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,~~June 30, 2023

☐ 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.)


650 West Peachtree Street NW		30308-1925
Atlanta,	Georgia
(Address of principal executive offices)		(Zip Code)
(855)		667-3655
(Registrant’s telephone number, including area code)


No change
(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol	Name of each exchange on which registered
Norfolk Southern Corporation Common Stock (Par Value $1.00)	NSC	New York Stock Exchange

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

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

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

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

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

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

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


Class	Outstanding at ~~March 31,~~June 30, 2023
Common Stock ($1.00 par value per share)	~~227,639,602~~227,015,277	(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~~Second Quarter ~~of 202~~3 and ~~202~~First Six Months 2 of 2023 and 2022	3
		Consolidated Statements of Comprehensive Income ~~First~~ S ~~Quarter~~ econd ~~of 202~~3 Quarter and ~~202~~First Six Months 2 of 2023 and 2022	4
		Consolidated Balance Sheets At ~~March~~ 3 1 ~~, 202~~June 3 0 , 2023 and December 31, ~~202~~2 2022	5
		Consolidated Statements of Cash Flows First ~~Thre~~Six e Months of ~~202~~3 2023 and ~~202~~22022	6
		Consolidated Statements of Changes in Stockholders’ Equity ~~First~~ S ~~Quarter~~e cond Quarter and F irst Six Months of ~~202~~3 2023 and ~~202~~22022	7
		Notes to Consolidated Financial Statements	89
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2123
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3133
	Item 4.	Controls and Procedures	3133

Part II.	Other Information:
	Item 1.	Legal Proceedings	3235
	Item 1A.	Risk Factors	3235
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3336
	Item 3.	Defaults Upon Senior Securities	3336
	Item 4.	Mine Safety Disclosures	3336
	Item 5.	Other Information	3336
	Item 6.	Exhibits	3437

		Signatures	3538

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)


		First Quarter					Second Quarter				First Six Months
		2023		2022					2023		2022		2023		2022
		($ in millions, except per share amounts)				($ in millions, except per share amounts)

Railway operating revenues	Railway operating revenues	$	3,132	$	2,915			Railway operating revenues	$	2,980	$	3,250	$	6,112	$	6,165

Railway operating expenses	Railway operating expenses							Railway operating expenses
Compensation and benefits	Compensation and benefits	690		619				Compensation and benefits	693		614		1,383		1,233
Purchased services and rents	Purchased services and rents	496		437				Purchased services and rents	506		481		1,002		918
Fuel	Fuel	315		301				Fuel	263		408		578		709
Depreciation	Depreciation	321		302				Depreciation	321		304		642		606
Materials and other	Materials and other	212		171				Materials and other	205		172		417		343
Eastern Ohio incident	Eastern Ohio incident	387		—				Eastern Ohio incident	416		—		803		—

Total railway operating expenses	Total railway operating expenses	2,421		1,830				Total railway operating expenses	2,404		1,979		4,825		3,809

Income from railway operations	Income from railway operations	711		1,085				Income from railway operations	576		1,271		1,287		2,356

Other income (expense) – net	Other income (expense) – net	56		(5)				Other income (expense) – net	57		(14)		113		(19)
Interest expense on debt	Interest expense on debt	175		168				Interest expense on debt	170		170		345		338

Income before income taxes	Income before income taxes	592		912				Income before income taxes	463		1,087		1,055		1,999

Income taxes	Income taxes	126		209				Income taxes	107		268		233		477

Net income	Net income	$	466	$	703			Net income	$	356	$	819	$	822	$	1,522

Earnings per share	Earnings per share							Earnings per share
Basic	Basic	$	2.04	$	2.94			Basic	$	1.56	$	3.46	$	3.61	$	6.39
Diluted	Diluted	2.04		2.93				Diluted	1.56		3.45		3.60		6.37

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)


		First Quarter					Second Quarter				First Six Months
		2023		2022					2023		2022		2023		2022
		($ in millions)				($ in millions)

Net income	Net income	$	466	$	703			Net income	$	356	$	819	$	822	$	1,522
Other comprehensive income (loss), before tax:	Other comprehensive income (loss), before tax:							Other comprehensive income (loss), before tax:
Pension and other postretirement benefit (expense)	Pension and other postretirement benefit (expense)	(5)		6				Pension and other postretirement benefit (expense)	(6)		5		(11)		11
Other comprehensive income (loss) of equity investees		(1)		6
Other comprehensive income of equity investees								Other comprehensive income of equity investees	1		2		—		8

Other comprehensive income (loss), before tax	Other comprehensive income (loss), before tax	(6)		12				Other comprehensive income (loss), before tax	(5)		7		(11)		19
Income tax benefit (expense) related to items of other	Income tax benefit (expense) related to items of other							Income tax benefit (expense) related to items of other
comprehensive income (loss)	comprehensive income (loss)	2		(4)				comprehensive income (loss)	1		(1)		3		(5)

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(4)		8				Other comprehensive income (loss), net of tax	(4)		6		(8)		14

Total comprehensive income	Total comprehensive income	$	462	$	711			Total comprehensive income	$	352	$	825	$	814	$	1,536

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)


		March 31, 2023		December 31, 2022			June 30, 2023		December 31, 2022
		($ in millions)					($ in millions)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	552	$	456	Cash and cash equivalents	$	556	$	456

Accounts receivable – net	Accounts receivable – net	1,170		1,148		Accounts receivable – net	1,089		1,148
Materials and supplies	Materials and supplies	262		253		Materials and supplies	272		253
Other current assets	Other current assets	138		150		Other current assets	114		150
Total current assets	Total current assets	2,122		2,007		Total current assets	2,031		2,007

Investments	Investments	3,738		3,694		Investments	3,673		3,694
Properties less accumulated depreciation of $12,810
Properties less accumulated depreciation of $13,024						Properties less accumulated depreciation of $13,024
and $12,592, respectively	and $12,592, respectively	32,240		32,156		and $12,592, respectively	32,474		32,156
Other assets	Other assets	1,069		1,028		Other assets	1,083		1,028

Total assets	Total assets	$	39,169	$	38,885	Total assets	$	39,261	$	38,885

Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	1,315	$	1,293	Accounts payable	$	1,416	$	1,293
Short-term debt	Short-term debt	—		100		Short-term debt	130		100
Income and other taxes	Income and other taxes	438		312		Income and other taxes	243		312
Other current liabilities	Other current liabilities	668		341		Other current liabilities	792		341
Current maturities of long-term debt	Current maturities of long-term debt	403		603		Current maturities of long-term debt	405		603
Total current liabilities	Total current liabilities	2,824		2,649		Total current liabilities	2,986		2,649

Long-term debt	Long-term debt	14,585		14,479		Long-term debt	14,594		14,479
Other liabilities	Other liabilities	1,785		1,759		Other liabilities	1,814		1,759
Deferred income taxes	Deferred income taxes	7,248		7,265		Deferred income taxes	7,227		7,265

Total liabilities	Total liabilities	26,442		26,152		Total liabilities	26,621		26,152

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares	Common stock $1.00 per share par value, 1,350,000,000 shares					Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 227,639,602 and 228,076,415 shares,
authorized; outstanding 227,015,277 and 228,076,415 shares,						authorized; outstanding 227,015,277 and 228,076,415 shares,
respectively, net of treasury shares	respectively, net of treasury shares	229		230		respectively, net of treasury shares	228		230
Additional paid-in capital	Additional paid-in capital	2,155		2,157		Additional paid-in capital	2,160		2,157
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(355)		(351)		Accumulated other comprehensive loss	(359)		(351)
Retained income	Retained income	10,698		10,697		Retained income	10,611		10,697

Total stockholders’ equity	Total stockholders’ equity	12,727		12,733		Total stockholders’ equity	12,640		12,733

Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	39,169	$	38,885	Total liabilities and stockholders’ equity	$	39,261	$	38,885

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)


			First Three Months						First Six Months
			2023		2022				2023		2022
			($ in millions)						($ in millions)
Cash flows from operating activities	Cash flows from operating activities						Cash flows from operating activities
		Net income	$	466	$	703		Net income	$	822	$	1,522
		Reconciliation of net income to net cash provided by operating activities:						Reconciliation of net income to net cash provided by operating activities:
		Depreciation	321		302			Depreciation	642		606
		Deferred income taxes	(15)		48			Deferred income taxes	(35)		111
		Gains and losses on properties	(4)		(6)			Gains and losses on properties	(25)		(37)
		Changes in assets and liabilities affecting operations:						Changes in assets and liabilities affecting operations:
		Accounts receivable	(22)		(94)			Accounts receivable	57		(230)
		Materials and supplies	(9)		(46)			Materials and supplies	(19)		(71)
		Other current assets	12		21			Other current assets	36		30
		Current liabilities other than debt	480		83			Current liabilities other than debt	460		75
		Other – net	(56)		(17)			Other – net	(92)		5

		Net cash provided by operating activities	1,173		994			Net cash provided by operating activities	1,846		2,011

Cash flows from investing activities	Cash flows from investing activities						Cash flows from investing activities
		Property additions	(428)		(389)			Property additions	(948)		(837)
		Property sales and other transactions	20		36			Property sales and other transactions	61		100
		Investment purchases	—		(1)			Investment purchases	(6)		(7)
		Investment sales and other transactions	17		19			Investment sales and other transactions	152		30

		Net cash used in investing activities	(391)		(335)			Net cash used in investing activities	(741)		(714)

Cash flows from financing activities	Cash flows from financing activities						Cash flows from financing activities
		Dividends	(307)		(297)			Dividends	(615)		(591)
		Common stock transactions	(10)		(18)			Common stock transactions	(9)		(14)
		Purchase and retirement of common stock	(163)		(600)			Purchase and retirement of common stock	(303)		(1,454)
		Proceeds from borrowings	594		989			Proceeds from borrowings	724		1,732
		Debt repayments	(800)		(1)			Debt repayments	(802)		(550)

		Net cash provided by (used in) financing activities	(686)		73			Net cash used in financing activities	(1,005)		(877)

		Net increase in cash and cash equivalents	96		732			Net increase in cash and cash equivalents	100		420

Cash and cash equivalents	Cash and cash equivalents						Cash and cash equivalents
		At beginning of year	456		839			At beginning of year	456		839

		At end of period	$	552	$	1,571		At end of period	$	556	$	1,259

Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information						Supplemental disclosures of cash flow information
		Cash paid during the period for:						Cash paid during the period for:
		Interest (net of amounts capitalized)	$	129	$	114		Interest (net of amounts capitalized)	$	318	$	294
		Income taxes (net of refunds)	(1)		9			Income taxes (net of refunds)	315		321

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, 2022	Balance at December 31, 2022	$	230	$	2,157	$	(351)	$	10,697	$	12,733	Balance at December 31, 2022	$	230	$	2,157	$	(351)	$	10,697	$	12,733

Comprehensive income:	Comprehensive income:											Comprehensive income:
Net income	Net income							466		466		Net income							466		466
Other comprehensive loss	Other comprehensive loss					(4)				(4)		Other comprehensive loss					(4)				(4)
Total comprehensive income	Total comprehensive income									462		Total comprehensive income									462
Dividends on common stock,	Dividends on common stock,											Dividends on common stock,
$1.35 per share	$1.35 per share							(307)		(307)		$1.35 per share							(307)		(307)
Share repurchases	Share repurchases	(1)		(6)				(156)		(163)		Share repurchases	(1)		(6)				(156)		(163)
Stock-based compensation	Stock-based compensation			4				(2)		2		Stock-based compensation			4				(2)		2

Balance at March 31, 2023	Balance at March 31, 2023	$	229	$	2,155	$	(355)	$	10,698	$	12,727	Balance at March 31, 2023	229		2,155		(355)		10,698		12,727

Comprehensive income:												Comprehensive income:
Net income												Net income							356		356
Other comprehensive loss												Other comprehensive loss					(4)				(4)
Total comprehensive income												Total comprehensive income									352
Dividends on common stock,												Dividends on common stock,
$1.35 per share												$1.35 per share							(308)		(308)
Share repurchases												Share repurchases	(1)		(4)				(135)		(140)
Stock-based compensation												Stock-based compensation			9						9

Balance at June 30, 2023												Balance at June 30, 2023	$	228	$	2,160	$	(359)	$	10,611	$	12,640

Common
Stock Additional
Paid-in
Capital Accum. Other
Comprehensive
Loss Retained
Income Total
($ in millions, except per share amounts)
Balance at December 31, 2021 $ 242 $ 2,215 $ (402) $ 11,586 $ 13,641
Comprehensive income:
Net income 703 703
Other comprehensive income 8 8
Total comprehensive income 711
Dividends on common stock,
$1.24 per share (297) (297)
Share repurchases (2) (19) (579) (600)
Stock-based compensation 7 (1) 6
Balance at March 31, 2022 $ 240 $ 2,203 $ (394) $ 11,412 $ 13,461

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)


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

Balance at December 31, 2021	$	242	$	2,215	$	(402)	$	11,586	$	13,641

Comprehensive income:
Net income							703		703
Other comprehensive income					8				8
Total comprehensive income									711
Dividends on common stock,
$1.24 per share							(297)		(297)
Share repurchases	(2)		(19)				(579)		(600)
Stock-based compensation			7				(1)		6

Balance at March 31, 2022	240		2,203		(394)		11,412		13,461

Comprehensive income:
Net income							819		819
Other comprehensive income					6				6
Total comprehensive income									825
Dividends on common stock,
$1.24 per share							(294)		(294)
Share repurchases	(4)		(29)				(821)		(854)
Stock-based compensation			16						16

Balance at June 30, 2022	$	236	$	2,190	$	(388)	$	11,116	$	13,154

See accompanying notes toconsolidatedfinancialstatements.

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,~~June 30, 2023 and December 31, 2022, our results of operations, comprehensive income and changes in stockholders’ equity for the second quarters and first ~~quarters~~six months of 2023 and 2022, and our cash flows for the first ~~three~~six months of 2023 and 2022 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
2023 2022
($ in millions)
Merchandise:
Agriculture, forest and consumer products $ 653 $ 573
Chemicals 541 498
Metals and construction 400 375
Automotive 284 226
Merchandise 1,878 1,672
Intermodal 814 854
Coal 440 389
Total $ 3,132 $ 2,915


	Second Quarter				First Six Months
	2023		2022		2023		2022
	($ in millions)
Merchandise:
Agriculture, forest and consumer products	$	627	$	624	$	1,280	$	1,197
Chemicals	503		552		1,044		1,050
Metals and construction	415		420		815		795
Automotive	281		257		565		483
Merchandise	1,826		1,853		3,704		3,525
Intermodal	745		972		1,559		1,826
Coal	409		425		849		814

Total	$	2,980	$	3,250	$	6,112	$	6,165

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,~~June 30, 2023 and December 31, 2022.

We may provide customers ancillary services, such as switching, demurrage and other incidental activities, under their transportation contracts. The revenues associated with these distinct performance obligations are recognized 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%4% and 7%6% of total “Railway operating revenues” on the Consolidated Statements of Income for the second quarters of 2023 and 2022, respectively, and 5% and 7% for the first ~~quarters~~six months of 2023 and 2022, 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, 2023		December 31, 2022			June 30, 2023		December 31, 2022
		($ in millions)					($ in millions)

Customer	Customer	$	919	$	895	Customer	$	818	$	895
Non-customer	Non-customer	251		253		Non-customer	271		253

Accounts receivable – net	Accounts receivable – net	$	1,170	$	1,148	Accounts receivable – net	$	1,089	$	1,148

Non-customer receivables include non-revenue-related amounts due from other railroads, governmental entities, and others. We do not have any material contract assets or liabilities at ~~March 31,~~June 30, 2023 and December 31, 2022.

2. Stock-Based Compensation


		First Quarter					Second Quarter				First Six Months
		2023		2022					2023		2022		2023		2022
		($ in millions)				($ in millions)

Stock-based compensation expense	Stock-based compensation expense	$	11	$	23			Stock-based compensation expense	$	11	$	13	$	22	$	36
Total tax benefit	Total tax benefit	6		13				Total tax benefit	3		4		9		17

During ~~the first quarter of~~ 2023, 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			Second Quarter			First Six Months
		Granted	Weighted-Average Grant-Date Fair Value				Granted	Weighted-Average Grant-Date Fair Value		Granted	Weighted-Average Grant-Date Fair Value

Stock options	Stock options	69,580	$	77.60		Stock options	—	$	—	69,580	$	77.60
RSUs	RSUs	173,221	237.70			RSUs	20,150	199.33		193,371	233.71
PSUs	PSUs	58,040	236.68			PSUs	920	209.22		58,960	236.25

910

Stock Options


		First Quarter					Second Quarter				First Six Months
		2023		2022					2023		2022		2023		2022
		($ in millions)				($ in millions)

Options exercised	Options exercised	66,811		119,343				Options exercised	10,461		39,546		77,272		158,889
Cash received upon exercise	Cash received upon exercise	$	5	$	10			Cash received upon exercise	$	1	$	4	$	6	$	14
Related tax benefits realized	Related tax benefits realized	3		5				Related tax benefits realized	—		1		3		6

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					Second Quarter				First Six Months
		2023		2022					2023		2022		2023		2022
		($ in millions)				($ in millions)

RSUs vested	RSUs vested	149,122		243,301				RSUs vested	3,908		3,652		153,030		246,953
Common Stock issued net of tax withholding	Common Stock issued net of tax withholding	104,608		172,364				Common Stock issued net of tax withholding	2,811		2,612		107,419		174,976
Related tax benefits realized	Related tax benefits realized	$	1	$	5			Related tax benefits realized	$	—	$	—	$	1	$	5

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. No PSUs were earned or paid out during the second quarters of 2023 and 2022.


		First Quarter					First Six Months
		2023		2022			2023		2022
		($ in millions)					($ in millions)

PSUs earned	PSUs earned	58,599		86,420		PSUs earned	58,599		86,420
Common Stock issued net of tax withholding	Common Stock issued net of tax withholding	40,255		54,651		Common Stock issued net of tax withholding	40,255		54,651
Related tax benefits realized	Related tax benefits realized	$	—	$	1	Related tax benefits realized	$	—	$	1

1011

3. Earnings Per Share

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


		Basic						Diluted					Basic				Diluted
		First Quarter											Second Quarter
		2023			2022			2023		2022			2023		2022		2023		2022
		($ in millions, except per share amounts, shares in millions)											($ in millions, except per share amounts, shares in millions)

Net income	Net income	$	466		$	703		$	466	$	703	Net income	$	356	$	819	$	356	$	819
Dividend equivalent payments	Dividend equivalent payments	(1)			—			—		—		Dividend equivalent payments	—		(1)		—		(1)

Income available to common stockholders	Income available to common stockholders	$	465		$	703		$	466	$	703	Income available to common stockholders	$	356	$	818	$	356	$	818

Weighted-average shares outstanding	Weighted-average shares outstanding	227.7			239.3			227.7		239.3		Weighted-average shares outstanding	227.5		236.7		227.5		236.7
Dilutive effect of outstanding options and share-settled awards	Dilutive effect of outstanding options and share-settled awards							0.6		0.9		Dilutive effect of outstanding options and share-settled awards					0.5		0.8
Adjusted weighted-average shares outstanding	Adjusted weighted-average shares outstanding							228.3		240.2		Adjusted weighted-average shares outstanding					228.0		237.5

Earnings per share	Earnings per share	$	2.04		$	2.94		$	2.04	$	2.93	Earnings per share	$	1.56	$	3.46	$	1.56	$	3.45

							Basic						Diluted
				First Six Months
													2023		2022		2023		2022
				($ in millions, except per share amounts, shares in millions)

Net income												Net income	$	822	$	1,522	$	822	$	1,522
Dividend equivalent payments												Dividend equivalent payments	(1)		(1)		(1)		(1)

Income available to common stockholders												Income available to common stockholders	$	821	$	1,521	$	821	$	1,521

Weighted-average shares outstanding												Weighted-average shares outstanding	227.6		238.0		227.6		238.0
Dilutive effect of outstanding options and share-settled awards												Dilutive effect of outstanding options and share-settled awards					0.5		0.9
Adjusted weighted-average shares outstanding												Adjusted weighted-average shares outstanding					228.1		238.9

Earnings per share												Earnings per share	$	3.61	$	6.39	$	3.60	$	6.37

During the second quarters and first ~~quarters~~six months of 2023 and 2022, 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. The dilution calculations exclude options having exercise prices exceeding the average market price of Common Stock as follows: 0.1 million in both the second quarters and first ~~quarters~~six months ended ~~March 31,~~June 30, 2023 and 2022.

1112

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			Balance at Beginning of Year		Net Income		Reclassification Adjustments		Balance at End of Period
		($ in millions)									($ in millions)
Three months ended March 31, 2023
Six months ended June 30, 2023										Six months ended June 30, 2023
Pensions and other postretirement liabilities	Pensions and other postretirement liabilities	$	(319)	$	—	$	(4)	$	(323)	Pensions and other postretirement liabilities	$	(319)	$	—	$	(8)	$	(327)
Other comprehensive loss of equity investees	Other comprehensive loss of equity investees	(32)		—		—		(32)		Other comprehensive loss of equity investees	(32)		—		—		(32)

Accumulated other comprehensive loss	Accumulated other comprehensive loss	$	(351)	$	—	$	(4)	$	(355)	Accumulated other comprehensive loss	$	(351)	$	—	$	(8)	$	(359)

Three months ended March 31, 2022
Six months ended June 30, 2022										Six months ended June 30, 2022
Pensions and other postretirement liabilities	Pensions and other postretirement liabilities	$	(356)	$	—	$	4	$	(352)	Pensions and other postretirement liabilities	$	(356)	$	—	$	8	$	(348)
Other comprehensive income (loss) of equity investees	Other comprehensive income (loss) of equity investees	(46)		4		—		(42)		Other comprehensive income (loss) of equity investees	(46)		6		—		(40)

Accumulated other comprehensive loss	Accumulated other comprehensive loss	$	(402)	$	4	$	4	$	(394)	Accumulated other comprehensive loss	$	(402)	$	6	$	8	$	(388)

5. Stock Repurchase Program

We repurchased and retired ~~0.6~~1.3 million and ~~2.2~~5.7 million shares of Common Stock under our stock repurchase programs in the first ~~three~~six months of 2023 and 2022, respectively, at a cost of ~~$163~~$303 million and ~~$600 million.~~$1.5 billion.

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 $1.6 billion at ~~March 31,~~June 30, 2023 and December 31, 2022.

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 ~~$45~~$39 million and ~~$38~~$36 million for the second quarters of 2023 and 2022, respectively, and $84 million and $74 million for the first ~~quarters~~six months of 2023 and 2022, respectively. Our equity in Conrail’s earnings, net of amortization, was ~~$16~~$19 million and ~~$14~~$11 million for the second quarters of 2023 and 2022, respectively, and $35 million and $25 million for the first ~~quarters~~six months of 2023 and 2022, respectively. 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,~~June 30, 2023 and December 31, 2022 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of 1.31%.

1213

Investment in TTX

We and ~~seven~~six 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 19.78% ownership interest in TTX.

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” These expenses amounted to $69 million and $66 million for the second quarters of 2023 and ~~$64~~2022, respectively, and $135 million and $130 million for the first ~~quarters~~six months of 2023 and 2022, respectively. Our equity in TTX’s earnings partially offsets these costs and totaled $9$12 million and ~~$10~~$11 million for the ~~first~~second quarters of 2023 and 2022, ~~respectively.~~respectively, and $21 million in both the first six months of 2023 and 2022.

7. Debt

In ~~February~~May 2023, we ~~issued $500 million of 4.45% senior notes due 2033.~~

~~We have in place an~~renewed our accounts receivable securitization program with a maximum borrowing capacity of $400 ~~million~~million. Amounts under our accounts receivable securitization program are borrowed and arepaid from time to time in the ordinary course for general corporate and cash management purposes. The term ~~that~~of our accounts receivable securitization program was extended in the second quarter and now expires in May ~~2023.~~2024. Amounts received under this facility are accounted for as borrowings. WeAt June 30, 2023, we had ~~no amounts~~$130 million (at an average variable interest rate of 5.81%) outstanding ~~under this program at March 31, 2023~~which is included within “Short-term debt” and our available borrowing capacity was ~~$400~~$270 million. At December 31, 2022, we had $100 million (at an average variable interest rate of 5.05%) outstanding ~~which is included within “Short-term debt”~~ and our available borrowing capacity was $300 million. Our accounts receivable securitization program was supported by ~~$916~~$840 million and $883 million in receivables at ~~March 31,~~June 30, 2023 and December 31, 2022, respectively, which are included in “Accounts receivable – net”.

In February 2023, we issued $500 million of 4.45% senior notes due 2033.

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:


		Pension Benefits				Other Postretirement Benefits					Pension Benefits				Other Postretirement Benefits
		First Quarter									Second Quarter
		2023		2022		2023		2022			2023		2022		2023		2022
		($ in millions)									($ in millions)
Service cost	Service cost	$	6	$	10	$	1	$	1	Service cost	$	6	$	10	$	1	$	2
Interest cost	Interest cost	27		17		4		2		Interest cost	27		17		5		2
Expected return on plan assets	Expected return on plan assets	(52)		(53)		(3)		(3)		Expected return on plan assets	(52)		(54)		(3)		(3)
Amortization of net losses	Amortization of net losses	1		12		—		—		Amortization of net losses	1		12		—		—
Amortization of prior service benefit	Amortization of prior service benefit	—		—		(6)		(6)		Amortization of prior service benefit	—		—		(7)		(7)

Net benefit	Net benefit	$	(18)	$	(14)	$	(4)	$	(6)	Net benefit	$	(18)	$	(15)	$	(4)	$	(6)



	Pension Benefits				Other Postretirement Benefits
	First Six Months
	2023		2022		2023		2022
	($ in millions)
Service cost	$	12	$	20	$	2	$	3
Interest cost	54		34		9		4
Expected return on plan assets	(104)		(107)		(6)		(6)
Amortization of net losses	2		24		—		—
Amortization of prior service benefit	—		—		(13)		(13)

Net benefit	$	(36)	$	(29)	$	(8)	$	(12)

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.

9. Fair Values of Financial Instruments

The fair values of “Cash and cash equivalents,” “Accounts receivable – net,” “Accounts payable,” and “Short-term debt,” 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,~~June 30, 2023 or December 31, 2022. The carrying amounts and estimated fair values, based on Level 1 inputs, of long-term debt consist of the following:

March 31, 2023 December 31, 2022
Carrying
Amount Fair
Value Carrying
Amount Fair
Value
($ in millions)
Long-term debt, including current maturities $ (14,988) $ (13,889) $ (15,082) $ (13,846)


	June 30, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	($ in millions)


Long-term debt, including current maturities	$	(14,999)	$	(13,817)	$	(15,082)	$	(13,846)

10. Commitments and Contingencies

Eastern Ohio Incident

Summary

On February 3, 2023, a train we operated derailed in East Palestine, Ohio. The derailed equipment included 38 railcars, 11 of which were non-Company-owned tank cars containing hazardous materials. Fires associated with the derailment threatened certain of the tank cars. There was concern about the risk that the ~~content~~contents of five of the tank cars carrying vinyl chloride might polymerize, which would have posed the risk of a catastrophic explosion. As a consequence, on February 6, 2023, the local incident commander—in consultation with the incident command that included, among others, federal, state and local officials and Norfolk Southern—opted to conduct a controlled vent and burn of five derailed tank cars, all of which contained vinyl chloride. This procedure involved creating holes in the five tank cars to drain the vinyl chloride into adjacent trenches that had been dug into the ground where such vinyl chloride was then burned, with any material remaining after burning of the vinyl chloride being remediated. The February 3rd derailment, the associated fire, and the resulting vent and burn of the tank cars containing vinyl chloride on February 6th is hereinafter referred to as the “Incident.”

In response to the Incident, we have ~~worked~~been working to clean the site safely and thoroughly, including those activities described in the Environmental Matters section below with respect to potentially impacted air, soil and water and to monitor for any impact on public health and the environment. We are working with federal, state, and local officials to mitigate impacts from the Incident, including, among other efforts, conducting environmental monitoring and clean-up activities (as more fully described below), and ~~establishing~~operating a family assistance center to provide financial support to affected members of the East Palestine and surrounding communities.

Financial Impact

Although we cannot predict the final outcome or estimate the reasonably possible range of loss with certainty, during the first six months of 2023, we have recognized ~~$387~~$803 million of expense for costs directly attributable to the Incident ($416 million of which was recognized in the second quarter), which is presented in “Eastern Ohio incident” on the Consolidated Statements of Income. During the first ~~quarter,~~six months of 2023, our cash expenditures attributable to the Incident were ~~$55~~$287 million, which are presented in “Net cash provided by operating activities” on the Consolidated ~~Statement~~Statements of Cash Flows. The ~~remainder, $332~~difference between the recognized expense and cash expenditures during the first six months of 2023, $516 million, is primarily comprised of our current estimates of

probable and reasonably estimable liabilities principally associated with environmental matters and legal proceedings, which are discussed in further detail below.

While certain costs recorded induring the first ~~quarter~~six months of 2023 may be recoverable from third parties or under our insurance policies in effect at the date of the Incident, no estimate of potential recoveries has yet been recorded. Any amounts recoverable from third parties or under our insurance policies will be reflected in future periods in which recovery is considered probable. For additional information about our insurance coverage, see “Insurance” below.

Environmental Matters – In response to the Incident, we have been working with federal, state, and local officials such as the U.S. Environmental Protection Agency (EPA), the Ohio EPA, and the Pennsylvania Department of Environmental Protection (DEP), to conduct environmental response and remediation activities, including but not limited to, air monitoring, indoor air quality screenings, municipal water and private water well testing, residential, commercial, and agricultural soil sampling, surface water and groundwater sampling, re-routing a local waterway around the affected site, capturing and shipping stormwater that enters the impacted derailment site to proper disposal facilities, and excavating and disposing of potentially affected soil at hazardous waste landfills or incinerators. The U.S. EPA issued a Unilateral Administrative Order (UAO) on February 21, 2023, containing various requirements, including the submission of numerous work plans to assess and remediate various environmental media and

performance of certain removal actions at the affected site. On February 24, 2023, we submitted to the U.S. EPA our Notice of Intent to Comply with the UAO and are currently cooperating with U.S. EPA as well as the Ohio EPA and Pennsylvania ~~Department of Environmental Protection,~~DEP, pursuant to the UAO and the directives issued thereunder.

We are also subject to the following legal proceedings that principally relate to the environmental impact of the Incident:

•The U.S. Department of Justice (DOJ) and the U.S. EPA filed a civil complaint (the DOJ Complaint) in the Northern District of Ohio (Eastern Division) seeking injunctive relief, cost recovery and civil penalties for violations of the Clean Water Act and seeking cost recovery under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)~~; and~~

•. The Ohio Attorney General (AG) also filed a CERCLA lawsuit (the Ohio Complaint) in the Northern District of Ohio (Eastern Division) ~~requesting~~seeking statutory damages for a variety of tort and environmental claims under ~~CERCLA.~~CERCLA and various state laws. The DOJ and Ohio AG cases have been consolidated for discovery purposes. We have filed an answer, and on June 30, 2023, we filed a third-party complaint bringing in numerous parties involved in the Incident.

In connection with the foregoing items, we recognized ~~$317~~$581 million of expense during the first ~~quarter,~~six months of 2023 ($264 million of which ~~$31~~was recognized in the second quarter), of which $208 million was paid during the first six months of 2023, related to probable obligations that are reasonably estimable, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 410-30, “Environmental Obligations.” Our current estimate includes ongoing and future environmental cleanup activities and remediation efforts, governmental oversight costs (including those incurred by the U.S. EPA and the Ohio EPA), and other related costs, including those in connection with the DOJ Complaint (including potential civil penalties related to violations of the Clean Water Act). Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, when activities at the ~~success of current cleanup techniques,~~site transition from extensive soil and water disposal and air monitoring activities to additional assessment and investigative efforts, the nature and extent of required future cleanup activities (including those resulting from additional assessment and investigative activities that will be conducted at the site), the extent and duration of governmental oversight, and the success of current cleanup techniques, amongst other factors. As clean-up efforts progress and more information is available, including any federal and state requirements, we will review these estimates and revise as appropriate.

Legal Proceedings and Claims (Non-Environmental) – To date, numerous non-environmental legal actions have ~~been filed~~commenced with respect to the Incident, including those more specifically set forth below.

•There ~~are currently numerous~~is a consolidated putative class action ~~and individual lawsuits that have been filed, primarily consolidated~~pending in the Northern District of Ohio (Eastern Division)~~. The putative class~~

~~action complaints currently allege numerous~~ alleging various claims, including negligence, gross negligence, strict liability, and nuisance, ~~trespass,~~ and seeking as relief compensatory and punitive damages, medical monitoring and ~~seek as relief, among other things, compensatory and punitive damages.~~business losses. The putative classes are ~~currently~~ defined by reference to a class ~~areas ranging from~~area covering a 30-mile radius. The court in the ~~evacuation zone up to 100 miles away.~~putative class action has established a fact discovery deadline in January 2024. Additional ~~multi-plaintiff~~ lawsuits are also pending in the same court and others, such as ~~additional~~ lawsuits pending in the Western District of Pennsylvania brought by three local school districts and including claims such as negligence, nuisance, trespass, and future health monitoring. ~~No responsive pleadings have yet been filed with respect to these matters (collectively~~The putative class action and individual lawsuits are collectively referred to herein as the Incident ~~Lawsuits).~~Lawsuits. In accordance with ASC 450, ““Contingencies”,” we have recognized a ~~$12~~$105 million ~~probable~~ loss induring the first ~~quarter~~six months of 2023 with respect to the Incident Lawsuits ($77 million of which ~~is in addition~~was recognized during the second quarter based on updated information and related discussions, including currently estimated liabilities related to ~~$16~~tailored property value and drinking water protection programs being negotiated with relevant stakeholders, including the Ohio AG, to assist affected residents and businesses). We have made $25 million in ~~amounts paid~~payments during the first ~~quarter~~six months of 2023 with respect to these matters.

•Securities litigation and demands, including a securities class action lawsuit under the Securities Exchange Act of 1934 filed in the Southern District of Ohio alleging multiple securities law violations, ~~for which no responsive pleading has yet been~~a securities class action lawsuit under the Securities Act of 1933 filed ~~as well as~~in the Southern District of New York alleging misstatements in association with our debt offerings, and multiple shareholder document and litigation demand letters that we have received (collectively, the Shareholder ~~Lawsuits)~~Matters). No responsive pleadings have been filed yet, although we are seeking to transfer the matter filed in the Southern District of Ohio to the Northern District of Georgia.

If and when we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it will be accrued through a charge to earnings and, if material, disclosed. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known. Because the final outcome of any of these legal proceedings cannot be predicted with certainty, unfavorable or unexpected developments or outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter. For legal proceedings 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.

In addition to the costs associated with environmental matters and legal proceedings and claims, we incurred other expenses directly related to the Incident of $117 million during the first six months of 2023 ($75 million of which was recognized in the second quarter) pertaining to legal fees, community support, and other response-related activities. The reserves established by us during the first ~~quarter~~six months of 2023 do not include any estimate of loss for the following additional items, for which we believe a loss is either not probable or not reasonably estimable for the reasons noted: (i) the overall cost to us for ~~programs~~the healthcare fund being developed in conjunction with relevant stakeholders, including the Ohio ~~Attorney General~~AG, for affected residents ~~and businesses,~~(given the preliminary nature of such discussions), which ~~amounts~~amount will impact our loss contingency analysis with respect to the Incident Lawsuits described above, ~~namely a healthcare fund, tailored protection for property owners, and programs to protect drinking water over the long term (given the preliminary nature of such discussions),~~ or (ii) any fines or penalties (in excess of the reserves established for Clean Water Act-related civil penalties) that may be imposed as a result of the Incident Inquiries and Investigations, as more specifically set forth and defined below (the outcome of which are uncertain at this time). Additionally, as noted above, amounts recognized during the first ~~quarter~~six months of 2023 do not include potential recoveries from third parties, including but not limited to the impact of our insurance coverage, which may apply to various Incident-related expenses or liabilities, as more specifically set forth further below (given the preliminary nature of any related discussions with our insurers).

Inquiries and Investigations

As set forth above, we are subject to inquiries and investigations by numerous federal, state, and local government authorities and regulatory agencies regarding the Incident, including but not limited to, the DOJ and the U.S. EPA, the Ohio EPA, the National Transportation Safety Board (NTSB), the Federal Railroad Administration (FRA), the Occupational Safety and Health Administration, the Ohio ~~Attorney General,~~AG, and the Pennsylvania ~~Attorney General.~~AG. Further details regarding the NTSB and FRA investigations are set forth below. We are cooperating with all inquiries and investigations, including responding to civil and criminal subpoenas and other requests for information (the aforementioned inquiries and investigations, as well as the civil and criminal subpoenas are collectively referred to herein as the Incident Inquiries and Investigations). The outcome of any current or future Incident Inquiries and Investigations is uncertain at this time, including any related fines, penalties or settlements. Therefore, our expenses for the first ~~quarter expenses~~six months of 2023 do not include estimates of the total amount that we may incur for any such fines, penalties or settlements.

Subsequent to the Incident, investigators from the NTSB examined railroad equipment and track conditions; reviewed data from the signal system, wayside defect detectors, local surveillance cameras, and the lead locomotive’s event recorder and forward-facing and inward-facing image recorders; and completed certain interviews (the NTSB Investigation). The NTSB issued a preliminary report indicating that one of the cars involved

in the derailment appeared to have a wheel bearing in the final stage of overheat failure moments before the derailment. Their preliminary report also indicates that the rail crew was operating the train within our rules; the rail crew operated the train below the track speed limit, the wayside heat detectors were operating as designed; and once the rail crew was alerted by the wayside detector, they immediately began to stop the train. The NTSB conducted a subsequent investigative field hearing in East Palestine, Ohio on June 22 and 23, 2023. The NTSB’s investigation remains ongoing. We expect the NTSB to issue a final report, with a probable cause determination and safety recommendations, in 2024.

Concurrent with the NTSB Investigation, the FRA is also investigating the Incident. Similar in scope to the NTSB Investigation, the FRA is examining railroad equipment, track conditions, hazardous materials train placement and routing, and emergency response (the FRA Incident Investigation). The FRA Incident Investigation may result in the assessment of civil penalties. In addition to the FRA Incident Investigation, the FRA ~~announced on March 7, 2023 that it would conduct~~recently completed a 60-day supplemental safety assessment (the FRA Safety Assessment). The FRA Safety Assessment ~~will~~included a review of findings from a previously completed 2022 system audit and ~~assess~~an assessment of operational elements including, but not limited to: track, signal, and rolling stock maintenance, inspection and repair practices; protection of employees; communications between transportation departments and mechanical and engineering staff; operation control center procedures and dispatcher training. The overall scope of the FRA Safety Assessment iswas to examine our safety culture. ~~At the conclusion of~~We expect the FRA ~~Safety Assessment, the FRA will~~to issue a public report ~~which will include~~in early August including its findings and recommended corrective actions. The FRA Incident Investigation ~~and the FRA Safety Assessment remain~~remains ongoing.

Other 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 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. On January 3, 2023, the court granted summary judgment to us on all of the compensatory claims but denied summary judgment for all equitable relief claims. On January 18, 2023, the court dismissed the federal equitable relief claims, leaving the state equitable relief claims as the sole remaining issue under consideration. On April 19, 2023, the court disposed of all remaining state equitable relief claims. ~~These rulings may be appealed. If appealed, we~~A notice

of appeal was filed on May 16, 2023. We will continue to vigorously defend the lawsuit and, although it is reasonably possible we could incur a loss in the case, we believe that we will prevail. However, given that litigation is inherently unpredictable and subject to uncertainties, there can be no assurances that the final outcome of the litigation (including ~~any~~the related appeal) will not be material. Until such appeal is final, we cannot reasonably estimate the potential loss or range of loss associated with this matter.

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 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. The variability inherent in 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 – Other than Incident-related matters noted above, 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. 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.

1820

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.

In addition to environmental claims associated with the Incident, our Consolidated Balance Sheets include liabilities for other environmental exposures of ~~$61~~$60 million at ~~March 31,~~June 30, 2023 and $66 million at December 31, 2022, of which $15 million is classified as a current liability at the end of both periods. At ~~March 31,~~June 30, 2023, ~~and December 31, 2022,~~ the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 8582 known locations and ~~projects.~~projects compared with 85 locations and projects at December 31, 2022. At ~~March 31,~~June 30, 2023, ~~twenty~~nineteen sites accounted for $49 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 eight locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under CERCLA 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.

As set forth above, with respect to known environmental sites (whether identified by us or by the U.S. EPA 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.

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. Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements. We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee.

~~discussions (none of which carry the risk of a work stoppage) with several of our unions to conclude the implementation of these national agreements.~~ With the conclusion of national bargaining, neither party can compel mandatory bargaining around any new proposals until November 1, 2024.

In addition, we understand the imperative to continue improving quality of life for our craft employees and ~~are~~remain actively engaged with our unions in voluntary local discussions ~~with our unions~~(none of which carry the risk of a work stoppage) on this important issue.

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 (or up to $1.1 billion for specified types of pollution releases) 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 82% of potential losses above $75 million and below $275 million per occurrence and/or policy year.

Our ability to recoup any of the foregoing amounts under our insurance coverage, including any amounts that may be recoverable with respect to the Incident, is subject to certain conditions, including but not limited to our insurers’ reservation of rights to further investigate and contest coverage, the express restrictions and sub-limits of coverage, and various policy exclusions, including those for some governmental fines or penalties, as well as potential coverage disputes over payments we make as part of our effort to mitigate the impact to the community and affected residents. We are working with our insurers to confirm applicable coverage with respect to the Incident, but no estimate for potential insurance recovery has been accrued at this time.

Asset Purchase and Sale Agreement

In November 2022, we entered into an asset purchase and sale agreement with the Board of Trustees of the Cincinnati Southern Railway to purchase approximately 337 miles of railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee which we currently operate under a lease agreement. The agreement is conditioned upon the following, among other items: (i) approval by the voters of the City of Cincinnati (Cincinnati Voter Approval), and (ii) the receipt of regulatory approval from the U.S. Surface Transportation Board (STB). On June 28, 2023, we entered into an amended and restated asset purchase and sale agreement which increased the purchase price by $500,000 and clarified the impact of Cincinnati Voter Approval on the closing timeline. If Cincinnati Voter Approval is obtained in November 2023, the transaction will close on the later of the date that is five days after all conditions have been satisfied (including potential STB regulatory approval) or March 15, 2024. Following the June 2023 amendment, the total purchase price for the line and other associated real and personal property included in the transaction is expected to be between $1.6 billion and $1.7 billion.

2022

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, 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 in 22 states and the District of 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. We are also a principal carrier of coal, automobiles, and automotive parts.

Our ~~first quarter~~second-quarter results ~~were impacted by~~reflect declines in income from railway operations, net income and diluted earnings per share as we continued our response efforts to a February 2023 derailment of 38 railcars in Eastern Ohio. ~~The derailment consisted of 38 railcars and resulted~~During the quarter, we recognized $416 million in ~~the release of certain chemicals that were being transported for our customers. Following the Incident (as defined and as further described in Note 10 in the Notes~~additional expenses related to Consolidated Financial Statements), we have worked to clean the derailment site safely and thoroughly and to monitor for any impact on public health and the environment. Expenses recognized in the first quarter amounted to $387 million and relate to our initial response costs, ongoing ~~cleanup efforts and estimates associated with environmental remediation and legal proceedings. Our current estimates of future~~ environmental cleanup and remediation ~~liabilities related to~~efforts, legal proceedings resulting from the Incident, ~~may change over time due to various factors,~~ and the final outcome of any legal proceedings cannot be predicted with certainty. Thus, unfavorable or unexpected developments or outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter. This amount does not include any estimate of loss for specific items for which we believe a loss is either not probable or not reasonably estimable for the reasons noted. In addition, this amount does not include any amounts that may be recoverable from third parties, including expenses or liabilities that may be recovered under our insurance policies and for which such amounts will be reflected in future periods when reimbursement is considered probable. Please see Note 10 in the Notes to Consolidated Financial Statements for a detailed discussion of these estimates and exclusions.other Incident-related costs. We continue to work with federal, state, and local officials to mitigate impacts from the Incident and to provide support to affected members of the community. Please see Note 10 in the Notes to Consolidated Financial Statements for a detailed discussion of the Incident.

~~Revenue growth over the prior year~~Further impacting our second-quarter 2023 financial results was ~~driven by higher~~a decline in railway operating revenues. The reduction in revenue was due to a decline in volumes, as service challenges and a weaker demand environment restricted our ability to grow, and a lower average revenue per unit, ~~as our volumes for the quarter were flat.~~driven by lower fuel surcharge revenue. In addition to the costs recognized from the Incident, our operating expenses were also slightly higher, driven by inflationary pressures, higher service-related costs and ~~service-related costs.~~increased headcount, though mostly offset by the impact of lower fuel expense. As we continue to make progress in response to the derailment and support the impacted community, we ~~are~~remain committed to our strategy — a balanced approach of delivering safe, reliable and resilient service, smart and sustainable growth, and continuous productivity improvement.

SUMMARIZED RESULTS OF OPERATIONS


		First Quarter					Second Quarter				First Six Months
		2023		2022		% change			2023		2022		% change	2023		2022		% change
		($ in millions, except per share amounts)							($ in millions, except per share amounts)

Income from railway operations	Income from railway operations	$	711	$	1,085	(34%)		Income from railway operations	$	576	$	1,271	(55%)	$	1,287	$	2,356	(45%)

Net income	Net income	$	466	$	703	(34%)		Net income	$	356	$	819	(57%)	$	822	$	1,522	(46%)
Diluted earnings per share	Diluted earnings per share	$	2.04	$	2.93	(30%)		Diluted earnings per share	$	1.56	$	3.45	(55%)	$	3.60	$	6.37	(43%)
Railway operating ratio (percent)	Railway operating ratio (percent)	77.3		62.8		23%		Railway operating ratio (percent)	80.7		60.9		33%	78.9		61.8		28%

~~First-quarter~~Results for the second quarter and first six months of 2023 included $416 million and $803 million, respectively, of expenses included in income from railway operations ~~included $387 million of expenses~~ arising from the Incident, which reduced net income by ~~$293~~$317 million and $610 million, respectively, and diluted earnings per share by ~~$1.28.~~$1.39 and $2.67, respectively. For more information see Note 10 in the Notes to Consolidated Financial Statements. ~~First~~Second quarter and the first six months income from railway operations, net income, and diluted earnings per share were further impacted by the factors set forth further below.

The following ~~table~~tables adjusts our 2023 GAAP financial results for the second quarter and the first six months to exclude the effects of the Incident. The income tax ~~effect~~effects of this non-GAAP adjustment ~~was~~were 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 2023 costs arising from the Incident. 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 First Quarter 2023
		Reported		Eastern Ohio Incident		Adjusted (non-GAAP)			Non-GAAP Reconciliation for the Second Quarter
		($ in millions, except per share amounts)							Reported 2023 (GAAP)		Eastern Ohio Incident		Adjusted 2023 (non-GAAP)
									($ in millions, except per share amounts)

Income from railway operations	Income from railway operations	$	711	$	387	$	1,098	Income from railway operations	$	576	$	416	$	992

Net income	Net income	$	466	$	293	$	759	Net income	$	356	$	317	$	673
Diluted earnings per share	Diluted earnings per share	$	2.04	$	1.28	$	3.32	Diluted earnings per share	$	1.56	$	1.39	$	2.95
Railway operating ratio (percent)	Railway operating ratio (percent)	77.3		(12.4)		64.9		Railway operating ratio (percent)	80.7		(14.0)		66.7

In the table below, references to the results for the second quarter of 2023 and related comparisons use the adjusted, non-GAAP results from the reconciliation in the table above.


	Second Quarter
	Adjusted 2023 (non-GAAP)		2022		Adjusted 2023 (non-GAAP) vs. 2022
	($ in millions, except per share amounts)				% change

Income from railway operations	$	992	$	1,271	(22%)
Net income	$	673	$	819	(18%)
Diluted earnings per share	$	2.95	$	3.45	(14%)
Railway operating ratio (percent)	66.7		60.9		10%


	Non-GAAP Reconciliation for First Six Months
	Reported 2023 (GAAP)		Eastern Ohio Incident		Adjusted 2023 (non-GAAP)
	($ in millions, except per share amounts)


Income from railway operations	$	1,287	$	803	$	2,090


Net income	$	822	$	610	$	1,432
Diluted earnings per share	$	3.60	$	2.67	$	6.27
Railway operating ratio (percent)	78.9		(13.1)		65.8

In the table below, references to the results for the first six months of 2023 and related comparisons use the adjusted, non-GAAP results from the reconciliation in the table above.


		First Quarter						First Six Months
		Adjusted 2023 (non-GAAP)		2022		Adjusted 2023 (non-GAAP) vs. 2022		Adjusted 2023 (non-GAAP)		2022		Adjusted 2023 (non-GAAP) vs. 2022
		($ in millions, except per share amounts)				% change		($ in millions, except per share amounts)				% change

Income from railway operations	Income from railway operations	$	1,098	$	1,085	1%	Income from railway operations	$	2,090	$	2,356	(11%)

Net income	Net income	$	759	$	703	8%	Net income	$	1,432	$	1,522	(6%)
Diluted earnings per share	Diluted earnings per share	$	3.32	$	2.93	13%	Diluted earnings per share	$	6.27	$	6.37	(2%)
Railway operating ratio (percent)	Railway operating ratio (percent)	64.9		62.8		3%	Railway operating ratio (percent)	65.8		61.8		6%

On a non-GAAP basis excluding the impact of the Incident, income from railway operations ~~increased~~decreased in both periods due to ~~higher~~lower railway operating ~~revenues. Revenue growth was driven by higher fuel surcharge~~ revenues and ~~pricing gains, as~~increased operating expenses. Railway operating revenues declined in both periods due to decreased volumes ~~remained flat~~and lower intermodal storage revenues compared to the same period last ~~year. The rise~~year, while the second quarter also experienced a larger decline in ~~revenues was partially offset by increased~~fuel surcharge revenue. Increased railway operating expenses in both periods were primarily driven by inflationary pressures, higher service-related costs and ~~service-related costs.~~increased headcounts which, during the second quarter, were mostly offset by lower fuel expense.

2325

DETAILED RESULTS OF OPERATIONS

Railway Operating Revenues

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


		First Quarter					Second Quarter				First Six Months
Revenues	Revenues	2023		2022		% change		Revenues	2023		2022		% change	2023		2022		% change
Merchandise:	Merchandise:							Merchandise:
Agriculture, forest and consumer products	Agriculture, forest and consumer products	$	653	$	573	14%		Agriculture, forest and consumer products	$	627	$	624	—%	$	1,280	$	1,197	7%
Chemicals	Chemicals	541		498		9%		Chemicals	503		552		(9%)	1,044		1,050		(1%)
Metals and construction	Metals and construction	400		375		7%		Metals and construction	415		420		(1%)	815		795		3%
Automotive	Automotive	284		226		26%		Automotive	281		257		9%	565		483		17%
Merchandise	Merchandise	1,878		1,672		12%		Merchandise	1,826		1,853		(1%)	3,704		3,525		5%
Intermodal	Intermodal	814		854		(5%)		Intermodal	745		972		(23%)	1,559		1,826		(15%)
Coal	Coal	440		389		13%		Coal	409		425		(4%)	849		814		4%
Total	Total	$	3,132	$	2,915	7%		Total	$	2,980	$	3,250	(8%)	$	6,112	$	6,165	(1%)


Units	Units				Units
Merchandise:	Merchandise:				Merchandise:
Agriculture, forest and consumer products	Agriculture, forest and consumer products	187.7	177.6	6%	Agriculture, forest and consumer products	187.7	183.6	2%	375.4	361.2	4%
Chemicals	Chemicals	136.1	129.4	5%	Chemicals	126.7	140.0	(10%)	262.8	269.4	(2%)
Metals and construction	Metals and construction	153.4	148.0	4%	Metals and construction	161.7	163.9	(1%)	315.1	311.9	1%
Automotive	Automotive	88.1	81.2	8%	Automotive	90.6	85.7	6%	178.7	166.9	7%
Merchandise	Merchandise	565.3	536.2	5%	Merchandise	566.7	573.2	(1%)	1,132.0	1,109.4	2%
Intermodal	Intermodal	916.8	956.5	(4%)	Intermodal	925.4	1,016.5	(9%)	1,842.2	1,973.0	(7%)
Coal	Coal	173.8	165.6	5%	Coal	165.5	166.1	—%	339.3	331.7	2%
Total	Total	1,655.9	1,658.3	—%	Total	1,657.6	1,755.8	(6%)	3,313.5	3,414.1	(3%)


Revenue per Unit	Revenue per Unit						Revenue per Unit
Merchandise:	Merchandise:						Merchandise:
Agriculture, forest and consumer products	Agriculture, forest and consumer products	$	3,477	$	3,228	8%	Agriculture, forest and consumer products	$	3,342	$	3,398	(2%)	$	3,410	$	3,314	3%
Chemicals	Chemicals	3,979		3,850		3%	Chemicals	3,966		3,941		1%	3,973		3,897		2%
Metals and construction	Metals and construction	2,607		2,535		3%	Metals and construction	2,569		2,560		—%	2,587		2,548		2%
Automotive	Automotive	3,226		2,776		16%	Automotive	3,102		3,007		3%	3,164		2,894		9%
Merchandise	Merchandise	3,323		3,118		7%	Merchandise	3,222		3,233		—%	3,273		3,177		3%
Intermodal	Intermodal	887		893		(1%)	Intermodal	805		955		(16%)	846		925		(9%)
Coal	Coal	2,533		2,347		8%	Coal	2,470		2,562		(4%)	2,502		2,455		2%
Total	Total	1,891		1,758		8%	Total	1,798		1,851		(3%)	1,845		1,806		2%

2426

Railway operating revenues ~~increased $217~~decreased $270 million in the second quarter and $53 million for the first six months compared with the same ~~period~~periods last year. The table below reflects the components of the revenue change by major commodity group ($ in millions).


		First Quarter							Second Quarter				First Six Months
		Merchandise		Intermodal		Coal					Merchandise		Intermodal		Coal		Merchandise		Intermodal		Coal
		Increase (Decrease)						Increase (Decrease)

Volume	Volume	$	91	$	(35)	$	19			Volume	$	(21)	$	(87)	$	(2)	$	72	$	(121)	$	19
Fuel surcharge revenue	Fuel surcharge revenue	84		29		18				Fuel surcharge revenue	(35)		(96)		(3)		49		(67)		15
Rate, mix and other	Rate, mix and other	31		(34)		14				Rate, mix and other	29		(44)		(11)		58		(79)		1

Total	Total	$	206	$	(40)	$	51			Total	$	(27)	$	(227)	$	(16)	$	179	$	(267)	$	35

Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges. Revenues associated with these surcharges totaled ~~$375~~$287 million and ~~$244~~$421 million in the second quarters of 2023 and 2022, respectively, and $662 million and $665 million for the first ~~quarters~~six months of 2023 and 2022, respectively. The ~~increase~~decrease in fuel surcharge revenues is driven by ~~higher~~lower fuel commodity prices.

For the remainder of 2023, we expect that revenue ~~growth~~ will ~~be a challenge, as there is substantial economic uncertainty. We expect revenue headwinds resulting from~~decline compared to 2022 driven by lower fuel prices, ~~softening coal pricing, and~~ declining storage service ~~charges.~~charges, and softening coal pricing.

Merchandise

Merchandise revenues decreased during the second quarter but increased during the first six months. The decrease during the second quarter was due to lower volume and lower average revenue per unit, driven by lower fuel surcharge revenue partially offset by increased pricing. The increase during the first six months was primarily due to higher average revenue per unit, driven by increased pricing and higher fuel surcharge revenue, and ~~increased pricing, as well as~~ higher ~~volumes in all commodity groups.~~volume.

Agriculture, forest and consumer products volume increased in both periods as ~~the shipment demand for~~increases in corn, ~~soybeans,~~fertilizers, food oils, ethanol ~~feed,~~ and ~~lumber,~~wheat more than offset the declines in ~~pulpboard.~~pulpboard, graphic paper and woodchips. Volume gains in corn, fertilizers, food oils, ethanol ~~feed~~ and ~~lumber~~wheat were driven by increased market demand. ~~Higher soybean volume was due to an extended export season.~~ The decline in pulpboard ~~was~~and graphic paper were due to higher inventories ~~slowing down~~which lowered the demand for ~~shipments.~~shipments, while the decline in woodchips was due to a customer mill closing.

Chemicals volume ~~rose~~declined in both periods as ~~growth in~~reduced shipments of ~~sand, petroleum products,~~crude oil, plastics, natural gas liquids, and ~~solid waste~~organic and inorganic chemicals, more than the offset increases in sand and solid waste. Volume declines for crude oil were driven by production outages and soft demand in ~~plastics,~~the energy markets. Plastics, natural gas liquids and organic chemicals ~~and natural gas liquids.~~volume declined as a result of lower demand, while the decline in inorganic chemicals was driven by reduced production. Volume gains ~~for~~in sand were driven by current market demand, while the ~~volume increases for petroleum and~~increase in solid waste ~~were both driven by~~was due to growth with existing customers. Plastics volumes declined due to lower demand as a result of decreased activity in the housing market, while organic chemicals volumes declined as a result of production delays due to weather events. Natural gas liquid volumes were down due to decreased demand.

Metals and construction volume decreased during the second quarter but increased during the first six months. The decline in the second quarter was due to lower volumes of kaolin and construction materials. The volume decline in kaolin was largely driven by higher inventories which lowered demand, while the decline in construction materials was due to extended cycle times and local service challenges. The increase during first six months was largely driven by increased demand for aggregates, scrap metal and ~~scrap metal.~~cement, which more than offset declines in kaolin and construction materials.

Automotive volume was higher in both periods due to ~~an increase in production of vehicles partially offset by elongated cycle times.~~higher finished vehicle inventory levels available for rail transportation.

Intermodal

Intermodal revenues decreased ~~driven by lower volumes, and~~in both periods the result of lower average revenue per unit, ~~a result of decreased~~driven by lower fuel surcharge revenue and storage service charges, ~~partially offset by higher fuel surcharge revenue.~~and decreased volume.

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


		First Quarter				Second Quarter			First Six Months
		2023	2022	% change		2023	2022	% change	2023	2022	% change

Domestic	Domestic	587.7	653.4	(10%)	Domestic	577.0	670.4	(14%)	1,164.7	1,323.8	(12	%)
International	International	329.1	303.1	9%	International	348.4	346.1	1%	677.5	649.2	4	%

Total	Total	916.8	956.5	(4%)	Total	925.4	1,016.5	(9%)	1,842.2	1,973.0	(7	%)

Domestic volume declined in both periods due to a decrease in freight demand as a result of reduced consumer consumption combined with high ~~inventories and increased truck availability resulting in strong over-the-road competition.~~inventories. International volume increased in both periods, driven by ocean carriers favoring inland point intermodal ~~traffic.~~traffic, partially offset by a decrease in imports.

Coal

Coal revenues decreased for the second quarter but increased for the first six months. The second quarter decline was the result of lower average revenue per unit, driven by lower pricing and decreased fuel surcharge revenue, partially offset by favorable traffic mix. The increase in the first six months was due to increased volume and higher average revenue per unit, driven by traffic mix and higher fuel surcharge revenue ~~and increased export coal volumes.~~partially offset by declining prices.

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


		First Quarter			Second Quarter			First Six Months
		2023	2022	% change			2023	2022	% change	2023	2022	% change

Utility	Utility	8,210	8,961	(8%)		Utility	6,852	8,267	(17%)	15,062	17,228	(13%)
Export	Export	8,206	6,414	28%		Export	7,697	6,514	18%	15,903	12,928	23%
Domestic metallurgical	Domestic metallurgical	2,331	2,430	(4%)		Domestic metallurgical	3,059	2,782	10%	5,390	5,212	3%
Industrial	Industrial	689	803	(14%)		Industrial	882	1,083	(19%)	1,571	1,886	(17%)

Total	Total	19,436	18,608	4%		Total	18,490	18,646	(1%)	37,926	37,254	2%

Coal tonnage ~~increased due to increased~~declined during the second quarter but rose for the first six months. Both periods saw increases in export ~~volume, partially offset by decreased volumes~~and domestic metallurgical tonnage with declines in ~~all other market groups.~~utility and industrial tonnage. Export and domestic metallurgical tonnage was higher due to increased demand and coal ~~supply, and metal production.~~supply. Utility tonnage decreased as a result of low natural gas prices, high stockpiles, and mild winter weather. ~~Domestic metallurgical and industrial~~Industrial coal tonnage decreased due to reduced coal shipments related to ~~idled customer facilities.~~sourcing changes.

2628

Railway Operating Expenses

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


		First Quarter					Second Quarter				First Six Months
		2023		2022		% change			2023		2022		% change	2023		2022		% change

Compensation and benefits	Compensation and benefits	$	690	$	619	11%		Compensation and benefits	$	693	$	614	13%	$	1,383	$	1,233	12%
Purchased services and rents	Purchased services and rents	496		437		14%		Purchased services and rents	506		481		5%	1,002		918		9%
Fuel	Fuel	315		301		5%		Fuel	263		408		(36%)	578		709		(18%)
Depreciation	Depreciation	321		302		6%		Depreciation	321		304		6%	642		606		6%
Materials and other	Materials and other	212		171		24%		Materials and other	205		172		19%	417		343		22%
Eastern Ohio incident	Eastern Ohio incident	387		—				Eastern Ohio incident	416		—			803		—

Total	Total	$	2,421	$	1,830	32%		Total	$	2,404	$	1,979	21%	$	4,825	$	3,809	27%

Compensation and benefits expense increased in both periods as follows:

•increased pay rates (up ~~$49 million)~~$54 million for the quarter and $103 million for the first six months),

•employee activity levels (up ~~$36 million)~~$30 million for the quarter and $66 million for the first six months),

•~~stock-based~~incentive compensation (down $12 ~~million)~~million for the quarter and $22 million for the first six months), and

•other ~~(down $2 million)~~(up $7 million for the quarter and $3 million for the first six months).

Average rail headcount for the quarter was up by ~~over~~ 1,400 compared with the ~~first~~second quarter of 2022 primarily due to the hiring of additional train and engine craft employees.

Purchased services and rents increased in both periods as follows ($ in millions):


		First Quarter					Second Quarter				First Six Months
		2023		2022		% change			2023		2022		% change	2023		2022		% change

Purchased services	Purchased services	$	399	$	349	14%		Purchased services	$	407	$	387	5%	$	806	$	736	10%
Equipment rents	Equipment rents	97		88		10%		Equipment rents	99		94		5%	196		182		8%

Total	Total	$	496	$	437	14%		Total	$	506	$	481	5%	$	1,002	$	918	9%

Purchased services ~~primarily increased~~rose in both periods due to ~~inflationary pressures which resulted in higher intermodal-related expenses,~~ increased operational and transportation expenses ~~as well as~~and higher technology-related ~~costs.~~expenses. In addition, the first six months were impacted by higher intermodal-related expenses. Equipment rents increased in both periods as lower network fluidity led to greater time-and-mileage expenses and increased intermodal equipment ~~expenses and greater time-and-mileage~~ expenses. We also incurred higher freight car lease costs.

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, ~~increased~~decreased in both periods due to lower locomotive fuel prices (down 36% in the second quarter and 19% in the first six months) partially offset by slightly higher locomotive fuel ~~prices (5%). Locomotive fuel~~ consumption ~~was flat compared to~~(up 1% in both the ~~same period last year.~~second quarter and first six months).

Depreciation expense increased in both periods due to our higher asset base and the impact of the results of our periodic roadway study.

2729

Materials and other expenses increased in both periods as follows ($ in millions):


		First Quarter					Second Quarter				First Six Months
		2023		2022		% change			2023		2022		% change	2023		2022		% change

Materials	Materials	$	91	$	62	47%		Materials	$	88	$	70	26%	$	179	$	132	36%
Claims	Claims	54		49		10%		Claims	60		64		(6%)	114		113		1%
Other	Other	67		60		12%		Other	57		38		50%	124		98		27%

Total	Total	$	212	$	171	24%		Total	$	205	$	172	19%	$	417	$	343	22%

Materials expense increased in both periods due to increased locomotive and freight car materials costs. Claims expense decreased in the second quarter, but slightly increased in the first six months of 2023. Both periods experienced lower costs associated with personal injury claims and environmental matters unrelated to the Incident. Claims expense for the first six months increased as a result of higher costs associated with derailments ~~not related~~unrelated to the Incident. Other expense increased in both periods due to higher travel-related ~~expenses.~~expenses and lower gains from operating property sales. Gains from operating property sales, included in Other, totaled $3$19 million and $6$28 million for the second quarter in 2023 and 2022, respectively, and $22 million and $34 million in the first six months of 2023 and 2022, respectively.

Eastern Ohio incident

During the second quarter and the first ~~quarter,~~six months of 2023, we recorded ~~$387~~$416 million and $803 million, respectively, for costs primarily associated with environmental matters and legal proceedings. The expense recorded in the first ~~quarter~~six months does not include any estimates for amounts that may be recovered from third parties or under our insurance policies. For further details regarding the Incident, see Note 10 in the Notes to Consolidated Financial Statements.

Other income (expense) – net

Other income increased ~~$61~~$71 million ~~due to~~in the second quarter and $132 million for the first six months, as both periods reflect higher returns on corporate-owned life insurance (COLI) ~~and increased interest income.~~.

Income taxes

The ~~first-quarter~~ effective tax ~~rate was 21.3%~~rates for the second quarter and first six months of 2023 were 23.1% and 22.1%, compared with ~~22.9%~~24.7% and 23.9%, respectively, for the same ~~period~~periods last year. ~~The effective~~Both periods in 2023 reflect higher returns on COLI slightly offset by lower tax benefits on stock-based compensation, while the year-to-date rate ~~for 2023~~also includes the ~~recognition~~benefit of certain business tax credits ~~and tax benefits on stock-based compensation.~~recognized in the first quarter.

FINANCIAL CONDITION AND LIQUIDITY

Cash provided by operating activities, our principal source of liquidity, was ~~$1.2~~$1.8 billion for the first ~~three~~six months of 2023, compared with ~~$1.0~~$2.0 billion for the same period of 2022. The ~~increase reflected changes in working capital,~~decrease reflects lower operating results, offset in part by ~~lower operating results.~~changes in working capital. We had negative working capital of ~~$702~~$955 million and $642 million at ~~March 31,~~June 30, 2023 and December 31, 2022, respectively. Cash and cash equivalents totaled ~~$552~~$556 million at ~~March 31,~~June 30, 2023.

Cash used in investing activities was ~~$391~~$741 million for the first ~~three~~six months of 2023, compared with ~~$335~~$714 million for the same period last year. The increase was primarily driven by higher property ~~additions.~~additions and lower proceeds from

property sales, partially offset by COLI investment activity. For 2023, we expect property additions will be approximately $2.2 billion.

Cash used in financing activities was ~~$686 million~~$1.0 billion for the first ~~three~~six months of 2023, ~~while cash provided by financing activities was $73~~compared with $877 million for the same period last ~~year, reflecting~~year. The increase reflects lower proceeds from borrowing and higher debt repayments, ~~and decreased proceeds from borrowing. Partially offsetting this activity was~~partially offset by lower repurchases of Common Stock. We repurchased ~~$163~~$303 million of Common Stock in the first ~~three~~six months of 2023 compared to ~~$600 million~~$1.5 billion in the same period last year. The timing and volume of future share repurchases will be guided by our assessment of market conditions 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)

and Rule 10b-18 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 May 2023, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $400 million. Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program was extended in the second quarter and now expires in May 2024. We had $130 million outstanding under this program at June 30, 2023 and $100 million outstanding at December 31, 2022. Our available borrowing capacity was $270 million and $300 million at June 30, 2023 and December 31, 2022, respectively.

In February 2023, we issued $500 million of 4.45% senior notes due 2033.

Our debt-to-total capitalization ratio was ~~54.1%~~54.5% at ~~March 31,~~June 30, 2023 and 54.4% at December 31, 2022. 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,~~June 30, 2023 or December 31, 2022. We also have in place an accounts receivable securitization program with a maximum borrowing capacity of $400 million. The term expires in May 2023. We had no amounts outstanding under this program at March 31, 2023 and $100 million outstanding at December 31, 2022. Our available borrowing capacity was $400 million and $300 million at March 31, 2023 and December 31, 2022, respectively.

In addition, we have investments in general purpose COLI policies and had the ability to borrow against these policies up to ~~$620~~$530 million and $610 million at ~~March 31,~~June 30, 2023 and December 31, 2022, 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 decrease shareholder distributions, including share repurchases, provide additional flexibility to meet our ongoing obligations. 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, 2022, with the exception of additional senior notes (see Note 7).

In June 2023, we amended and restated our asset purchase and sale agreement with the Board of Trustees of the Cincinnati Southern Railway to purchase approximately 337 miles of railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee which we currently operate under a lease agreement. Following this amendment, the total purchase price for the line and other associated real and personal property included in the transaction is expected to be between $1.6 billion and $1.7 billion. The agreement is conditioned upon the following, among other items: (i) Cincinnati Voter Approval, and (ii) the receipt of regulatory approval from the STB. If Cincinnati Voter Approval is obtained in November 2023, the transaction will close on the later of the date that is five days after all remaining conditions have been satisfied (including potential STB regulatory approval) or March 15, 2024.

CRITICAL ACCOUNTING 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. In addition to the critical accounting estimates below, the remainder of our critical accounting estimates are contained in our December 31, 2022 Form 10-K.

Contingencies

We are currently involved in certain environmental response and remediation activities and subject to numerous legal proceedings and regulatory inquiries and investigations resulting from the Incident. As required, we have accrued estimates of the probable and reasonably estimable costs for the resolution of these matters. Our environmental estimates are based upon types of remediation efforts currently anticipated, the volume of contaminants in the impacted areas, and governmental oversight and other costs, amongst other factors. Estimates associated with the legal proceedings to which we are subject are based on information that is currently available, including but not limited to an assessment of the proceedings and the potential and likely results of such proceedings.

Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, when activities at the ~~success of current cleanup techniques,~~site transition from extensive soil and water disposal and air monitoring activities to additional assessment and investigative efforts, the nature and extent of required future cleanup activities (including those resulting from additional assessment and investigative activities that will be conducted at the site), the extent and duration of governmental oversight, and the success of current cleanup techniques, amongst other factors. Additionally, the final outcome of any of the legal proceedings and regulatory inquiries and investigations cannot be predicted with certainty, and unfavorable or unexpected developments or outcomes could result in new or additional accruals that could be material. Furthermore, certain of these costs may be recoverable from third parties or under our insurance policies in effect at the date of the Incident. Any amounts that are recoverable from third parties or under our insurance policies will be reflected in periods in which we determine that such amounts are probable of recovery.

See Note 10 in the Notes to Consolidated Financial Statements for more detailed information as it pertains to these contingencies.

OTHER MATTERS

Labor Agreements

The latest round of national bargaining concluded in December 2022, when agreements were either ratified or enacted through legislative action for all twelve of our unions. ~~We are currently participating in additional discussions (none of which carry the risk of a work stoppage) with several of our unions to conclude the implementation of these national agreements.~~ With the conclusion of national bargaining, neither party can compel mandatory bargaining around any new proposals until November 1, 2024.

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 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 supplemented in Part II, Item ~~1 A~~1A of this Form 10-Q, 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,~~June 30, 2023. Based on such evaluation, our officers have concluded that, at ~~March 31,~~June 30, 2023, 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~~second quarter of 2023, 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.

3134

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information on our legal proceedings, see Note 10 “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.

Item 1A. Risk Factors

The risks set forth in “Risk Factors” included in our 2022 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 ~~are incorporated herein by reference and~~ are updated to include the following risks.

INCIDENT RISKS

As defined and as further described in Note 10 in the Notes to Consolidated Financial Statements, there was an Incident that occurred in the first quarter that consisted of a February 3, 2023 train derailment in East Palestine, Ohio that included 11 non-Company-owned tank cars containing hazardous materials, fires associated with the derailment that threatened certain of the tank cars, and a controlled vent and burn procedure conducted on February 6, 2023 on five of the derailed tank cars, all of which contained vinyl chloride. As a result of the Incident, we have become subject to numerous legal, regulatory, legislative and other proceedings related thereto, including but not limited to, the NTSB Investigation, the FRA Incident Investigation, the FRA Safety Assessment, the DOJ Complaint, the Ohio Complaint, the Incident Lawsuits, the Shareholder Lawsuits, and the Incident Inquiries and Investigations, in addition to other proceedings, actions, or potential changes in response to the Incident, including but not limited to those related to, among other items, train size, train length, train composition, or crew size (collectively, the “Incident Proceedings”). Set forth below are additional risks pertaining to an investment in the Company that are related to the Incident and the Incident Proceedings.

New or additional governmental regulation and/or operational changes resulting from or related to the Incident or the Incident Proceedings may negatively impact us, our customers, the rail industry, or the markets we serve. The legislative, regulatory, operational or other actions taken, protocols adopted (including by us), or changes resulting from the Incident or any of the Incident Proceedings may, either individually or in the aggregate, negatively impact us, our customers, the rail industry, or the markets we serve. Our inability to comply with the requirements of any new or additional laws, regulations or operating protocols resulting from or related to the Incident or the Incident Proceedings may have a material adverse effect on our financial position, results of operations, liquidity, or operations.

The costs, liabilities, fines, penalties, and/or financial impact resulting from or related to the Incident or the Incident Proceedings may be significant, exceed expected or accrued amounts, or negatively affect our financial results. We have incurred and will continue to remain subject to incurring significant costs, liabilities, fines, and penalties related to the Incident and the Incident Proceedings, including amounts that may have a material adverse effect on our financial position, results of operations, or liquidity.

In addition, while we have provided estimates of probable and reasonably estimable liabilities with respect to the Incident and the Incident Proceedings, we cannot predict the final outcome or estimate the reasonably possible range of loss with certainty and such estimates may change over time due to a variety of factors, including but not limited to those set forth in Note 10 hereto or other unfavorable or unexpected developments or outcomes which could result in our current estimates being insufficient. These estimated amounts also do not include any estimate of loss for specific items for which we believe a loss is either not probable or not reasonably estimable for the reasons set forth in Note 10 hereto. As a result, our currently accrued amounts of estimated liabilities may be insufficient, and any additional, new or updated accruals may potentially have a material adverse effect on our results of operations or financial ~~condition.~~

position.

3235

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

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, 2023 491,282 $ 252.38 490,984 $ 7,365,890,306
February 1-28, 2023 157,502 245.64 157,194 7,327,270,905
March 1-31, 2023 — — — 7,327,270,905
Total 648,784 648,178


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

April 1-30, 2023	14,773	$	203.06	14,773	$	7,324,271,033
May 1-31, 2023	83,840	205.74		83,840	7,307,021,689
June 1-30, 2023	541,523	222.23		541,523	7,186,677,232

Total	640,136			640,136

(1)~~Of this amount, 606 represent shares were tendered by employees in connection with the exercise of options under the stockholder-approved LTIP.~~

~~(2)~~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. As of ~~March 31,~~June 30, 2023, ~~$7.3~~$7.2 billion remains authorized for repurchase.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~Director and Officer Trading Arrangements

None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this report.

3336

Item 6. Exhibits



~~4.1~~10.1*			~~Tenth Supplemental Indenture,~~First Amendment to the Credit Agreement dated as of ~~February 2,~~May 4, 2023 ~~between~~(to 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 2, 2023.

10.1*			~~The Norfolk Southern Corporation Executive Life Insurance Plan, as amended and restated effective November 30, 2022 and executed~~Credit Agreement dated as of ~~February 21, 2023.~~March 27, 2020).

10.2*			~~Third Omnibus Amendment~~Commitment Termination Date Extension Request effective as of May 26, 2023 to the Amended and Restated Transfer and Administrative Agreement dated as of May 28, 2021 ,.

10.3*			First Amended and Restated Asset Purchase and Sale Agreement dated ~~January 23,~~as of June 28, 2023 between ~~NSRC, BA Leasing, BSC, LLC, Bank~~Board of ~~America, N.A as Administrative Agent, and each~~Trustees of the ~~Rent Assignees.~~Cincinnati Southern Railway, Norfolk Southern Railway Company and The Cincinnati, New Orleans and Texas Pacific Railway Company.

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

31-B*			Rule 13a-14(a)/15d-14(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~~second quarter of 2023, formatted in Inline Extensible Business Reporting Language (iXBRL) includes (i) the Consolidated Statements of Income for the second quarter and first ~~quarter~~six months of 2023 and 2022; (ii) the Consolidated Statements of Comprehensive Income for the second quarter and first ~~quarter~~six months of 2023 and 2022; (iii) the Consolidated Balance Sheets at ~~March 31,~~June 30, 2023 and December 31, 2022; (iv) the Consolidated Statements of Cash Flows for the first ~~three~~six months of 2023 and 2022; (v) the Consolidated Statements of Changes in Stockholders’ Equity for the second quarter and first ~~quarter~~six months of 2023 and 2022; 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.

3437

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 26,~~July 27, 2023	/s/ Claiborne L. Moore
		Claiborne L. Moore Vice President and Controller (Principal Accounting Officer) (Signature)


Date:	~~April 26,~~July 27, 2023	/s/ Denise W. Hutson
		Denise W. Hutson Corporate Secretary (Signature)

3538


	March 31, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	($ in millions)


Long-term debt, including current maturities	$	(14,988)	$	(13,889)	$	(15,082)	$	(13,846)