation revenues are recognized proportionally as a shipment moves, and related expenses are recognized as incurred. These performance obligations are generally short-term in nature with transit days averaging approximately one week or less for each commodity group. The customer has an unconditional obligation to pay for the service once the service has been completed. Estimated revenues associated with in-process shipments at period-end are recorded based on the estimated percentage of service completed. We had no material remaining performance obligations at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

We may provide customers ancillary services, such as switching, demurrage and other incidental activities, under their transportation contracts. These are distinct performance obligations that are recognized at a point in time when the services are performed or as contractual obligations are met. These revenues are included within each of the commodity groups and represent approximately 6%7% and 5%6% of total “Railway operating revenues” on the Consolidated Statements of Income for the first quarters ended March 31, ~~2021~~2022 and ~~March 31, 2020,~~2021, respectively.

Revenues related to interline transportation services that involve another railroad are reported on a net basis. Therefore, the portion of the amount that relates to another party is not reflected in revenues.

Under the typical terms of our freight contracts, payment for services is due within fifteen days of billing the customer, thus there are no significant financing components. “Accounts receivable – net” on the Consolidated Balance Sheets includes both customer and non-customer receivables as follows:

March 31,
2021 December 31, 2020
($ in millions)
Customer $ 722 $ 629
Non-customer 222 219
Accounts receivable – net $ 944 $ 848


	March 31, 2022		December 31, 2021
	($ in millions)

Customer	$	830	$	741
Non-customer	240		235

Accounts receivable – net	$	1,070	$	976

Non-customer receivables include ~~non-revenue-related~~non-revenue related amounts due from other railroads, governmental entities, and others. There were no non-current customer receivables at March 31, 2022, while “Other assets” on the Consolidated Balance Sheets includes ~~non-current customer receivables of~~ $23 million at ~~both March 31, 2021 and~~ December 31, ~~2020.~~2021. We do 0tnot have any material contract assets or liabilities at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

2. Stock-Based Compensation

First Quarter
2021 2020
($ in millions)
Stock-based compensation expense $ 16 $ 2
Total tax benefit 17 26


	First Quarter
	2022		2021
	($ in millions)

Stock-based compensation expense	$	23	$	16
Total tax benefit	13		17

During the first quarter of ~~2021,~~2022, we granted stock options, restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP), as follows:


		First Quarter			First Quarter
		Granted	Weighted-Average Grant-Date Fair Value				Granted	Weighted-Average Grant-Date Fair Value

Stock options	Stock options	42,770	$	62.49		Stock options	132,170	$	60.40
RSUs	RSUs	174,115	238.03			RSUs	154,901	268.48
PSUs	PSUs	49,940	240.61			PSUs	49,025	274.84

Stock Options

First Quarter
2021 2020
($ in millions)
Options exercised 212,546 523,238
Cash received upon exercise $ 19 $ 43
Related tax benefit realized 7 13


	First Quarter
	2022		2021
	($ in millions)

Options exercised	119,343		212,546
Cash received upon exercise	$	10	$	19
Related tax benefits realized	5		7

Restricted Stock Units

RSUs granted primarily have a four-year ratable restriction period and will be settled through the issuance of shares of Norfolk Southern common stock (Common Stock). Certain RSU grants include cash dividend equivalent payments during the restriction period in an amount equal to the regular quarterly dividends paid on Common Stock.

First Quarter
2021 2020
($ in millions)
RSUs vested 257,397 202,299
Common Stock issued net of tax withholding 182,289 143,712
Related tax benefit realized $ 7 $ 5


	First Quarter
	2022		2021
	($ in millions)

RSUs vested	243,301		257,397
Common Stock issued net of tax withholding	172,364		182,289
Related tax benefits realized	$	5	$	7

Performance Share Units

PSUs provide for awards based on the achievement of certain predetermined corporate performance goals at the end of a three-year cycle and are settled through the issuance of shares of Common Stock. All PSUs will earn out based on the achievement of performance conditions and some will also earn out based on a market condition. The market condition fair value was measured on the date of grant using a Monte Carlo simulation model.

First Quarter
2021 2020
($ in millions)
PSUs earned 78,727 235,935
Common Stock issued net of tax withholding 49,967 156,450
Related tax benefit realized $ 1 $ 7

~~3. Loss on Asset Disposal~~

In 2020, we sold 703 locomotives deemed excess and no longer needed for railroad operations. We evaluated these locomotive retirements and concluded they were abnormal. Accordingly, we recorded a $385 million loss to adjust their carrying amount to their estimated fair value, which resulted in a $97 million tax benefit.


	First Quarter
	2022		2021
	($ in millions)

PSUs earned	86,420		78,727
Common Stock issued net of tax withholding	54,651		49,967
Related tax benefits realized	$	1	$	1

4.3. Earnings Per Share

The following table sets forth the calculation of basic and diluted earnings per share:


		Basic				Diluted					Basic				Diluted
		First Quarter									First Quarter
		2021		2020		2021		2020			2022		2021		2022		2021
		($ in millions, except per share amounts, shares in millions)									($ in millions, except per share amounts, shares in millions)

Net income	Net income	$	673	$	381	$	673	$	381	Net income	$	703	$	673	$	703	$	673
Dividend equivalent payments	Dividend equivalent payments	(1)		(1)		0		(1)		Dividend equivalent payments	—		(1)		—		—

Income available to common stockholders	Income available to common stockholders	$	672	$	380	$	673	$	380	Income available to common stockholders	$	703	$	672	$	703	$	673

Weighted-average shares outstanding	Weighted-average shares outstanding	251.4		257.3		251.4		257.3		Weighted-average shares outstanding	239.3		251.4		239.3		251.4
Dilutive effect of outstanding options and share-settled awards	Dilutive effect of outstanding options and share-settled awards					1.2		1.4		Dilutive effect of outstanding options and share-settled awards					0.9		1.2
Adjusted weighted-average shares outstanding	Adjusted weighted-average shares outstanding					252.6		258.7		Adjusted weighted-average shares outstanding					240.2		252.6

Earnings per share	Earnings per share	$	2.67	$	1.48	$	2.66	$	1.47	Earnings per share	$	2.94	$	2.67	$	2.93	$	2.66

During the first quarters of ~~2021~~2022 and ~~2020,~~2021, dividend equivalent payments were made to certain holders of stock options and RSUs. For purposes of computing basic earnings per share, dividend equivalent payments made to holders of stock options and RSUs were deducted from net income to determine income available to common stockholders. For purposes of computing diluted earnings per share, we evaluate on a grant-by-grant basis those stock options and RSUs receiving dividend equivalent payments under the two-class and treasury stock methods to determine which method is more dilutive for each grant. For those grants for which the two-class method was more dilutive, net income was reduced by dividend equivalent payments to determine income available to common stockholders. ~~There are 0 options excluded from the~~The dilution calculations ~~due to~~exclude options having exercise prices exceeding the average market price of Common Stock ~~for~~as follows: 0.1 million and none in the first quarters ended March 31, 2022 and 2021, ~~and 2020.~~respectively.

5.4. Accumulated Other Comprehensive Loss

The changes in the cumulative balances of “Accumulated other comprehensive loss” reported in the Consolidated Balance Sheets consisted of the following:

Balance at
Beginning
of Year Net Income Reclassification
Adjustments Balance at
End of Period
($ in millions)
Three Months Ended March 31, 2021
Pensions and other postretirement liabilities $ (526) $ 0 $ 8 $ (518)
Other comprehensive income (loss) of equity investees (68) 0 0 (68)
Accumulated other comprehensive loss $ (594) $ 0 $ 8 $ (586)
Three Months Ended March 31, 2020
Pensions and other postretirement liabilities $ (421) $ 0 $ 5 $ (416)
Other comprehensive income (loss) of equity investees (70) 5 0 (65)
Accumulated other comprehensive loss $ (491) $ 5 $ 5 $ (481)


	Balance at Beginning of Year		Net Income		Reclassification Adjustments		Balance at End of Period
	($ in millions)
Three months ended March 31, 2022
Pensions and other postretirement liabilities	$	(356)	$	—	$	4	$	(352)
Other comprehensive income (loss) of equity investees	(46)		4		—		(42)

Accumulated other comprehensive loss	$	(402)	$	4	$	4	$	(394)

Three months ended March 31, 2021
Pensions and other postretirement liabilities	$	(526)	$	—	$	8	$	(518)
Other comprehensive loss of equity investees	(68)		—		—		(68)

Accumulated other comprehensive loss	$	(594)	$	—	$	8	$	(586)

6.5. Stock Repurchase Program

We repurchased and ~~retired 2.3~~retired 2.2 million and ~~2.6~~2.3 million shares of Common Stock under our stock repurchase program during the first three months of ~~2021~~2022 and ~~2020,~~2021, respectively, at a cost of $600 million and $591 million, ~~and $466 million,~~ respectively. On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $10.0 billion of Common Stock beginning April 1, 2022. Our previous share repurchase program terminated on March 31, 2022.

7.6. Investments

Investment in Conrail

Through a limited liability company, we and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC). We have a 58% economic and 50% voting interest in the jointly-owned entity, and CSX has the remainder of the economic and voting interests. Our investment in Conrail was $1.5 billion ~~and $1.4 billion~~ at both March 31, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021.

CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of Norfolk Southern Railway Company (NSR) and CSX Transportation, Inc. (CSXT). The costs of operating the Shared Assets Areas are borne by NSR and CSXT based on usage. In addition, NSR and CSXT pay CRC a fee for access to the Shared Assets Areas. “Purchased services and rents” and “Fuel” include expenses payable to CRC for operation of the Shared Assets Areas totaling ~~$34~~$38 million and ~~$35~~$34 million for the first quarters of ~~2021~~2022 and ~~2020,~~2021, respectively. Our equity in Conrail’s earnings, net of amortization, was $14 million ~~and $9 million~~ for both the first quarters of ~~2021~~2022 and ~~2020, respectively.~~2021. These amounts partially offset the costs of operating the Shared Assets Areas and are included in “Purchased services and rents.”

“Other liabilities” includes $534 million at both March 31, ~~2021,~~2022, and December 31, ~~2020~~2021 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of 1.31%.

Investment in TTX

We and 8 other North American railroads collectively own TTX Company (TTX), a railcar pooling company that provides its owner-railroads with standardized fleets of intermodal, automotive, and general use railcars at stated rates. We have a 19.65% ownership interest in TTX.

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” This amounted to ~~$63~~$64 million and ~~$60~~$63 million for the first quarters of ~~2021~~2022 and ~~2020,~~2021, respectively. Our equity in TTX’s earnings partially offsets these costs and totaled ~~$17~~$10 million and $4$17 million for the first quarters of ~~2021~~2022 and ~~2020,~~2021, respectively.

8.7. Debt

In February 2022, we issued $600 million of 3.00% senior notes due 2032 and $400 million of 3.70% senior notes due 2053.

We have in place an accounts receivable securitization program with a maximum borrowing capacity of $400 million and a term that expires in May ~~2021.~~2022. We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both March 31, ~~2021,~~2022 and December 31, ~~2020.~~2021.

9.8. Pensions and Other Postretirement Benefits

We have both funded and unfunded defined benefit pension plans covering eligible employees. We also provide specified health care benefits to eligible retired employees; these plans can be amended or terminated at our option. Under our self-insured retiree health care plan, for those participants who are not Medicare-eligible, certain health care expenses are covered for retired employees and their dependents, reduced by any deductibles, coinsurance, and, in some cases, coverage provided under other group insurance policies. Eligible retired participants and their spouses who are Medicare-eligible are not covered under the self-insured retiree health care plan, but instead are provided with an employer-funded health reimbursement account which can be used for reimbursement of health insurance premiums or eligible out-of-pocket medical expenses.

Pension and postretirement benefit cost components were as follows:

Other Postretirement
Pension Benefits Benefits
First Quarter
2021 2020 2021 2020
($ in millions)
Service cost $ 11 $ 10 $ 2 $ 1
Interest cost 13 19 2 3
Expected return on plan assets (48) (48) (3) (3)
Amortization of net losses 17 13 0 0
Amortization of prior service benefit 0 0 (6) (6)
Net benefit $ (7) $ (6) $ (5) $ (5)



	Pension Benefits				Other Postretirement Benefits
	First Quarter
	2022		2021		2022		2021
	($ in millions)
Service cost	$	10	$	11	$	1	$	2
Interest cost	17		13		2		2
Expected return on plan assets	(53)		(48)		(3)		(3)
Amortization of net losses	12		17		—		—
Amortization of prior service benefit	—		—		(6)		(6)

Net benefit	$	(14)	$	(7)	$	(6)	$	(5)

The service cost component of defined benefit pension cost and postretirement benefit cost are reported within “Compensation and benefits” and all other components of net benefit cost are presented in “Other income (expense) – net” on the Consolidated Statements of Income.

~~10.~~9. Fair Values of Financial Instruments

The fair values of “Cash and cash equivalents,” “Accounts receivable – net,” and “Accounts payable,” approximate carrying values because of the short maturity of these financial instruments. The carrying value of corporate-owned life insurance is recorded at cash surrender value and, accordingly, approximates fair value. There are no other assets or liabilities measured at fair value on a recurring basis at March 31, ~~2021~~2022 or December 31, ~~2020.~~2021. The carrying amounts and estimated fair values, based on Level 1 inputs, of long-term debt consist of the following:

March 31, 2021 December 31, 2020
Carrying
Amount Fair
Value Carrying
Amount Fair
Value
($ in millions)
Long-term debt, including current maturities $ (12,617) $ (15,249) $ (12,681) $ (16,664)


	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	($ in millions)


Long-term debt, including current maturities	$	(14,844)	$	(16,251)	$	(13,840)	$	(17,033)

~~11.~~10. Commitments and Contingencies

Lawsuits

We and/or certain subsidiaries are defendants in numerous lawsuits and other claims relating principally to railroad operations. When we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings and, if material, disclosed below. While the ultimate amount of liability incurred in any of these lawsuits and claims is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payment of such liability and claims. However, the final outcome of any of these lawsuits and claims cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known. For lawsuits and other claims where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed below. We routinely review relevant information with respect to our lawsuits and other claims and update our accruals, disclosures and estimates of reasonably possible ~~losses~~loss based on such reviews.

In 2007, various antitrust class actions filed against us and other Class I railroads in various Federal district courts regarding fuel surcharges were consolidated in the District of Columbia by the Judicial Panel on Multidistrict Litigation. In 2012, the court certified the case as a class action. The defendant railroads appealed this certification, and the Court of Appeals for the District of Columbia vacated the District Court’s decision and remanded the case for further consideration. On October 10, 2017, the District Court denied class certification. The decision was upheld by the Court of Appeals on August 16, 2019. Since that decision, various individual cases have been filed in multiple jurisdictions and also consolidated in the District of Columbia. We believe the allegations in the complaints are without merit and intend to vigorously defend the cases. We do not believe the outcome of these proceedings will have a material effect on our financial position, results of operations, or liquidity.

In 2018, a lawsuit was filed against one of our subsidiaries by the minority owner in a jointly-owned terminal railroad company in which our subsidiary has the majority ownership. The lawsuit alleged violations of various state laws and federal antitrust laws. It is reasonably possible that we could incur a loss in the case; however, we intend to vigorously defend the case and believe that we will prevail. The potential range of loss cannot be estimated at this time.

Casualty Claims

Casualty claims include employee personal injury and occupational claims as well as third-party claims, all exclusive of legal costs. To aid in valuing our personal injury liability and determining the amount to accrue with respect to such claims during the year, we utilize studies prepared by an independent actuarial consulting ~~actuarial~~ firm. Job-

related personal injury and occupational claims are subject to the Federal Employer’s Liability Act (FELA), which is applicable only to railroads. ~~FELA’s fault-based tort system produces results that are unpredictable and inconsistent as compared with a no-fault workers’ compensation system.~~ The variability inherent in ~~this~~FELA’s fault-based tort system could result in actual costs being different from the liability recorded. While the ultimate amount of claims incurred is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payments of claims and is supported by the most recent actuarial study. In all cases, we record a liability when the expected loss for the claim is both probable and reasonably estimable.

Employee personal injury claims – The largest component of claims expense is employee personal injury costs. The independent actuarial firm we engage provides quarterly studies to aid in valuing our employee personal injury liability and estimating personal injury expense. The actuarial firm studies our historical patterns of reserving for claims and subsequent settlements, taking into account relevant outside influences. The actuarial firm uses the results of these analyses to estimate the ultimate amount of liability. We adjust the liability quarterly based upon our assessment and the results of the study. The accuracy of our estimate of the liability is subject to inherent limitation given the difficulty of predicting future events such as jury decisions, court interpretations, or legislative changes. As a result, actual claim settlements may vary from the estimated liability recorded.

Occupational claims – Occupational claims include injuries and illnesses alleged to be caused by exposures which occur over time as opposed to injuries or illnesses caused by a specific accident or event. Types of occupational claims commonly seen allege exposure to asbestos and other claimed toxic substances resulting in respiratory diseases or cancer. Many such claims are being asserted by former or retired employees, some of whom have not been employed in the rail industry for decades. The independent actuarial firm provides an estimate of the occupational claims liability based upon our history of claim filings, severity, payments, and other pertinent facts. The liability is dependent upon judgments we make as to the specific case reserves as well as judgments of the actuarial firm in the quarterly studies. ~~The actuarial firm’s~~Our estimate of ultimate loss includes a provision for those claims that have been incurred but not reported. This provision is derived by analyzing industry data and projecting our experience. We adjust the liability quarterly based upon our assessment and the results of the study. However, it is possible that the recorded liability may not be adequate to cover the future payment of claims. Adjustments to the recorded liability are reflected in operating expenses in the periods in which such adjustments become known.

Third-party claims – We record a liability for third-party claims including those for highway crossing accidents, trespasser and other injuries, property damage, and lading damage. The actuarial firm assists us with the calculation of potential liability for third-party claims, except lading damage, based upon our experience including the number and timing of incidents, amount of payments, settlement rates, number of open claims, and legal defenses. We adjust the liability quarterly based upon our assessment and the results of the study. Given the inherent uncertainty in regard to the ultimate outcome of third-party claims, it is possible that the actual loss may differ from the estimated liability recorded.

Environmental Matters

We are subject to various jurisdictions’ environmental laws and regulations. We record a liability where such liability or loss is probable and reasonably estimable. Environmental specialists regularly participate in ongoing evaluations of all known sites and in determining any necessary adjustments to liability estimates.

Our Consolidated Balance Sheets include liabilities for environmental exposures of ~~$51~~$49 million at both March 31, ~~2021,~~2022 and ~~$54 million at~~ December 31, ~~2020,~~2021, of which $15 million is classified as a current liability at the end of both periods. At ~~both~~ March 31, ~~2021 and December 31, 2020,~~2022, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at ~~100~~89 known locations and ~~projects.~~projects compared with 88 locations and projects at December 31, 2021. At March 31, ~~2021, 17~~2022, 18 sites accounted for ~~$38~~$37 million of the liability, and no individual site was considered to be material. We anticipate that most of this liability will be paid out over five years; however, some costs will be paid out over a longer period.

At 118 locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under the Comprehensive Environmental Response, Compensation and

Liability Act of 1980 or comparable state statutes that impose joint and several liability for cleanup costs. We calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not solely on the basis of the potential for joint liability.

With respect to known environmental sites (whether identified by us or by the Environmental Protection Agency or comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the aggregate for all such sites can change over time because of the widely varying costs of currently available cleanup techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies, the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to bear it), and evolving statutory and regulatory standards governing liability.

The risk of incurring environmental liability for acts and omissions, past, present, and future, is inherent in the railroad business. Some of the commodities we transport, particularly those classified as hazardous materials, pose special risks that we work diligently to reduce. In addition, several of our subsidiaries own, or have owned, land used as operating property, or which is leased and operated by others, or held for sale. Because environmental problems that are latent or undisclosed may exist on these properties, there can be no assurance that we will not incur environmental liabilities or costs with respect to one or more of them, the amount and materiality of which cannot be estimated reliably at this time. Moreover, lawsuits and claims involving these and potentially other unidentified environmental sites and matters are likely to arise from time to time. The resulting liabilities could have a significant effect on financial position, results of operations, or liquidity in a particular year or quarter.

Based on our assessment of the facts and circumstances now known, we believe we have recorded the probable and reasonably estimable costs for dealing with those environmental matters of which we are aware. Further, we believe that it is unlikely that any known matters, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, or liquidity.

Insurance

We purchase insurance covering legal liabilities for bodily injury and property damage to third parties. This insurance provides coverage above $75 million and below $800 million ($1.1 billion for specific perils) per occurrence and/or policy year. In addition, we purchase insurance covering damage to property owned by us or in our care, custody, or control. This insurance covers approximately ~~85%~~87% of potential losses above $75 million and below $275 million per occurrence and/or policy year.

~~12.~~11. New Accounting Pronouncements

~~On January 1,~~In November 2021, ~~we adopted~~the Financial Accounting Standards Board issued Accounting Standards Update ~~2019-12,~~2021-10, “~~Simplifying the Accounting for Income Taxes~~Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” which ~~adds new guidance~~requires annual disclosures when an entity has received government assistance. Entities are required to ~~simplify~~disclose the types of government assistance received, the accounting treatment for ~~income taxes, changes~~that government assistance, and the ~~accounting for certain income tax transactions, and makes other minor changes. There was no material impact to~~effect of the government assistance on the financial ~~statements upon adoption.~~statements. The new standard is effective for annual periods beginning after December 15, 2021, and early adoption is permitted. We do not expect this standard to have a material effect on our disclosures. We did not adopt the standard early.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Norfolk Southern Corporation and Subsidiaries

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes.

OVERVIEW

We are one of the nation’s premier transportation ~~companies.~~companies, moving goods and materials that help drive the U.S. economy. We connect customers to markets and communities to economic opportunity with safe, reliable, and cost-effective shipping solutions. Our Norfolk Southern Railway Company subsidiary operates ~~approximately 19,300 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.~~Columbia. We are a major transporter of industrial products, including agriculture, forest and consumer products, chemicals, and metals and construction materials. In addition, in the East we serve every major container port and operate the most extensive intermodal ~~network in the East and~~network. We are also a principal carrier of coal, automobiles, and automotive parts.

~~Our first-quarter results reflect our sustained focus on margin improvement through~~Revenue grew 10% in the first quarter as a result of stronger average revenue per unit. Volumes declined compared to the prior year, partly attributable to lower network velocity, and we are progressing with initiatives to ~~drive organizational~~improve network fluidity and ~~operational efficiencies and grow~~resiliency for our ~~revenue base. Although challenging winter conditions adversely impacted our network, we were able to reduce expenses while absorbing~~customers. We experienced an increase in ~~total volume. As a result, we achieved a record quarterly~~fuel commodity prices, which led to higher fuel surcharge revenues and fuel expense. The overall increase in revenue drove improvements in income from railway ~~operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 61.5 percent and increased~~operations, net income and diluted earnings per share. However, the net impact of fuel prices on revenues and expenses contributed to the degradation of the operating ratio.

The COVID-19 pandemic continues to impact the U.S. and global economies and has resulted in ongoing supply chain challenges. We ~~continue~~are monitoring and reacting to ~~monitor~~ the ~~pace~~evolving nature of the ~~global economic recovery, particularly as it is influenced by the ongoing COVID-19 pandemic. The~~ pandemic, ~~caused significant economic disruption during 2020~~governmental responses, and ~~continues to generate uncertainty, impacting the health and availability of~~their impacts on our ~~employees and customers’ demand for our services.~~business, including employee availability. We remain committed to protecting our employees, operating safely, and providing excellent transportation service products for our customers.

SUMMARIZED RESULTS OF OPERATIONS

~~($ in millions, except per share amounts)~~


									First Quarter
		First Quarter					2022	2021			% change
		2021		2020		% change					($ in millions, except per share amounts)

Income from railway operations	Income from railway operations	$	1,015	$	568	79%				Income from railway operations	$	1,085	$	1,015	7%
Net income	Net income	$	673	$	381	77%				Net income	$	703	$	673	4%
Diluted earnings per share	Diluted earnings per share	$	2.66	$	1.47	81%				Diluted earnings per share	$	2.93	$	2.66	10%
Railway operating ratio (percent)	Railway operating ratio (percent)	61.5		78.4		(22%)				Railway operating ratio (percent)	62.8		61.5		2%

~~Our first-quarter 2021 financial results reflect significant increases in income~~Income from railway operations ~~net income~~increased due to higher railway operating revenues. Revenue growth was driven by higher fuel surcharge revenues and pricing gains, which exceeded the impact of a 5% volume decline. The rise in revenues was offset in part by increased railway operating expenses, driven by higher fuel prices, other inflationary pressures, and service-related costs. Our share repurchase activity resulted in the increase in diluted earnings per share ~~as prior year results were adversely impacted by a $385 million loss on asset disposal related to locomotives sold or designated as held-for-sale. For more information on~~that exceeded the ~~impact of this charge, see Note 3. Notwithstanding the prior year loss on asset disposal, railway operating expenses decreased as operational efficiency improvements resulted~~increase in reduced employment levels, lower materials costs, and improved fuel efficiency. Additionally, fuel prices were lower compared to 2020. Revenues were higher, a result of increased total volume that was partially offset by lower average revenue per unit as negative mix and lower fuel surcharge revenue more than offset pricing gains. Our railway operating ratio improved to 61.5 percent, a quarterly record.net income.

The following tables adjust our first-quarter 2020 GAAP financial results to exclude the loss on asset disposal. The income tax effect of this non-GAAP adjustment was calculated based on the applicable tax rates to which the non-GAAP adjustment related. We use these non-GAAP financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding the 2020 charge. While we believe that these non-GAAP financial measures are useful in evaluating our

business, this information should be considered as supplemental in nature and is not meant to be considered in isolation from, 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.

Non-GAAP Reconciliation for the First Quarter 2020
Reported Loss on Asset Disposal Adjusted
(non-GAAP)
($ in millions, except per share amounts)
Railway operating expenses $ 2,057 $ (385) $ 1,672
Income from railway operations $ 568 $ 385 $ 953
Income before income taxes $ 436 $ 385 $ 821
Income taxes $ 55 $ 97 $ 152
Net income $ 381 $ 288 $ 669
Diluted earnings per share $ 1.47 $ 1.11 $ 2.58
Railway operating ratio (percent) 78.4 (14.7) 63.7

~~In the table below, references and comparisons to first-quarter 2020 results use the adjusted, non-GAAP results from the reconciliation in the table above.~~

First Quarter
2021 Adjusted 2020
(non-GAAP) 2021 vs. Adjusted 2020 (non-GAAP)
($ in millions, except per share amounts) % change
Railway operating expenses $ 1,624 $ 1,672 (3%)
Income from railway operations $ 1,015 $ 953 7%
Income before income taxes $ 866 $ 821 5%
Income taxes $ 193 $ 152 27%
Net income $ 673 $ 669 1%
Diluted earnings per share $ 2.66 $ 2.58 3%
Railway operating ratio (percent) 61.5 63.7 (3%)

1817

DETAILED RESULTS OF OPERATIONS

Railway Operating Revenues

The following tables present a comparison of revenues ($ in millions), ~~volumes (units in~~units (in thousands), and average revenue per unit ($ per unit) by commodity group.


	First Quarter
Revenues	2022		2021		% change
Merchandise:
Agriculture, forest and consumer products	$	573	$	539	6%
Chemicals	498		459		8%
Metals and construction	375		370		1%
Automotive	226		240		(6%)
Merchandise	1,672		1,608		4%
Intermodal	854		719		19%
Coal	389		312		25%
Total	$	2,915	$	2,639	10%


		First Quarter
Revenues		2021		2020		% change
Units							Units
Merchandise:	Merchandise:						Merchandise:
Agriculture, forest and consumer products	Agriculture, forest and consumer products	$	539	$	551	(2%)	Agriculture, forest and consumer products	177.6	178.3	—%
Chemicals	Chemicals	459		520		(12%)	Chemicals	129.4	127.0	2%
Metals and construction	Metals and construction	370		367		1%	Metals and construction	148.0	155.0	(5%)
Automotive	Automotive	240		234		3%	Automotive	81.2	93.7	(13%)
Merchandise	Merchandise	1,608		1,672		(4%)	Merchandise	536.2	554.0	(3%)
Intermodal	Intermodal	719		655		10%	Intermodal	956.5	1,016.4	(6%)
Coal	Coal	312		298		5%	Coal	165.6	166.5	(1%)
Total	Total	$	2,639	$	2,625	1%	Total	1,658.3	1,736.9	(5%)

Units
Merchandise:
Agriculture, forest and consumer products 178.3 181.5 (2%)
Chemicals 127.0 142.3 (11%)
Metals and construction 155.0 154.9 —%
Automotive 93.7 90.4 4%
Merchandise 554.0 569.1 (3%)
Intermodal 1,016.4 955.1 6%
Coal 166.5 163.5 2%
Total 1,736.9 1,687.7 3%


Revenue per Unit	Revenue per Unit						Revenue per Unit
Merchandise:	Merchandise:						Merchandise:
Agriculture, forest and consumer products	Agriculture, forest and consumer products	$	3,026	$	3,036	—%	Agriculture, forest and consumer products	$	3,228	$	3,026	7%
Chemicals	Chemicals	3,615		3,653		(1%)	Chemicals	3,850		3,615		7%
Metals and construction	Metals and construction	2,386		2,370		1%	Metals and construction	2,535		2,386		6%
Automotive	Automotive	2,557		2,593		(1%)	Automotive	2,776		2,557		9%
Merchandise	Merchandise	2,903		2,939		(1%)	Merchandise	3,118		2,903		7%
Intermodal	Intermodal	708		685		3%	Intermodal	893		708		26%
Coal	Coal	1,872		1,826		3%	Coal	2,347		1,872		25%
Total	Total	1,519		1,556		(2%)	Total	1,758		1,519		16%

1918

Railway operating revenues increased ~~$14~~$276 million compared with the same period last year. The table below reflects the components of the revenue change by major commodity group ($ in millions).


		First Quarter						First Quarter
		Increase (Decrease)						Merchandise	Intermodal		Coal
		Merchandise		Intermodal		Coal					Increase (Decrease)

Volume	Volume	$	(44)	$	42	$	6			Volume	$	(51)	$	(42)	$	(2)
Fuel surcharge revenue	Fuel surcharge revenue	(25)		(6)		(3)				Fuel surcharge revenue	67		73		7
Rate, mix and other	Rate, mix and other	5		28		11				Rate, mix and other	48		104		72

Total	Total	$	(64)	$	64	$	14			Total	$	64	$	135	$	77

Approximately 90% of our revenue base is covered by contracts that include negotiated fuel surcharges. Revenues associated with these surcharges totaled $244 million and $97 million in 2022 and ~~$131 million in~~ 2021, ~~and 2020,~~ respectively. The ~~decrease~~increase in fuel surcharge revenues is driven by ~~lower~~higher fuel commodity prices. Should the current fuel price environment persist for the remainder of 2022, we expect fuel surcharge revenue to be higher than 2021.

Merchandise

Merchandise revenues ~~decreased~~increased due to ~~volume declines and lower~~higher average revenue per unit ~~a result of lower~~driven by higher fuel surcharge ~~revenue.~~revenue and increased pricing partially offset by decreased volume. Volumes fell as ~~gains~~declines in automotive and metals and construction shipments ~~were~~ more than offset ~~by declines in shipments of chemicals and agriculture, forest and consumer products.~~higher chemical shipments.

Agriculture, forest and consumer products volume decreased, as declines in corn, soybeans, and fertilizers more than offset increases in ethanol and feed. Decreased corn and fertilizer shipments were due to ~~the continued impact of COVID-19 on ethanol demand~~decreased customer demand. Soybean volumes were lower due to slower equipment cycle times. Ethanol and ~~the food service industry. This was partially offset by gains in soybeans~~feed shipments were higher due to increased ~~export opportunities and gains~~demand in ~~pulpboard due to increased e-commerce demand.~~those markets.

Chemicals volume declined due to the continued impact from COVID-19 and ongoing challenges in the energy market. Volumes were further impacted by disruptions resulting from winter storms. This was partially offset by volumerose as growth in ~~the~~shipments of solid waste ~~market due to~~and natural gas liquids more than offset declines in petroleum. Volume gains for solid waste and natural gas liquids were driven by increased ~~business~~growth with ~~new and~~ existing customers. Petroleum volume declined as a result of reduced demand.

Metals and construction volume ~~was flat.~~fell, largely the result of decreased shipments of coil steel, iron and steel driven by commodity pricing and slower equipment cycle times. These declines were partially offset by higher aggregates traffic due to strong demand and rebuilding inventories.

Automotive volume ~~was higher due to increased retail demand and production of vehicles, partially offset by volume declines in vehicle parts~~declined due to plant shutdowns, as a result of the global microchip shortage, and ~~disruptions associated with winter weather.~~slower equipment cycle times.

Merchandise revenues for the remainder of the year are expected to be higher due to increased ~~volumes and higher~~ average revenue per ~~unit.~~unit, driven by higher fuel surcharge revenue and pricing gains, and volume growth.

Intermodal

Intermodal revenues increased, ~~the result of volume growth and~~driven by higher average revenue per unit, ~~driven by~~a result of higher fuel surcharge revenues, pricing gains and ~~favorable mix.~~storage service charges, partially offset by lower volume.

2019

Intermodal units (in thousands) by market were as follows:

First Quarter
2021 2020 % change
Domestic 639.0 598.3 7%
International 377.4 356.8 6%
Total 1,016.4 955.1 6%


	First Quarter
	2022	2021	% change

Domestic	653.4	639.0	2%
International	303.1	377.4	(20%)

Total	956.5	1,016.4	(6%)

Domestic volume ~~grew~~rose due to ~~increased shipments originating from the West Coast~~strong demand, partially offset by labor and ~~tightened truck capacity.~~capacity constraints, overall supply chain congestion, and limited chassis availability. International volume ~~rose, the result of~~decreased as supply chain constraints with warehousing, drayage, terminals, ports, labor, and equipment more than offset strong ~~import~~consumer demand.

Intermodal revenues for the remainder of the year are expected to rise, driven by ~~volume growth and higher average revenue per unit due to~~ increased fuel surcharge ~~revenue.~~revenue, pricing gains, and volume growth, partially offset by lower storage service revenues.

Coal

Coal revenues increased due to higher average revenue per unit, ~~inclusive of a $12 million settlement for tonnage commitment shortfalls,~~driven by pricing gains and ~~volume increases.~~higher fuel surcharge revenue.

Coal tonnage (in thousands) by market was as follows:


		First Quarter			First Quarter
		2021	2020	% change			2022	2021	% change

Utility	Utility	8,546	8,898	(4%)		Utility	8,961	8,546	5%
Export	Export	6,693	6,069	10%		Export	6,414	6,693	(4%)
Domestic metallurgical	Domestic metallurgical	2,487	2,276	9%		Domestic metallurgical	2,430	2,487	(2%)
Industrial	Industrial	899	981	(8%)		Industrial	803	899	(11%)

Total	Total	18,625	18,224	2%		Total	18,608	18,625	—%

Coal tonnage ~~rose~~was flat due to increased utility volume, offset by reduced export, domestic metallurgical, and industrial tonnage. Utility tonnage increased due to strengthened market conditions driven by increased ~~export~~natural gas prices and ~~domestic~~the need to replenish depleted inventories. Export tonnage decreased due to service disruptions and tight coal supply. Domestic metallurgical ~~volumes from continued global economic recovery. This was partially offset by a decline in utility tonnage.~~coal tonnage fell due to reduced coke shipments related to customer sourcing changes. Industrial coal tonnage decreased due to sourcing challenges with coal supply.

Coal revenues for the remainder of the year are expected to ~~decline, a result of lower average~~rise due to increased revenue per unit, driven by increased fuel surcharge revenue and ~~reduced utility volume.~~pricing gains. Volumes are expected to remain flat.

2120

Railway Operating Expenses

Railway operating expenses summarized by major classifications follow ($ in millions):


		First Quarter					First Quarter
		2021		2020		% change			2022		2021		% change

Compensation and benefits	Compensation and benefits	$	611	$	622	(2%)		Compensation and benefits	$	619	$	611	1%
Purchased services and rents	Purchased services and rents	393		403		(2%)		Purchased services and rents	437		393		11%
Fuel	Fuel	177		189		(6%)		Fuel	301		177		70%
Depreciation	Depreciation	292		292		—%		Depreciation	302		292		3%
Materials and other	Materials and other	151		166		(9%)		Materials and other	171		151		13%
Loss on asset disposal		—		385		(100%)

Total	Total	$	1,624	$	2,057	(21%)		Total	$	1,830	$	1,624	13%

Compensation and benefits expense ~~decreased~~increased as follows:

•~~employment levels (down $51 million),~~

•~~health and welfare benefits for craft employees (down $9 million),~~

•~~overtime and recrews (up $7 million),~~

•increased pay rates (up $10 million),

•~~incentive~~overtime (up $9 million),

•stock-based and ~~stock-based~~incentive compensation (up ~~$22~~$8 million),

•employee activity levels (down $17 million), and

•other ~~(up $10~~(down $2 million).

Average rail headcount for the quarter ~~fell~~was down by ~~approximately 2,500~~over 500 compared with the first quarter of ~~2020.~~2021, but up over 200 compared to the fourth quarter of 2021.

Purchased services and rents ~~decreased~~increased as follows ($ in millions):


		First Quarter					First Quarter
		2021		2020		% change			2022		2021		% change

Purchased services	Purchased services	$	318	$	321	(1%)		Purchased services	$	349	$	318	10%
Equipment rents	Equipment rents	75		82		(9%)		Equipment rents	88		75		17%

Total	Total	$	393	$	403	(2%)		Total	$	437	$	393	11%

~~The decrease in purchased~~Purchased services ~~was~~increased due to ~~lower~~higher intermodal-related expenses, technology costs, as well as, increased operational and transportation ~~expenses and higher earnings of equity affiliates, which were partially offset by increased technology and volume-related intermodal~~ expenses. Equipment rents ~~decreased~~increased due to ~~higher~~lower equity in TTX earnings, increased automotive equipment expenses and greater time-and-mileage expense, partially offset by ~~increased~~decreased intermodal equipment expenses.

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, ~~decreased~~increased due to ~~reduced consumption (down 4%) and lower~~higher locomotive fuel prices (up 77%), partially offset by decreased consumption (down 4%2%). Should the current fuel price environment persist for the remainder of 2022, we expect higher fuel expenses compared to 2021.

2221

Materials and other expenses ~~decreased~~increased as follows ($ in millions):


		First Quarter					First Quarter
		2021		2020		% change			2022		2021		% change

Materials	Materials	$	61	$	72	(15%)		Materials	$	62	$	61	2%
Claims	Claims	38		42		(10%)		Claims	49		38		29%
Other	Other	52		52		—%		Other	60		52		15%

Total	Total	$	151	$	166	(9%)		Total	$	171	$	151	13%

Materials ~~expenses decreased due to lower maintenance requirements~~expense remained relatively flat. Claims expense increased as a result of ~~fewer locomotives and freight cars in service. Claims expenses decreased as a result of lower~~higher costs associated with personal injuries. Other expense ~~remained unchanged as reduced~~increased due to higher sales and use taxes and travel ~~expenses and higher income generated from operating properties was offset by lower gains from sales of operating property.~~expenses. Gains from operating property sales, included in Other, totaled $6 million and $4 million in 2022 and ~~$11 million in~~ 2021, ~~and 2020,~~ respectively.

Other income (expense) – net

Other income (expense) – net decreased ~~$15~~$12 million ~~driven primarily by~~due to lower net returns on corporate-owned life insurance ~~investments.~~(COLI) partially offset by a higher net pension benefit.

Income taxes

The first-quarter effective tax rate was ~~22.3%~~22.9% compared with ~~12.6% for~~22.3% in the same period last year. ~~First quarter 2020 included a $19 million income tax reduction upon the resolution of our 2012 amended federal return and higher~~The effective rate for 2022 reflects lower tax benefits on stock-based compensation ~~than those in 2021.~~and returns on COLI.

FINANCIAL CONDITION AND LIQUIDITY

Cash provided by operating activities, our principal source of liquidity, was $1.0 billion for both the first three months of ~~2021, compared with $955 million for the same period of 2020.~~2022 and 2021. We had negative working capital of ~~$54~~$132 million and ~~$158~~$354 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Cash and cash equivalents totaled ~~$998 million~~$1.6 billion at March 31, ~~2021.~~2022.

Cash used in investing activities was ~~$202~~$335 million for the first three months of ~~2021,~~2022, compared with ~~$233~~$202 million for the same period last year. The ~~decrease~~increase was primarily driven by ~~lower~~higher property ~~additions and increased corporate-owned life insurance activity, partially offset by lower property sales.~~additions.

Cash ~~used in~~provided by financing activities was ~~$930~~$73 million for the first three months of ~~2021, compared with $694~~2022, while $930 million was used in financing activities for the same period last year, reflecting increased proceeds from borrowing and lower debt repayments, partially offset by higher ~~repurchases of Common Stock and debt repayments.~~dividends. We repurchased ~~$591~~$600 million of Common Stock in the first three months of ~~2021~~2022 compared to ~~$466~~$591 million in the same period last year. On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to an additional $10.0 billion of Common Stock beginning April 1, 2022. Our previous share repurchase program terminated on March 31, 2022. The timing and volume of future share repurchases will be guided by our assessment of market conditions ~~cash flow~~ and other pertinent factors. Repurchases may be executed in the open market, through derivatives, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) under the Securities and Exchange Act of 1934. Any near-term purchases under the program are expected to be made with internally-generated cash, cash on hand, or proceeds from borrowings.

In February 2022, we issued $600 million of 3.00% senior notes due 2032 and $400 million of 3.70% senior notes due 2053.

Our debt-to-total capitalization ratio was ~~46.3%~~52.4% at March 31, ~~2021,~~2022, and ~~46.2%~~50.4% at December 31, ~~2020.~~2021. We have in place and available an $800 million credit agreement expiring in March 2025, which provides for borrowings at

prevailing rates and includes covenants. We had no amounts outstanding under this facility at March 31, ~~2021~~2022 or December 31, ~~2020.~~2021. We also have in place an accounts receivable securitization program with a maximum borrowing capacity of $400 million. The term expires in May ~~2021.~~2022. We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both March 31, ~~2021~~2022, and December 31, ~~2020.~~2021.

In addition, we have investments in general purpose corporate-owned life insurance policies and had the ability to borrow against these policies up to ~~$720~~$675 million and ~~$750~~$715 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

We expect cash on hand combined with cash provided by operating activities will be sufficient to meet our ongoing obligations. In addition, we believe our currently-available borrowing capacity, access to additional financing, and ability to reduce or defer expenditures on property additions and decrease shareholder distributions, including share repurchases, provide additional flexibility to meet our ongoing obligations. Nonetheless, we are monitoring the ongoing impacts of the COVID-19 pandemic, which could lead to a decline of cash inflows from operations. There have been no material changes to the information on future contractual obligations, including those that may have material cash requirements, contained in our Form 10-K for the year ended December 31, ~~2020.~~2021, with the exception of additional senior notes (see Note 7) and $1.0 billion of additional unconditional purchase obligations, which extend through 2025.

~~APPLICATION OF~~ CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. These estimates and assumptions may require judgment about matters that are inherently uncertain, and future events are likely to occur that may require us to make changes to these estimates and assumptions. Accordingly, we regularly review these estimates and assumptions based on historical experience, changes in the business environment, and other factors we believe to be reasonable under the circumstances. There have been no significant changes to the ~~application of the~~ critical accounting ~~policies~~estimates contained in our Form 10-K at December 31, ~~2020.~~ 2021.

OTHER MATTERS

Labor Agreements

Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. Pursuant to the Railway Labor Act, these agreements remain in effect until new agreements are reached, or until the bargaining procedures mandated by the Railway Labor Act are completed. We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee. Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements. The current round of bargaining commenced on November 1, 2019, with both management and the unions serving their formal proposals for changes to the collective bargaining agreements, and ~~direct~~ negotiations are ~~ongoing.~~ongoing with the assistance of mediators assigned by the National Mediation Board.

New Accounting Pronouncements

For a detailed discussion of new accounting pronouncements, see Note ~~12.~~11.

Inflation

In preparing financial statements, GAAP requires the use of historical cost that disregards the effects of inflation on the replacement cost of property. As a capital-intensive company, we have most of our capital invested in ~~long-lived~~long-

lived assets. The replacement cost of these assets, as well as the related depreciation expense, would be substantially greater than the amounts reported on the basis of historical cost.

FORWARD-LOOKING STATEMENTS

Certain statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or our achievements or those of our industry to be materially different from those expressed

or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “project,” “consider,” “predict,” “potential,” “feel,” or other comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates, beliefs, and projections. While we believe these expectations, assumptions, estimates, beliefs, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond our control. These and other important factors, including those discussed under “Risk Factors” in our latest Form 10-K, as well as our subsequent filings with the Securities and Exchange Commission, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements herein are made only as of the date they were first issued, and unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Additional Information

Investors and others should note that we routinely use the Investor Relations, Performance Metrics, and Sustainability sections of our website (www.norfolksouthern.com/content/nscorp/en/investor-relations.html, http://www.nscorp.com/content/nscorp/en/investor-relations/performance-metrics.html & www.nscorp.com/content/nscorp/en/about-ns/sustainability.html) to post presentations to investors and other important information, including information that may be deemed material to investors. Information about us, including information that may be deemed material, may also be announced by posts on our social media channels, including Twitter (www.twitter.com/nscorp) and LinkedIn (www.linkedin.com/company/norfolk-southern). We may also use our website and social media channels for the purpose of complying with our disclosure obligations under Regulation FD. As a result, we encourage investors, the media, and others interested in Norfolk Southern to review the information posted on our website and social media channels. The information posted on our website and social media channels is not incorporated by reference in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is included in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Financial Condition and Liquidity.”

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, with the assistance of management, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) at March 31, ~~2021.~~2022. Based on such evaluation, our officers have concluded that, at March 31, ~~2021,~~2022, our disclosure controls and procedures were effective in alerting them on a timely basis to material information required to be included in our periodic filings under the Exchange Act.

Changes in Internal Control Over Financial Reporting

During the first quarter of ~~2021,~~2022, we have not identified any changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~In 2007, various antitrust class actions filed against us~~For information on our legal proceedings, see Note 10 “Commitments and ~~other Class I railroads in various Federal district courts regarding fuel surcharges were consolidated~~Contingencies” in the District of Columbia by the Judicial Panel on Multidistrict Litigation. In 2012, the court certified the case as a class action. The defendant railroads appealed this certification, and the Court of Appeals for the District of Columbia vacated the District Court’s decision and remanded the case for further consideration. On October 10, 2017, the District Court denied class certification. The decision was upheld by the Court of Appeals on August 16, 2019. Since that decision, various individual cases have been filed in multiple jurisdictions and also consolidated in the District of Columbia. We believe the allegations in the complaints are without merit and intend to vigorously defend the cases. We do not believe the outcome of these proceedings will have a material effect on our financial position, results of operations, or liquidity.

Item 1A. Risk Factors

The risks set forth in “Risk Factors” included in our ~~2020~~2021 Form 10-K could have a material adverse effect on our financial position, results of operations, or liquidity in a particular year or quarter, and could cause those results to differ materially from those expressed or implied in our forward-looking statements. Those risks remain unchanged and are incorporated herein by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Period
(a) Total Number of Shares (or Units) Purchased (1)
(a) Total Number of Shares (or Units)
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be purchased under the Plans or Programs (2)
January 1-31, 2021 516,139 $ 246.03 515,572 20,173,200
February 1-28, 2021 806,030 250.96 806,030 19,367,170
March 1-31, 2021 1,003,194 260.81 1,002,802 18,364,368
Total 2,325,363 2,324,404


Period	(a) Total Number of Shares (or Units) Purchased (1)	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be purchased under the Plans or Programs (2)

January 1-31, 2022	710,845	$	282.97	710,641	7,329,432
February 1-28, 2022	713,439	268.21		713,439	6,615,993
March 1-31, 2022	755,546	274.63		754,866	5,861,127

Total	2,179,830			2,178,946

(1)Of this amount, ~~959~~884 represent shares tendered by employees in connection with the exercise of options under the stockholder-approved ~~Long-Term Incentive Plan.~~LTIP.

(2)On September 26, 2017, our Board of Directors authorized the repurchase of up to an additional 50 million shares of Common Stock through December 31, 2022. AsOn March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $10.0 billion of Common Stock beginning April 1, 2022. Our previous share repurchase program terminated on March 31, ~~2021, 18.4 million shares remain authorized for repurchase.~~2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits



1.1			Underwriting Agreement, dated February 15, 2022, among the Registrant and Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and U.S. Bancorp Investments, Inc., is incorporated by reference to Exhibit 1.1 of the Registrant’s Current Report on Form 8-K filed on February 17, 2022.

4.1			Eighth Supplemental Indenture, dated February 25, 2022, between the Registrant and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee, is incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed on February 25, 2022.

31-A*			Rule 13a-14(a)/15d-014(a) CEO Certifications.

31-B*			Rule 13a-14(a)/15d-014(a) CFO Certifications.

32*			Section 1350 Certifications.

101*			The following financial information from Norfolk Southern Corporation’s Quarterly Report on Form 10-Q for the first quarter of ~~2021,~~2022, formatted in Inline Extensible Business Reporting Language (iXBRL) includes (i) the Consolidated Statements of Income for the first quarter of ~~2021~~2022 and ~~2020;~~2021; (ii) the Consolidated Statements of Comprehensive Income for the first quarter of ~~2021~~2022 and ~~2020;~~2021; (iii) the Consolidated Balance Sheets at March 31, ~~2021~~2022 and December 31, ~~2020;~~2021; (iv) the Consolidated Statements of Cash Flows for the first three months of ~~2021~~2022 and ~~2020;~~2021; (v) the Consolidated Statements of Changes in Stockholders’ Equity for the first quarter of ~~2021~~2022 and ~~2020;~~2021; and (vi) the Notes to Consolidated Financial Statements.

104*			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		NORFOLK SOUTHERN CORPORATION Registrant



Date:	April ~~28, 2021~~27, 2022	/s/ ~~Clyde H. Allison, Jr.~~Claiborne L. Moore
		~~Clyde H. Allison, Jr.~~Claiborne L. Moore Vice President and Controller (Principal Accounting Officer) (Signature)


Date:	April ~~28, 2021~~27, 2022	/s/ Denise W. Hutson
		Denise W. Hutson Corporate Secretary (Signature)


	March 31, 2021		December 31, 2020
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	998	$	1,115

Accounts receivable – net	944		848
Materials and supplies	241		221
Other current assets	120		134
Total current assets	2,303		2,318

Investments	3,604		3,590
Properties less accumulated depreciation of $11,672
and $11,985, respectively	31,312		31,345
Other assets	718		709

Total assets	$	37,937	$	37,962

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,043	$	1,016

Income and other taxes	361		263
Other current liabilities	344		302
Current maturities of long-term debt	501		579
Total current liabilities	2,249		2,160

Long-term debt	12,116		12,102
Other liabilities	1,952		1,987
Deferred income taxes	6,977		6,922

Total liabilities	23,294		23,171

Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 250,241,009 and 252,095,082 shares,
respectively, net of treasury shares	251		254
Additional paid-in capital	2,241		2,248
Accumulated other comprehensive loss	(586)		(594)
Retained income	12,737		12,883

Total stockholders’ equity	14,643		14,791

Total liabilities and stockholders’ equity	$	37,937	$	37,962


	March 31, 2021		December 31, 2020
	($ in millions)

Customer	$	722	$	629
Non-customer	222		219

Accounts receivable – net	$	944	$	848



					Other Postretirement
	Pension Benefits				Benefits
	First Quarter
	2021		2020		2021		2020
	($ in millions)

Service cost	$	11	$	10	$	2	$	1
Interest cost	13		19		2		3
Expected return on plan assets	(48)		(48)		(3)		(3)
Amortization of net losses	17		13		0		0
Amortization of prior service benefit	0		0		(6)		(6)

Net benefit	$	(7)	$	(6)	$	(5)	$	(5)


	March 31, 2021				December 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	($ in millions)


Long-term debt, including current maturities	$	(12,617)	$	(15,249)	$	(12,681)	$	(16,664)


	Non-GAAP Reconciliation for the First Quarter 2020
	Reported		Loss on Asset Disposal		Adjusted (non-GAAP)
	($ in millions, except per share amounts)

Railway operating expenses	$	2,057	$	(385)	$	1,672
Income from railway operations	$	568	$	385	$	953
Income before income taxes	$	436	$	385	$	821
Income taxes	$	55	$	97	$	152
Net income	$	381	$	288	$	669
Diluted earnings per share	$	1.47	$	1.11	$	2.58
Railway operating ratio (percent)	78.4		(14.7)		63.7


	First Quarter
	2021		Adjusted 2020 (non-GAAP)		2021 vs. Adjusted 2020 (non-GAAP)
	($ in millions, except per share amounts)				% change

Railway operating expenses	$	1,624	$	1,672	(3%)
Income from railway operations	$	1,015	$	953	7%
Income before income taxes	$	866	$	821	5%
Income taxes	$	193	$	152	27%
Net income	$	673	$	669	1%
Diluted earnings per share	$	2.66	$	2.58	3%
Railway operating ratio (percent)	61.5		63.7		(3%)


Period	(a) Total Number of Shares (or Units) Purchased (1)	(a) Total Number of Shares (or Units)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be purchased under the Plans or Programs (2)

January 1-31, 2021	516,139	$	246.03	515,572	20,173,200
February 1-28, 2021	806,030	250.96		806,030	19,367,170
March 1-31, 2021	1,003,194	260.81		1,002,802	18,364,368

Total	2,325,363			2,324,404