FINANCIAL HIGHLIGHTS
Norfolk Southern Corporation & Subsidiaries
FOR THE YEAR
(numbers in millions, except per-share amounts)
Railway operating revenues
Income from railway operations1
Net income1
Per share – diluted1
Dividends per share
Dividend pay-out ratio1
Net cash provided by operating activities
Property additions
Free cash flow2
AT YEAR-END
Total assets
Total debt
Stockholders’ equity
Shares outstanding
FINANCIAL RATIOS
Operating ratio1
Debt-to-total capitalization ratio
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2022
12,745
4,809
3,270
13.88
4.96
36%
4,222
1,948
2,274
38,885
15,182
12,733
228.1
62.3%
54.4%
RAILWAY
OPERATING
REVENUES
(in millions)
$12,745
$11,142
$9,789
INCOME FROM
RAILWAY
OPERATIONS
(in millions)
FREE
CASH
FLOW2
(in millions)
$4,809
$4,447
$2,785
$3,486
$2,274
$2,143
2021
11,142
4,447
3,005
12.11
4.16
34%
4,255
1,470
2,785
38,493
13,840
13,641
240.2
60.1%
50.4%
$ 250
$ 200
$ 150
$ 100
$ 50
$ 0
DESCRIPTION OF BUSINESS
Norfolk Southern Corporation (NYSE:
NSC) is one of the nation’s premier
transportation companies, moving
the goods and materials that drive the
U.S. economy. Its Norfolk Southern
Railway Company subsidiary connects
customers to markets and communities
to economic opportunity with safe,
reliable, and cost-effective shipping
solutions. The company operates
approximately 19,100 route miles across
a service territory that includes 22
states and the District of Columbia,
every major container port in the
eastern United States, and a majority of
the U.S. population and manufacturing
base. In addition to operating the most
extensive intermodal network in the
East, the company is a major transporter
of industrial products, automobiles,
automotive parts, and coal.
$
$
$
$
$
$
$
$
$
$
$
2020
9,789
3,486
2,375
9.25
3.76
40%
3,637
1,494
2,143
37,962
12,681
14,791
252.1
64.4%
46.2%
TOTAL STOCKHOLDER RETURNS3
(in dollars)
Norfolk Southern Corp. Common Stock
S&P Railroad Stock Price Index
S&P Composite – 500 Stock Price Index
2022 2021 2020
2022 2021 20201
2022 2021 2020
12/2017
12/2018
12/2019
12/2020
12/2021
12/2022
1 Our 2020 financial results included a loss on asset disposal of $385M related to locomotives sold and a $99M impairment charge related to an equity method investment. For purposes of period-
over-period comparability, 2020 results for income from railway operations, net income, net income per share– diluted, dividend payout ratio, and operating ratio have been adjusted to exclude
these charges, and are considered non-GAAP financial measures. The 2020 dividend payout ratio is dividends paid ($960M) as a percentage of adjusted net income ($2,375M), as compared to
a 48% dividend payout ratio using net income under GAAP ($2,013M). For more information, see the “Non-GAAP Reconciliation for 2020” on page K20 of our Annual Report on Form 10-K.
2 Free cash flow is considered a non-GAAP financial measure and is a measure of cash available for other investing and financing activities, including payment of dividends, repurchases of
common stock, and repayments of debt. Management believes that this non-GAAP financial measure provides useful supplemental information to investors regarding our ability to generate
cash flows after taking into consideration cash necessary to cover operations and maintain and grow our capital base. Net cash provided by operating activities is a GAAP measure. Free cash
flow ($2,274M) is net cash provided by operating activities ($4,222M) reduced by payments for property additions ($1,948M).
3 This graph compares the cumulative stockholder returns on Norfolk Southern Corporation common stock with the other identified indices. It assumes an investment of $100 in NSC common
stock and each index on Dec. 31, 2017, and that all dividends were reinvested over the five-year period, ending Dec. 31, 2022. Data furnished by Bloomberg Financial Markets.
NORFOLK SOUTHERN 2022 ANNUAL REPORT | 1
2 | NORFOLK SOUTHERN 2022 ANNUAL REPORT
DEAR FELLOW
SHAREHOLDERS
The priority for your management team in 2022 was to
improve service. To achieve that goal, we implemented
our new TOP|SPG operating plan, with safety at its
core; launched recruiting and training initiatives that
achieved industry-leading success hiring conductors
in a historically tight job market, and strengthened our
leadership team and culture.
Our efforts took hold in the fourth quarter, and we
ended 2022 delivering our best service in more than two
years. Our customers noticed the difference. Volumes in
December were at 52-week highs, outperforming typical
seasonality.
Overcoming headwinds associated with a slower network
in the first three quarters, your company achieved strong
financial results in a challenging year. Total revenue grew
by 14 percent to reach a company-record $12.7 billion.
We achieved company-record operating income and our
second-best annual operating ratio.
We returned more than $4 billion to shareholders in
2022, with more than 12.6 million shares repurchased.
Earnings per share grew 15 percent for the year, dividend
distributions increased 14 percent, and we raised our
dividend 9 percent in the first quarter of 2023.
We entered 2023 with tremendous momentum, ready to
execute on the pioneering new strategy we announced
at our Investor Day in December.
NORFOLK SOUTHERN 2022 ANNUAL REPORT | 3
railroaders, who deliver every day for our company, our
customers, and the U.S. economy.
This is an exciting and important time for our company.
We thank you for your confidence and support as we
launch a new way forward for our industry.
With the right strategy, the
right team, and a franchise
built for growth, Norfolk
Southern intends to lead the
industry in service and growth.
Our strategy is to create long-term shareholder value
through a balanced approach of:
• reliable and resilient service,
• continuous productivity improvement, and
• smart and sustainable growth.
These are not competing priorities — they are
complementary in a carefully blended balance.
The resulting value proposition is simple and powerful:
Norfolk Southern is uniquely positioned to deliver long-
term shareholder value through top-tier revenue and
earnings growth, industry-competitive margins, and
balanced capital deployment.
We will look to compete in the $860 billion U.S. truck and
logistics market by being a customer-centric, operations-
driven service organization. Customer-centric means
we will deliver a service product the market values.
Operations-driven means we will make reliable and
resilient service an enduring competitive strength.
With the right strategy, the right team, and a franchise
built for growth, Norfolk Southern intends to lead the
industry in service and growth.
As I near the end of my first year as President and CEO of
Norfolk Southern, I would like to thank our outstanding
Board of Directors for their thoughtful guidance,
especially our Independent Chair Amy Miles for her
leadership and partnership.
I would also like to recognize all the members of the
Thoroughbred team, including our dedicated craft
4 | NORFOLK SOUTHERN 2022 ANNUAL REPORT
BOARD OF DIRECTORS
NORFOLK SOUTHERN 2022 ANNUAL REPORT | 5
THOMAS D. BELL, JR.
Director since 2010
MITCHELL E. DANIELS, JR.
Director since 2016
MARCELA E. DONADIO
Director since 2016
COMMITTEES
Executive, Governance and
Nominating (Chair), Human
Capital Management and
Compensation
CAREER HIGHLIGHTS
Mr. Daniels served as the
President of Purdue University
from 2013 to 2023 and served as
Governor of Indiana from 2005
to 2013. From 1990 to 2000, Mr.
Daniels worked for Eli Lilly and
Company, holding the executive
positions of President of North
American Pharmaceutical
Operations and Senior Vice
President of Corporate Strategy
and Policy. Mr. Daniels is also a
director of Cerner Corporation.
EXPERTISE
CEO/Senior Officer; Finance and
Accounting; Governance/Board;
Governmental and Stakeholder
Relations; Strategic Planning
COMMITTEES
Finance and Risk Management,
Human Capital Management
and Compensation
CAREER HIGHLIGHTS
Mr. Bell is the Chairman of Mesa
Capital Partners, LLC, a real
estate investment company.
Mr. Bell previously served as
Chairman and CEO of Cousins
Properties, a publicly traded
real estate investment trust
that invests in office buildings
throughout the South, from
2002 to 2009. He is also a
director of Southern Company
Gas (formerly AGL Resources)
and was a director of Regal
Entertainment Group, Inc. until
its acquisition in March 2018.
EXPERTISE
CEO/Senior Officer;
Environmental and Safety;
Governance/Board;
Governmental and Stakeholder
Relations; Human Resources
and Compensation; Marketing;
Risk Management; Strategic
Planning
COMMITTEES
Audit (Chair), Executive, Finance
and Risk Management
CAREER HIGHLIGHTS
Ms. Donadio is a certified public
accountant with over 37 years
of audit and public accounting
experience. In 2014, she retired
as a partner of Ernst & Young
LLP, a multinational professional
services firm. From 2007 until
her retirement, Ms. Donadio
was Americas Oil & Gas Sector
Leader, with responsibility
for one of Ernst & Young’s
significant industry groups
helping set firm strategy for oil
and gas industry clients in the
United States and throughout
the Americas. Ms. Donadio
serves as Lead Independent
Director of Marathon Oil
Corporation, and as a director
of NOV Inc. and Freeport-
McMoRan, Inc.
EXPERTISE
CEO/Senior Officer; Finance
and Accounting; Governance/
Board; Human Resources
and Compensation; Risk
Management; Strategic Planning
JOHN C. HUFFARD, JR.
Director since 2020
COMMITTEES
Finance and Risk Management,
Human Capital Management
and Compensation
CAREER HIGHLIGHTS
Mr. Huffard is a co-founder
of Tenable Network Security,
Inc. and Tenable Holdings,
Inc., a cybersecurity software
company. Mr. Huffard served as
President and Chief Operating
Officer and a director of Tenable
Network Security, Inc. from
2002 to 2018, where he was
responsible for driving Tenable’s
global corporate strategy and
business operations, and was
instrumental in the venture
funding and IPO process.
From 2018 to 2019, Mr. Huffard
focused exclusively on business
operations as chief operating
officer of Tenable Holdings, Inc.
He is also a director of Tenable
Holdings, Inc.
EXPERTISE
CEO/Senior Officer; Finance
and Accounting; Governance/
Board; Human Resources and
Compensation; Information
Technology; Marketing; Risk
Management; Strategic Planning
All directors are subject to re-election each year. Information as of Feb. 1, 2023.
6 | NORFOLK SOUTHERN 2022 ANNUAL REPORT
CHRISTOPHER T.
JONES
Director since 2020
COMMITTEES
Audit, Governance and
Nominating, Safety
CAREER HIGHLIGHTS
Mr. Jones served as
Corporate Vice President
and President of the
technology services
sector of Northrop
Grumman Corporation,
a global aerospace and
defense technology
company, from January
2013 through December
2019. Previously, he
served as Vice President
and General Manager
of Northrop Grumman’s
integrated logistics and
modernization division
from 2010 through
2012. Mr. Jones was a
maintenance officer in the
Connecticut Air National
Guard from 1997 to 2011.
EXPERTISE
CEO/Senior Officer;
Finance and Accounting;
Governance/Board;
Governmental and
Stakeholder Relations;
Information Technology;
Risk Management;
Strategic Planning
THOMAS C.
KELLEHER
Director since 2019
COMMITTEES
Audit, Executive, Finance
and Risk Management
(Chair)
CAREER HIGHLIGHTS
Mr. Kelleher has been
Chairman of the Board
of UBS Group AG since
April 2022. Previously,
he served as President
of Morgan Stanley, a
leading global financial
services firm, from 2016
until his retirement in
June 2019. He also served
as Chairman and Chief
Executive Officer of
Morgan Stanley Bank, N.A.
until June 2019. Previously,
he was President of Morgan
Stanley Institutional
Securities from 2010 to
2016, CEO of Morgan
Stanley International from
2011 to 2016, Chief Financial
Officer and co-head of
Corporate Strategy from
2007 to early 2010, and
served as Morgan Stanley’s
Head of Global Capital
Markets from 2006 to 2007.
EXPERTISE
CEO/Senior Officer;
Finance and Accounting;
Governance/Board;
Governmental and
Stakeholder Relations;
Human Resources and
Compensation; Risk
Management; Strategic
Planning
STEVEN F. LEER
Director since 1999
COMMITTEES
Governance and
Nominating, Human
Capital Management
and Compensation
CAREER HIGHLIGHTS
Mr. Leer served as the
Chief Executive Officer of
Arch Coal, Inc., a company
engaged in coal mining
and related businesses,
from 1992 through 2012.
He was Chairman of its
board from 2006 through
2012 and its Executive
Chairman from 2012
through 2014. He then
served as Senior Advisor
to the President and CEO
of Arch Coal from 2014
through May 2015. Mr. Leer
was a director of Cenovus
Energy Inc. until January
1, 2021, and served as the
non-executive Chairman
of USG Corporation
until April 2019. Mr. Leer
is a director of Parsons
Corporation and has
served as its Lead
Independent Director
since April 2022.
EXPERTISE
CEO/Senior Officer;
Environmental and
Safety; Governance/
Board; Governmental and
Stakeholder Relations;
Human Resources and
Compensation; Marketing;
Strategic Planning;
Transportation
MICHAEL D.
LOCKHART
Director since 2008
COMMITTEES
Audit, Executive, Finance
and Risk Management,
Safety (Chair)
CAREER HIGHLIGHTS
Mr. Lockhart served
as Chairman of the
Board, President and
Chief Executive Officer
of Armstrong World
Industries, Inc., and its
predecessor, Armstrong
Holdings, Inc., a leading
global producer of
flooring products and
ceiling systems, from
2000 until his retirement
in February 2010. Mr.
Lockhart previously
served as Chairman
and Chief Executive
Officer of General Signal
Corporation, a diversified
manufacturer, from
September 1995 until it
was acquired in 1998.
EXPERTISE
CEO/Senior Officer;
Environmental and
Safety; Finance and
Accounting; Governance/
Board; Marketing; Risk
Management; Strategic
Planning; Transportation
AMY E. MILES
Director since 2014
COMMITTEES
Independent Chair,
Audit, Executive (Chair),
Governance and
Nominating
CAREER HIGHLIGHTS
Ms. Miles has served
as Chair of the Board of
Norfolk Southern since
May 1, 2022, and as a
director since 2014. Ms.
Miles served as Chief
Executive Officer of Regal
Entertainment Group,
Inc., a leading motion
picture exhibitor, from
2009 until its acquisition
in March 2018. During
that time, she served as
a director of Regal and
was named Chair of its
board in 2015. Ms. Miles
previously served as
Regal Entertainment’s
Executive Vice President,
Chief Financial Officer and
Treasurer from 2002 to
2009. She is also a director
of The Gap, Inc. and
Amgen, Inc.
EXPERTISE
CEO/Senior Officer;
Finance and Accounting;
Governance/Board;
Information Technology;
Marketing; Strategic
Planning
NORFOLK SOUTHERN 2022 ANNUAL REPORT | 7
ALAN H. SHAW
Director since 2022
COMMITTEES
Executive
CAREER HIGHLIGHTS
Mr. Shaw has been
President of Norfolk
Southern Corporation
since December 1, 2021,
and Chief Executive
Officer and a director since
May 1, 2022. Mr. Shaw has
27 years of experience
at Norfolk Southern and
most recently served
as Norfolk Southern’s
Executive Vice President
and Chief Marketing
Officer from May 2015
until December 2021. Mr.
Shaw previously served
as Norfolk Southern’s
Vice President Intermodal
Operations from 2013 to
2015 and has been with
Norfolk Southern
in various positions
since 1994.
EXPERTISE
CEO/Senior Officer;
Governmental and
Stakeholder Relations;
Governance/Board;
Information Technology;
Marketing; Risk
Management; Strategic
Planning; Transportation
JAMES A. SQUIRES
Director since 2014
JOHN R. THOMPSON
Director since 2013
CAREER HIGHLIGHTS
Mr. Squires previously
served as Chairman of the
Board and Chief Executive
Officer of Norfolk
Southern from 2015 to May
2022. He served as Norfolk
Southern’s President
from June 2013 until
December 2021. During his
30-year career at Norfolk
Southern, Mr. Squires also
served as Executive Vice
President-Administration,
Executive Vice President-
Finance and Chief
Financial Officer, Senior
Vice President Finance,
Senior Vice President Law,
and Vice President Law.
EXPERTISE
CEO/Senior Officer;
Finance and Accounting;
Governance/Board;
Governmental and
Stakeholder Relations;
Human Resources and
Compensation; Marketing;
Strategic Planning;
Transportation
COMMITTEES
Executive, Governance
and Nominating, Human
Capital Management and
Compensation (Chair)
CAREER HIGHLIGHTS
Mr. Thompson served as
a government relations
consultant for Best Buy
Co., Inc., a multinational
consumer electronics
corporation, from October
2012 to April 2016, and
as Senior Vice President
and General Manager
of BestBuy.com LLC, a
subsidiary of Best Buy Co.,
Inc., from 2002 through
2012. Mr. Thompson was
formerly a director of
Belk, Inc. and Wendy’s
International, Inc.
EXPERTISE
CEO/Senior Officer;
Finance and Accounting;
Governance/Board;
Governmental and
Stakeholder Relations;
Human Resources
and Compensation;
Information Technology;
Marketing; Strategic
Planning
CLAUDE MONGEAU
Director since 2019
COMMITTEES
Finance and Risk
Management, Human
Capital Management and
Compensation, Safety
CAREER HIGHLIGHTS
Mr. Mongeau served
as President and Chief
Executive Officer of
Canadian National Railway
Company (CN), a North
American railroad and
transportation company,
from January 2010 to June
2016 and as a director of CN
from October 2009 to June
2016. During his 22-year
career at CN, he also served
as Executive Vice President
and Chief Financial
Officer, Vice President
Strategic and Financial
Planning, and Assistant
Vice President Corporate
Development. Mr.
Mongeau is also a director
of Cenovus Energy and
Toronto-Dominion Bank.
He was formerly a director
of Telus from 2017 to 2019.
EXPERTISE
CEO/Senior Officer;
Environmental and
Safety; Finance and
Accounting; Governance/
Board; Governmental and
Stakeholder Relations;
Human Resources and
Compensation; Marketing;
Risk Management;
Strategic Planning;
Transportation
JENNIFER F.
SCANLON
Director since 2018
COMMITTEES
Governance and
Nominating, Human
Capital Management and
Compensation, Safety
CAREER HIGHLIGHTS
Ms. Scanlon has been
President and Chief
Executive Officer and a
director of UL Solutions,
a global science safety
organization, since
September 30, 2019.
She is the first woman
to lead the organization.
She previously served
as President and Chief
Executive Officer of USG
Corporation from 2016
until its acquisition in
April 2019. During that
time, she served as a
director of USG. Ms.
Scanlon also previously
served as President
of USG’s international
business, President of its
L & W Supply Corporation,
and Chief Information
Officer and Chairman of
the Board for USG Boral
Building Products.
EXPERTISE
CEO/Senior Officer;
Environmental and Safety;
Governance/Board;
Information Technology;
Marketing; Strategic
Planning; Transportation
8 | NORFOLK SOUTHERN 2022 ANNUAL REPORT
OFFICERS
As of Feb. 1, 2023.
Equal Employment Opportunity Policy
Norfolk Southern Corporation’s policy is to comply with all applicable laws, regulations, and executive
orders concerning equal opportunity and nondiscrimination. The company’s policy is to offer employment,
training, remuneration, advancement, and all other privileges of employment on the basis of qualification
and performance regardless of race, religion, color, national origin, gender, age, status as a covered veteran,
sexual orientation, gender identity, the presence of a disability, genetic information, or any other legally
protected status.
Alan H. Shaw
President & Chief Executive Officer
Ann A. Adams
Executive Vice President
& Chief Transformation Officer
Paul B. Duncan
Executive Vice President & Chief Operating Officer
Claude E. “Ed” Elkins
Executive Vice President & Chief Marketing Officer
Mark R. George
Executive Vice President & Chief Financial Officer
Nabanita C. Nag
Executive Vice President & Chief Legal Officer
Michael R. McClellan
Senior Vice President & Chief Strategy Officer
Edward F. “Ed” Boyle Jr.
Vice President Engineering
Michael F. “Mike” Cox
Vice President Taxation
Fredric M. “Fred” Ehlers
Vice President Information Technology
& Chief Information Officer
Jacob R. Elium
Vice President Network Planning & Optimization
John S. Hatfield
Vice President Corporate Communications
Floyd E. Hudson III
Vice President Transportation
James “Leggett” Kitchin
Vice President Industrial Products
Claiborne L. “Clay” Moore
Vice President & Controller
Rodney D. Moore
Vice President Network Operations
Jason M. Morris
Vice President Law
Christopher R. Neikirk
Vice President & Treasurer
Barbara N. Paul
Vice President Human Resources
Thomas W. “Tom” Schnautz
Vice President Advanced Train Control
Kathleen C. Smith
Vice President Business Development & Real Estate
Susan S. Stuart
Vice President Audit & Compliance
Shawn I. Tureman
Vice President Intermodal & Automotive
Frank J. Voyack
Vice President Government Relations
R. Wai Wong
Vice President Labor Relations
Jason A. Zampi
Vice President Financial Planning & Analysis
Denise W. Hutson
Corporate Secretary
STOCKHOLDER INFORMATION
Financial Inquiries
Mark R. George
Executive Vice President
& Chief Financial Officer
Norfolk Southern Corporation
650 W. Peachtree St. NW
Atlanta, GA 30308
470.463.4833
Investor Inquiries
Luke Nichols
Senior Director Investor Relations
Norfolk Southern Corporation
650 W. Peachtree St. NW
Atlanta, GA 30308
470.867.4807
Corporate Office
Norfolk Southern Corporation
650 W. Peachtree St. NW
Atlanta, GA 30308
855.NORFOLK or 855.667.3655
Shareholder Services
Information
Norfolk Southern Corporation
Requests & Information
shareholder@nscorp.com
800.531.6757
PUBLICATIONS
The following reports and publications
are available on our website at
www.norfolksouthern.com and, upon
written request, will be furnished in printed
form to shareholders free of charge:
•
•
•
•
•
•
Annual Reports on Form 10-K
Quarterly Reports on Form 10-Q
Corporate Governance Guidelines
Board Committee Charters
Thoroughbred Code of Ethics
Code of Ethical Conduct for Senior
Financial Officers
• Categorical Independence Standards
for Directors
Norfolk Southern Corporation Bylaws
•
Shareholders desiring a printed copy
of one or more of these reports and
publications should send their request
to our corporate secretary:
Denise W. Hutson
Corporate Secretary
Norfolk Southern Corporation
650 W. Peachtree St. NW
Atlanta, GA 30308
470.463.0400
A notice and proxy statement for the annual
meeting of shareholders are furnished to
shareholders in advance of the meeting.
Amendments to or waivers of the
Thoroughbred Code of Ethics and/or the
Code of Ethical Conduct for Senior Financial
Officers that are required to be disclosed
pursuant to Item 5.05 of the current report
on Form 8-K will be disclosed on our website.
ETHICS & COMPLIANCE HOTLINE
High ethical standards have always been
key to our success. Anyone who might be
aware of a violation of our corporation’s
Thoroughbred Code of Ethics is encouraged
to contact our Ethics & Compliance Hotline
at 800.732.9279.
COMMON STOCK
Ticker symbol: NSC
Our common stock is listed and traded
on the New York Stock Exchange.
DIVIDENDS
At its January 2023 meeting, our board of
directors declared a quarterly dividend
of $1.35 per share on the company’s
common stock, payable on Feb. 21, 2023,
to shareholders of record on Feb. 3, 2023.
We reduced the days between shareholder
of record date and payable date beginning
in the second quarter of 2021, effectively
accelerating payments to shareholders.
We usually pay quarterly dividends on our
common stock on or about Feb. 20, May 20,
Aug. 20, and Nov. 20, when and if declared
by our Board of Directors to shareholders
of record. Through the end of 2022, we have
paid 162 consecutive quarterly dividends
since our inception in 1982.
ACCOUNT ASSISTANCE
For assistance with lost stock certificates,
transfer requirements, the INVESTORS
CHOICE Plan, address changes, dividend
checks, and direct deposit of dividends,
contact:
American Stock Transfer
& Trust Company LLC
6201 15th Avenue
Brooklyn, NY 11219
877.864.4750
INVESTORS CHOICE
We and our transfer agent, American Stock
Transfer & Trust Company LLC (AST), offer
the INVESTORS CHOICE Plan for investors
wishing to purchase or sell Norfolk Southern
Corporation common stock. This plan is
available to both present shareholders of
record and individual investors wishing to
make an initial purchase of Norfolk Southern
Corporation common stock. Once enrolled in
the plan, you can invest cash dividends when
paid and make optional cash investments
simply and conveniently.
To take advantage of the INVESTORS
CHOICE Plan, contact AST at 877.864.4750
or visit http://astfinancial.mobular.net/
amstock/NSC/ to learn more about the
INVESTORS CHOICE Plan.
FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report 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 financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results or performance 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,” or
other comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates, beliefs, and projections, which we believe are reasonable.
However, 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 in Item 1A “Risk Factors,” in the Form 10-K set forth herein, 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.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ___________ to___________
Commission File Number 1-8339
NORFOLK SOUTHERN CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S Employer Identification No.)
Virginia
52-1188014
650 West Peachtree Street NW
Atlanta, Georgia
(Address of principal executive offices)
30308-1925
(Zip Code)
(855) 667-3655
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Norfolk Southern Corporation Common Stock (Par Value $1.00)
NSC
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any
of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting common equity held by non-affiliates at June 30, 2022 was $53,336,433,209 (based on the closing price as quoted on the
New York Stock Exchange on June 30, 2022).
The number of shares outstanding of each of the registrant’s classes of common stock, at January 31, 2023: 227,782,202 (excluding 20,320,777 shares held by the
registrant’s consolidated subsidiaries).
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant’s definitive proxy statement to be filed electronically pursuant to Regulation
14A not later than 120 days after the end of the fiscal year, are incorporated herein by reference in Part III.
TABLE OF CONTENTS
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Part I.
Items 1 and 2. Business and Properties
Item 1A.
Item 1B.
Item 3.
Item 4.
Risk Factors
Unresolved Staff Comments
Legal Proceedings
Mine Safety Disclosures
Information About Our Executive Officers
Part II.
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Item 7.
Management’s Discussion and Analysis of Financial Condition and
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Part III.
Part IV.
Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedule
Form 10-K Summary
Power of Attorney
Signatures
Page
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PART I
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Item 1. Business and Item 2. Properties
GENERAL – Norfolk Southern Corporation (Norfolk Southern) is an Atlanta, Georgia-based company that owns a
major freight railroad, Norfolk Southern Railway Company (NSR). We were incorporated on July 23, 1980, under
the laws of the Commonwealth of Virginia. Our common stock (Common Stock) is listed on the New York Stock
Exchange (NYSE) under the symbol “NSC.”
Unless indicated otherwise, Norfolk Southern Corporation and its subsidiaries, including NSR, are referred to
collectively as NS, we, us, and our.
We are primarily engaged in the rail transportation of raw materials, intermediate products, and finished goods
primarily in the Southeast, East, and Midwest and, via interchange with rail carriers, to and from the rest of the
United States (U.S.). We also transport overseas freight through several Atlantic and Gulf Coast ports. We offer
the most extensive intermodal network in the eastern half of the U.S.
We make available free of charge through our website, www.norfolksouthern.com, our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as
reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and
Exchange Commission (SEC). In addition, the following documents are available on our website and in print to any
shareholder who requests them:
• Norfolk Southern Corporation Bylaws
• Charters of the Committees of the Board of Directors
• Corporate Governance Guidelines
• Categorical Independence Standards
•
The Thoroughbred Code of Ethics
• Code of Ethical Conduct for Senior Financial Officers
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RAILROAD OPERATIONS – At December 31, 2022, we operated approximately 19,100 route miles in 22 states
and the District of Columbia.
Our system reaches many manufacturing plants, electric generating facilities, mines, distribution centers, transload
facilities, and other businesses located in our service area.
Corridors with heaviest freight volume:
• New York City area to Chicago (via Allentown and Pittsburgh)
• Chicago to Macon (via Cincinnati, Chattanooga, and Atlanta)
• Central Ohio to Norfolk (via Columbus and Roanoke)
• Birmingham to Meridian
• Cleveland to Kansas City
• Memphis to Chattanooga
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The miles operated, which include major leased lines between Cincinnati and Chattanooga, and an exclusive
operating agreement for trackage rights over property owned by North Carolina Railroad Company, were as
follows:
Mileage Operated at December 31, 2022
Passing
Track,
Crossovers
and
Turnouts
Second
and
Other
Main
Track
Way and
Yard
Switching
Route
Miles
Total
Owned
Operated under lease, contract or trackage
rights
Total
14,312
2,676
1,957
8,158
27,103
4,825
1,889
406
841
7,961
19,137
4,565
2,363
8,999
35,064
We operate freight service over lines with significant ongoing Amtrak and commuter passenger operations and
conduct freight operations over trackage owned or leased by Amtrak, New Jersey Transit, Southeastern
Pennsylvania Transportation Authority, Metro-North Commuter Railroad Company, Maryland Department of
Transportation, and Michigan Department of Transportation.
The following table sets forth certain statistics relating to our operations for the past five years:
2022
Years ended December 31,
2019
2020
2021
2018
Revenue ton miles (billions)
Revenue per thousand revenue ton miles
Revenue ton miles (thousands) per railroad employee
Ratio of railway operating expenses to railway
operating revenues (railway operating ratio)
179
$ 71.35
9,513
178
$ 62.56
9,694
164
$ 59.67
8,191
194
$ 58.21
7,939
207
$ 55.25
7,822
62.3%
60.1%
69.3%
64.7%
65.4%
RAILWAY OPERATING REVENUES – Total railway operating revenues were $12.7 billion in 2022.
Following is an overview of our three commodity groups. See the discussion of merchandise revenues by major
commodity group, intermodal revenues, and coal revenues and tonnage in Item 7 “Management’s Discussion and
Analysis of Financial Condition and Results of Operations.”
MERCHANDISE – Our merchandise commodity group is composed of four groupings:
• Agriculture, forest and consumer products includes soybeans, wheat, corn, fertilizer, livestock and poultry
feed, food products, food oils, flour, sweeteners, ethanol, lumber and wood products, pulp board and paper
products, wood fibers, wood pulp, beverages, and canned goods.
• Chemicals includes sulfur and related chemicals, petroleum products (including crude oil), chlorine and
bleaching compounds, plastics, rubber, industrial chemicals, chemical wastes, sand, and natural gas liquids.
• Metals and construction includes steel, aluminum products, machinery, scrap metals, cement, aggregates,
minerals, clay, transportation equipment, and items for the U.S. military.
• Automotive includes finished motor vehicles and automotive parts.
In 2022, we handled 2.2 million merchandise carloads, which accounted for 57% of our total railway operating
revenues.
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INTERMODAL – Our intermodal commodity group consists of shipments moving in domestic and international
containers and trailers. These shipments are handled on behalf of intermodal marketing companies, international
steamship lines, premium customers and asset-owning companies. In 2022, we handled 3.9 million intermodal
units, which accounted for 29% of our total railway operating revenues.
COAL – Coal revenues accounted for 14% of our total railway operating revenues in 2022. We handled 77 million
tons, or 0.7 million carloads, most of which originated on our lines from major eastern coal basins, with the balance
from major western coal basins received via the Memphis and Chicago gateways. Our coal franchise supports the
electric generation market, directly serving approximately 30 coal-fired power plants, as well as the export,
domestic metallurgical and industrial markets, primarily through direct rail and river, lake, and coastal facilities,
including various terminals on the Ohio River, at Lamberts Point in Norfolk, Virginia, at the Port of Baltimore, and
on Lake Erie.
FREIGHT RATES – Our predominant pricing mechanisms, private contracts and exempt price quotes, are not
subject to regulation. In general, market forces are the primary determinant of rail service prices.
RAILWAY PROPERTY
Our railroad infrastructure makes us capital intensive with net properties of approximately $32 billion on a historical
cost basis.
Property Additions – Property additions for the past five years were as follows:
2022
2021
2020
($ in millions)
2019
2018
Road and other property
Equipment
$ 1,345 $ 1,041 $ 1,046 $ 1,371 $ 1,276
675
603
648
429
448
Total
$ 1,948 $ 1,470 $ 1,494 $ 2,019 $ 1,951
Our capital spending and replacement programs are and have been designed to assure the ability to provide safe,
efficient, and reliable rail transportation services.
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Equipment – At December 31, 2022, we owned or leased the following units of equipment:
Owned
Leased
Total
Locomotives:
Multiple purpose
Auxiliary units
Switching
Total locomotives
Freight cars:
Gondola
Hopper
Covered hopper
Box
Flat
Other
3,046
140
4
3,190
17,391
7,818
5,571
2,530
1,390
1,555
—
—
—
—
2,836
—
—
703
676
—
Capacity of
Equipment
(Horsepower)
11,845,600
—
4,400
3,046
140
4
3,190
11,850,000
20,227
7,818
5,571
3,233
2,066
1,555
(Tons)
2,265,085
892,800
619,424
295,536
152,719
69,649
Total freight cars
36,255
4,215
40,470
4,295,213
Other:
Chassis
Containers
Work equipment
Vehicles
Miscellaneous
Total other
35,393
18,047
5,408
2,976
2,243
1,100
—
243
14
—
36,493
18,047
5,651
2,990
2,243
64,067
1,357
65,424
The following table indicates the number and year built for locomotives and freight cars owned at December 31,
2022:
2022
2021
2020
2019
2018
2013-
2017
2008-
2012
2007 &
Before
Total
Locomotives:
No. of units
% of fleet
Freight cars:
No. of units
% of fleet
—
—%
1
—%
10
—%
36
1%
15
1%
260
8%
231
7%
2,637
83%
3,190
100%
236
1%
—
—%
—
—%
200
—%
— 4,202
12%
—%
8,843
24%
22,774
63%
36,255
100%
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The following table shows the average age of our owned locomotive and freight car fleets at December 31, 2022
and information regarding 2022 retirements:
Average age – in service
Retirements
Average age – retired
Locomotives
27.6 years
22 units
25.2 years
Freight Cars
25.9 years
1,209 units
45.5 years
Track Maintenance – Of the 35,100 total miles of track on which we operate, we are responsible for maintaining
28,400 miles, with the remainder being operated under trackage rights from other parties responsible for
maintenance.
Over 85% of the main line trackage (including first, second, third, and branch main tracks, all excluding rail
operated pursuant to trackage rights) has rail ranging from 131 to 155 pounds per yard with the standard installation
currently at 136 pounds per yard. Approximately 40% of our lines, excluding rail operated pursuant to trackage
rights, carried 20 million or more gross tons per track mile during 2022.
The following table summarizes several measurements regarding our track roadway additions and replacements
during the past five years:
Track miles of rail installed
Miles of track surfaced
Crossties installed (millions)
2022
2021
2020
2019
2018
541
4,155
2.2
458
4,225
2.0
418
4,785
1.8
449
5,012
2.4
416
4,594
2.2
Traffic Control – Of the 16,200 route miles we dispatch, 11,300 miles are signalized, including 8,500 miles of
centralized traffic control (CTC) and 2,800 miles of automatic block signals. Of the 8,500 miles of CTC, 7,600
miles are controlled by data radio originating at 355 base station radio sites.
ENVIRONMENTAL MATTERS – Compliance with federal, state, and local laws and regulations relating to the
protection of the environment is one of our principal goals. To date, such compliance has not had a material effect
on our financial position, results of operations, liquidity, or competitive position. See Note 17 to the Consolidated
Financial Statements.
HUMAN CAPITAL MANAGEMENT
Workforce – We employed an average of 18,900 employees during 2022, and 19,300 employees at the end of
2022. Approximately 80% of our railroad employees – referred to as “craft” employees – are covered by collective
bargaining agreements with various labor unions. See the discussion of “Labor Agreements” in Item 7
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The remainder of our
workforce is composed of management employees.
Craft Workforce Levels and Productivity – Maintaining appropriate headcount levels for our craft-employee
workforce is critical to our on-time and consistent delivery of customers’ goods and operational efficiency goals.
We manage this human capital metric through forecasting tools designed to ensure the optimal level of staffing to
meet business demands. We measure and monitor employee productivity based on various factors, including gross
ton miles per train and engine employee.
Safety – We are dedicated to providing employees with a safe workplace and the knowledge and tools they need to
work safely and return home safely every day. Our commitment to an injury-free workplace is outlined in our
Foundation of Safety policy which focuses on rules compliance, responsibility, relationships, and responsiveness.
Our safety programs, practices, and messaging further reinforces the importance of working safely. We measure
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employee safety performance through internal metrics such as accidents, injuries, and serious injuries per 200,000
employee-hours. We also use metrics established by the Federal Railroad Administration (FRA) to measure FRA
reportable accidents and injuries per 200,000 employee-hours. Given the importance of safety among our
workforce and business, in 2020, our Board of Directors established a standing Safety Committee that, among other
duties, reviews, monitors, and evaluates our compliance with our safety programs and practices.
Attracting and Retaining Management Employees – Our talent strategy for management employees is essential
to attracting strong candidates in a competitive talent environment. We evaluate the effectiveness of that strategy by
studying market trends, benchmarking the attractiveness of our employee value proposition, maintaining a
competitive compensation package, and analyzing retention data.
We also focus on driving employee engagement, which is key to increasing employee productivity, retention, and
safety. We take a data-centric approach, including the use of quarterly surveys among management employees, to
identify new initiatives that will help boost engagement and drive business results.
Employee Development and Training – We provide a range of developmental programs, opportunities, skills, and
resources for our employees to be successful in their careers. We provide classroom instruction, hands-on training
and simulation-based training designed to improve training effectiveness and safety outcomes.
We also use modern learning and performance technologies to offer robust professional growth opportunities.
Through on-demand digital course offerings, custom-built learning paths, and performance-management tools, our
platforms deliver a contemporary, convenient, and inclusive approach to professional development.
Diversity, Equity, and Inclusion – As a leading transportation service company, we understand that competing in
the global marketplace requires recruiting the most qualified, talented, and diverse people. We strive to create a
diverse, equitable, and inclusive workplace where a wide range of perspectives and experiences are represented,
valued, and empowered to thrive.
While our current workforce reflects a broad range of backgrounds and experiences, we continue to focus on
building an even more diverse workforce, using technology-driven outreach and multiple recruiting relationships to
maintain a robust pipeline of diverse talent.
To underscore our commitment to cultivating a workplace experience where the unique experiences, perspectives,
and contributions of all our people are valued, our CEO recently signed the CEO Action for Diversity & Inclusion
pledge, which outlines specific actions to create a welcoming environment for discussions and ideas about diversity
and inclusion. To advance that commitment, senior leaders from across the company serve on an Inclusion
Leadership Council, which partners with the Diversity, Equity, and Inclusion Strategy team in implementing our
enterprise inclusion strategy, articulating measurable goals, and holding ourselves accountable.
GOVERNMENT REGULATION – In addition to environmental, safety, securities, and other regulations
generally applicable to all business, our railroads are subject to regulation by the U.S. Surface Transportation Board
(STB). The STB has jurisdiction to varying extents over rates, routes, customer access provisions, fuel surcharges,
conditions of service, and the extension or abandonment of rail lines. The STB has jurisdiction to determine
whether we are “revenue adequate” on an annual basis based on the results of the prior year. A railroad is “revenue
adequate” on an annual basis under the applicable law when its return on net investment exceeds the rail industry’s
composite cost of capital. This determination is made pursuant to a statutory requirement. The STB also has
jurisdiction over the consolidation, merger, or acquisition of control of and by rail common carriers.
The relaxation of economic regulation of railroads, following the Staggers Rail Act of 1980, included exemption
from STB regulation of the rates and most service terms for intermodal business (trailer-on-flat-car, container-on-
flat-car), rail boxcar shipments, lumber, manufactured steel, automobiles, and certain bulk commodities such as
sand, gravel, pulpwood, and wood chips for paper manufacturing. Further, all shipments that we have under
contract are effectively removed from commercial regulation for the duration of the contract. Approximately 90%
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of our revenues comes from either exempt shipments or shipments moving under transportation contracts; the
remainder comes from shipments moving under public tariff rates.
Efforts have been made over the past several years to increase federal economic regulation of the rail industry, and
such efforts are expected to continue in 2023. The Staggers Rail Act of 1980 substantially balanced the interests of
shippers and rail carriers, and encouraged and enabled rail carriers to innovate, invest in their infrastructure, and
compete for business, thereby contributing to the economic health of the nation and to the revitalization of the
industry. Accordingly, we will continue to oppose efforts to reimpose increased economic regulation.
Railroads are also subject to the enactment of laws by Congress and regulation by the U.S. Department of
Transportation (DOT) (including the Federal Railroad Administration) and the U.S. Department of Homeland
Security (DHS) (including the Transportation Security Administration (TSA)), which regulate most aspects of our
operations related to safety, security and cybersecurity.
Government regulations are further discussed within Item 1A “Risk Factors” and the safety and security of our
railroads are discussed within the “Security of Operations” section contained herein.
COMPETITION – There is continuing strong competition among rail, water, and highway carriers. Price is
usually only one factor of importance as shippers and receivers choose a transport mode and specific hauling
company. Inventory carrying costs, service reliability, ease of handling, and the desire to avoid loss and damage
during transit are also important considerations, especially for higher-valued finished goods, machinery, and
consumer products. Even for raw materials, semi-finished goods, and work-in-progress, users are increasingly
sensitive to transport arrangements that minimize problems at successive production stages.
Our primary rail competitor is CSX Corporation (CSX); both we and CSX operate throughout much of the same
territory. Other railroads also operate in parts of the territory. We also compete with motor carriers, water carriers,
and with shippers who have the additional options of handling their own goods in private carriage, sourcing
products from different geographic areas, and using substitute products.
Certain marketing strategies to expand reach and shipping options among railroads and between railroads and motor
carriers enable railroads to compete more effectively in specific markets.
SECURITY OF OPERATIONS – We continue to enhance the security of our rail system. Our comprehensive
security plan is modeled on and was developed in conjunction with the security plan prepared by the Association of
American Railroads (AAR) post September 11, 2001. The AAR Security Plan defines four Alert Levels and details
the actions and countermeasures that are being applied across the railroad industry to mitigate the risk of terrorist,
violent extremist or seriously disruptive cyber-attack increases or decreases. The Alert Level actions include
countermeasures that will be applied in three general areas: (1) operations (including transportation, engineering,
and mechanical); (2) information technology and communications; and, (3) railroad police. All of our Operations
Division employees are advised by their supervisors or train dispatchers, as appropriate, of any change in Alert
Level and any additional responsibilities they may incur due to such change.
Our security plan also complies with DOT security regulations pertaining to training and security plans with respect
to the transportation of hazardous materials. As part of the plan, security awareness training is given to all railroad
employees who directly affect hazardous material transportation safety, and is integrated into hazardous material
training programs. Additionally, location-specific security plans are in place for rail corridors in certain
metropolitan areas referred to as High Threat Urban Areas (HTUA). Particular attention is aimed at reducing risk in
a HTUA by: (1) the establishment of secure storage areas for rail cars carrying toxic-by-inhalation (TIH) materials;
(2) the expedited movement of trains transporting rail cars carrying TIH materials; (3) reducing the number of
unattended loaded tank cars carrying TIH materials; and (4) cooperation with federal, state, local, and tribal
governments to identify those locations where security risks are the highest.
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We also operate four facilities that are under U.S. Coast Guard (USCG) Maritime Security Regulations. With
respect to these facilities, each facility’s security plan has been approved by the applicable Captain of the Port and
remains subject to inspection by the USCG.
Additionally, we continue to engage in close and regular coordination with numerous federal and state agencies,
including the DHS, the TSA, the Federal Bureau of Investigation, the FRA, the USCG, U.S. Customs and Border
Protection, the Department of Defense, and various state Homeland Security offices.
In 2022, through the Norfolk Southern Operation Awareness and Response Program as well as participation in the
Transportation Community Awareness and Emergency Response Program, we provided rail accident response
training to approximately 5,000 emergency responders, such as local police and fire personnel, utilizing a
combination of online training and face-to-face training sessions as well as the Norfolk Southern Safety Train. We
also have ongoing programs to sponsor local emergency responders at the Security and Emergency Response
Training Center.
We also continually evaluate ourselves for appropriate business continuity and disaster recovery planning, with test
scenarios that include cybersecurity attacks. Our risk-based information security program helps ensure our defenses
and resources are aligned to address the most likely and most damaging potential attacks, to provide support for our
organizational mission and operational objectives, and to keep us in the best position to detect, mitigate, and recover
from a wide variety of potential attacks in a timely fashion.
Item 1A. Risk Factors
The risks set forth in the following risk factors 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. The information set forth in this Item 1A “Risk Factors”
should be read in conjunction with the rest of the information included in this annual report, including
Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8
“Financial Statements and Supplementary Data.”
REGULATORY AND LEGISLATIVE RISKS
Governmental legislation, regulation, and Executive Orders over commercial, operational, tax, safety,
security, or cybersecurity matters could negatively affect us, our customers, the rail industry or the markets
we serve. Congress can enact laws, agencies can promulgate regulations, and Executive Orders can be issued that
increase or alter regulation that negatively affects us, our customers, the rail industry or the markets we serve.
Railroads presently are subject to commercial and operational regulation by the STB, which has jurisdiction to
varying extents over rates, routes, customer access provisions, fuel surcharges, conditions of service, and the
extension or abandonment of rail lines.
The STB also has jurisdiction over the consolidation, merger, or acquisition of control of and by rail common
carriers. Additional or updated regulation of the rail industry by Congress or the STB, whether under new, existing
or amended laws or regulations, could have a significant negative impact on our ability to negotiate prices for rail
services, on our railway operating revenues, and on the efficiency, conduct, or complexity of our operations. Such
additional or updated industry regulation, as well as enactment of any new or updated tax laws, could also
negatively impact cash flows from our operating activities and, therefore, result in reduced capital spending on our
rail network or abandonment of lines.
Railroads are also subject to the enactment of laws by Congress and regulation by the DOT (including the FRA) and
the DHS (including the TSA), which regulate many aspects of our operations related to safety, security and
cybersecurity. Additional or updated safety, security, or cybersecurity regulation by Congress, the DOT or DHS
could have a negative impact on our business and the efficiency, conduct, or complexity of our operations including
(but not limited to) increased operating costs, capital expenditures, claims and litigation.
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Our inability to comply with the requirements of existing or updated laws, regulations, or Executive Orders that
govern our operations or the rail industry, including but not limited to those pertaining to commercial, operational,
tax, safety, security, or cybersecurity matters, could have a material adverse effect on our financial position, results
of operations or liquidity.
Federal and state environmental laws and regulations could negatively impact us and our operations. Our
operations are subject to extensive federal and state environmental laws and regulations concerning, among other
things: emissions to the air; discharges to waterways or groundwater supplies; handling, storage, transportation, and
disposal of waste and other materials; and, the cleanup of hazardous material or petroleum releases. The risk of
incurring environmental liability, for acts and omissions, past, present, and future, is inherent in the railroad
business. This risk includes property owned by us, whether currently or in the past, that is or has been subject to a
variety of uses, including our railroad operations and other industrial activity by past owners or our past and present
tenants.
Environmental problems that are latent or undisclosed may exist on these properties, and we could incur
environmental liabilities or costs, the amount and materiality of which cannot be estimated reliably at this time, with
respect to one or more of these properties. Moreover, lawsuits and claims involving other unidentified
environmental sites and matters are likely to arise from time to time.
Our inability to comply with the extensive federal and state environmental laws and regulations to which we are
subject could result in significant liabilities or otherwise adversely impact our operations.
OPERATIONAL RISKS
Pandemics, epidemics or endemic diseases could further negatively impact us, our customers, our supply
chain and our operations. The magnitude and duration of a pandemic, epidemic or endemic disease, and its
impact on our customers and general economic conditions can influence the demand for our services and affect our
revenues. In addition, such outbreaks could affect our operations and business continuity if a significant number of
our essential employees, overall or in a key location, are quarantined from contraction of or exposure to the disease
or if governmental orders prevent our employees or critical suppliers from working. To the extent such diseases
adversely affect our business and financial results, they may also have the effect of heightening many of the other
risks described in the risk factors included herein, or may affect our operating and financial results in a manner that
is not presently known to us.
A significant cybersecurity incident or other disruption to our technology infrastructure could disrupt our
business operations. We rely on information technology, and improvements in that technology, in all aspects of
our business. If we experience significant disruption or failure of one or more of information technology systems
operated by us or under control of third parties, including computer hardware, software, and communications
equipment, we could experience a service interruption, data breach, or other operational difficulties. Although we
maintain comprehensive security programs designed to protect our information technology systems, we are
continually targeted by threat actors attempting to access our networks. While we have previously experienced
cybersecurity events that have had minimal impact, future events may result in more significant impacts to our
operations, reputation or results of operations. These potentially impactful events could include unauthorized access
to our systems, viruses, ransomware, and/or compromise, acquisition, or destruction of our data. We also could be
impacted by cybersecurity events targeting third parties that we rely on for business operations, including third party
vendors that have access to our systems or data and third parties in our supply chain. Such a direct or indirect
cybersecurity incident could interrupt our service, cause safety failures or operational difficulties, decrease
revenues, increase operating costs, impact our efficiency, damage our corporate reputation, and/or expose us to
litigation or government action or increased regulation, which could result in penalties, fines or judgments. In
addition, our failure to comply with privacy-related or data protection laws and regulations could result in
government investigations and proceedings against us, or litigation, resulting in adverse reputational impacts,
penalties, and legal liability.
K12
Our business may be seriously harmed if we fail to develop, implement, maintain, upgrade, enhance, protect
and integrate our information technology systems. If we fail to develop, acquire or implement new technology,
or otherwise fail to maintain, protect or integrate our information technology systems, we may suffer a competitive
disadvantage within the rail industry and with companies providing alternative modes of transportation service.
As a common carrier by rail, we must offer to transport hazardous materials, regardless of risk.
Transportation of certain hazardous materials could create catastrophic losses in terms of personal injury and
property (including environmental) damage and compromise critical parts of our rail network. The costs of a
catastrophic rail accident involving hazardous materials could exceed our insurance coverage. We have obtained
insurance for potential losses for third-party liability and first-party property damages (see Note 17 to the
Consolidated Financial Statements); however, insurance is available from a limited number of insurers and may not
continue to be available or, if available, may not be obtainable on terms acceptable to us.
We face competition from other transportation providers. We are subject to competition from motor carriers,
railroads and, to a lesser extent, ships, barges, and pipelines, on the basis of transit time, pricing, and quality and
reliability of service. While we have primarily used internal resources to build or acquire and maintain our rail
system, trucks and barges have been able to use public rights-of-way maintained by public entities. Any future
improvements, expenditures, legislation, or regulation changing or materially increasing the efficiency or reducing
the cost of one or more alternative modes of transportation in the regions in which we operate (such as granting
materially greater latitude for motor carriers with respect to size or weight limitations or adoption and utilization of
autonomous commercial vehicles) could have a material adverse effect on our ability to compete with other modes
of transportation.
Capacity constraints could negatively impact our service and operating efficiency. We have experienced and
may again experience capacity constraints on our rail network related to employee or equipment shortages,
increased demand for rail services, severe weather, congestion on other railroads, including passenger activities, or
impacts from changes to our network structure or composition. Such constraints could result in operational
inefficiencies or adversely affect our operations.
Significant increases in demand for rail services could result in the unavailability of qualified personnel and
resources like locomotives. Changes in workforce demographics, training requirements, and availability of
qualified personnel, particularly for engineers and conductors, have negatively impacted and may again negatively
impact our ability to meet short-term demand for rail service. Unpredicted increases in demand for rail services
may exacerbate such risks and could negatively impact our operational efficiency.
Constraints on the supply chain or the operations of carriers with which we interchange may adversely affect
our operations. Our ability to provide rail service to our customers depends in large part upon a functioning global
supply chain and our ability to maintain collaborative relationships with connecting carriers (including shortlines
and regional railroads) with respect to, among other matters, freight rates, revenue division, car supply and
locomotive availability, data exchange and communications, reciprocal switching, interchange, and trackage rights.
Deterioration in the supply chain or operations of or service provided by connecting carriers, or in our relationship
with those connecting carriers, could result in our inability to meet our customers’ demands or require us to use
alternate train routes, which could result in significant additional costs and network inefficiencies. Additionally,
any significant consolidations, mergers or operational changes among other railroads may significantly redefine our
market access and reach.
We may be negatively affected by terrorism or war. Any terrorist attack, or other similar event, any government
response thereto, and war or risk of war could cause significant business interruption. Because we play a critical
role in the nation’s transportation system, we could become the target of such an attack or have a significant role in
the government’s preemptive approach or response to an attack or war.
Although we currently maintain insurance coverage for third-party liability arising out of war and acts of terrorism,
we maintain only limited insurance coverage for first-party property damage and damage to property in our care,
K13
custody, or control caused by certain acts of terrorism. In addition, premiums for some or all of our current
insurance programs covering these losses could increase dramatically, or insurance coverage for certain losses could
be unavailable to us in the future.
We may be negatively affected by supply constraints resulting from disruptions in the fuel markets or the
nature of some of our supplier markets. We consumed approximately 376 million gallons of diesel fuel in 2022.
Fuel availability could be affected by limitation in the fuel supply or by imposition of mandatory allocation or
rationing regulations. A severe fuel supply shortage arising from production curtailments, increased demand in
existing or emerging foreign markets, disruption of oil imports, disruption of domestic refinery production, damage
to refinery or pipeline infrastructure, political unrest, war or other factors could impact us as well as our customers
and other transportation companies.
Due to the capital-intensive nature, as well as the industry-specific requirements of the rail industry, high barriers of
entry exist for potential new suppliers of core railroad items, such as locomotives and rolling stock equipment.
Additionally, we compete with other industries for available capacity and raw materials used in the production of
locomotives and certain track and rolling stock materials. Changes in the competitive landscapes of these limited
supplier markets could result in increased prices or significant shortages of materials.
LITIGATION RISKS
We may be subject to various claims and lawsuits that could result in significant expenditures. The nature of
our business exposes us to the potential for various claims and litigation related to labor and employment, personal
injury, commercial disputes, freight loss and other property damage, and other matters. Job-related personal injury
and occupational claims are subject to the Federal Employer’s Liability Act (FELA), which is applicable only to
railroads. FELA’s fault-based tort system produces results that are unpredictable and inconsistent as compared with
a no-fault worker’s compensation system. The variability inherent in this system could result in actual costs being
different from the liability recorded.
A catastrophic rail accident, whether on our lines or another carrier’s, involving any or all of release of hazardous
materials, freight loss, property damage, personal injury, and environmental liability could compromise critical parts
of our rail network. Losses associated with such an accident involving us could exceed our insurance coverage,
resulting in a material adverse effect on our liquidity. Any material changes to current litigation trends could also
have a material adverse effect on our liquidity to the extent not covered by insurance.
We have obtained insurance for potential losses for third-party liability and first-party property damages; however,
insurance is available from a limited number of insurers and may not continue to be available or, if available, may
not be obtainable on terms acceptable to us.
HUMAN CAPITAL RISKS
The vast majority of our employees belong to labor unions, and the renegotiation of labor agreements or any
provisions thereof, or any strikes or work stoppages (including any entered into in connection with any such
negotiations), could adversely affect our operations. Approximately 80% of our railroad employees are covered
by collective bargaining agreements with various labor unions. Although we recently entered into updated labor
agreements with these labor unions, future national labor agreements, or renegotiation of labor agreements or
provisions of labor agreements, could significantly increase our costs for health care, wages, and other benefits.
Additionally, if our craft employees were to engage in a strike, work stoppage, or other slowdown, including in
connection with the renegotiation of any such agreements or any provisions thereof, we could experience a
significant disruption in our operations, thereby adversely impacting our results of operations.
Failure to attract and retain key executive officers, or skilled professional or technical employees could
adversely impact our business and operations. Our success depends on our ability to attract and retain skilled
employees, including a sufficient number of craft employees to enable us to efficiently conduct our operations.
K14
Difficulties in recruiting and retaining skilled employees, including train and engine workers, key executives, and
other skilled professional and technical employees; the unexpected loss of such individuals; and/or our inability to
successfully transition key roles could each have a material adverse effect on our business and operations.
CLIMATE CHANGE RISKS
Severe weather and disasters have caused, and could again cause, significant business interruptions and
expenditures. Severe weather conditions and other natural phenomena resulting from changing weather patterns
and rising sea levels or other causes, including hurricanes, floods, fires, landslides, extreme temperatures, significant
precipitation, and earthquakes, have caused, and may again cause damage to our network, our workforce to be
unavailable and us to be unable to use our equipment. Additionally, shifts in weather patterns caused by climate
change are expected to increase the frequency, severity or duration of certain adverse weather conditions, which
could cause more significant business interruptions that result in increased costs, increased liabilities, and decreased
revenues.
Concern over climate change has led to significant federal, state, and international legislative and regulatory
efforts to limit greenhouse gas (GHG) emissions. Restrictions, caps, taxes, or other legislative or regulatory
controls on GHG emissions, including diesel exhaust, could significantly increase our operating costs and decrease
the amount of traffic we handle.
In addition, legislation and regulation related to climate change or GHG emissions could negatively affect the
markets we serve and our customers. Even without legislation or regulation, government incentives and adverse
publicity relating to climate change or GHG emissions could negatively affect the markets for certain of the
commodities we carry, or our customers that use commodities we carry to produce energy (including coal), use
significant amounts of energy in producing or delivering the commodities we carry, or manufacture or produce
goods that consume significant amounts of energy associated with GHG emissions.
MACROECONOMIC AND MARKET RISKS
We may be negatively impacted by changes in general economic conditions. Negative changes in domestic and
global economic conditions, including reduced import and export volumes, could affect the producers and
consumers of the freight we carry. Economic conditions could also result in bankruptcies of one or more large
customers.
We may be negatively affected by energy prices. Volatility in energy prices could have a significant effect on a
variety of items including, but not limited to: the economy; demand for transportation services; business related to
the energy sector, including crude oil, natural gas, and coal; fuel prices; and, fuel surcharges.
The state of capital markets could adversely affect our liquidity. We rely on the capital markets to provide
some of our capital requirements, including the issuance of debt instruments and the sale of certain receivables.
Significant instability or disruptions of the capital markets, including the credit markets, or deterioration of our
financial position due to internal or external factors could restrict or eliminate our access to, and/or significantly
increase the cost of, various financing sources, including bank credit facilities and issuance of corporate bonds.
Instability or disruptions of the capital markets and deterioration of our financial position, alone or in combination,
could also result in a reduction of our credit rating to below investment grade, which could prohibit or restrict us
from accessing external sources of short- and long-term debt financing and/or significantly increase the associated
costs.
Item 1B. Unresolved Staff Comments
None.
K15
Item 3. Legal Proceedings
For information on our legal proceedings, see Note 17 “Commitments and Contingencies” in the Consolidated
Financial Statements.
Item 4. Mine Safety Disclosures
Not applicable.
K16
Information About Our Executive Officers
Our executive officers generally are elected and designated annually by the Board of Directors (Board) at its first
meeting held after the annual meeting of stockholders, and they hold office until their successors are elected.
Executive officers also may be elected and designated throughout the year as the Board considers appropriate.
There are no family relationships among our officers, nor any arrangement or understanding between any officer
and any other person pursuant to which the officer was selected. The following table sets forth certain information,
at February 1, 2023, relating to our officers.
Name, Age, Present Position
Business Experience During Past Five Years
Alan H. Shaw, 55,
President and
Chief Executive Officer
Present position since May 1, 2022.
Served as President from December 1, 2021 to May 1, 2022.
Served as Executive Vice President and Chief Marketing Officer
from May 16, 2015 to December 1, 2021.
Ann A. Adams, 52,
Executive Vice President and
Chief Transformation Officer
Present position since April 1, 2019.
Served as Vice President Human Resources from April 1, 2016 to
April 1, 2019.
Paul B. Duncan, 43,
Executive Vice President and
Chief Operating Officer
Claude E. Elkins, Jr., 57,
Executive Vice President and
Chief Marketing Officer
Mark R. George, 55,
Executive Vice President and
Chief Financial Officer
Nabanita C. Nag, 47,
Executive Vice President and
Chief Legal Officer
Claiborne L. Moore, 43,
Vice President and Controller
Present position since January 1, 2023.
Served as Senior Vice President Transportation & Network
Operations from September 1, 2022 to January 1, 2023. Served as
Vice President Network Planning & Operations from March 1,
2022 to September 1, 2022. Prior to joining Norfolk Southern,
served as Vice President of Service Design and Performance for
BNSF Railway from October 1, 2018 to March 1, 2022 and as
Assistant Vice President for Capacity Planning from June 1, 2015
to October 1, 2018.
Present position since December 1, 2021.
Served as Vice President Industrial Products from April 1, 2018 to
December 1, 2021. Served as Group Vice President Chemicals
from March 1, 2016 to April 1, 2018.
Present position since November 1, 2019.
Prior to joining Norfolk Southern, served as Vice President,
Finance and Chief Financial Officer at segments of United
Technologies Corporation. The positions were Vice President
Finance, Strategy, IT and Chief Financial Officer at Otis Elevator
Company from October 2015 to May 2019, and Vice President
Finance and Chief Financial Officer at Carrier Corporation from
June 2019 until joining Norfolk Southern.
Present position since July 1, 2022.
Served as Senior Vice President & Chief Legal Officer from March
1, 2022 to July 1, 2022. Served as General Counsel - Corporate
from August 31, 2020 to March 1, 2022. Prior to joining Norfolk
Southern, served as Vice President & Corporate Counsel in the
Financial Management Law Group at Prudential Financial from
March 3, 2014 to August 1, 2020.
Present position since March 1, 2022.
Served as Assistant Vice President Corporate Accounting from
March 15, 2019 to March 1, 2022. Served as Director Investor
Relations from July 1, 2017 to March 15, 2019.
K17
PART II
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
STOCK INFORMATION
Common Stock is owned by 19,796 stockholders of record as of December 31, 2022, and is traded on the New York
Stock Exchange under the symbol “NSC.”
ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total Number
of Shares
(or Units)
Purchased(1)
Average
Price Paid
per Share
(or Unit)
Total
Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced Plans
or Programs(2)
Maximum
Number
(or Approximate
Dollar Value)
of Shares (or
Units)
that may yet be
Purchased under
the Plans or
Programs(2)
October 1-31, 2022
November 1-30, 2022
December 1-31, 2022
$
1,027,142
1,023,706
1,422,612
217.12
243.00
249.05
1,027,142
1,023,706
1,422,438
$
8,092,825,748
7,844,066,906
7,489,805,905
Total
3,473,460
3,473,286
(1) Of this amount, 174 represent shares tendered by employees in connection with the exercise of stock options
under the stockholder-approved Long-Term Incentive Plan (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 December 31, 2022, $7.5 billion remains authorized for
repurchase. Our previous share repurchase program terminated on March 31, 2022.
K18
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Norfolk Southern Corporation and Subsidiaries
The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements
and Notes.
OVERVIEW
We are one of the nation’s premier transportation companies, moving goods and materials that help drive the U.S.
economy. We connect customers to markets and communities to economic opportunity with safe, reliable, and cost-
effective shipping solutions. Our Norfolk Southern Railway Company subsidiary operates in 22 states and the
District of Columbia. We are a major transporter of industrial products, including agriculture, forest and consumer
products, chemicals, and metals and construction materials. In addition, in the East we serve every major container
port and operate the most extensive intermodal network. We are also a principal carrier of coal, automobiles, and
automotive parts.
In 2022, revenue growth led to year-over-year improvements in income from operations, net income and diluted
earnings per share. Throughout the year, we focused on efforts to increase our network fluidity and improve service
for our customers. These efforts included the hiring of new conductors in a tight labor market and evolving our
operating plan, which collectively drove improvements in our network performance as we concluded the year and is
providing strong momentum going into 2023. Additionally, new labor agreements were secured by December 2022
which provided retroactive pay and other benefits for our craft employees. As we head into 2023, we are focused
on providing reliable and resilient service and delivering smart sustainable revenue growth that will deliver long-
term value to our customers and shareholders.
SUMMARIZED RESULTS OF OPERATIONS
2022
2021
($ in millions, except per share amounts)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
Income from railway operations
Net income
Diluted earnings per share
Railway operating ratio (percent)
$
$
$
4,809 $
3,270 $
13.88 $
62.3
4,447 $
3,005 $
12.11 $
60.1
3,002
2,013
7.84
69.3
8%
9%
15%
4%
48%
49%
54%
(13%)
Income from railway operations increased in 2022 compared to 2021, driven by higher railway operating revenues.
Revenue growth was the result of higher fuel surcharge revenues and pricing gains, which more than offset the
impact of volume declines. The rise in revenues was partly offset by increased railway operating expenses, driven
by higher fuel prices, other inflationary pressures, service-related costs, increased labor-related costs primarily
resulting from labor union negotiations, and higher claims-related expenses. Incremental expenses incurred in 2022
that resulted from finalized labor agreements for wages earned in 2021 and prior periods lowered diluted earnings
per share by $0.18. Additionally, net income includes a $136 million deferred tax benefit resulting from a corporate
income tax rate change in the Commonwealth of Pennsylvania, which increased diluted earnings per share by $0.58.
Our share repurchase activity resulted in the percentage increase in diluted earnings per share that exceeded that of
net income. Railway operating ratio (a measure of the amount of operating revenues consumed by operating
expenses) increased to 62.3 percent.
Income from railway operations increased in 2021 compared to 2020, the result of a 14% increase in railway
operating revenues and a 1% reduction in railway operating expenses. Revenue growth was driven by increased
average revenue per unit and higher volumes, the result of improved customer demand. The decline in railway
K19
operating expenses was largely due to the absence of two charges, as 2020 results were adversely impacted by a
$385 million loss on asset disposal related to locomotives and a $99 million impairment charge related to an equity
method investment. For more information on these charges, see Notes 7 and 6, respectively. Higher fuel costs,
purchased services, and compensation and benefits expense mostly offset the reduction associated with these
charges. Additionally, gains on the sale of operating properties increased compared to 2020. The 48% increase in
income from railway operations drove comparable increases in net income and diluted earnings per share. Our
railway operating ratio decreased to 60.1 percent.
The following tables adjust our 2020 U.S. Generally Accepted Accounting Principles (GAAP) financial results to
exclude the effects of the loss on asset disposal and investment impairment. The income tax effects on these non-
GAAP adjustments were calculated based on the applicable tax rates to which the non-GAAP adjustments relate.
We use these non-GAAP financial measures internally and believe this information provides useful supplemental
information to investors to facilitate making period-to-period comparisons by excluding the 2020 charges. While
we believe that these non-GAAP financial measures are useful in evaluating our business, this information should
be considered as supplemental in nature and is not meant to be considered in isolation from, or as a substitute for,
the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial
measures may not be the same as similar measures presented by other companies.
Non-GAAP Reconciliation for 2020
Reported
(GAAP)
Loss on Asset
Disposal
Investment
Impairment
Adjusted
(non-GAAP)
($ in millions, except per share amounts)
Railway operating expenses
Income from railway operations
Income before income taxes
Income taxes
Net income
Diluted earnings per share
Railway operating ratio (percent)
$
$
$
$
$
$
6,787 $
3,002 $
2,530 $
517 $
2,013 $
7.84 $
69.3
(385) $
385 $
385 $
97 $
288 $
1.12 $
(3.9)
(99) $
99 $
99 $
25 $
74 $
0.29 $
(1.0)
6,303
3,486
3,014
639
2,375
9.25
64.4
In the table below, references to 2020 results and related comparisons use the adjusted, non-GAAP results from the
table above.
Adjusted
2020
(non-GAAP)
2022
2021
($ in millions, except per share amounts)
Railway operating expenses
Income from railway operations
Income before income taxes
Income taxes
Net income
Diluted earnings per share
Railway operating ratio (percent)
$
$
$
$
$
$
7,936 $
4,809 $
4,130 $
860 $
3,270 $
13.88 $
62.3
6,695 $
4,447 $
3,878 $
873 $
3,005 $
12.11 $
60.1
6,303
3,486
3,014
639
2,375
9.25
64.4
K20
2022
vs.
2021
2021
vs. Adjusted
2020
(non-GAAP)
(% change)
19%
8%
6%
(1%)
9%
15%
4%
6%
28%
29%
37%
27%
31%
(7%)
DETAILED RESULTS OF OPERATIONS
Railway Operating Revenues
The following tables present a three-year comparison of revenues, volumes (units), and average revenue per unit by
commodity group.
Merchandise:
Agriculture, forest and consumer
products
Chemicals
Metals and construction
Automotive
Merchandise
Intermodal
Coal
Total
Merchandise:
Agriculture, forest and consumer
products
Chemicals
Metals and construction
Automotive
Merchandise
Intermodal
Coal
Total
Merchandise:
Agriculture, forest and consumer
products
Chemicals
Metals and construction
Automotive
Merchandise
Intermodal
Coal
Total
2022
Revenues
2021
($ in millions)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
$
$
2,493 $
2,148
1,652
1,038
7,331
3,681
1,733
12,745 $
2,251 $
1,951
1,562
905
6,669
3,163
1,310
11,142 $
2,116
1,809
1,333
830
6,088
2,654
1,047
9,789
11%
10%
6%
15%
10%
16%
32%
14%
6%
8%
17%
9%
10%
19%
25%
14%
2022
Units
2021
(in thousands)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
723.0
540.1
634.6
339.1
2,236.8
3,913.1
684.6
6,834.5
725.5
529.7
669.0
345.4
2,269.6
4,104.1
658.0
7,031.7
704.4
482.0
601.2
329.7
2,117.3
3,992.1
574.1
6,683.5
—%
2%
(5%)
(2%)
(1%)
(5%)
4%
(3%)
3%
10%
11%
5%
7%
3%
15%
5%
2022
Revenue per Unit
2021
($ per unit)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
$
3,448 $
3,978
2,604
3,059
3,277
941
2,532
1,865
3,102 $
3,684
2,334
2,621
2,938
771
1,991
1,584
3,004
3,753
2,216
2,518
2,875
665
1,824
1,465
11%
8%
12%
17%
12%
22%
27%
18%
3%
(2%)
5%
4%
2%
16%
9%
8%
K21
Revenues increased $1.6 billion in 2022 and $1.4 billion in 2021 compared to the prior years. Higher revenue for
2022 was the result of increased average revenue per unit, driven by higher fuel surcharge revenue, pricing gains,
improved mix, and increased intermodal storage service charges, partially offset by volume declines. In 2021,
higher revenue was the result of increased average revenue per unit, driven by pricing gains, higher fuel surcharge
revenue, increased intermodal storage service charges and improved mix, as well as volume growth.
The table below reflects the components of the revenue change by major commodity group.
2022 vs. 2021
Increase (Decrease)
2021 vs. 2020
Increase (Decrease)
($ in millions)
Merchandise
Intermodal
Coal
Merchandise
Intermodal
Coal
$
(96) $
(147) $
53 $
438 $
75 $
153
455
303
417
248
79
291
91
52
178
256
$
662 $
518 $
423 $
581 $
509 $
4
106
263
Volume
Fuel surcharge
revenue
Rate, mix and
other
Total
Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges. Fuel
surcharge revenues totaled $1.6 billion, $622 million, and $349 million in 2022, 2021, and 2020, respectively. The
increase in fuel surcharge revenues in 2022 and 2021 was driven by higher fuel commodity prices.
For 2023, we expect that revenue growth will be a challenge, as there is substantial economic uncertainty.
Additionally, we expect revenue headwinds resulting from lower fuel prices, softening coal pricing, and declining
storage service charges. In this difficult environment, we will continue to fight to increase revenue by recapturing
truck-competitive freight and achieving pricing gains.
MERCHANDISE revenues increased in both 2022 and 2021 compared with the prior years. In 2022, revenues
rose due to higher average revenue per unit, driven by higher fuel surcharge revenue and increased pricing, partially
offset by lower volume. Decreased volumes in metal and construction and automotive shipments more than offset
higher chemical shipments. In 2021, revenues rose due to increased volume and higher average revenue per unit
driven by increased fuel surcharge revenue and pricing. Volumes increased in all merchandise commodity groups,
reflecting economic recovery following the onset of the COVID-19 pandemic.
Agriculture, forest and consumer products revenues increased in both 2022 and 2021 compared with the prior
years. In 2022, the rise was the result of increased average revenue per unit, the result of higher fuel surcharge
revenue and pricing gains, while volumes were nearly flat. Declines in pulpboard, fertilizer, and pulp, were offset
by increases in soybeans, feed, and corn. Pulpboard and pulp shipments declined due to decreased demand,
equipment availability, service disruptions, and production down time. Lower fertilizer shipments were driven by
high fertilizer prices causing customers to draw down on existing inventories or delay purchases as well as
production disruptions. Soybean volumes were higher due to increased opportunity for exports. Feed shipments
were higher due to increased customer demand. Increased corn shipments were due to improved equipment cycle
times. In 2021, higher revenues were the result of higher volume across almost all markets, as the economy
improved from the early months of the pandemic in 2020, and increased average revenue per unit, the result of
pricing gains and higher fuel surcharge revenue. Gains in ethanol, pulpboard, beverages, lumber and wood, and
woodchips more than offset declines in soybeans and pulp.
Chemicals revenues increased in both 2022 and 2021 compared with the prior years. In 2022, the increase was the
result of higher average revenue per unit, driven by fuel surcharge revenue and pricing gains, and volume growth.
K22
Increases in sand and solid waste shipments were partially offset by declines in plastics, inorganic chemicals,
organic chemicals, and natural gas liquids. The increase in sand was due to greater demand resulting from sustained
high natural gas prices. Solid waste shipments increased due to growth with existing customers. Plastics shipments
decreased due to softening of the housing market. Declines in inorganic chemicals, organic chemicals, and natural
gas liquids shipments were due to decreased demand and reduced production. In 2021, the increase was the result
of volume growth partially offset by lower average revenue per unit, driven by mix of traffic. The increase in
volume was due to economic and production recovery since the beginning of the pandemic, despite ongoing
challenges in the energy markets. The markets with the largest gains were solid waste, industrial chemicals, sand,
natural gas liquids, and plastics.
Metals and construction revenues were higher in both 2022 and 2021 compared with the prior years. In 2022,
revenue growth was driven by higher average revenue per unit, the result of higher fuel surcharge revenue and
pricing gains, partially offset by lower volume. Volumes fell largely as a result of decreased shipments of coil steel,
iron and steel, and scrap metal driven by service disruptions and slower equipment cycle times. In 2021, revenue
growth was driven by increased volumes and higher average revenue per unit, the result of pricing gains and higher
fuel surcharge revenue. Volume increased across almost all markets due to economic improvement since the
beginning of the pandemic. The commodities serving the metal production industry, including coil steel, scrap
metal, and iron and steel, experienced the largest gains.
Automotive revenues rose in both 2022 and 2021 compared with the prior years. The increase in revenues in 2022
was driven by higher average revenue per unit, due to higher fuel surcharge revenue and pricing gains, partially
offset by volume declines. Volume declines were the result of slower equipment cycle times partially offset by
fewer parts supply issues due to easing supply chain congestion when compared to the prior year. In 2021, the
increase in revenues was driven by volume growth and higher average revenue per unit, a result of an increase in
fuel surcharge revenue and pricing gains. Automotive volumes were higher due primarily to increased retail
demand and the impact of prior-year pandemic-induced production shutdowns. This was partially offset by the
impact of the microchip shortage on production.
INTERMODAL revenues increased in both 2022 and 2021 compared with the prior years. The increase in 2022
was the result of higher average revenue per unit, driven by higher fuel surcharge revenue, pricing gains, and
increased storage service charges, partially offset by decreased volume. The rise in 2021 was primarily the result of
higher average revenue per unit driven by increased storage service charges, higher fuel surcharge revenue and
pricing gains.
Intermodal units by market were as follows:
Domestic
International
Total
2022
2021
(units in thousands)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
2,573.6
1,339.5
2,630.6
1,473.5
2,568.7
1,423.4
(2%)
(9%)
3,913.1
4,104.1
3,992.1
(5%)
2%
4%
3%
Domestic volume decreased in 2022 but increased in 2021 compared with the prior years. In 2022, volume
declined due to service disruptions, terminal congestion, strong over-the-road competition, and increased truck
availability. In 2021, volume rose due to strong consumer demand which was partially offset by overall supply
chain congestion, including equipment availability issues.
International volume fell in 2022 but rose in 2021. The decline in 2022 was the result of supply chain constraints,
chassis shortages, and excess retail inventory. The increase in 2021 was the result of strong import demand despite
being limited by various supply chain constraints, including chassis availability issues.
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COAL revenues increased in both 2022 and 2021 compared with the prior years. The increase in 2022 was due to
higher average revenue per unit, driven by pricing gains and higher fuel surcharge revenue, and increased volumes.
The increase in 2021 was due to increased volumes and higher average revenue per unit driven by pricing gains and
positive mix.
As shown in the following table, total tonnage increased in both 2022 and 2021.
2022
2021
(tons in thousands)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
Utility
Export
Domestic metallurgical
Industrial
35,705
25,887
11,307
3,765
33,169
24,886
11,804
3,595
32,479
18,900
9,441
3,566
8%
4%
(4%)
5%
Total
76,664
73,454
64,386
4%
2%
32%
25%
1%
14%
Utility coal tonnage increased in both 2022 and 2021 compared with the prior years. The increase in 2022 was due
to increased demand and service improvements. The increase in 2021 was due to higher natural gas prices and
increased demand from coal-sourced electrical generation.
Export coal tonnage increased in both periods compared with prior years. The increase in 2022 was a result of
strong global demand and increased coal supply. The increase in 2021 was a result of strong seaborne pricing,
improved global economic conditions, and greater global demand.
Domestic metallurgical coal tonnage decreased in 2022 but increased in 2021 compared with the prior years. The
decrease in 2022 was the result of reduced coke shipments related to customer sourcing changes and idled customer
facilities. The increase in 2021 was the result of strong recovery in the steel market.
Industrial coal tonnage increased in both 2022 and 2021 compared with the prior year as a result of increased
demand.
Railway Operating Expenses
Railway operating expenses summarized by major classifications were as follows:
2022
2021
($ in millions)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
Compensation and benefits
Purchased services and rents
Fuel
Depreciation
Materials and other
Loss on asset disposal
$
2,621 $
1,922
1,459
1,221
713
—
2,442 $
1,726
799
1,181
547
—
2,373
1,687
535
1,154
653
385
7%
11%
83%
3%
30%
3%
2%
49%
2%
(16%)
Total
$
7,936 $
6,695 $
6,787
19%
(1%)
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In 2022, expenses increased primarily as a result of higher fuel prices, other inflationary pressures, service-related
costs, increased labor-related costs resulting from labor union negotiations, and higher claims expenses. In 2021,
expenses declined primarily as a result of the absence of the 2020 loss on asset disposal and the equity method
investment impairment charge, which is included in purchased services and rents. This was partially offset by
higher fuel costs, increased other purchased services, and higher compensation and benefits expense.
Compensation and benefits increased in 2022, reflecting changes in:
•
•
•
•
•
increased pay rates (up $188 million),
employee activity levels (up $51 million),
overtime (up $18 million),
incentive and stock-based compensation (down $79 million), and
other (up $1 million).
The increase in pay rates in 2022 includes payments in excess of amounts previously estimated in 2021 and 2020
for retroactive wage increases and other benefits under our labor agreements. In 2022, compensation and benefits
includes $54 million and purchased services includes $2 million of additional expenses pertaining to compensation
earned in those periods.
In 2021, compensation and benefits increased, a result of changes in:
•
•
•
•
•
•
incentive and stock-based compensation (up $128 million),
overtime and recrews (up $47 million),
increased pay rates (up $41 million),
health and welfare benefits for craft employees (down $19 million),
employee activity levels (down $154 million), and
other (up $26 million).
Our employment averaged 18,900 in 2022, compared with 18,500 in 2021, and 20,200 in 2020.
Purchased services and rents includes the costs of services purchased from external vendors and contractors,
including the net costs of operating joint (or leased) facilities with other railroads and the net cost of equipment
rentals.
2022
2021
($ in millions)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
Purchased services
Equipment rents
$
1,565 $
357
1,409 $
317
1,387
300
11%
13%
Total
$
1,922 $
1,726 $
1,687
11%
2%
6%
2%
The increase in purchased services in 2022 was due to inflationary pressures which resulted in higher intermodal-
related expenses, and increased operational and transportation expenses, as well as higher technology-related costs.
The increase in purchased services in 2021 was due to increased technology costs, higher intermodal-related
expenses, and increased Conrail, Inc. (Conrail) costs. This was partially offset by the absence of a prior year $99
million impairment related to an equity method investment.
Equipment rents, which includes our cost of using equipment (mostly freight cars) owned by other railroads or
private owners less the rent paid to us for the use of our equipment, increased in both periods. In 2022, the increase
was the result of lower network fluidity which led to greater time-and-mileage expenses, increased automotive and
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intermodal equipment expenses, and higher short-term locomotive resource costs. In 2021, equipment rents were
higher for general-use equipment due to decreased network velocity and increased volume. These increases were
partially offset by lower intermodal costs and higher equity in TTX earnings.
Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, increased
in both periods. The change in both years was due to higher locomotive fuel prices (up 87% in 2022 and 43% in
2021) which increased expenses by $634 million in 2022 and $224 million in 2021. Locomotive fuel consumption
decreased 2% in 2022, but increased 4% in 2021. We consumed 376 million gallons of diesel fuel in 2022,
compared with 384 million gallons in 2021 and 368 million gallons in 2020.
Depreciation expense increased in both periods, a reflection of reinvestment in our infrastructure, rolling stock, and
technology.
Materials and other expenses increased in 2022 but decreased in 2021 as shown in the following table.
Materials
Claims
Other
Total
2022
2021
($ in millions)
2020
2022
vs. 2021
2021
vs. 2020
(% change)
$
283 $
270
160
250 $
165
132
274
179
200
13%
64%
21%
(9%)
(8%)
(34%)
$
713 $
547 $
653
30%
(16%)
Materials expense increased in 2022 but decreased in 2021. The increase in 2022 is due to increased locomotive,
freight car, and track materials costs. In 2021, the decrease was due primarily to lower maintenance requirements as
a result of fewer locomotives and freight cars in service.
Claims expense includes costs related to personal injury, property damage, and environmental matters. The increase
in 2022 was primarily the result of higher costs associated with unfavorable personal injury case development,
increased environmental remediation expenses, and higher lading and property damage costs. The decrease in 2021
was primarily the result of lower costs associated with derailments and personal injuries.
Other expense increased in 2022, primarily due to higher travel-related expenses, increased non-income based taxes,
and lower gains from sales of operating property, partially offset by lower relocation expenses. In 2021, other
expense decreased primarily due to higher gains from sales of operating property. Gains from operating property
sales amounted to $76 million, $82 million, and $26 million in 2022, 2021, and 2020, respectively.
Loss on asset disposal
During 2020, we recorded a $385 million charge related to the disposal of 703 locomotives. For more information
on the impact of the charge, see Note 7.
Other income – net
Other income – net decreased in both 2022 and 2021. Other income fell in 2022 due to lower net returns on
corporate-owned life insurance (COLI) partially offset by a higher net pension benefit and increased interest
income. The decrease in 2021 was driven by lower net returns on COLI and lower gains on sales of non-operating
property.
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Income taxes
The effective income tax rate was 20.8% in 2022, compared with 22.5% in 2021 and 20.4% in 2020. The current
year benefited by $136 million due to an enacted reduction to the Pennsylvania corporate income tax rate while
2021 benefited by $34 million due to various state law changes (see Note 4). All years experienced favorable
benefits associated with stock-based compensation, while 2021 and 2020 benefited from COLI returns.
For 2023, we expect an effective income tax rate between 23% and 24%.
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
Cash provided by operating activities, our principal source of liquidity, was $4.2 billion in 2022, $4.3 billion in
2021, and $3.6 billion in 2020. The decrease in 2022 reflected changes in working capital, offset in part by
improved operating results. The increase in 2021 was primarily the result of improved operating results. We had
negative working capital of $642 million at December 31, 2022 and $354 million at December 31, 2021. Cash and
cash equivalents totaled $456 million and $839 million at December 31, 2022, and 2021, respectively. We expect
that cash on hand combined with cash provided by operating activities will be sufficient to meet our ongoing
obligations. In addition, we believe our currently-available borrowing capacity, access to additional financing, and
ability to reduce property additions and shareholder distributions, including share repurchases, provides us
additional flexibility to meet our ongoing obligations.
Contractual obligations at December 31, 2022, including those that may have material cash requirements, include
interest on fixed-rate long-term debt, long-term debt (Note 9), unconditional purchase obligations (Note 17), long-
term advances from Conrail (Note 6), operating leases (Note 10), agreements with Consolidated Rail Corporation
(CRC) (Note 6), and unrecognized tax benefits (Note 4).
Total
2023
2024 -
2025
2026 -
2027
2028 and
Subsequent
($ in millions)
Interest on fixed-rate long-term debt
Long-term debt principal
Unconditional purchase obligations
Long-term advances from Conrail
Operating leases
Agreements with CRC
Unrecognized tax benefits*
$ 17,085 $
16,012
1,650
534
462
272
22
643 $ 1,239 $ 1,144 $
603
757
—
103
42
—
1,223
80
—
96
84
—
957
736
—
182
84
—
14,059
13,229
77
534
81
62
22
Total
$ 36,037 $ 2,148 $ 3,198 $ 2,627 $
28,064
* This amount is shown in the 2028 and Subsequent column because the year of settlement cannot be reasonably
estimated.
Off balance sheet arrangements consist primarily of unrecognized obligations, including unconditional purchase
obligations and future interest payments on fixed-rate long-term debt, which are included in the table above.
Cash used in investing activities was $1.6 billion in 2022, and $1.2 billion in both 2021 and 2020. The increase in
2022 is due to higher property additions partially offset by increased proceeds from property sales. In 2021, lower
proceeds from property sales were mostly offset by reduced COLI policy loan repayments and lower property
additions.
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Capital spending and track and equipment statistics can be found within the “Railway Property” section of Part I of
this report on Form 10-K. For 2023, we expect property additions will be approximately $2.1 billion.
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 total purchase price for
the line and other associated real and personal property included in the transaction is approximately $1.6 billion.
The agreement is conditioned upon (i) certain changes to Ohio state law applicable to the use of the related sale
proceeds, (ii) approval by the voters of the City of Cincinnati, and (iii) the receipt of regulatory approval from the
STB. The agreement includes various termination provisions including termination at any time prior to closing by
the mutual written consent of the parties, termination at any time after December 31, 2024 by the mutual written
consent of the parties, termination by us if the STB takes action that we deem unsatisfactory, and termination by
either party if Cincinnati voter approval is not obtained on or before the later of June 30, 2025 and the calendar date
on which the polls are open for the 2025 Cincinnati primary election.
Cash used in financing activities was $3.0 billion in 2022, compared with $3.3 billion in 2021, and $1.9 billion in
2020. The decrease in 2022 reflects lower repurchases of Common Stock, and increased proceeds from borrowings,
partially offset by higher dividends. In 2021, the increase reflects higher repurchases of Common Stock and debt
repayments, partially offset by increased proceeds from borrowings.
Share repurchases of $3.1 billion in 2022, $3.4 billion in 2021, and $1.4 billion in 2020 resulted in the retirement of
12.6 million, 12.7 million, and 7.4 million shares, respectively. On March 29, 2022, our Board of Directors
authorized a new program for the repurchase of up to an additional $10.0 billion of Common Stock beginning April
1, 2022. Our previous share repurchase program terminated on March 31, 2022. As of December 31, 2022,
$7.5 billion remains authorized by our Board of Directors for repurchase. 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 June 2022, we issued $750 million of 4.55% senior notes due 2053.
In February 2022, we issued $600 million of 3.00% senior notes due 2032 and $400 million of 3.70% senior notes
due 2053.
In May 2022, we renewed our accounts receivable securitization program with a maximum borrowing capacity of
$400 million. The term expires in May 2023. We had $100 million in borrowings outstanding under this program
and our available borrowing capacity was $300 million at December 31, 2022 and $400 million at December 31,
2021.
We also 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 either
December 31, 2022 or December 31, 2021, and we are in compliance with all of its covenants.
In addition, we have investments in general purpose COLI policies and had the ability to borrow against these
policies up to $610 million and $715 million at December 31, 2022 and December 31, 2021, respectively.
Our debt-to-total capitalization ratio was 54.4% at December 31, 2022, compared with 50.4% at December 31,
2021. We discuss our credit agreement and our accounts receivable securitization program in Note 9. Subsequent
to December 31, 2022, we issued $500 million in fixed rate debt securities. These senior notes, issued February 2,
2023, carry an interest rate of 4.45% and mature in 2033. After this issuance, we have authority from our Board of
K28
Directors to issue an additional $800 million of debt or equity securities through public or private sale, all of which
provide for access to additional liquidity should the need arise.
Upcoming annual debt maturities are disclosed in Note 9. Overall, our goal is to maintain a capital structure with
appropriate leverage to support our business strategy and provide flexibility through business cycles.
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 revenues 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. The following critical accounting estimates are a
subset of our significant accounting policies described in Note 1.
Pensions and Other Postretirement Benefits
Accounting for pensions and other postretirement benefit plans requires us to make several estimates and
assumptions (Note 12). These include the expected rate of return from investment of the plans’ assets and the
expected retirement age of employees as well as their projected earnings and mortality. In addition, the amounts
recorded are affected by changes in the interest rate environment because the associated liabilities are discounted to
their present value. We make these estimates based on our historical experience and other information we deem
pertinent under the circumstances (for example, expectations of future stock market performance). We utilize an
independent actuarial consulting firm’s studies to assist us in selecting appropriate actuarial assumptions and
valuing related liabilities.
For 2022, we assumed a long-term investment rate of return of 8.0%, which was supported by our long-term total
rate of return on pension plan assets since inception, as well as our expectation of future returns. A one-percentage
point change to this rate of return assumption would result in a $26 million change in annual pension expense. We
review assumptions related to our defined benefit plans annually, and while changes are likely to occur in
assumptions concerning retirement age, projected earnings, and mortality, they are not expected to have a material
effect on our net pension expense or net pension liability in the future. The net pension liability is recorded at net
present value using discount rates that are based on the current interest rate environment in light of the timing of
expected benefit payments. We utilize analyses in which the projected annual cash flows from the pension and
postretirement benefit plans are matched with yield curves based on an appropriate universe of high-quality
corporate bonds. We use the results of the yield curve analyses to select the discount rates that match the payment
streams of the benefits in these plans. A one-percentage point change to this discount rate assumption would result
in a $3 million change in annual pension expense.
Properties and Depreciation
Most of our assets are long-lived railway properties (Note 7). “Properties” are stated principally at cost and are
depreciated using the group method whereby assets with similar characteristics, use, and expected lives are grouped
together in asset classes and depreciated using a composite depreciation rate. See Note 1 for a more detailed
discussion of assumptions and estimates.
Expenditures, including those on leased assets, that extend an asset’s useful life or increase its utility are capitalized.
Expenditures capitalized include those that are directly related to a capital project and may include materials, labor,
and other direct costs, in addition to an allocable portion of indirect costs that relate to a capital project. A
significant portion of our annual capital spending relates to self-constructed assets. Costs related to repairs and
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maintenance activities that, in our judgment, do not extend an asset’s useful life or increase its utility are expensed
when such repairs are performed.
Depreciation expense for 2022 totaled $1.2 billion. Our composite depreciation rates for 2022 are disclosed in Note
7; a one-year increase (or decrease) in the estimated average useful lives of depreciable assets would have resulted
in an approximate $44 million decrease (or increase) to annual depreciation expense.
Personal Injury
Claims expense, included in “Materials and other” in the Consolidated Statements of Income, includes our estimate
of costs for personal injuries.
To aid in valuing our personal injury liability and determining the amount to accrue with respect to such claims
during the year, we utilize studies prepared by an independent actuarial consulting firm. The actuarial firm studies
our historical patterns of reserving for claims and subsequent settlements, taking into account relevant outside
influences. 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 and, as
such, the ultimate loss sustained may vary from the estimated liability recorded.
See Note 17 for a more detailed discussion of the assumptions and estimates we use for personal injury.
Income Taxes
Our net deferred tax liability totaled $7.3 billion at December 31, 2022 (Note 4). This liability is estimated based on
the expected future tax consequences of items recognized in the financial statements. After application of the
federal statutory tax rate to book income, judgment is required with respect to the timing and deductibility of
expenses in our income tax returns. For state income and other taxes, judgment is also required with respect to the
apportionment among the various jurisdictions. A valuation allowance is recorded if we expect that it is more likely
than not that deferred tax assets will not be realized. We have a $41 million valuation allowance on $373 million of
deferred tax assets as of December 31, 2022, reflecting the expectation that substantially all of these assets will be
realized.
OTHER MATTERS
Labor Agreements
Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor
unions. Pursuant to the Railway Labor Act (RLA), these agreements remain in effect until new agreements are
reached, or until the bargaining procedures mandated by the RLA 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.
After management and the unions served their formal proposals in November 2019 for changes to the collective
bargaining agreements, negotiations began in 2020 following the expiration of the last moratorium. On June 17,
2022, the National Mediation Board notified the parties that all practical methods of ending the dispute had been
exhausted without effecting a settlement and that its mediation services had been terminated. Shortly thereafter,
President Biden created Presidential Emergency Board (PEB) No. 250, effective July 18, 2022, to investigate the
facts of the dispute and make recommendations. The PEB issued its recommendations on August 16, 2022, and the
parties engaged in further negotiations. By December 2022, agreements based on the PEB’s recommendations had
either been ratified or enacted through legislative action for all twelve unions.
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While the parties are engaged in additional discussions to conclude the implementation of the recently finalized
agreements, neither party can compel mandatory bargaining around any new proposals until November 1, 2024.
That said, we understand the imperative to continue improving quality of life for our craft employees and are
actively engaged in voluntary discussions (which carry no risk of a work stoppage) with all of our unions on this
important issue.
Market Risks
We manage overall exposure to fluctuations in interest rates by issuing both fixed- and floating- rate debt
instruments. At December 31, 2022, debt subject to interest rate fluctuations totaled $100 million. A one-
percentage point increase in interest rates would increase total annual interest expense related to all variable debt by
approximately $1 million. Market risk for fixed-rate debt is estimated as the potential increase in fair value
resulting from a one-percentage point decrease in interest rates as of December 31, 2022 and amounts to an increase
of approximately $1.3 billion to the fair value of our debt at December 31, 2022. We consider it unlikely that
interest rate fluctuations applicable to these instruments will result in a material adverse effect on our financial
position, results of operations, or liquidity.
New Accounting Pronouncements
For a detailed discussion of new accounting pronouncements, see Note 1.
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 in Item 1A “Risk Factors,” 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.
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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 Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is included in Item 7 “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” under the heading “Market Risks.”
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Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Report of Management
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Income
Years ended December 31, 2022, 2021, and 2020
Consolidated Statements of Comprehensive Income
Years ended December 31, 2022, 2021, and 2020
Consolidated Balance Sheets
At December 31, 2022 and 2021
Consolidated Statements of Cash Flows
Years ended December 31, 2022, 2021, and 2020
Consolidated Statements of Changes in Stockholders’ Equity
Years ended December 31, 2022, 2021, and 2020
Notes to Consolidated Financial Statements
Index to Financial Statement Schedule in Item 15
Page
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K33
Report of Management
February 3, 2023
To the Stockholders
Norfolk Southern Corporation:
Management is responsible for establishing and maintaining adequate internal control over financial reporting. In
order to ensure that Norfolk Southern’s internal control over financial reporting is effective, management regularly
assesses such controls and did so most recently as of December 31, 2022. This assessment was based on criteria for
effective internal control over financial reporting described in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment,
management has concluded that we maintained effective internal control over financial reporting as of December
31, 2022.
KPMG LLP, independent registered public accounting firm, has audited our financial statements and issued an
attestation report on our internal control over financial reporting as of December 31, 2022.
/s/ Alan H. Shaw
Alan H. Shaw
President and
Chief Executive Officer
/s/ Mark R. George
Mark R. George
Executive Vice President
and Chief Financial Officer
/s/ Claiborne L. Moore
Claiborne L. Moore
Vice President and
Controller
K34
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Norfolk Southern Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited Norfolk Southern Corporation and subsidiaries’ (the Company) internal control over financial
reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the
related consolidated statements of income, comprehensive income, cash flows, and changes in stockholders’ equity
for each of the years in the three-year period ended December 31, 2022, and the related notes and financial
statement schedule of valuation and qualifying accounts as listed in Item 15(A)2 (collectively, the consolidated
financial statements), and our report dated February 3, 2023 expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
K35
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Atlanta, Georgia
February 3, 2023
/s/ KPMG LLP
KPMG LLP
K36
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Norfolk Southern Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Norfolk Southern Corporation and subsidiaries
(the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive
income, cash flows, and changes in stockholders’ equity for each of the years in the three-year period ended
December 31, 2022, and the related notes and financial statement schedule of valuation and qualifying accounts as
listed in Item 15(A)2 (collectively, the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based
on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated February 3, 2023 expressed an unqualified
opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our
opinion.
K37
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Sufficiency of audit evidence related to the capitalization of property expenditures
As discussed in Note 1 to the consolidated financial statements, expenditures that extend an asset’s useful
life or increase its utility are capitalized. The Company has recorded $32,156 million in net book value of
properties at December 31, 2022 and has recorded $1,948 million in property additions for the year ended
December 31, 2022. Expenditures capitalized include those that are directly related to a capital project and
may include materials, labor and other direct costs, in addition to an allocable portion of indirect costs that
relate to a capital project. A significant portion of the Company’s annual capital spending relates to self-
constructed assets. Costs related to repair and maintenance activities, that in the Company’s judgment, do
not extend an asset’s useful life or increase its utility are expensed when such repairs are performed.
We identified the evaluation of the sufficiency of audit evidence related to capitalization of property
expenditures as a critical audit matter. Subjective auditor judgment was required in determining procedures
and evaluating audit results related to the capitalization of purchased services and compensation due to their
usage for both self-constructed assets and repairs and maintenance.
The following are the primary procedures we performed to address this critical audit matter. We applied
auditor judgment to determine the nature and extent of procedures to be performed over capitalized property
expenditures. We evaluated the design and tested the operating effectiveness of certain internal controls
over the Company’s process to capitalize property expenditures, including controls over the determination
of whether purchased services and compensation expenditures extend an asset’s useful life or increase its
utility. For a sample of property addition expenditures, we inquired and inspected support to evaluate that
the expenditure extended an asset’s useful life or increased its utility. We evaluated the sufficiency of audit
evidence obtained by assessing the results of the procedures performed, including the appropriateness of the
nature of such evidence.
/s/ KPMG LLP
KPMG LLP
We have served as the Company’s auditor since 1982.
Atlanta, Georgia
February 3, 2023
K38
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
Years ended December 31,
2021
($ in millions, except per share amounts)
2020
2022
Railway operating revenues
$
12,745 $
11,142 $
9,789
Railway operating expenses
Compensation and benefits
Purchased services and rents
Fuel
Depreciation
Materials and other
Loss on asset disposal
2,621
1,922
1,459
1,221
713
—
2,442
1,726
799
1,181
547
—
2,373
1,687
535
1,154
653
385
Total railway operating expenses
7,936
6,695
6,787
Income from railway operations
4,809
4,447
3,002
Other income – net
Interest expense on debt
13
692
77
646
153
625
Income before income taxes
4,130
3,878
2,530
Income taxes
Net income
Earnings per share
Basic
Diluted
860
873
517
$
3,270 $
3,005 $
2,013
$
13.92 $
13.88
12.16 $
12.11
7.88
7.84
See accompanying notes to consolidated financial statements.
K39
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
2022
Years ended December 31,
2021
($ in millions)
2020
Net income
Other comprehensive income (loss), before tax:
Pension and other postretirement benefits
Other comprehensive income of equity investees
Other comprehensive income (loss), before tax
Income tax benefit (expense) related to items of
other comprehensive income (loss)
$
3,270 $
3,005 $
2,013
51
17
68
226
24
250
(140)
2
(138)
(17)
(58)
35
Other comprehensive income (loss), net of tax
51
192
(103)
Total comprehensive income
$
3,321 $
3,197 $
1,910
See accompanying notes to consolidated financial statements.
K40
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
Assets
Current assets:
Cash and cash equivalents
Accounts receivable – net
Materials and supplies
Other current assets
Total current assets
Investments
Properties less accumulated depreciation of $12,592 and
$12,031, respectively
Other assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Short-term debt
Income and other taxes
Other current liabilities
Current maturities of long-term debt
Total current liabilities
Long-term debt
Other liabilities
Deferred income taxes
Total liabilities
Stockholders’ equity:
Common Stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 228,076,415 and 240,162,790 shares,
respectively, net of treasury shares
Additional paid-in capital
Accumulated other comprehensive loss
Retained income
Total stockholders’ equity
At December 31,
2021
2022
($ in millions)
$
456 $
1,148
253
150
2,007
3,694
839
976
218
134
2,167
3,707
32,156
1,028
31,653
966
$
38,885 $
38,493
$
1,293 $
100
312
341
603
2,649
14,479
1,759
7,265
1,351
—
305
312
553
2,521
13,287
1,879
7,165
26,152
24,852
230
2,157
(351)
10,697
242
2,215
(402)
11,586
12,733
13,641
Total liabilities and stockholders’ equity
$
38,885 $
38,493
See accompanying notes to consolidated financial statements.
K41
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years ended December 31,
2020
2021
2022
($ in millions)
Cash flows from operating activities
Net income
Reconciliation of net income to net cash provided by operating activities:
$
3,270 $
3,005 $
2,013
Depreciation
Deferred income taxes
Gains and losses on properties
Loss on asset disposal
Impairment of investment
Changes in assets and liabilities affecting operations:
Accounts receivable
Materials and supplies
Other current assets
Current liabilities other than debt
Other – net
1,221
83
(82)
—
—
(171)
(35)
(18)
23
(69)
1,181
184
(86)
—
—
(133)
3
(6)
283
(176)
1,154
142
(39)
385
99
71
23
3
34
(248)
Net cash provided by operating activities
4,222
4,255
3,637
Cash flows from investing activities
Property additions
Property sales and other transactions
Investment purchases
Investment sales and other transactions
Net cash used in investing activities
Cash flows from financing activities
Dividends
Common Stock transactions
Purchase and retirement of Common Stock
Proceeds from borrowings
Debt repayments
Net cash used in financing activities
(1,948)
263
(12)
94
(1,470)
159
(10)
99
(1,494)
333
(13)
(1)
(1,603)
(1,222)
(1,175)
(1,167)
(4)
(3,110)
1,832
(553)
(1,028)
17
(3,390)
1,676
(584)
(960)
69
(1,439)
784
(381)
(3,002)
(3,309)
(1,927)
Net increase (decrease) in cash and cash equivalents
(383)
(276)
535
Cash and cash equivalents
At beginning of year
At end of year
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amounts capitalized)
Income taxes (net of refunds)
839
1,115
580
$
456 $
839 $
1,115
$
619 $
750
579 $
654
577
311
See accompanying notes to consolidated financial statements.
K42
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
Common
Stock
Accum. Other
Additional
Retained
Comprehensive
Paid-in
Capital
Income
Loss
($ in millions, except per share amounts)
Total
Balance at December 31, 2019
$
259 $
2,209 $
(491) $
13,207 $
15,184
Comprehensive income:
Net income
Other comprehensive loss
Total comprehensive income
Dividends on Common Stock,
$3.76 per share
Share repurchases
Stock-based compensation
2,013
(103)
(7)
2
(59)
98
(960)
(1,373)
(4)
2,013
(103)
1,910
(960)
(1,439)
96
Balance at December 31, 2020
254
2,248
(594)
12,883
14,791
Comprehensive income:
Net income
Other comprehensive income
Total comprehensive income
Dividends on Common Stock,
$4.16 per share
Share repurchases
Stock-based compensation
3,005
192
(1,028)
(3,271)
(3)
3,005
192
3,197
(1,028)
(3,390)
71
(13)
1
(106)
73
Balance at December 31, 2021
242
2,215
(402)
11,586
13,641
Comprehensive income:
Net income
Other comprehensive income
Total comprehensive income
Dividends on Common Stock,
$4.96 per share
Share repurchases
Stock-based compensation
3,270
51
(1,167)
(2,989)
(3)
3,270
51
3,321
(1,167)
(3,110)
48
(13)
1
(108)
50
Balance at December 31, 2022
$
230 $
2,157 $
(351) $
10,697 $
12,733
See accompanying notes to consolidated financial statements.
K43
Norfolk Southern Corporation and Subsidiaries
Notes to Consolidated Financial Statements
The following Notes are an integral part of the Consolidated Financial Statements.
1. Summary of Significant Accounting Policies
Description of Business
Norfolk Southern Corporation is a Georgia-based holding company engaged principally in the rail transportation
business, operating 19,100 route miles primarily in the Southeast, East, and Midwest. These consolidated financial
statements include Norfolk Southern and its majority-owned and controlled subsidiaries (collectively, NS, we, us,
and our). Norfolk Southern’s major subsidiary is NSR. All significant intercompany balances and transactions
have been eliminated in consolidation.
NSR and its railroad subsidiaries transport raw materials, intermediate products, and finished goods classified in the
following commodity groups (percent of total railway operating revenues in 2022): intermodal (29%); agriculture,
forest and consumer products (19%); chemicals (17%); coal (14%); metals and construction (13%); and automotive
(8%). Although most of our customers are domestic, ultimate points of origination or destination for some of the
products transported (particularly coal bound for export and some intermodal shipments) may be outside the
U.S. Approximately 80% of our railroad employees are covered by collective bargaining agreements with various
labor unions.
Use of 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 revenues and expenses during the reporting period. We
periodically review our estimates, including those related to the recoverability and useful lives of assets, as well as
liabilities for litigation, environmental remediation, casualty claims, income taxes and pension and other
postretirement benefits. Changes in facts and circumstances may result in revised estimates.
Revenue Recognition
Transportation revenues are recognized proportionally as a shipment moves from origin to destination, and related
expenses are recognized as incurred. Certain of our contract refunds (which are primarily volume-based incentives)
are recorded as a reduction to revenues on the basis of our best estimate of projected liability, which is based on
historical activity, current shipment counts and expectation of future activity. Certain ancillary services, such as
switching, demurrage and other incidental activities, may be provided to customers 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.
Cash Equivalents
“Cash equivalents” are highly liquid investments purchased three months or less from maturity.
Allowance for Doubtful Accounts
Our allowance for doubtful accounts was $9 million and $8 million at December 31, 2022 and 2021,
respectively. To determine our allowance for doubtful accounts, we evaluate historical loss experience (which has
not been significant), the characteristics of current accounts, and general economic conditions and trends.
K44
Materials and Supplies
“Materials and supplies,” consisting mainly of items for maintenance of property and equipment, are stated at the
lower of average cost or net realizable value. The cost of materials and supplies expected to be used in property
additions or improvements is included in “Properties.”
Investments
Investments in entities over which we have the ability to exercise significant influence but do not control the entity
are accounted for using the equity method, whereby the investment is carried at the cost of the acquisition plus our
equity in undistributed earnings or losses since acquisition.
Properties
“Properties” are stated principally at cost and are depreciated using the group method whereby assets with similar
characteristics, use, and expected lives are grouped together in asset classes and depreciated using a composite
depreciation rate. This methodology treats each asset class as a pool of resources, not as singular items. We use
approximately 75 depreciable asset classes.
Depreciation expense is based on our assumptions concerning expected service lives of our properties as well as the
expected net salvage that will be received upon their retirement. In developing these assumptions, we utilize
periodic depreciation studies that are performed by an independent outside firm of consulting engineers and
approved by the STB. Our depreciation studies are conducted about every three years for equipment and every six
years for track assets and other roadway property. The frequency of these studies is consistent with guidelines
established by the STB. We adjust our rates based on the results of these studies and implement the changes
prospectively. The studies may also indicate that the recorded amount of accumulated depreciation is deficient (or
in excess) of the amount indicated by the study. Any such deficiency (or excess) is amortized as a component of
depreciation expense over the remaining service lives of the affected class of property, as determined by the study.
Key factors that are considered in developing average service life and salvage estimates include:
•
•
•
•
•
statistical analysis of historical retirement data and surviving asset records,
review of historical salvage received and current market rates,
review of our operations including expected changes in technology, customer demand, maintenance
practices and asset management strategies,
review of accounting policies and assumptions, and
industry review and analysis.
The composite depreciation rate for rail in high density corridors is derived based on consideration of annual gross
tons as compared to the total or ultimate capacity of rail in these corridors. Our experience has shown that traffic
density is a leading factor in the determination of the expected service life of rail in high density corridors. In
developing the respective depreciation rate, consideration is also given to several rail characteristics including age,
weight, condition (new or second-hand) and type (curved or straight).
We capitalize interest on major projects during the period of their construction. Expenditures, including those on
leased assets, that extend an asset’s useful life or increase its utility are capitalized. Expenditures capitalized
include those that are directly related to a capital project and may include materials, labor, and other direct costs, in
addition to an allocable portion of indirect costs that relate to a capital project. A significant portion of our annual
capital spending relates to self-constructed assets. Removal activities occur in conjunction with replacement and are
estimated based on the average percentage of time employees replacing assets spend on removal functions. Costs
related to repairs and maintenance activities that, in our judgment, do not extend an asset’s useful life or increase its
utility are expensed when such repairs are performed.
K45
When depreciable operating road and equipment assets are sold or retired in the ordinary course of business, the
cost of the assets, net of sales proceeds or salvage, is charged to accumulated depreciation, and no gain or loss is
recognized in earnings. Actual historical cost values are retired when available, such as with most equipment
assets. The use of estimates in recording the retirement of certain roadway assets is necessary based on the
impracticality of tracking individual asset costs. When retiring rail, ties and ballast, we use statistical curves that
indicate the relative distribution of the age of the assets retired. The historical cost of other roadway assets is
estimated using a combination of inflation indices specific to the rail industry and those published by the U.S.
Bureau of Labor Statistics. The indices are applied to the replacement value based on the age of the retired
assets. These indices are used because they closely correlate with the costs of roadway assets. Gains and losses on
disposal of operating land are included in “Materials and other” expenses. Gains and losses on disposal of non-
operating land and non-rail assets are included in “Other income – net” since such income is not a product of our
railroad operations.
A retirement is considered abnormal if it does not occur in the ordinary course of business, if it relates to disposition
of a large segment of an asset class and if the retirement varies significantly from the retirement profile identified
through our depreciation studies, which inherently consider the impact of normal retirements on expected service
lives and depreciation rates. Gains or losses from abnormal retirements are recognized in income from railway
operations.
We review the carrying amount of properties whenever events or changes in circumstances indicate that such
carrying amount may not be recoverable based on future undiscounted cash flows. Assets that are deemed impaired
as a result of such review are recorded at the lower of carrying amount or fair value.
New Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
2019-12, “Simplifying the Accounting for Income Taxes,” which added new guidance to simplify the accounting for
income taxes, changed the accounting for certain income tax transactions, and made other minor changes. We
adopted the standard on January 1, 2021 and there was no material impact to the financial statements upon adoption.
In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business
Entities about Government Assistance,” which requires annual disclosures when an entity has received government
assistance. Entities are required to disclose the types of government assistance received, the accounting treatment
for that government assistance, and the effect of the government assistance on the financial statements. We adopted
the new standard on January 1, 2022 and there was no material impact to the financial statements upon adoption.
K46
2. Railway Operating Revenues
The following table disaggregates our revenues by major commodity group:
Merchandise:
Agriculture, forest and consumer products
Chemicals
Metals and construction
Automotive
Merchandise
Intermodal
Coal
Total
2022
2021
($ in millions)
2020
$
2,493 $
2,148
1,652
1,038
7,331
3,681
1,733
2,251 $
1,951
1,562
905
6,669
3,163
1,310
2,116
1,809
1,333
830
6,088
2,654
1,047
$
12,745 $
11,142 $
9,789
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 December 31, 2022 and 2021.
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 7%, 7% and 5%, respectively, of total “Railway operating
revenues” on the Consolidated Statements of Income for the years ended December 31, 2022, 2021, and 2020.
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:
Customer
Non-customer
Accounts receivable – net
December 31,
2022
2021
($ in millions)
$
895 $
253
741
235
$
1,148 $
976
Non-customer receivables include non-revenue-related amounts due from other railroads, governmental entities, and
others. There were no non-current customer receivables at December 31, 2022, while “Other assets” on the
K47
Consolidated Balance Sheets included $23 million at December 31, 2021. We do not have any material contract
assets or liabilities at December 31, 2022 and 2021.
3. Other Income – Net
Pension and other postretirement benefits (Note 12)
COLI – net
Other
Total
4. Income Taxes
Current:
Federal
State
Total current taxes
Deferred:
Federal
State
Total deferred taxes
Income taxes
2022
2021
($ in millions)
2020
$
126 $
(77)
(36)
102 $
17
(42)
91
85
(23)
$
13 $
77 $
153
2022
2021
($ in millions)
2020
$
645 $
132
777
553 $
136
689
206
(123)
83
186
(2)
184
307
68
375
111
31
142
$
860 $
873 $
517
Reconciliation of Statutory Rate to Effective Rate
“Income taxes” on the Consolidated Statements of Income differs from the amounts computed by applying the
statutory federal corporate tax rate as follows:
2022
2021
Amount % Amount % Amount %
($ in millions)
2020
Federal income tax at statutory rate
State income taxes, net of federal tax effect
State law changes
Excess tax benefits on stock-based compensation
Other, net
$
867
146
(136)
(18)
1
21.0 $
3.5
(3.3)
(0.4)
—
814
143
(34)
(25)
(25)
21.0 $
3.6
(0.8)
(0.6)
(0.7)
531
85
—
(39)
(60)
21.0
3.3
—
(1.5)
(2.4)
Income taxes
$
860
20.8 $
873
22.5 $
517
20.4
On July 8, 2022, House Bill 1342 was signed into law in the Commonwealth of Pennsylvania, which reduced its
corporate income tax rate from 9.99% to 4.99%, through a series of phased reductions beginning each tax year from
K48
January 1, 2023 through January 1, 2031. GAAP requires companies to recognize the effect of tax law changes in
the period of enactment. As a result, in 2022, we recognized a $136 million benefit in “Income taxes” with a
corresponding reduction in “Deferred income taxes.”
Deferred Tax Assets and Liabilities
Certain items are reported in different periods for financial reporting and income tax purposes. Deferred tax assets
and liabilities are recorded in recognition of these differences. The tax effects of temporary differences that give
rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
Deferred tax assets:
Accruals, including casualty and other claims
Compensation and benefits, including postretirement benefits
Other
Total gross deferred tax assets
Less valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Property
Other
Total deferred tax liabilities
Deferred income taxes
December 31,
2022
2021
($ in millions)
$
110 $
99
164
373
(41)
332
92
181
188
461
(60)
401
(7,050)
(547)
(7,597)
(7,016)
(550)
(7,566)
$
(7,265) $
(7,165)
Except for amounts for which a valuation allowance has been provided, we believe that it is more likely than not
that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. The
valuation allowance at the end of each year primarily relates to subsidiary state income tax net operating losses and
state investment tax credits that may not be utilized prior to their expiration. The total valuation allowance
decreased by $19 million in 2022 and increased $3 million in both 2021 and 2020.
K49
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
December 31,
2022
2021
($ in millions)
Balance at beginning of year
$
21 $
22
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Settlements with taxing authorities
Lapse of statutes of limitations
3
1
(2)
(1)
3
3
(5)
(2)
Balance at end of year
$
22 $
21
Included in the balance of unrecognized tax benefits at December 31, 2022 are potential benefits of $18 million that
would affect the effective tax rate if recognized. Unrecognized tax benefits are adjusted in the period in which new
information about a tax position becomes available or the final outcome differs from the amount recorded.
The statute of limitations on Internal Revenue Service examinations has expired for all years prior to 2019. State
income tax returns are generally subject to examination for a period of three to four years after the return. In
addition, we are generally obligated to report changes in taxable income arising from federal income tax
examinations to the states within a period of up to two years from the date the federal examination is final. We have
various state income tax returns either under examination, administrative appeal, or litigation.
5. Fair Value Measurements
FASB Accounting Standards Codification (ASC) 820-10, “Fair Value Measurements,” established a framework for
measuring fair value and a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value into three broad levels, as follows:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in
active markets that we have the ability to access.
Level 2 Inputs to the valuation methodology include:
• quoted prices for similar assets or liabilities in active markets,
• quoted prices for identical or similar assets or liabilities in inactive markets,
• inputs other than quoted prices that are observable for the asset or liability, and
• inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for
substantially the full term of the asset or liability.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The asset or liability’s fair value measurement level within the hierarchy is based on the lowest level of any input
that is significant to the fair value measurement.
K50
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 COLI 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 December 31, 2022 or 2021. The carrying amounts and
estimated fair values, based on Level 1 inputs, of long-term debt consist of the following at December 31:
2022
2021
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
($ in millions)
Long-term debt, including current maturities
$
(15,082) $
(13,846) $
(13,840) $
(17,033)
6. Investments
Long-term investments:
Equity method investments:
Conrail
TTX Company
Other
Total equity method investments
COLI at net cash surrender value
Other investments
Total long-term investments
Investment in Conrail
December 31,
2022
2021
($ in millions)
$ 1,584 $ 1,526
851
420
2,797
918
421
2,923
752
19
885
25
$ 3,694 $ 3,707
Through a limited liability company, we and CSX jointly own Conrail, whose primary subsidiary is 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. We are amortizing the excess of the purchase price over Conrail’s net equity using the
principles of purchase accounting, based primarily on the estimated useful lives of Conrail’s depreciable property
and equipment, including the related deferred tax effect of the differences in book and tax accounting bases for such
assets, as all of the purchase price at acquisition was allocable to Conrail’s tangible assets and liabilities. At
December 31, 2022, our investment in Conrail exceeds our share of Conrail’s underlying net equity by $480
million.
CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of 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
$156 million in 2022, $147 million in 2021, and $129 million in 2020. Future payments for access fees due to CRC
under the Shared Assets Areas agreements are as follows: $42 million in each of 2023 through 2027 and $62 million
K51
thereafter. We provide certain general and administrative support functions to Conrail, the fees for which are billed
in accordance with several service-provider arrangements and approximate $6 million annually.
In 2020, we converted $254 million of accounts payable into long-term advances from Conrail included in “Other
liabilities.” “Accounts payable” includes $173 million at December 31, 2022, and $112 million at December 31,
2021, due to Conrail for the operation of the Shared Assets Areas. “Other liabilities” includes $534 million at
December 31, 2022 and 2021, respectively, for long-term advances from Conrail, maturing in 2050 that bear interest
at an average rate of 1.31%.
Our equity in Conrail’s earnings, net of amortization, was $58 million for 2022, $56 million for 2021, and $58
million for 2020. These amounts partially offset the costs of operating the Shared Assets Areas and are included in
“Purchased services and rents.” Equity in Conrail’s earnings is included in the “Other – net” line item within
operating activities in the Consolidated Statements of Cash Flows.
Investment in TTX
We and seven 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.” This amounted to
$256 million, $246 million, and $250 million, respectively, for the years ended December 31, 2022, 2021 and 2020.
Our equity in TTX’s earnings partially offsets these costs and totaled $53 million for 2022 and 2021, respectively,
and $48 million for 2020. Equity in TTX’s earnings is included in the “Other – net” line item within operating
activities in the Consolidated Statements of Cash Flows.
Impairment of Investment
In 2020, we recorded an other-than-temporary impairment of $99 million related to the carrying value of an equity
method investment. This non-cash impairment charge is recorded in “Purchased services and rents” on the
Consolidated Statements of Income and had a $74 million impact on net income.
K52
7. Properties
December 31, 2022
Cost
Accumulated
Depreciation
($ in millions)
Net Book
Value
Depreciation
Rate (1)
Land
Roadway:
Rail and other track material
Ties
Ballast
Construction in process
Other roadway
Total roadway
Equipment:
Locomotives
Freight cars
Computers and software
Construction in process
Other equipment
Total equipment
$
2,405 $
— $
2,405
—
7,589
5,981
3,126
431
14,270
31,397
5,878
2,701
926
206
1,145
10,856
(1,971)
(1,696)
(873)
—
(3,948)
(8,488)
(2,060)
(1,033)
(476)
—
(463)
(4,032)
2.42%
3.49%
2.84%
—
2.69%
3.66%
2.51%
9.10%
—
4.51%
5,618
4,285
2,253
431
10,322
22,909
3,818
1,668
450
206
682
6,824
Other property
90
(72)
18
2.26%
Total properties
$
44,748 $
(12,592) $
32,156
K53
December 31, 2021
Cost
Accumulated
Depreciation
($ in millions)
Net Book
Value
Depreciation
Rate (1)
Land
Roadway:
Rail and other track material
Ties
Ballast
Construction in process
Other roadway
Total roadway
Equipment:
Locomotives
Freight cars
Computers and software
Construction in process
Other equipment
Total equipment
$
2,453 $
— $
2,453
—
7,330
5,779
3,041
339
14,111
30,600
5,695
2,701
893
164
1,088
10,541
(1,907)
(1,642)
(818)
—
(3,733)
(8,100)
(1,994)
(1,009)
(438)
—
(420)
(3,861)
2.40%
3.44%
2.79%
—
2.69%
3.87%
2.59%
10.34%
—
4.63%
5,423
4,137
2,223
339
10,378
22,500
3,701
1,692
455
164
668
6,680
Other property
90
(70)
20
2.25%
Total properties
$
43,684 $
(12,031) $
31,653
(1) Composite annual depreciation rate for the underlying assets, excluding the effects of the amortization of any
deficiency (or excess) that resulted from our depreciation studies.
Loss on Asset Disposal
In 2020, we sold 703 locomotives deemed excess and no longer needed for railroad operations. We evaluated these
locomotive retirements and concluded they were abnormal (see Note 1). Accordingly, we recorded a $385 million
loss to adjust their carrying amount to their estimated fair value, which resulted in a $97 million tax benefit.
Capitalized Interest
Total interest cost incurred on debt was $708 million, $657 million, and $639 million during 2022, 2021 and 2020,
respectively, of which $16 million, $11 million, and $14 million was capitalized during 2022, 2021 and 2020,
respectively.
K54
8. Current Liabilities
Accounts payable:
Accounts and wages payable
Due to Conrail (Note 6)
Casualty and other claims (Note 17)
Vacation liability
Other
Total
Other current liabilities:
Interest payable
Current operating lease liability (Note 10)
Pension benefit obligations (Note 12)
Other
Total
9. Debt
Debt maturities are presented below:
Notes and debentures, with weighted-average interest rates as of December 31, 2022:
3.95% maturing to 2027
3.66% maturing 2028 to 2032
4.05% maturing 2037 to 2055
5.22% maturing 2097 to 2121
Securitization borrowings and finance leases
Discounts, premiums, and debt issuance costs
Total debt
December 31,
2022
2021
($ in millions)
$
712 $
173
170
136
102
850
112
166
119
104
$
1,293 $
1,351
$
157 $
94
20
70
150
82
20
60
$
341 $
312
December 31,
2022
2021
($ in millions)
$
2,770 $
2,595
9,247
1,384
116
(930)
15,182
3,318
1,995
8,097
1,384
22
(976)
13,840
Less current maturities and short-term debt
(703)
(553)
Long-term debt excluding current maturities and short-term debt
$
14,479 $
13,287
K55
Long-term debt maturities subsequent to 2023 are as follows:
2024
2025
2026
2027
2028 and subsequent years
Total
$
403
554
602
621
12,299
$
14,479
In June 2022, we issued $750 million of 4.55% senior notes due 2053.
In February 2022, we issued $600 million of 3.00% senior notes due 2032 and $400 million of 3.70% senior notes
due 2053.
In May 2022, we renewed our accounts receivable securitization program with a maximum borrowing capacity of
$400 million. The term expires in May 2023. Under this facility NSR sells substantially all of its eligible third-
party receivables to a subsidiary, which in turn may transfer beneficial interests in the receivables to various
commercial paper vehicles. Amounts received under this facility are accounted for as borrowings. We had $100
million (at an average variable interest rate of 5.05%) outstanding under this program at December 31, 2022, which
is included within “Short-term debt”, and no amounts outstanding at December 31, 2021. Our available borrowing
capacity was $300 million and $400 million at December 31, 2022 and December 31, 2021, respectively. Our
accounts receivable securitization program was supported by $883 million in receivables at December 31, 2022,
which are included in “Accounts receivable – net”.
Credit Agreement and Debt Covenants
We also 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 either
December 31, 2022 or December 31, 2021, and we are in compliance with all of its covenants.
Subsequent Event
On February 2, 2023, we issued $500 million of 4.45% senior notes due 2033.
10. Leases
We are committed under long-term lease agreements for equipment, lines of road, and other property. We combine
lease and non-lease components for new and reassessed leases. Some of these agreements are variable lease
agreements that include usage-based payments. These agreements contain payment provisions that depend on an
index or rate, initially measured using the index or rate at the lease commencement date, and are therefore not
included in our future minimum lease payments. Our long-term lease agreements do not contain any material
restrictive covenants.
Our equipment leases have remaining terms of less than 1 year to 7 years and our lines of road and land leases have
remaining terms of less than 1 year to 135 years. Some of these leases include options to extend the leases for up to
99 years and some include options to terminate the leases within 30 days. Because we are not reasonably certain to
exercise these renewal options, the options are not considered in determining the lease term, and associated
payments are excluded from future minimum lease payments.
Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognize lease
expense for these leases on a straight-line basis over the lease term.
K56
Operating lease amounts included on the Consolidated Balance Sheets are as follows:
Assets
Right-of-use (ROU) assets
Other assets
Classification
Liabilities
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Other current liabilities
Other liabilities
December 31,
2022
2021
($ in millions)
$
$
$
407 $
411
94 $
316
82
331
410 $
413
The components of total lease expense, primarily included in “Purchased services and rents,” are as follows:
Operating lease expense
Variable lease expense
Short-term lease expense
Total lease expense
2022
2021
($ in millions)
2020
$
101 $
55
18
106 $
44
9
109
42
9
$
174 $
159 $
160
In March 2019, we entered into a non-cancellable lease for an office building. In 2021, the construction of the
office building was completed and the lease commenced. The initial lease term is five years with options to renew,
purchase, or sell the office building at the end of the lease term. The lease contains a residual value guarantee of up
to eighty-three percent of the total construction cost of $499 million.
Other information related to operating leases is as follows:
December 31,
2022
2021
Weighted-average remaining lease term (years) on operating leases
6.67
7.49
Weighted-average discount rates on operating leases
3.16%
3.04%
As the rates implicit in most of our leases are not readily determinable, we use a collateralized incremental
borrowing rate based on the information available at the lease commencement date in determining the present value
of future payments. We use the portfolio approach and group leases into short-, medium-, and long-term categories,
applying the corresponding incremental borrowing rates to these categories.
During 2022 and 2021, respectively, ROU assets obtained in exchange for new operating lease liabilities were $57
million at both periods. Cash paid for amounts included in the measurement of lease liabilities was $100 million
and $103 million in 2022 and 2021, respectively, and is included in operating cash flows.
K57
Future minimum lease payments under non-cancellable operating leases are as follows:
2023
2024
2025
2026
2027
2028 and subsequent years
Total lease payments
Less: Interest
Present value of lease liabilities
2022
2023
2024
2025
2026
2027 and subsequent years
Total lease payments
Less: Interest
Present value of lease liabilities
11. Other Liabilities
Long-term advances from Conrail (Note 6)
Non-current operating lease liability (Note 10)
Net pension benefit obligations (Note 12)
Casualty and other claims (Note 17)
Net other postretirement benefit obligations (Note 12)
Deferred compensation
Other
Total
K58
December 31, 2022
($ in millions)
103
95
87
69
27
81
462
52
410
December 31, 2021
($ in millions)
92
83
73
69
55
98
470
57
413
$
$
$
$
December 31,
2022
2021
($ in millions)
$
534 $
316
255
218
204
91
141
534
331
338
170
244
109
153
$
1,759 $
1,879
12. 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 Other Postretirement Benefit Obligations and Plan Assets
Change in benefit obligations:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gains
Plan amendments
Benefits paid
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets at end of year
Pension Benefits
2021
2022
Other Postretirement
Benefits
2022
2021
($ in millions)
$
2,777 $
40
67
(677)
(4)
(152)
2,051
2,845 $
43
55
(13)
(2)
(151)
2,777
2,861
(470)
21
(152)
2,260
2,675
317
20
(151)
2,861
417 $
6
9
(70)
—
(36)
326
173
(28)
13
(36)
122
471
6
7
(29)
—
(38)
417
165
29
17
(38)
173
Funded status at end of year
$
209 $
84 $
(204) $
(244)
Amounts recognized in the Consolidated Balance Sheets:
Other assets
Other current liabilities
Other liabilities
$
484 $
(20)
(255)
442 $
(20)
(338)
— $
—
(204)
—
—
(244)
Net amount recognized
$
209 $
84 $
(204) $
(244)
Amounts included in accumulated other comprehensive
loss (before tax):
Net (gain) loss
Prior service benefit
$
623 $
(6)
666 $
(2)
(19) $
(177)
10
(202)
K59
Our accumulated benefit obligation for our defined benefit pension plans is $1.9 billion and $2.6 billion at
December 31, 2022 and 2021, respectively. Our unfunded pension plans, included above, which in all cases have
no assets, had projected benefit obligations of $275 million and $358 million at December 31, 2022 and 2021,
respectively, and had accumulated benefit obligations of $249 million and $332 million at December 31, 2022 and
2021, respectively.
Pension and Other Postretirement Benefit Cost Components
Pension benefits:
Service cost
Interest cost
Expected return on plan assets
Amortization of net losses
Amortization of prior service cost
Net benefit
Other postretirement benefits:
Service cost
Interest cost
Expected return on plan assets
Amortization of net losses
Amortization of prior service benefit
2022
2021
($ in millions)
2020
$
$
$
40 $
67
(213)
49
—
43 $
55
(193)
66
—
40
74
(190)
51
1
(57) $
(29) $
(24)
6 $
9
(13)
—
(25)
6 $
7
(12)
1
(26)
6
12
(14)
—
(25)
Net benefit
$
(23) $
(24) $
(21)
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
2022
Pension
Benefits
Other
Postretirement
Benefits
($ in millions)
$
$
$
6 $
(4)
(49)
—
(47) $
(104) $
(29)
—
—
25
(4)
(27)
Net (gains) losses arising during the year
Prior service effect of plan amendment
Amortization of net losses
Amortization of prior service benefit
Total recognized in other comprehensive income
Total recognized in net periodic cost and other comprehensive income
K60
Net losses arising during the year for pension benefits were due primarily to lower actual returns on plan assets
offset by an increase in discount rates. Net gains arising during the year for other postretirement benefits were due
primarily to an increase in discount rates, partially offset by lower actual returns on plan assets.
The estimated net losses and prior service credits for the pension plans that will be amortized from accumulated
other comprehensive loss into net periodic cost over the next year are $4 million. The estimated net gains and prior
service benefit for the other postretirement benefit plans that will be amortized from accumulated other
comprehensive loss into net periodic benefit over the next year is $26 million.
Pension and Other Postretirement Benefits Assumptions
Costs for pension and other postretirement benefits are determined based on actuarial valuations that reflect
appropriate assumptions as of the measurement date, ordinarily the beginning of each year. The funded status of the
plans is determined using appropriate assumptions as of each year end. A summary of the major assumptions
follows:
Pension funded status:
Discount rate
Future salary increases
Other postretirement benefits funded status:
Discount rate
Pension cost:
Discount rate - service cost
Discount rate - interest cost
Return on assets in plans
Future salary increases
Other postretirement benefits cost:
Discount rate - service cost
Discount rate - interest cost
Return on assets in plans
Health care trend rate
2022
2021
2020
5.56%
4.44%
2.97%
4.44%
2.67%
4.21%
5.45%
2.72%
2.27%
3.25%
2.45%
8.00%
4.44%
3.01%
2.13%
7.75%
6.50%
3.14%
1.95%
8.00%
4.44%
2.71%
1.57%
7.75%
6.00%
3.71%
2.92%
8.25%
4.21%
3.41%
2.69%
8.00%
6.25%
To determine the discount rates used to measure our benefit obligations, we utilize analyses in which the projected
annual cash flows from the pension and other postretirement benefit plans were matched with yield curves based on
an appropriate universe of high-quality corporate bonds. We use the results of the yield curve analyses to select the
discount rates that match the payment streams of the benefits in these plans.
We use a spot rate approach to estimate the service cost and interest cost components of net periodic benefit cost for
our pension and other postretirement benefit plans.
Health Care Cost Trend Assumptions
For measurement purposes at December 31, 2022, increases in the per capita cost of pre-Medicare covered health
care benefits were assumed to be 7.0% for 2023. We assume the rate will ratably decrease to an ultimate rate of
5.0% for 2030 and remain at that level thereafter.
K61
Assumed health care cost trend rates affect the amounts reported in the financial statements. To illustrate, a one-
percentage point change in the assumed health care cost trend would have the following effects:
Increase (decrease) in:
Total service and interest cost components
Postretirement benefit obligation
Asset Management
One-percentage Point
Increase
Decrease
($ in millions)
$
1 $
6
(1)
(5)
Thirteen investment firms manage our defined benefit pension plan’s assets under investment guidelines approved
by our Benefits Investment Committee that is composed of members of our management. Investments are restricted
to domestic and international equity securities, domestic and international fixed income securities, and unleveraged
exchange-traded options and financial futures. Limitations restrict investment concentration and use of certain
derivative investments. The target asset allocation for equity is 75% of the pension plan’s assets. Fixed income
investments must consist predominantly of securities rated investment grade or higher. Equity investments must be
in liquid securities listed on national exchanges. No investment is permitted in our securities (except through
commingled pension trust funds).
Our pension plan’s weighted-average asset allocations, by asset category, were as follows:
Domestic equity securities
Debt securities
International equity securities
Cash and cash equivalents
Total
Percentage of Plan
Assets at December 31,
2021
2022
53%
26%
20%
1%
52%
24%
23%
1%
100%
100%
The other postretirement benefit plan assets consist primarily of trust-owned variable life insurance policies with an
asset allocation at December 31, 2022 of 64% in equity securities and 36% in debt securities compared with 65% in
equity securities and 35% in debt securities at December 31, 2021. The target asset allocation for equity is between
50% and 75% of the plan’s assets.
The plans’ assumed future returns are based principally on the asset allocations and historical returns for the plans’
asset classes determined from both actual plan returns and, over longer time periods, expected market returns for
those asset classes. For 2023, we assume an 8.00% return on pension plan assets.
K62
Fair Value of Plan Assets
The following is a description of the valuation methodologies used for pension plan assets measured at fair value.
Common stock: Shares held by the plan at year end are valued at the official closing price as defined by the
exchange or at the most recent trade price of the security at the close of the active market.
Common collective trusts: The readily determinable fair value is based on the published fair value per unit
of the trusts. The common collective trusts hold equity securities, fixed income securities and cash and cash
equivalents.
Fixed income securities: Valued based on quotes received from independent pricing services or at an
estimated price at which a dealer would pay for the security at year end using observable market-based
inputs.
Commingled funds: The readily determinable fair value is based on the published fair value per unit of the
funds. The commingled funds hold equity securities.
Cash and cash equivalents: Short-term Treasury bills or notes are valued at an estimated price at which a
dealer would pay for the security at year end using observable market-based inputs; money market funds are
valued at the closing price reported on the active market on which the funds are traded.
The following table sets forth the pension plan’s assets by valuation technique level, within the fair value hierarchy.
There were no level 3 valued assets at December 31, 2022 or 2021.
Common stock
Common collective trusts:
International equity securities
Debt securities
Domestic equity securities
Fixed income securities:
Government and agencies securities
Corporate bonds
Mortgage and other asset-backed securities
Commingled funds
Cash and cash equivalents
Total investments
Level 1
December 31, 2022
Level 2
($ in millions)
Total
$
1,011 $
— $
1,011
—
—
—
—
—
—
—
55
336
291
160
158
100
28
121
—
336
291
160
158
100
28
121
55
$
1,066 $
1,194 $
2,260
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Common stock
Common collective trusts:
International equity securities
Debt securities
Domestic equity securities
Fixed income securities:
Government and agencies securities
Corporate bonds
Mortgage and other asset-backed securities
Commingled funds
Cash and cash equivalents
Total investments
Level 1
December 31, 2021
Level 2
($ in millions)
Total
$
1,383 $
— $
1,383
—
—
—
—
—
—
—
42
397
367
189
170
120
33
160
—
397
367
189
170
120
33
160
42
$
1,425 $
1,436 $
2,861
The following is a description of the valuation methodologies used for other postretirement benefit plan assets
measured at fair value.
Trust-owned life insurance: Valued at our interest in trust-owned life insurance issued by a major insurance
company. The underlying investments owned by the insurance company consist of a U.S. stock account
and a U.S. bond account but may retain cash at times as well. The U.S. stock account and U.S. bond
account are valued based on readily determinable fair values.
The other postretirement benefit plan assets consisted of trust-owned life insurance with fair values of $122 million
and $173 million at December 31, 2022 and 2021, respectively, and are valued under level 2 of the fair value
hierarchy. There were no level 1 or level 3 valued assets.
Contributions and Estimated Future Benefit Payments
In 2023, we expect to contribute approximately $20 million to our unfunded pension plans for payments to
pensioners and approximately $33 million to our other postretirement benefit plans for retiree health and death
benefits. We do not expect to contribute to our funded pension plan in 2023.
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Benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:
2023
2024
2025
2026
2027
Years 2028 – 2032
Other Postretirement Coverage
Pension
Benefits
Other
Postretirement
Benefits
($ in millions)
$
148 $
148
147
147
147
736
33
32
31
30
29
135
Under collective bargaining agreements, Norfolk Southern and certain subsidiaries participate in a multi-employer
benefit plan, which provides certain postretirement health care and life insurance benefits to eligible craft
employees. Premiums under this plan are expensed as incurred and totaled $13 million in 2022, $21 million in
2021, and $22 million in 2020.
Section 401(k) Plans
Norfolk Southern and certain subsidiaries provide Section 401(k) savings plans for employees. Under the plans, we
match a portion of employee contributions, subject to applicable limitations. Our matching contributions, recorded
as an expense, totaled $22 million in 2022, $23 million in 2021, and $21 million in 2020.
13. Stock-Based Compensation
Under the stockholder-approved LTIP, the Human Capital Management and Compensation Committee
(Committee), which is made up of nonemployee members of the Board, or the Chief Executive Officer (when
delegated authority by such Committee), may grant stock options, stock appreciation rights (SARs), restricted stock
units (RSUs), restricted shares, performance share units (PSUs), and performance shares, up to a maximum of
104,125,000 shares of our Common Stock, of which 8,238,993 remain available for future grants as of
December 31, 2022.
The number of shares remaining for issuance under the LTIP is reduced (i) by 1 for each award granted as a stock
option or stock-settled SAR, or (ii) by 1.61 for an award made in the form other than a stock option or stock-settled
SAR. Under the Board-approved Thoroughbred Stock Option Plan (TSOP), the Committee may grant stock options
up to a maximum of 6,000,000 shares of Common Stock. We use newly issued shares to satisfy any exercises and
awards under the LTIP and the TSOP.
The LTIP also permits the payment, on a current or a deferred basis and in cash or in stock, of dividend equivalents
on shares of Common Stock covered by stock options, RSUs, or PSUs in an amount commensurate with regular
quarterly dividends paid on Common Stock. With respect to stock options, if employment of the participant is
terminated for any reason, including retirement, disability, or death, we have no further obligation to make any
dividend equivalent payments. Regarding RSUs, we have no further obligation to make any dividend equivalent
payments unless employment of the participant is terminated as a result of qualifying retirement or disability.
Should an employee terminate employment, they are not required to forfeit dividend equivalent payments already
received. Outstanding PSUs do not receive dividend equivalent payments.
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The Committee granted stock options, RSUs and PSUs pursuant to the LTIP for the last three years as follows:
2022
2021
2020
Granted
Granted
Granted
Weighted-
Average
Grant-Date
Fair Value
61.32
265.21
272.22
140,080 $
180,306
58,945
Weighted-
Average
Grant-Date
Fair Value
62.49
240.09
240.72
42,770 $
183,093
50,100
Weighted-
Average
Grant-Date
Fair Value
52.05
210.11
212.66
43,770 $
178,190
78,830
Stock options
RSUs
PSUs
Recipients of certain RSUs and PSUs pursuant to the LTIP who retire prior to October 1st will forfeit awards
received in the current year. Receipt of certain LTIP awards is contingent on the recipient having executed a non-
compete agreement with the company.
We account for our grants of stock options, RSUs, PSUs, and dividend equivalent payments in accordance with
FASB ASC 718, “Compensation - Stock Compensation.” Accordingly, all awards result in charges to net income
while dividend equivalent payments, which are all related to equity classified awards, are charged to retained
income. Compensation cost for the awards is recognized on a straight-line basis over the requisite service period for
the entire award. Related compensation costs and tax benefits during the years were:
2022
2021
($ in millions)
2020
Stock-based compensation expense
Total tax benefit
$
53 $
27
54 $
34
28
44
Stock Options
Option exercise prices will be at least the higher of (i) the average of the high and low prices at which Common
Stock is traded on the grant date, or (ii) the closing price of Common Stock on the grant date. All options are
subject to a vesting period of at least one year, and the term of the option will not exceed ten years. Holders of the
options granted under the LTIP who remain actively employed receive cash dividend equivalent payments for four
years in an amount equal to the regular quarterly dividends paid on Common Stock.
For all years, options granted under the LTIP and the TSOP may not be exercised prior to the fourth and third
anniversaries of the date of grant, respectively, or if the optionee retires or dies before that anniversary date, may not
be exercised before the later of one year after the grant date or the date of the optionee’s retirement or death.
The fair value of each option awarded was measured on the date of grant using the Black-Scholes valuation model.
Expected volatility is based on implied volatility from traded options on, and historical volatility of, Common
Stock. Historical data is used to estimate option exercises and employee terminations within the valuation model.
Historical exercise data is used to estimate the average expected option term. The average risk-free interest rate is
based on the U.S. Treasury yield curve in effect at the time of grant. A dividend yield of zero was used for the LTIP
options during the vesting period. For 2022, 2021, and 2020, a dividend yield of 1.85%, 1.64%, and 1.76%,
respectively, was used for the vested period during the remaining expected option term for LTIP options.
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The assumptions for the LTIP grants for the last three years are shown in the following table:
Average expected volatility
Average risk-free interest rate
Average expected option term
A summary of changes in stock options is presented below:
Outstanding at December 31, 2021
Granted
Exercised
Forfeited
Outstanding at December 31, 2022
2022
2021
2020
27%
1.80%
6.5 years
26%
0.75%
7.5 years
22%
1.47%
7.5 years
Stock
Options
Weighted-
Average
Exercise
Price
1,095,895 $
140,080
(307,660)
(48,313)
106.58
287.31
82.72
270.92
880,002
134.66
The aggregate intrinsic value of options outstanding at December 31, 2022 was $103 million with a weighted-
average remaining contractual term of 4.1 years. Of these options outstanding, 742,810 were exercisable and had an
aggregate intrinsic value of $101 million with a weighted-average exercise price of $110.09 and a weighted-average
remaining contractual term of 2.1 years.
The following table provides information related to options exercised for the last three years:
Options exercised
Total intrinsic value
Cash received upon exercise
Related tax benefits realized
2022
2021
($ in millions)
2020
$
307,660
470,632
54 $
25
12
83 $
42
17
1,171,786
144
98
29
At December 31, 2022, total unrecognized compensation related to options granted under the LTIP was $3 million,
and is expected to be recognized over a weighted-average period of approximately 3.0 years.
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Restricted Stock Units
RSUs granted primarily have a four-year ratable restriction period and will be settled through the issuance of shares
of Common Stock. Certain RSU grants include cash dividend equivalent payments during the restriction period in
an amount equal to regular quarterly dividends paid on Common Stock. The fair value of each RSU was measured
on the date of grant as the average of the high and low prices at which Common Stock is traded on the grant date,
adjusted for the impact of dividend equivalent payments as applicable.
2022
2021
($ in millions)
2020
RSUs vested
Common Stock issued net of tax withholding
Related tax benefits realized
249,138
175,781
260,307
184,319
$
5 $
7 $
204,665
146,047
4
A summary of changes in RSUs is presented below:
Nonvested at December 31, 2021
Granted
Vested
Forfeited
Nonvested at December 31, 2022
Weighted-
Average
Grant-Date
Fair Value
RSUs
501,103 $
180,306
(249,138)
(44,890)
193.23
265.21
168.66
244.99
387,381
236.53
At December 31, 2022, total unrecognized compensation related to RSUs was $37 million, and is expected to be
recognized over a weighted-average period of approximately 2.6 years.
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.
PSUs earned
Common Stock issued net of tax withholding
Related tax benefits realized
86,420
54,651
78,727
49,967
$
1 $
1 $
235,935
156,477
7
2022
2021
($ in millions)
2020
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A summary of changes in PSUs is presented below:
Balance at December 31, 2021
Granted
Earned
Unearned
Forfeited
Balance at December 31, 2022
Weighted-
Average
Grant-Date
Fair Value
PSUs
202,930 $
58,945
(86,420)
(260)
(32,758)
197.33
272.22
161.14
161.14
254.83
142,437
236.70
At December 31, 2022, total unrecognized compensation related to PSUs granted under the LTIP was $3 million,
and is expected to be recognized over a weighted-average period of approximately 1.7 years.
Shares Available and Issued
Shares of Common Stock available for future grants and issued in connection with all features of the LTIP and the
TSOP at December 31, were as follows:
Available for future grants:
LTIP
TSOP
Issued:
LTIP
TSOP
14. Stockholders’ Equity
Common Stock
2022
2021
2020
8,238,993
436,402
8,609,075
435,867
8,995,582
435,699
503,090
35,002
632,279
72,639
1,270,208
204,102
Common Stock is reported net of shares held by our consolidated subsidiaries (Treasury Shares). Treasury Shares
at December 31, 2022 and 2021 amounted to 20,320,777, with a cost of $19 million at both dates.
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Accumulated Other Comprehensive Loss
The components of “Other comprehensive income (loss)” reported in the Consolidated Statements of
Comprehensive Income and changes in the cumulative balances of “Accumulated other comprehensive loss”
reported in the Consolidated Balance Sheets consisted of the following:
Balance
at
Beginning
of Year
Net
Income
Reclassification
Adjustments
($ in millions)
Balance
at End
of Year
Year ended December 31, 2022
Pensions and other postretirement liabilities
Other comprehensive income of equity investees
$
(356) $
(46)
20 $
14
17 $
—
(319)
(32)
Accumulated other comprehensive loss
$
(402) $
34 $
17 $
(351)
Year ended December 31, 2021
Pensions and other postretirement liabilities
Other comprehensive income of equity investees
$
(526) $
(68)
139 $
22
31 $
—
(356)
(46)
Accumulated other comprehensive loss
$
(594) $
161 $
31 $
(402)
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Other Comprehensive Income (Loss)
“Other comprehensive income (loss)” reported in the Consolidated Statements of Comprehensive Income consisted
of the following:
Pretax
Amount
Tax
(Expense)
Benefit
($ in millions)
Net-of-Tax
Amount
Year ended December 31, 2022
Net gain arising during the year:
Pensions and other postretirement benefits
Reclassification adjustments for costs included in net income
Subtotal
Other comprehensive income of equity investees
$
27 $
24
(7) $
(7)
51
17
(14)
(3)
Other comprehensive income
$
68 $
(17) $
Year ended December 31, 2021
Net gain arising during the year:
Pensions and other postretirement benefits
Reclassification adjustments for costs included in net income
Subtotal
Other comprehensive income of equity investees
$
185 $
41
(46) $
(10)
226
24
(56)
(2)
20
17
37
14
51
139
31
170
22
Other comprehensive income
$
250 $
(58) $
192
Year ended December 31, 2020
Net loss arising during the year:
Pensions and other postretirement benefits
Reclassification adjustments for costs included in net income
Subtotal
Other comprehensive income of equity investees
$
(167) $
27
42 $
(7)
(140)
2
35
—
(125)
20
(105)
2
Other comprehensive loss
$
(138) $
35 $
(103)
15. Stock Repurchase Programs
We repurchased and retired 12.6 million, 12.7 million, and 7.4 million shares of Common Stock under our stock
repurchase programs in 2022, 2021, and 2020, respectively, at a cost of $3.1 billion, $3.4 billion, and $1.4 billion,
respectively.
On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $10.0 billion of
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Common Stock beginning April 1, 2022. As of December 31, 2022, $7.5 billion remains authorized for repurchase.
Our previous share repurchase program terminated on March 31, 2022.
16. Earnings Per Share
The following table sets forth the calculation of basic and diluted earnings per share:
Basic
2021
Diluted
2021
2022
2020
($ in millions except per share amounts, shares in millions)
2022
2020
Net income
Dividend equivalent payments
$ 3,270 $ 3,005 $ 2,013 $ 3,270 $ 3,005 $ 2,013
(2)
(3)
(1)
(2)
(2)
—
Income available to common stockholders
$ 3,268 $ 3,003 $ 2,010 $ 3,269 $ 3,005 $ 2,011
Weighted-average shares outstanding
Dilutive effect of outstanding options
and share-settled awards
Adjusted weighted-average shares outstanding
234.8
246.9
255.1
234.8
246.9
255.1
0.8
235.6
1.2
248.1
1.5
256.6
Earnings per share
$ 13.92 $ 12.16 $ 7.88 $ 13.88 $ 12.11 $ 7.84
In each year, 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 the year ended December 31, 2022 and none in the years ended December 31, 2021 and 2020.
17. 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.
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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. We expect the rulings will be appealed. A trial on the state equitable relief claims has not
been scheduled. We 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 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 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 – 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
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possible that the recorded liability may not be adequate to cover the future payment of claims. Adjustments to the
recorded liability are reflected in operating expenses in the periods in which such adjustments become known.
Third-party claims – We record a liability for third-party claims including those for highway crossing accidents,
trespasser and other injuries, property damage, and lading damage. The actuarial firm assists us with the calculation
of potential liability for third-party claims, except lading damage, based upon our experience including the number
and timing of incidents, amount of payments, settlement rates, number of open claims, and legal defenses. We
adjust the liability quarterly based upon our assessment and the results of the study. Given the inherent uncertainty
in regard to the ultimate outcome of third-party claims, it is possible that the actual loss may differ from the
estimated liability recorded.
Environmental Matters
We are subject to various jurisdictions’ environmental laws and regulations. We record a liability where such
liability or loss is probable and reasonably estimable. Environmental specialists regularly participate in ongoing
evaluations of all known sites and in determining any necessary adjustments to liability estimates.
Our Consolidated Balance Sheets include liabilities for environmental exposures of $66 million at December 31,
2022, and $49 million at December 31, 2021, of which $15 million is classified as a current liability at the end of
both 2022 and 2021. At December 31, 2022, the liability represents our estimates of the probable cleanup,
investigation, and remediation costs based on available information at 85 known locations and projects compared
with 88 locations and projects at December 31, 2021. At December 31, 2022, twenty-two sites accounted for $55
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 the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 or comparable state statutes that impose joint and several liability for cleanup costs. We
calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not
solely on the basis of the potential for joint liability.
With respect to known environmental sites (whether identified by us or by the Environmental Protection Agency or
comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the
aggregate for all such sites can change over time because of the widely varying costs of currently available cleanup
techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies,
the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full
extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to
bear it), and evolving statutory and regulatory standards governing liability.
The risk of incurring environmental liability for acts and omissions, past, present, and future, is inherent in the
railroad business. Some of the commodities we transport, particularly those classified as hazardous materials, pose
special risks that we work diligently to reduce. In addition, several of our subsidiaries own, or have owned, land
used as operating property, or which is leased and operated by others, or held for sale. Because environmental
problems that are latent or undisclosed may exist on these properties, there can be no assurance that we will not
incur environmental liabilities or costs with respect to one or more of them, the amount and materiality of which
cannot be estimated reliably at this time. Moreover, lawsuits and claims involving these and potentially other
unidentified environmental sites and matters are likely to arise from time to time. The resulting liabilities could
have a significant effect on financial position, results of operations, or liquidity in a particular year or quarter.
Based on our assessment of the facts and circumstances now known, we believe we have recorded the probable and
reasonably estimable costs for dealing with those environmental matters of which we are aware. Further, we
believe that it is unlikely that any known matters, either individually or in the aggregate, will have a material
adverse effect on our financial position, results of operations, or liquidity.
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Labor Agreements
Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor
unions. Pursuant to the RLA, these agreements remain in effect until new agreements are reached, or until the
bargaining procedures mandated by the RLA 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.
After management and the unions served their formal proposals in November 2019 for changes to the collective
bargaining agreements, negotiations began in 2020 following the expiration of the last moratorium. On June 17,
2022, the National Mediation Board notified the parties that all practical methods of ending the dispute had been
exhausted without effecting a settlement and that its mediation services had been terminated. Shortly thereafter,
President Biden created PEB No. 250, effective July 18, 2022, to investigate the facts of the dispute and make
recommendations. The PEB issued its recommendations on August 16, 2022, and the parties engaged in further
negotiations. By December 2022, agreements based on the PEB’s recommendations had either been ratified or
enacted through legislative action for all twelve unions. For 2022, “Compensation and benefits” includes $54
million and “Purchased services and rents” includes $2 million of additional expenses pertaining to wages earned
prior to January 1, 2022.
While the parties are engaged in additional discussions to conclude the implementation of the recently finalized
agreements, neither party can compel mandatory bargaining around any new proposals until November 1, 2024.
That said, we understand the imperative to continue improving quality of life for our craft employees and are
actively engaged in voluntary discussions (which carry no risk of a work stoppage) with all of our unions 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 ($1.1 billion for specific perils) per
occurrence and/or policy year. In addition, we purchase insurance covering damage to property owned by us or in
our care, custody, or control. This insurance covers approximately 82% of potential losses above $75 million and
below $275 million per occurrence and/or policy year.
Purchase Commitments
At December 31, 2022, we had outstanding purchase commitments totaling $1.7 billion through 2030 for
locomotive modernizations, long-term technology support and development contracts, track material, and
intermodal equipment.
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 total purchase price for
the line and other associated real and personal property included in the transaction is approximately $1.6 billion.
The agreement is conditioned upon (i) certain changes to Ohio state law applicable to the use of the related sale
proceeds, (ii) approval by the voters of the City of Cincinnati, and (iii) the receipt of regulatory approval from the
STB. The agreement includes various termination provisions including termination at any time prior to closing by
the mutual written consent of the parties, termination at any time after December 31, 2024 by the mutual written
consent of the parties, termination by us if the STB takes action that we deem unsatisfactory, and termination by
either party if Cincinnati voter approval is not obtained on or before the later of June 30, 2025 and the calendar date
on which the polls are open for the 2025 Cincinnati primary election.
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Change-In-Control Arrangements
We have compensation agreements with certain officers and key employees that become operative only upon a
change in control of Norfolk Southern, as defined in those agreements. The agreements provide generally for
payments based on compensation at the time of a covered individual’s involuntary or other specified termination
and for certain other benefits.
Indemnifications
In a number of instances, we have agreed to indemnify lenders for additional costs they may bear as a result of
certain changes in laws or regulations applicable to their loans. Such changes may include impositions or
modifications with respect to taxes, duties, reserves, liquidity, capital adequacy, special deposits, and similar
requirements relating to extensions of credit by, deposits with, or the assets or liabilities of such lenders. The nature
and timing of changes in laws or regulations applicable to our financings are inherently unpredictable, and therefore
our exposure in connection with the foregoing indemnifications cannot be quantified. No liability has been
recorded related to these indemnifications.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
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 December 31, 2022. Based on such
evaluation, our officers have concluded that, at December 31, 2022, our disclosure controls and procedures were
effective to ensure that information required to be disclosed in our reports under the Exchange Act is recorded,
processed, summarized, and reported, within the time period specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to management, including the Chief Executive Officer and the Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal
control over financial reporting includes those policies and procedures that pertain to our ability to record, process,
summarize, and report reliable financial data. We recognize that there are inherent limitations in the effectiveness
of any internal control over financial reporting, including the possibility of human error and the circumvention or
overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only
reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the
effectiveness of internal control over financial reporting may vary over time.
Our Board of Directors, acting through its Audit Committee, is responsible for the oversight of our accounting
policies, financial reporting, and internal control. The Audit Committee of our Board of Directors is comprised of
outside directors who are independent of management. The independent registered public accounting firm and our
internal auditors have full and unlimited access to the Audit Committee, with or without management, to discuss the
adequacy of internal control over financial reporting, and any other matters which they believe should be brought to
the attention of the Audit Committee.
We have issued a report of our assessment of internal control over financial reporting, and our independent
registered public accounting firm has issued an attestation report on our internal control over financial reporting at
December 31, 2022. These reports appear in Item 8 of this report on Form 10-K.
Changes in Internal Control Over Financial Reporting
During the fourth quarter of 2022, we have not identified any changes in internal control over financial reporting
that have materially affected, or are reasonably likely to materially effect, our internal control over financial
reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Item 10. Directors, Executive Officers and Corporate Governance
In accordance with General Instruction G(3), information called for by Part III, Item 10, is incorporated herein by
reference from the information appearing under the caption “Election of the 13 Directors Named in the Proxy
Statement for a One-Year Term,” under the caption “Delinquent Section 16(a) Reports,” under the caption
“Committees of the Board,” under the caption “Shareholder Recommendations and Nominations,” and under the
caption “The Thoroughbred Code of Ethics” in our definitive Proxy Statement for our 2023 Annual Meeting of
Stockholders, which definitive Proxy Statement will be filed electronically with the SEC pursuant to Regulation
14A. The information regarding executive officers called for by Item 401 of Regulation S-K is included in Part I
hereof beginning under “Information about our Executive Officers.”
Item 11. Executive Compensation
In accordance with General Instruction G(3), information called for by Part III, Item 11, is incorporated herein by
reference from the information:
•
•
•
under the caption “Compensation of Directors;”
under the caption “Compensation Discussion and Analysis,” the information appearing in the “Summary
Compensation Table” and the “2022 Grants of Plan-Based Awards” table, including the narrative to such
tables, the “Outstanding Equity Awards at Fiscal Year-End 2022” and “Option Exercises and Stock Vested
in 2022” tables, and the tabular and narrative information appearing under the subcaptions “Retirement
Benefits,” “Deferred Compensation,” and “Potential Payments Upon a Change in Control or Other
Termination of Employment;” and,
under the captions “Compensation Committee Interlocks and Insider Participation,” “Compensation Policy
Risk Assessment,” and “Compensation Committee Report,”
in each case included in our definitive Proxy Statement for our 2023 Annual Meeting of Stockholders, which
definitive Proxy Statement will be filed electronically with the SEC pursuant to Regulation 14A.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
In accordance with General Instruction G(3), information on security ownership of certain beneficial owners and
management called for by Part III, Item 12, is incorporated herein by reference from the information appearing
under the caption “Beneficial Ownership of Stock” in our definitive Proxy Statement for our 2023 Annual Meeting
of Stockholders, which definitive Proxy Statement will be filed electronically with the SEC pursuant to Regulation
14A.
Equity Compensation Plan Information (at December 31, 2022)
Plan
Category
Equity compensation plans
approved by securities holders(2)
Equity compensation plans
not approved by securities holders
Number of
securities
to be issued upon
exercise of
outstanding
options,
warrants and
rights
(a)
Weighted-
average
exercise price
of outstanding
options,
warrants
and rights
(b)
Number of
securities
remaining
available
for future issuance
under equity
compensation
plans (1)
(c)
1,476,081 (3) $
143.28 (5)
8,238,993
150,015 (4)
92.72
436,402 (6)
Total
1,626,096
8,675,395
Includes options, RSUs and PSUs granted under LTIP that will be settled in shares of Common Stock.
(1) Excludes securities reflected in column (a).
(2) LTIP.
(3)
(4) TSOP.
(5) Calculated without regard to 746,094 outstanding RSUs and PSUs at December 31, 2022.
(6) Reflects shares remaining available for grant under TSOP.
Norfolk Southern Corporation Long-Term Incentive Plan
Established on June 28, 1983, and approved by our stockholders at their Annual Meeting held on May 10, 1984,
LTIP was adopted to promote the success of our company by providing an opportunity for non-employee Directors,
officers, and other key employees to acquire a proprietary interest in Norfolk Southern Corporation (the
Corporation). The Board of Directors amended LTIP on January 23, 2015, which amendment was approved by
shareholders on May 14, 2015, to include the reservation for issuance of an additional 8,000,000 shares of
authorized but unissued Common Stock.
The amended LTIP adopted a fungible share reserve ratio so that, for awards granted after May 13, 2010, the
number of shares remaining for issuance under the amended LTIP will be reduced (i) by 1 for each award granted as
an option or stock-settled SAR, or (ii) by 1.61 for an award made in the form other than an option or stock-settled
SAR. Any shares of Common Stock subject to options, PSUs, restricted shares, or RSUs which are not issued as
Common Stock will again be available for award under LTIP after the expiration or forfeiture of an award.
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Non-employee Directors, officers, and other key employees residing in the U.S. or Canada are eligible for selection
to receive LTIP awards. Under LTIP, the Committee, or the Corporation’s chief executive officer to the extent the
Committee delegates award-making authority pursuant to LTIP, may grant incentive stock options, nonqualified
stock options, SARs, RSUs, restricted shares, PSUs and performance shares. In addition, dividend equivalent
payments may be awarded for options, RSUs and PSUs. Awards under LTIP may be made subject to forfeiture
under certain circumstances and the Committee may establish such other terms and conditions for the awards as
provided in LTIP.
The option price is at least the higher of (i) the average of the high and low prices at which Common Stock is traded
on the date of grant, or (ii) the closing price of Common Stock on the date of the grant. All options are subject to a
vesting period of at least one year, and the term of the option will not exceed ten years. LTIP specifically prohibits
option repricing without stockholder approval, except that adjustments may be made in the event of changes in our
capital structure or Common Stock.
PSUs entitle a recipient to receive performance-based compensation at the end of a three-year cycle based on our
performance during that period. For the 2022 PSU awards, corporate performance will be based directly on return
on average capital invested, with total return to stockholders serving as a modifier, and will be settled in shares of
Common Stock.
RSUs are payable in cash or in shares of Common Stock at the end of a restriction period. During the restriction
period, the holder of the RSUs has no beneficial ownership interest in the Common Stock represented by the RSUs
and has no right to vote the shares represented by the units or to receive dividends (except for dividend equivalent
payment rights that may be awarded with respect to the RSUs). The Committee at its discretion may waive the
restriction period, but settlement of any RSUs will occur on the same settlement date as would have applied absent a
waiver of restrictions, if no performance goals were imposed. RSUs will be settled in shares of Common Stock.
Norfolk Southern Corporation Thoroughbred Stock Option Plan
Our Board of Directors adopted TSOP on January 26, 1999, to promote the success of our company by providing an
opportunity for management employees to acquire a proprietary interest in our company and thereby to provide an
additional incentive to management employees to devote their maximum efforts and skills to the advancement,
betterment, and prosperity of our company and our stockholders. Under TSOP there were 6,000,000 shares of
authorized but unissued Common Stock reserved for issuance. TSOP has not been and is not required to have been
approved by our stockholders.
Active full-time management employees residing in the U.S. or Canada are eligible for selection to receive TSOP
awards. Under TSOP, the Committee, or the Corporation’s chief executive officer to the extent the Committee
delegates award-making authority pursuant to TSOP, may grant nonqualified stock options subject to such terms
and conditions as provided in TSOP.
The option price may not be less than the average of the high and low prices at which Common Stock is traded on
the date of the grant. All options are subject to a vesting period of at least one year, and the term of the option will
not exceed ten years. TSOP specifically prohibits repricing without stockholder approval, except for capital
adjustments.
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Norfolk Southern Corporation Directors’ Restricted Stock Plan
The Plan was adopted on January 1, 1994, and was designed to increase ownership of Common Stock by our non-
employee Directors so as to further align their ownership interest in our company with that of our stockholders. The
Plan has not been and is not required to have been approved by our stockholders.
Effective January 23, 2015, the Board amended the Plan to provide that no additional awards will be made under the
Plan. Prior to that amendment, only non-employee Directors who are not and never have been employees of our
company were eligible to participate in the Plan. Upon becoming a Director, each eligible Director received a one-
time grant of 3,000 restricted shares of Common Stock. No additional shares may be granted under the Plan. No
individual member of the Board exercised discretion concerning the eligibility of any Director or the number of
shares granted.
The restriction period applicable to restricted shares granted under the Plan begins on the date of the grant and ends
on the earlier of the recipient’s death or the day after the recipient ceases to be a Director by reason of disability or
retirement. During the restriction period, shares may not be sold, pledged, or otherwise encumbered. Directors
forfeit the restricted shares if they cease to serve as a Director of our company for reasons other than their disability,
retirement, or death.
Item 13. Certain Relationships and Related Transactions, and Director Independence
In accordance with General Instruction G(3), information called for by Part III, Item 13, is incorporated herein by
reference from the information appearing under the caption “Related Persons Transactions” and under the caption
“Director Independence” in our definitive Proxy Statement for our 2023 Annual Meeting of Stockholders, which
definitive Proxy Statement will be filed electronically with the SEC pursuant to Regulation 14A.
Item 14. Principal Accountant Fees and Services
Our independent registered public accounting firm is KPMG LLP, Atlanta, GA, Auditor Firm ID: 185.
In accordance with General Instruction G(3), information called for by Part III, Item 14, is incorporated herein by
reference from the information appearing under the caption “Ratification of Appointment of Independent Registered
Public Accounting Firm” in our definitive Proxy Statement for our 2023 Annual Meeting of Stockholders, which
definitive Proxy Statement will be filed electronically with the SEC pursuant to Regulation 14A.
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PART IV
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Item 15. Exhibits and Financial Statement Schedule
(A)
The following documents are filed as part of this report:
1.
Index to Financial Statements
Page
Report of Management
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Income, Years ended December 31, 2022, 2021, and 2020
Consolidated Statements of Comprehensive Income, Years ended December 31, 2022,
2021, and 2020
Consolidated Balance Sheets at December 31, 2022 and 2021
Consolidated Statements of Cash Flows, Years ended December 31, 2022, 2021, and
2020
Consolidated Statements of Changes in Stockholders’ Equity, Years ended December 31,
2022, 2021, and 2020
Notes to Consolidated Financial Statements
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2. Financial Statement Schedule:
The following consolidated financial statement schedule should be read in connection
with the consolidated financial statements:
Index to Consolidated Financial Statement Schedule
Schedule II – Valuation and Qualifying Accounts
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Schedules other than the one listed above are omitted either because they are not required
or are inapplicable, or because the information is included in the consolidated financial
statements or related notes.
3. Exhibits
Exhibit
Number
2.1
3
(i)(a)
(i)(b)
(i)(c)
(ii)
Description
Distribution Agreement, dated as of July 26, 2004, by and among CSX Corporation, CSX
Transportation, Inc., CSX Rail Holding Corporation, CSX Northeast Holdings
Corporation, Norfolk Southern Corporation, Norfolk Southern Railway Company, CRR
Holdings LLC, Green Acquisition Corp., Conrail Inc., Consolidated Rail Corporation,
New York Central Lines LLC, Pennsylvania Lines LLC, NYC Newco, Inc., and PRR
Newco, Inc., is incorporated by reference to Exhibit 2.1 to Norfolk Southern
Corporation’s Form 8-K filed on September 2, 2004. (SEC File No. 001-08339)
Articles of Incorporation and Bylaws –
The Restated Articles of Incorporation of Norfolk Southern Corporation are incorporated
by reference to Exhibit 3(i) to Norfolk Southern Corporation’s 10-K filed on March 5,
2001. (SEC File No. 001-08339)
An amendment to the Articles of Incorporation of Norfolk Southern Corporation is
incorporated by reference to Exhibit 3(i) to Norfolk Southern Corporation’s Form 8-K
filed on May 18, 2010. (SEC File No. 001-08339)
An amendment to the Articles of Incorporation of Norfolk Southern Corporation is
incorporated by reference to Exhibit 3(i) to Norfolk Southern Corporation’s Form 10-Q
filed on July 29, 2020. (SEC File No. 001-08339)
The Bylaws of Norfolk Southern Corporation, as amended January 25, 2022, are
incorporated by reference to Exhibit 3(ii) to Norfolk Southern Corporation’s Form 8-K
filed on January 26, 2022. (SEC File No. 001-08339)
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(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
Instruments Defining the Rights of Security Holders, Including Indentures:
Indenture, dated as of January 15, 1991, from Norfolk Southern Corporation to First Trust of New
York, National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk
Southern Corporation’s Registration Statement on Form S-3 (No. 33-38595).
First Supplemental Indenture, dated May 19, 1997, between Norfolk Southern Corporation and
First Trust of New York, National Association, as Trustee, related to the issuance of notes in the
principal amount of $4.3 billion, is incorporated by reference to Exhibit 1.1(d) to Norfolk Southern
Corporation’s Form 8-K filed on May 21, 1997. (SEC File No. 001-08339)
Fourth Supplemental Indenture, dated as of February 6, 2001, between Norfolk Southern
Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes
in the principal amount of $1 billion, is incorporated by reference to Exhibit 4.1 to Norfolk
Southern Corporation’s Form 8-K filed on February 7, 2001. (SEC File No. 001-08339)
Indenture, dated August 27, 2004, among PRR Newco, Inc., as Issuer, and Norfolk Southern
Railway Company, as Guarantor, and The Bank of New York, as Trustee, is incorporated by
reference to Exhibit 4(1) to Norfolk Southern Corporation’s Form 10-Q filed on October 28, 2004.
(SEC File No. 001-08339)
First Supplemental Indenture, dated August 27, 2004, among PRR Newco, Inc., as Issuer, and
Norfolk Southern Railway Company, as Guarantor, and The Bank of New York, as Trustee, related
to the issuance of notes in the principal amount of approximately $451.8 million, is incorporated by
reference to Exhibit 4(m) to Norfolk Southern Corporation’s Form 10-Q filed on October 28, 2004.
(SEC File No. 001-08339)
Ninth Supplemental Indenture, dated as of March 11, 2005, between Norfolk Southern Corporation
and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the
principal amount of $300 million, is incorporated by reference to Exhibit 4.1 to Norfolk Southern
Corporation’s Form 8-K filed on March 15, 2005. (SEC File No. 001-08339)
Tenth Supplemental Indenture, dated as of May 17, 2005, between Norfolk Southern Corporation
and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the
principal amount of $366.6 million, is incorporated by reference to Exhibit 99.1 to Norfolk
Southern Corporation’s Form 8-K filed on May 18, 2005. (SEC File No. 001-08339)
Eleventh Supplemental Indenture, dated as of May 17, 2005, between Norfolk Southern
Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes
in the principal amount of $350 million, is incorporated by reference to Exhibit 99.2 to Norfolk
Southern Corporation’s Form 8-K filed on May 18, 2005. (SEC File No. 001-08339)
Twelfth Supplemental Indenture, dated as of August 26, 2010, between Norfolk Southern
Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes
in the principal amount of $250 million, is incorporated by reference to Exhibit 4.2 to Norfolk
Southern Corporation’s Form 8-K filed on August 26, 2010. (SEC File No. 001-08339)
Indenture, dated as of June 1, 2009, between Norfolk Southern Corporation and U.S. Bank Trust
National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern
Corporation’s Form 8-K filed on June 1, 2009. (SEC File No. 001-08339)
Second Supplemental Indenture, dated as of May 23, 2011, between the Registrant and U.S. Bank
Trust National Association, as Trustee, related to the issuance of notes in the principal amount of
$400 million, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form
8-K filed on May 23, 2011. (SEC File No. 001-08339)
Indenture, dated as of September 14, 2011, between the Registrant and U.S. Bank Trust National
Association, as Trustee, related to the issuance of notes in the principal amount of $595,504,000, is
incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on
September 15, 2011. (SEC File No. 001-08339)
Third Supplemental Indenture, dated as of September 14, 2011, between the Registrant and U.S.
Bank Trust National Association, as Trustee, related to the issuance of notes in the principal
amount of $4,492,000, is incorporated by reference to Exhibit 4.2 to Norfolk Southern
Corporation’s Form 8-K filed on September 15, 2011. (SEC File No. 001-08339)
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(x)
(y)
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(aa)
(bb)
(cc)
Fourth Supplemental Indenture, dated as of November 17, 2011, between the Registrant and U.S.
Bank Trust National Association, as Trustee, related to the issuance of two series of notes, one in
the principal amount of $500 million and one in the principal amount of $100 million, is
incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on
November 17, 2011. (SEC File No. 001-08339)
Indenture, dated as of March 15, 2012, between the Registrant and U.S. Bank Trust National
Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern
Corporation’s Form 8-K filed on March 15, 2012. (SEC File No. 001-08339)
Indenture, dated as of August 20, 2012, between the Registrant and U.S. Bank Trust National
Association, as Trustee, is incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K
filed on August 21, 2012. (SEC File No. 001-08339)
Second Supplemental Indenture, dated as of September 7, 2012, between the Registrant and U.S.
Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk
Southern Corporation’s Form 8-K filed on September 7, 2012. (SEC File No. 001-08339)
Third Supplemental Indenture, dated as of August 13, 2013, between the Registrant and U.S. Bank
Trust National Association, as Trustee, related to the issuance of notes in the principal amount of
$500,000,000, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form
8-K filed on August 13, 2013. (SEC File No. 001-08339)
Fourth Supplemental Indenture, dated as of November 21, 2013, between the Registrant and U.S.
Bank Trust National Association, as Trustee, related to the issuance of notes in the principal
amount of $400,000,000, is incorporated by reference to Exhibit 4.1 to Norfolk Southern
Corporation’s Form 8-K filed on November 21, 2013. (SEC File No. 001-08339)
Indenture, dated as of June 2, 2015, between Registrant and U.S. Bank National Association, as
Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K
filed on June 2, 2015. (SEC File No. 001-08339)
First Supplemental Indenture, dated as of June 2, 2015, between the Registrant and U.S. Bank
National Association, as Trustee, is incorporated by reference to Exhibit 4.2 to Norfolk Southern
Corporation’s Form 8-K filed on June 2, 2015. (SEC File No. 001-08339)
Second Supplemental Indenture, dated as of November 3, 2015, between the Registrant and U.S.
Bank National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk
Southern Corporation’s Form 8-K filed on November 3, 2015. (SEC File No. 001-08339)
Third Supplemental Indenture, dated as of June 3, 2016, between the Registrant and U.S. Bank
National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern
Corporation’s Form 8-K filed on June 3, 2016. (SEC File No. 001-08339)
Fourth Supplemental Indenture, dated as of May 31, 2017, between the Registrant and U.S. Bank
National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to the Corporation’s
Form 8-K filed May 31, 2017. (SEC File No. 001-08339)
Indenture, dated as of August 15, 2017, between the Registrant and U.S. Bank National
Association, as Trustee, is incorporated by reference herein to Exhibit 4.1 to Norfolk Southern
Corporation’s Form 8-K filed August 15, 2017. (SEC File No. 001-08339)
Indenture, dated as of February 28, 2018 between the Registrant and U.S. Bank National
Association, as Trustee. The Indenture is incorporated by reference herein to Exhibit 4.1 to
Norfolk Southern Corporation’s Form 8-K filed February 28, 2018. (SEC File No. 001-08339)
First Supplemental Indenture, dated as of February 28, 2018, between the Registrant and U.S. Bank
National Association, as Trustee. The Indenture is incorporated by reference herein to Exhibit 4.2
to Norfolk Southern Corporation’s Form 8-K filed February 28, 2018. (SEC File No. 001-08339)
Second Supplemental Indenture, dated as of August 2, 2018, between the Registrant and U.S. Bank
National Association, as Trustee. The Indenture is incorporated by reference herein to Exhibit 4.1
to Norfolk Southern Corporation’s Form 8-K filed August 2, 2018. (SEC File No. 001-08339)
Third Supplemental Indenture, dated as of May 8, 2019, between the Registrant and U.S. Bank
National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to the Registrant’s
Form 8-K filed on May 8, 2019 (SEC File No. 001-08339).
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10
(a)
(b)
(c)
(d)
Fourth Supplemental Indenture, dated as of November 4, 2019, between the Registrant and U.S.
Bank National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to the
Registrant’s Form 8-K filed on November 4, 2019. (SEC File No. 001-08339)
Description of the Registrant’s Common Stock Registered Under Section 12 of the Securities
Exchange Act of 1934, is incorporated by reference to Exhibit 4(hh) to Norfolk Southern
Corporation's Form 10-K filed on February 6, 2020. (SEC File No. 001-08339)
Fifth Supplemental Indenture, dated as of May 11, 2020, between the Registrant and U.S. Bank
National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to the Registrant’s
Form 8-K filed on May 11, 2020. (SEC File No. 001-08339)
Indenture dated as of May 15, 2020, between the Registrant and U.S. Bank National Association,
as Trustee is incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on May
15, 2020. (SEC File No. 001-08339)
Sixth Supplemental Indenture, dated as of May 12, 2021, between the Registrant and U.S. Bank
National Association, as Trustee, is incorporated by reference to Exhibit 4.2 to the Registrant’s
Form 8-K filed on May 12, 2021. (SEC File No. 001-08339)
Seventh Supplemental Indenture, dated as of August 25, 2021, between the Registrant and U.S.
Bank National Association, as trustee, is incorporated by reference to Exhibit 4.1 to the
Registrant’s Form 8-K filed on August 25, 2021. (SEC File No. 001-08339)
Eighth Supplemental Indenture, dated as of February 25, 2022, between the Registrant and U.S.
Bank Trust Company, National Association (as successor to U.S. Bank National Association), as
trustee, is incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-K filed on February
25, 2022.
Ninth Supplemental Indenture, dated June 13, 2022, between the Registrant and U.S. Bank Trust
Company, National Association (as successor to U.S. Bank National Association), as trustee, is
incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-K filed on June 15, 2022.
In accordance with Item 601(b)(4)(iii) of Regulation S-K, copies of other instruments of Norfolk
Southern Corporation and its subsidiaries with respect to the rights of holders of long-term debt are
not filed herewith, or incorporated by reference, but will be furnished to the Commission upon
request.
Material Contracts -
The Transaction Agreement, dated as of June 10, 1997, by and among CSX and CSX
Transportation, Inc., Registrant, Norfolk Southern Railway Company, Conrail Inc., Consolidated
Rail Corporation, and CRR Holdings LLC, with certain schedules thereto, previously filed, is
incorporated by reference to Exhibit 10(a) to Norfolk Southern Corporation’s Form 10-K filed on
February 24, 2003. (SEC File No. 001-08339)
Amendment No. 1 dated as of August 22, 1998, to the Transaction Agreement, dated as of June 10,
1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation,
Norfolk Southern Railway Company, Conrail, Inc., Consolidated Rail Corporation, and CRR
Holdings LLC, is incorporated by reference from Exhibit 10.1 to Norfolk Southern Corporation’s
Form 10-Q filed on August 11, 1999. (SEC File No. 001-08339)
Amendment No. 2 dated as of June 1, 1999, to the Transaction Agreement, dated June 10, 1997, by
and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk
Southern Railway Company, Conrail, Inc., Consolidated Rail Corporation, and CRR Holdings
LLC, is incorporated by reference from Exhibit 10.2 to Norfolk Southern Corporation’s Form 10-Q
filed on August 11, 1999. (SEC File No. 001-08339)
Amendment No. 3 dated as of June 1, 1999, and executed in April 2004, to the Transaction
Agreement, dated June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc.,
Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail, Inc., Consolidated
Rail Corporation, and CRR Holdings LLC, is incorporated by reference from Exhibit 10(dd) to
Norfolk Southern Corporation’s Form 10-Q filed on July 30, 2004. (SEC File No. 001-08339)
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Amendment No. 5 to the Transaction Agreement, dated as of August 27, 2004, by and among CSX
Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway
Company, Conrail, Inc., Consolidated Rail Corporation, and CRR Holdings LLC, is incorporated
by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 8-K filed on September 2,
2004. (SEC File No. 001-08339)
Amendment No. 6 dated as of April 1, 2007, to the Transaction Agreement, dated June 10, 1997,
by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Railway Company,
Conrail, Inc., Consolidated Rail Corporation, and CRR Holdings LLC, is incorporated by reference
to Exhibit 10.5 to Norfolk Southern Corporation’s Form 10-Q filed on July 27, 2007. (SEC File
No. 001-08339)
Shared Assets Area Operating Agreement for North Jersey, dated as of June 1, 1999, by and among
Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway
Company, with exhibit thereto, is incorporated by reference from Exhibit 10.4 to Norfolk Southern
Corporation’s Form 10-Q filed on August 11, 1999. (SEC File No. 001-08339)
Shared Assets Area Operating Agreement for Detroit, dated as of June 1, 1999, by and among
Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway
Company, with exhibit thereto, is incorporated by reference from Exhibit 10.6 to Norfolk Southern
Corporation’s Form 10-Q filed on August 11, 1999. (SEC File No. 001-08339)
Shared Assets Area Operating Agreement for South Jersey/Philadelphia, dated as of June 1, 1999,
by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern
Railway Company, with exhibit thereto, is incorporated by reference from Exhibit 10.5 to Norfolk
Southern Corporation’s Form 10-Q filed on August 11, 1999. (SEC File No. 001-08339)
Amendment No. 1, dated as of June 1, 2000, to the Shared Assets Area Operating Agreements for
North Jersey, South Jersey/Philadelphia, and Detroit, dated as of June 1, 1999, by and among
Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway
Company, with exhibits thereto, is incorporated by reference to Exhibit 10(h) to Norfolk Southern
Corporation’s Form 10-K filed on March 5, 2001. (SEC File No. 001-08339)
Amendment No. 2, dated as of January 1, 2001, to the Shared Assets Area Operating Agreements
for North Jersey, South Jersey/Philadelphia, and Detroit, dated as of June 1, 1999, by and among
Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway
Company, with exhibits thereto, is incorporated by reference to Exhibit 10(j) to Norfolk Southern
Corporation’s Form 10-K filed on February 21, 2002. (SEC File No. 001-08339)
Amendment No. 3, dated as of June 1, 2001, and executed in May of 2002, to the Shared Assets
Area Operating Agreements for North Jersey, South Jersey/Philadelphia, and Detroit, dated as of
June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk
Southern Railway Company, with exhibits thereto, is incorporated by reference to Exhibit 10(k) to
Norfolk Southern Corporation’s Form 10-K filed on February 24, 2003. (SEC File No. 001-08339)
Amendment No. 4, dated as of June 1, 2005, and executed in late June 2005, to the Shared Assets
Area Operating Agreements for North Jersey, South Jersey/Philadelphia, and Detroit, dated as of
June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk
Southern Railway Company, with exhibits thereto, is incorporated by reference to Exhibit 99 to
Norfolk Southern Corporation’s Form 8-K filed on July 1, 2005. (SEC File No. 001-08339)
Monongahela Usage Agreement, dated as of June 1, 1999, by and among CSX Transportation, Inc.,
Norfolk Southern Railway Company, Pennsylvania Lines LLC, and New York Central Lines LLC,
with exhibit thereto, is incorporated by reference from -Exhibit 10.7 to Norfolk Southern
Corporation’s Form 10-Q filed on August 11, 1999. (SEC File No. 001-08339)
The Agreement, entered into as of July 27, 1999, between North Carolina Railroad Company and
Norfolk Southern Railway Company, is incorporated by reference from Exhibit 10(i) to Norfolk
Southern Corporation’s Form 10-K filed on March 6, 2000. (SEC File No. 001-08339)
Second Amendment, dated December 28, 2009, to the Master Agreement dated July 27, 1999, by
and between North Carolina Railroad Company and Norfolk Southern Railway Company, is
incorporated by reference to Exhibit 10(q) to Norfolk Southern Corporation’s Form 10-K filed on
February 17, 2010 (Exhibits, annexes and schedules omitted. The Registrant will furnish
supplementary copies of such materials to the SEC upon request). (SEC File No. 001-08339)
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The Supplementary Agreement, entered into as of January 1, 1987, between the Trustees of the
Cincinnati Southern Railway and The Cincinnati, New Orleans and Texas Pacific Railway
Company (the latter a wholly owned subsidiary of Norfolk Southern Railway Company) –
extending and amending a Lease, dated as of October 11, 1881 – is incorporated by reference to
Exhibit 10(k) to Norfolk Southern Corporation’s Form 10-K filed on March 5, 2001. (SEC File
No. 001-08339)
Norfolk Southern Corporation Executive Management Incentive Plan, as approved by shareholders
May 14, 2015, and as amended effective March 27, 2018, and November 17, 2020, is incorporated
by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 8-K filed on January 8, 2021.
(SEC File No. 001-08339)
The Norfolk Southern Corporation Directors’ Restricted Stock Plan, adopted January 1, 1994, and
amended and restated effective as of January 23, 2015, is incorporated by reference to Exhibit 10.1
to Norfolk Southern Corporation’s Form 10-Q filed on October 25, 2017. (SEC File No.
001-08339)
Supplemental Benefit Plan of Norfolk Southern Corporation and Participating Subsidiary
Companies, adopted June 1, 1982, as amended and restated effective as of June 26, 2015, is
incorporated by reference to Exhibit 10.2 to Norfolk Southern Corporation’s Form 10-Q filed on
October 25, 2017. (SEC File No. 001-08339)
The Norfolk Southern Corporation Directors’ Charitable Award Program, as amended effective
July 2007, is incorporated by reference to Exhibit 10.6 to Norfolk Southern Corporation’s Form
10-Q filed on July 27, 2007. (SEC File No. 001-08339)
The Norfolk Southern Corporation Thoroughbred Stock Option Plan, as amended effective July 22,
2013, is incorporated by reference to Exhibit 10.2 to Norfolk Southern Corporation’s Form 10-Q
filed on July 24, 2013. (SEC File No. 001-08339)
The Norfolk Southern Corporation Executive Life Insurance Plan, as amended and restated
effective December 1, 2018, is incorporated by reference to Exhibit 10(y) to Norfolk Southern
Corporation's Form 10-K filed on February 8, 2019. (SEC File No. 001-08339)
The Norfolk Southern Corporation Long-Term Incentive Plan, as approved by shareholders May
14, 2015, and as amended July 29, 2016, November 29, 2016, November 28, 2017, November 27,
2018, and November 19, 2019, is incorporated by referenced to Exhibit 10(aa) to Norfolk Southern
Corporation’s Form 10-K filed on February 6, 2020. (SEC File No. 001-08339)
Amended and Restated Transfer and Administration Agreement dated as of May 28, 2021 is
incorporated by reference to Exhibit 10.1 on Norfolk Southern Corporation’s Form 8-K filed on
May 28, 2021. (SEC File No. 001-08339)
Amendment No. 1 dated as of May 27, 2022, to the Amended and Restated Transfer and
Administration Agreement, dated as of May 28, 2021 is incorporated by reference to Exhibit 10.1
on Norfolk Southern Corporation’s Form 10-Q filed on October 26, 2022. (SEC File No.
001-08339)
Amendment No. 2 dated as of June 30, 2022, to the Amended and Restated Transfer and
Administration Agreement, dated as of May 28, 2021 is incorporated by reference to Exhibit 10.2
on Norfolk Southern Corporation’s Form 10-Q filed on October 26, 2022. (SEC File No.
001-08339)
Asset Purchase and Sale Agreement dated November 21, 2022, by and among the Registrant as
purchaser, the Cincinnati, New Orleans and Texas Pacific Railway Company, and the Board of
Trustees of the Cincinnati Southern Railway as seller is incorporated by reference to Exhibit 2.1 on
Norfolk Southern Corporation’s Form 8-K filed on November 21, 2022. (SEC File No.
001-08339)
Directors’ Deferred Fee Plan of Norfolk Southern Corporation, adopted June 1, 1982 and as
amended and restated effective December 1, 2019, is incorporated by referenced to Exhibit 10(xx)
to Norfolk Southern Corporation’s Form 10-K filed on February 6, 2020. (SEC File No.
001-08339)
Norfolk Southern Corporation Executives’ Deferred Compensation Plan, as amended and restated
effective January 1, 2019, is incorporated by reference to Exhibit 10(ww) to Norfolk Southern
Corporation's Form 10-K filed on February 8, 2019. (SEC File No. 001-08339)
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Form of Norfolk Southern Corporation Long-Term Incentive Plan, Award Agreement for Outside
Directors for restricted stock units and deferral election form as approved by the Human Capital
Management and Compensation Committee on November 18, 2021, is incorporated by reference to
Exhibit 10(cc) to Norfolk Southern Corporation's Form 10-K filed on February 4, 2022. (SEC File
No. 001-08339)
Form of Norfolk Southern Corporation Long-Term Incentive Plan, Award Agreement for non-
qualified stock options approved by the Human Capital Management and Compensation
Committee on January 23, 2023.
Form of Norfolk Southern Corporation Long-Term Incentive Plan, Award Agreement for restricted
stock units approved by the Human Capital Management and Compensation Committee on January
23, 2023.
Form of Norfolk Southern Corporation Long-Term Incentive Plan, Award Agreement for
performance share units approved by the Human Capital Management and Compensation
Committee on January 23, 2023.
Form of Change in Control Agreement between Norfolk Southern Corporation and executive
officers who entered into a change in control agreement after 2015 is incorporated by reference to
Exhibit 10.2 to Norfolk Southern Corporation’s Form 10-Q filed on July 29, 2020. (SEC File No.
001-08339)
Credit Agreement dated as of March 27, 2020 establishing a 5 year, $800 million, unsecured
revolving credit facility of the Registrant, is incorporated by reference to Exhibit 10.1 to Norfolk
Southern Corporation’s Form 8-K filed on March 30, 2020. (SEC File No. 001-08339)
Form of Norfolk Southern Corporation Long-Term Incentive Plan, Off-Cycle Award Agreement
for Non-Qualified Stock Options as approved by the Human Capital Management and
Compensation Committee on January 23, 2023.
Form of Norfolk Southern Corporation Long-Term Incentive Plan, Off-Cycle Award Agreement
for Performance Share Units as approved by the Human Capital Management and Compensation
Committee on January 23, 2023.
Form of Norfolk Southern Corporation Long-Term Incentive Plan, Off-Cycle Award Agreement
for Restricted Stock Units as approved by the Human Capital Management and Compensation
Committee on January 23, 2023.
Offer Letter for Mark R. George, dated August 26, 2019, is incorporated by reference to Exhibit
99.1 to Norfolk Southern Corporation’s Form 8-K filed on August 28, 2019. (SEC File No.
001-08339)
Norfolk Southern Corporation Long-Term Incentive Plan Inducement Award Agreement for
Performance-Based Restricted Stock Units is incorporated by reference to Exhibit 99.2 to Norfolk
Southern Corporation’s Form 8-K filed on August 28, 2019. (SEC File No. 001-08339)
Norfolk Southern Corporation Long-Term Incentive Plan Inducement Award Agreement for
Restricted Stock Units is incorporated by reference to Exhibit 99.3 to Norfolk Southern
Corporation’s Form 8-K filed on August 28, 2019. (SEC File No. 001-08339)
Norfolk Southern Corporation Long-Term Incentive Plan Inducement Award Agreement for Non-
Qualified Stock Options is incorporated by reference to Exhibit 99.4 to Norfolk Southern
Corporation’s Form 8-K filed on August 28, 2019. (SEC File No. 001-08339)
A Lease Agreement, dated March 1, 2019, between NSRC and BA Leasing BSC, LLC. This
Agreement is incorporated by reference herein to Exhibit 10.2 to Norfolk Southern Corporation’s
Form 8-K filed March 5, 2019. (See SEC File No. 001-08339)
A Participation Agreement, dated March 1, 2019, between NSRC, BA Leasing BSC, LLC, Bank of
America, N.A. as Administrative Agent, and each of the Rent Assignees listed on Schedule II
thereto. This Agreement is incorporated by reference herein to Exhibit 10.3 to Norfolk Southern
Corporation’s Form 8-K filed March 5, 2019. (See SEC File No. 001-08339)
Guaranty of NSRC’s obligations under the Participation Agreement, Construction Agency
Agreement, Lease Agreement and related documents by Norfolk Southern Corporation. This
Agreement is incorporated by reference herein to Exhibit 10.4 to Norfolk Southern Corporation’s
Form 8-K filed March 5, 2019. (See SEC File No. 001-08339)
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31-A**
31-B**
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(B)
(C)
Consent and First Omnibus Amendment dated May 14, 2021 between NSRC, BA Leasing, BSC,
LLC, Bank of America, N.A as Administrative Agent, and each of the Rent Assignees (the
Registrant will furnish supplementally to the Securities and Exchange Commission upon request, a
copy of any omitted exhibit or schedule).
Consent and Second Omnibus Amendment dated September 10, 2021 between NSRC, BA
Leasing, BSC, LLC, Bank of America, N.A as Administrative Agent, and each of the Rent
Assignees (the Registrant will furnish supplementally to the Securities and Exchange Commission
upon request, a copy of any omitted exhibit or schedule).
Norfolk Southern Executive Severance Plan as adopted on May 14, 2020, and as amended July 28,
2020, and November 17, 2022, is incorporated by reference herein to Exhibit 10.1 to Norfolk
Southern Corporation's Form 8-K filed on November 21, 2022. (SEC File No. 001-08339)
Subsidiaries of the Registrant.
Consent of Independent Registered Public Accounting Firm.
Rule 13a-14(a)/15d-014(a) CEO Certification.
Rule 13a-14(a)/15d-014(a) CFO Certification.
Section 1350 Certifications.
The following financial information from Norfolk Southern Corporation’s Annual Report on Form
10-K for the year ended December 31, 2022, formatted in Inline Extensible Business Reporting
Language (iXBRL) includes: (i) the Consolidated Statements of Income for each of the years
ended December 31, 2022, 2021, and 2020; (ii) the Consolidated Statements of Comprehensive
Income for each of the years ended December 31, 2022, 2021, and 2020; (iii) the Consolidated
Balance Sheets at December 31, 2022 and 2021; (iv) the Consolidated Statements of Cash Flows
for each of the years ended December 31, 2022, 2021, and 2020; (v) the Consolidated Statements
of Changes in Stockholders’ Equity for each of the years ended December 31, 2022, 2021, and
2020; and (vi) the Notes to Consolidated Financial Statements.
* Management contract or compensatory arrangement.
** Filed herewith.
Exhibits.
The Exhibits required by Item 601 of Regulation S-K as listed in Item 15(A)3 are filed herewith or
incorporated by reference.
Financial Statement Schedules.
Financial statement schedules and separate financial statements specified by this Item are included
in Item 15(A)2 or are otherwise not required or are not applicable.
Exhibits 23, 31, and 32 are included in copies assembled for public dissemination. All exhibits are
included in the 2022 Form 10-K posted on our website at www.norfolksouthern.com under “Invest
in NS” and “SEC Filings” or you may request copies by writing to:
Office of Corporate Secretary
Norfolk Southern Corporation
650 West Peachtree Street NW
Atlanta, Georgia 30308-1925
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Item 16. Form 10-K Summary
Not applicable.
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POWER OF ATTORNEY
Each person whose signature appears on the next page under SIGNATURES hereby authorizes Nabanita C. Nag
and Mark R. George, or any one of them, to execute in the name of each such person, and to file, any amendments
to this report, and hereby appoints Nabanita C. Nag and Mark R. George, or any one of them, as attorneys-in-fact to
sign on his or her behalf, individually and in each capacity stated below, and to file, any and all amendments to this
report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Norfolk Southern
Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on
this 3rd day of February, 2023.
/s/ Alan H. Shaw
By: Alan H. Shaw
(President and Chief Executive Officer)
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on this 3rd
day of February, 2023, by the following persons on behalf of Norfolk Southern Corporation and in the capacities
indicated.
Signature
Title
/s/ Alan H. Shaw
(Alan H. Shaw)
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Mark R. George
(Mark R. George)
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Claiborne L. Moore
(Claiborne L. Moore)
Vice President and Controller
(Principal Accounting Officer)
/s/ Amy E. Miles
(Amy E. Miles)
Independent Chair and Director
/s/ Thomas D. Bell, Jr.
(Thomas D. Bell, Jr.)
Director
/s/ Mitchell E. Daniels, Jr.
(Mitchell E. Daniels, Jr.)
Director
/s/ Marcela E. Donadio
(Marcela E. Donadio)
Director
/s/ John C. Huffard, Jr.
(John C. Huffard, Jr.)
Director
/s/ Christopher T. Jones
(Christopher T. Jones)
Director
/s/ Thomas C. Kelleher
(Thomas C. Kelleher)
Director
/s/ Steven F. Leer
(Steven F. Leer)
Director
/s/ Michael D. Lockhart
(Michael D. Lockhart)
Director
/s/ Claude Mongeau
(Claude Mongeau)
Director
/s/ Jennifer F. Scanlon
(Jennifer F. Scanlon)
Director
/s/ James A. Squires
(James A. Squires)
/s/ John R. Thompson
(John R. Thompson)
Director
Director
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Norfolk Southern Corporation and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2022, 2021, and 2020
($ in millions)
Schedule II
Additions charged to:
Beginning
Balance
Expenses
Other
Accounts
Deductions
Ending
Balance
Year ended December 31, 2022
Current portion of casualty and
other claims included in
accounts payable
Casualty and other claims
included in other liabilities
Year ended December 31, 2021
Current portion of casualty and
other claims included in
accounts payable
Casualty and other claims
included in other liabilities
Year ended December 31, 2020
Current portion of casualty and
other claims included in
accounts payable
Casualty and other claims
included in other liabilities
$
166
$
43
$
88 (2) $
127 (3) $
170
170
147 (1)
—
99 (4)
218
$
182
$
20
$
80 (2) $
116 (3) $
166
169
77 (1)
—
76 (4)
170
$
212
$
27
$
81 (2) $
138 (3) $
182
171
80 (1)
—
82 (4)
169
(1)
(2)
Includes adjustments for changes in estimates for prior years’ claims.
Includes revenue refunds and overcharges provided through deductions from operating revenues and transfers
from other accounts.
(3) Payments and reclassifications to/from accounts payable.
(4) Payments and reclassifications to/from other liabilities.
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