What changed in this filing

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Item 1. Financial Statements

2023-10-25 compared with 2023-07-27 · 101 added, 69 removed, 473 unchanged (26% of the section changed)

2 unchanged sentences

Consolidated Statements of Income

Second Quarter First Six Months

Third Quarter First Nine Months

2023 2022 2023 2022

21 unchanged sentences

Consolidated Statements of Comprehensive Income

Second Quarter First Six Months

Third Quarter First Nine Months

2023 2022 2023 2022

3 unchanged sentences

Pension and other postretirement benefit (expense) ( 6 ) 6 ( 17 ) 17

Other comprehensive income of equity investees 1 2 — 8

Other comprehensive income (loss) of equity investees ( 1 ) 5 ( 1 ) 13

Other comprehensive income (loss), before tax ( 7 ) 11 ( 18 ) 30

6 unchanged sentences

Consolidated Balance Sheets

September 30,

2023 December 31,

36 unchanged sentences

Consolidated Statements of Cash Flows

First Six Months

First Nine Months

($ in millions)

62 unchanged sentences

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

Comprehensive income:

Net income 478 478

Other comprehensive loss ( 5 ) ( 5 )

Total comprehensive income 473

Dividends on common stock,

$ 1.35 per share

( 305 ) ( 305 )

Share repurchases ( 1 ) ( 9 ) ( 195 ) ( 205 )

Stock-based compensation 12 12

Balance at September 30, 2023 $ 227 $ 2,163 $ ( 364 ) $ 10,589 $ 12,615

See accompanying notes to consolidated financial statements.

27 unchanged sentences

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

Comprehensive income:

Net income 958 958

Other comprehensive income 11 11

Total comprehensive income 969

Dividends on common stock,

$ 1.24 per share

( 290 ) ( 290 )

Share repurchases ( 3 ) ( 31 ) ( 796 ) ( 830 )

Stock-based compensation 22 ( 1 ) 21

Balance at September 30, 2022 $ 233 $ 2,181 $ ( 377 ) $ 10,987 $ 13,024

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Notes to Consolidated Financial Statements

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly Norfolk Southern Corporation (Norfolk Southern) and subsidiaries’ (collectively, NS, we, us, and our) financial position at June 30, 2023 and December 31, 2022, our results of operations, comprehensive income and changes in stockholders’ equity for the second quarters and first six months of 2023 and 2022, and our cash flows for the first six months of 2023 and 2022 in conformity with U.S.

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly Norfolk Southern Corporation (Norfolk Southern) and subsidiaries’ (collectively, NS, we, us, and our) financial position at September 30, 2023 and December 31, 2022, our results of operations, comprehensive income and changes in stockholders’ equity for the third quarters and first nine months of 2023 and 2022, and our cash flows for the first nine months of 2023 and 2022 in conformity with U.S.

Generally Accepted Accounting Principles (GAAP).

2 unchanged sentences

The following table disaggregates our revenues by major commodity group:

Second Quarter First Six Months

Third Quarter First Nine Months

2023 2022 2023 2022

15 unchanged sentences

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 June 30, 2023 and December 31, 2022.

We had no material remaining performance obligations at September 30, 2023 and December 31, 2022.

We may provide customers ancillary services, such as switching, demurrage and other incidental activities, under their transportation contracts.

The revenues associated with these distinct performance obligations are recognized when the services are performed or as contractual obligations are met.

These revenues are included within each of the commodity groups and represent approximately 4 % and 6 % of total “Railway operating revenues” on the Consolidated Statements of Income for the second quarters of 2023 and 2022, respectively, and 5 % and 7 % for the first six months of 2023 and 2022, respectively.

These revenues are included within each of the commodity groups and represent approximately 5 % of total “Railway operating revenues” on the Consolidated Statements of Income for the third quarter and first nine months of 2023, and 7 % for the third quarter and first nine months of 2022.

Revenues related to interline transportation services that involve another railroad are reported on a net basis.

2 unchanged sentences

“Accounts receivable – net” on the Consolidated Balance Sheets includes both customer and non-customer receivables as follows:

September 30,

2023 December 31, 2022

4 unchanged sentences

Non-customer receivables include non-revenue-related amounts due from other railroads, governmental entities, and others.

We do no t have any material contract assets or liabilities at June 30, 2023 and December 31, 2022.

We do no t have any material contract assets or liabilities at September 30, 2023 and December 31, 2022.

Stock-Based Compensation

Second Quarter First Six Months

Third Quarter First Nine Months

2023 2022 2023 2022

3 unchanged sentences

During 2023, we granted stock options, restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP), as follows:

Second Quarter First Six Months

Third Quarter First Nine Months

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

3 unchanged sentences

Stock Options

Second Quarter First Six Months

Third Quarter First Nine Months

2023 2022 2023 2022

6 unchanged sentences

Certain RSU grants include cash dividend equivalent payments during the restriction period in an amount equal to the regular quarterly dividends paid on Common Stock.

Second Quarter First Six Months

Third Quarter First Nine Months

2023 2022 2023 2022

7 unchanged sentences

The market condition fair value was measured on the date of grant using a Monte Carlo simulation model.

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

First Six Months

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

First Nine Months

($ in millions)

2 unchanged sentences

Related tax benefits realized $ — $ 1

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 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 the third quarter of 2022 we recognized a $ 136 million benefit in “Income taxes” with a corresponding reduction in “Deferred income taxes.”

Earnings Per Share

1 unchanged sentence

Basic Diluted

Second Quarter

Third Quarter

2023 2022 2023 2022

9 unchanged sentences

Basic Diluted

First Six Months

First Nine Months

2023 2022 2023 2022

8 unchanged sentences

Earnings per share $ 5.71 $ 10.49 $ 5.70 $ 10.45

During the second quarters and first six months of 2023 and 2022, dividend equivalent payments were made to certain holders of stock options and RSUs.

During the third quarters and first nine months of 2023 and 2022, dividend equivalent payments were made to certain holders of stock options and RSUs.

For purposes of computing basic earnings per share, dividend equivalent payments made to holders of stock options and RSUs were deducted from net income to determine income available to common stockholders.

2 unchanged sentences

The dilution calculations exclude options having exercise prices exceeding the average market price of Common Stock as follows:

0.1 million in both the second quarters and first six months ended June 30, 2023 and 2022.

0.1 million in the third quarters and first nine months ended September 30, 2023 and 2022.

Accumulated Other Comprehensive Loss

4 unchanged sentences

($ in millions)

Six months ended June 30, 2023

Nine months ended September 30, 2023

Pensions and other postretirement liabilities $ ( 319 ) $ — $ ( 13 ) $ ( 332 )

1 unchanged sentence

Accumulated other comprehensive loss $ ( 351 ) $ — $ ( 13 ) $ ( 364 )

Six months ended June 30, 2022

Nine months ended September 30, 2022

Pensions and other postretirement liabilities $ ( 356 ) $ — $ 14 $ ( 342 )

2 unchanged sentences

Stock Repurchase Program

We repurchased and retire d 1.3 million and 5.7 million shares of Common Stock under our stock repurchase programs in the first six months of 2023 and 2022, respectively, at a cost of $ 303 million and $ 1.5 billion.

We repurchased and retire d 2.2 million and 9.2 million shares of Common Stock under our stock repurchase programs in the first nine months of 2023 and 2022, respectively, at a cost of $ 508 million and $ 2.3 billion, inclusive of excise taxes.

Investment in Conrail

2 unchanged sentences

We have a 58 % economic and 50 % voting interest in the jointly-owned entity, and CSX has the remainder of the economic and voting interests.

Our investment in Conrail was $ 1.6 billion at June 30, 2023 and December 31, 2022.

Our investment in Conrail was $ 1.6 billion at both September 30, 2023 and December 31, 2022.

CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of Norfolk Southern Railway Company (NSR) and CSX Transportation, Inc.

1 unchanged sentence

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 $ 39 million and $ 36 million for the second quarters of 2023 and 2022, respectively, and $ 84 million and $ 74 million for the first six months of 2023 and 2022, respectively.

Our equity in Conrail’s earnings, net of amortization, was $ 19 million and $ 11 million for the second quarters of 2023 and 2022, respectively, and $ 35 million and $ 25 million for the first six months of 2023 and 2022, respectively.

“Purchased services and rents” and “Fuel” include expenses payable to CRC for operation of the Shared Assets Areas totaling $ 39 million and $ 42 million for the third quarters of 2023 and 2022, respectively, and $ 123 million and $ 116 million for the first nine months of 2023 and 2022, respectively.

Our equity in Conrail’s earnings, net of amortization, was $ 15 million for both the third quarters of 2023 and 2022 and $ 50 million and $ 40 million for the first nine months of 2023 and 2022, respectively.

These amounts partially offset the costs of operating the Shared Assets Areas and are included in “Purchased services and rents.”

“Other liabilities” includes $ 534 million at both June 30, 2023 and December 31, 2022 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of 1.31 %.

“Other liabilities” includes $ 534 million at both September 30, 2023 and December 31, 2022 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of 1.31 %.

Investment in TTX

1 unchanged sentence

We have a 19.78 % ownership interest in TTX.

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” These expenses amounted to $ 69 million and $ 66 million for the second quarters of 2023 and 2022, respectively, and $ 135 million and $ 130 million for the first six months of 2023 and 2022, respectively.

Our equity in TTX’s earnings partially offsets these costs and totaled $ 12 million and $ 11 million for the second quarters of 2023 and 2022, respectively, and $ 21 million in both the first six months of 2023 and 2022.

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” These expenses amounted to $ 66 million and $ 63 million for the third quarters of 2023 and 2022, respectively, and $ 201 million and $ 193 million for the first nine months of 2023 and 2022, respectively.

Our equity in TTX’s earnings partially offsets these costs and totaled $ 13 million and $ 18 million for the third quarters of 2023 and 2022, respectively, and $ 34 million and $ 39 million in the first nine months of 2023 and 2022, respectively.

In August 2023, we issued $ 600 million of 5.05 % senior notes due 2030 and $ 1.0 billion of 5.35 % senior notes due 2054.

In May 2023, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $ 400 million.

Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes.

The term of our accounts receivable securitization program was extended in the second quarter and now expires in May 2024.

The term of our accounts receivable securitization program expires in May 2024.

Amounts received under this facility are accounted for as borrowings.

At June 30, 2023, we had $ 130 million (at an average variable interest rate of 5.81 %) outstanding which is included within “Short-term debt” and our available borrowing capacity was $ 270 million.

We had no amounts outstanding under this program at September 30, 2023 and our available borrowing capacity was $ 400 million.

At December 31, 2022, we had $ 100 million (at an average variable interest rate of 5.05 %) outstanding and our available borrowing capacity was $ 300 million.

Our accounts receivable securitization program was supported by $ 840 million and $ 883 million in receivables at June 30, 2023 and December 31, 2022, respectively, which are included in “Accounts receivable – net”.

Our accounts receivable securitization program was supported by $ 911 million and $ 883 million in receivables at September 30, 2023 and December 31, 2022, respectively, which are included in “Accounts receivable – net”.

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

7 unchanged sentences

Pension Benefits Other Postretirement Benefits

Second Quarter

Third Quarter

2023 2022 2023 2022

7 unchanged sentences

Pension Benefits Other Postretirement Benefits

First Six Months

First Nine Months

2023 2022 2023 2022

10 unchanged sentences

The carrying value of corporate-owned life insurance is recorded at cash surrender value and, accordingly, approximates fair value.

There are no other assets or liabilities measured at fair value on a recurring basis at June 30, 2023 or December 31, 2022.

There are no other assets or liabilities measured at fair value on a recurring basis at September 30, 2023 or December 31, 2022.

The carrying amounts and estimated fair values, based on Level 1 inputs, of long-term debt consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Value Carrying

13 unchanged sentences

Financial Impact

Although we cannot predict the final outcome or estimate the reasonably possible range of loss with certainty, during the first six months of 2023, we have recognized $ 803 million of expense for costs directly attributable to the Incident ($ 416 million of which was recognized in the second quarter), which is presented in “Eastern Ohio incident” on the Consolidated Statements of Income.

During the first six months of 2023, our cash expenditures attributable to the Incident were $ 287 million, which are presented in “Net cash provided by operating activities” on the Consolidated Statements of Cash Flows.

The difference between the recognized expense and cash expenditures during the first six months of 2023, $ 516 million, is primarily comprised of our current estimates of probable and reasonably estimable liabilities principally associated with environmental matters and legal proceedings, which are discussed in further detail below.

While certain costs recorded during the first six months of 2023 may be recoverable from third parties or under our insurance policies in effect at the date of the Incident, no estimate of potential recoveries has yet been recorded.

Any amounts recoverable from third parties or under our insurance policies will be reflected in future periods in which recovery is considered probable.

Although we cannot predict the final outcome or estimate the reasonably possible range of loss with certainty, during the first nine months of 2023 we have recognized $ 966 million of expense for costs directly attributable to the Incident ($ 163 million of which was recognized in the third quarter), which is presented in “Eastern Ohio incident” on the Consolidated Statements of Income.

These amounts are net of $ 25 million in insurance recoveries recorded during the third quarter related to the Incident.

During the first nine months of 2023, our cash expenditures attributable to the Incident were $ 511 million, which are presented in “Net cash provided by operating activities” on the Consolidated Statements of Cash Flows.

The difference between the recognized expense and cash expenditures during the first nine months of 2023, $ 455 million comprises primarily of our current estimates of probable and reasonably estimable liabilities principally associated with environmental matters and legal proceedings, which are discussed in further detail below.

While certain costs recorded during the first nine months of 2023 may be recoverable under our insurance policies in effect at the date of the Incident or, from third parties, to date we have recognized $ 25 million in insurance recoveries.

Any additional amounts recoverable under our insurance policies or from third parties will be reflected in future periods in which recovery is considered probable.

For additional information about our insurance coverage, see “Insurance” below.

Environmental Matters – In response to the Incident, we have been working with federal, state, and local officials such as the U.S.

Environmental Protection Agency (EPA), the Ohio EPA, and the Pennsylvania Department of Environmental Protection (DEP), to conduct environmental response and remediation activities, including but not limited to, air monitoring, indoor air quality screenings, municipal water and private water well testing, residential, commercial, and agricultural soil sampling, surface water and groundwater sampling, re-routing a local waterway around the affected site, capturing and shipping stormwater that enters the impacted derailment site to proper disposal facilities, and excavating and disposing of potentially affected soil at hazardous waste landfills or incinerators.

EPA issued a Unilateral Administrative Order (UAO) on February 21, 2023, containing various requirements, including the submission of numerous work plans to assess and remediate various environmental media and

performance of certain removal actions at the affected site.

Environmental Protection Agency (EPA), the Ohio EPA, the Pennsylvania Department of Environmental Protection (DEP), and the Columbiana County Health District to conduct environmental response and remediation activities, including but not limited to, air monitoring, indoor air quality screenings, municipal water and private water well testing, residential, commercial, and agricultural soil sampling, surface water and groundwater sampling, re-routing a local waterway around the affected site, capturing and shipping stormwater that enters the impacted derailment site to proper disposal facilities, and excavating and disposing of potentially affected soil at hazardous waste landfills or incinerators.

EPA issued a Unilateral Administrative Order (UAO) on February 21, 2023, containing various

requirements, including the submission of numerous work plans to assess and remediate various environmental media and performance of certain removal actions at the affected site.

On February 24, 2023, we submitted to the U.S.

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We have filed an answer, and on June 30, 2023, we filed a third-party complaint bringing in numerous parties involved in the Incident.

In connection with the foregoing items, we recognized $ 581 million of expense during the first six months of 2023 ($ 264 million of which was recognized in the second quarter), of which $ 208 million was paid during the first six months of 2023, related to probable obligations that are reasonably estimable, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 410-30, “Environmental Obligations.” Our current estimate includes ongoing and future environmental cleanup activities and remediation efforts, governmental oversight costs (including those incurred by the U.S.

In connection with the foregoing items, we recognized $ 699 million of expense during the first nine months of 2023 ($ 118 million of which was recognized in the third quarter), of which $ 372 million was paid during the first nine months of 2023, related to probable obligations that are reasonably estimable, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 410-30, “Environmental Obligations.” Our current estimate includes ongoing and future environmental cleanup activities and remediation efforts, governmental oversight costs (including those incurred by the U.S.

EPA and the Ohio EPA), and other related costs, including those in connection with the DOJ Complaint (including potential civil penalties related to violations of the Clean Water Act).

Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, when activities at the site transition from extensive soil and water disposal and air monitoring activities to additional assessment and investigative efforts, the nature and extent of required future cleanup activities (including those resulting from additional assessment and investigative activities that will be conducted at the site), the extent and duration of governmental oversight, and the success of current cleanup techniques, amongst other factors.

As clean-up efforts progress and more information is available, including any federal and state requirements, we will review these estimates and revise as appropriate.

Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, when activities at the site transition from extensive soil and water disposal and air monitoring activities to additional assessment and investigative efforts, the nature and extent of required future cleanup activities (including those resulting from additional assessment and investigative activities that will be conducted at the site), and the extent and duration of governmental oversight, amongst other factors.

As clean-up efforts progress and more information is available, we will review these estimates and revise as appropriate.

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

• There is a consolidated putative class action pending in the Northern District of Ohio (Eastern Division) alleging various claims, including negligence, gross negligence, strict liability, and nuisance, and seeking as relief compensatory and punitive damages, medical monitoring and business losses.

The putative classes are defined by reference to a class area covering a 30-mile radius.

• There is a consolidated putative class action pending in the Northern District of Ohio (Eastern Division) in which plaintiffs allege various claims, including negligence, gross negligence, strict liability, and nuisance, and seeking as relief compensatory and punitive damages, medical monitoring and business losses.

The putative class is defined by reference to a class area covering a 30 -mile radius.

On July 12, 2023, we filed a third-party complaint bringing in numerous parties involved in the Incident.

The court in the putative class action has established a fact discovery deadline in January 2024.

Additional lawsuits are also pending in the same court and others, such as lawsuits pending in the Western District of Pennsylvania brought by three local school districts and including claims such as negligence, nuisance, trespass, and future health monitoring.

On August 22, 2023, the three school districts voluntarily dismissed their actions.

On the same day, those three Pennsylvania school districts along with four others filed a class action lawsuit on behalf of school students alleging negligence, nuisance, and trespass, and seeking damages and health monitoring.

The putative class action and individual lawsuits are collectively referred to herein as the Incident Lawsuits.

In accordance with ASC 450, “ Contingencies ,” we have recognized a $ 105 million loss during the first six months of 2023 with respect to the Incident Lawsuits ($ 77 million of which was recognized during the second quarter based on updated information and related discussions, including currently estimated liabilities related to tailored property value and drinking water protection programs being negotiated with relevant stakeholders, including the Ohio AG, to assist affected residents and businesses).

We have made $ 25 million in payments during the first six months of 2023 with respect to these matters.

• Securities litigation and demands, including a securities class action lawsuit under the Securities Exchange Act of 1934 filed in the Southern District of Ohio alleging multiple securities law violations, a securities class action lawsuit under the Securities Act of 1933 filed in the Southern District of New York alleging misstatements in association with our debt offerings, and multiple shareholder document and litigation demand letters that we have received (collectively, the Shareholder Matters).

No responsive pleadings have been filed yet, although we are seeking to transfer the matter filed in the Southern District of Ohio to the Northern District of Georgia.

In accordance with ASC 450, “ Contingencies ,” we have recognized a $ 105 million loss during the first nine months of 2023 with respect to the Incident

We have made $ 30 million in payments during the first nine months of 2023 with respect to these matters.

• We have received securities litigation and demands and multiple shareholder document and litigation demand letters, including a securities class action lawsuit under the Securities Exchange Act of 1934 initially filed in the Southern District of Ohio alleging multiple securities law violations but since transferred to the Northern District of Georgia, and a securities class action lawsuit under the Securities Act of 1933 filed in the Southern District of New York alleging misstatements in association with our debt offerings, (collectively, the Shareholder Matters).

No responsive pleadings have been filed yet with respect to the Shareholder Matters.

If and when we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it will be accrued through a charge to earnings and, if material, disclosed.

Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known.

Because the final outcome of any of these legal proceedings cannot be predicted with certainty, unfavorable or unexpected developments or outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter.

Because the final outcome of any of these legal proceedings cannot be predicted with certainty, developments related to the progress of such legal proceedings or other unfavorable or unexpected developments or outcomes could result in additional costs or new or additionally accrued amounts that could be material to our results of operations in a particular year or quarter.

For legal proceedings where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed.

In addition to the costs associated with environmental matters and legal proceedings and claims, we incurred other expenses directly related to the Incident of $ 117 million during the first six months of 2023 ($ 75 million of which was recognized in the second quarter) pertaining to legal fees, community support, and other response-related activities.

The reserves established by us during the first six months of 2023 do not include any estimate of loss for the following additional items, for which we believe a loss is either not probable or not reasonably estimable for the reasons noted:

In addition to the costs associated with environmental matters and legal proceedings and claims, we incurred other expenses directly related to the Incident of $ 187 million during the first nine months of 2023 ($ 70 million of which was recognized in the third quarter) pertaining to legal fees, community support, and other response-related activities.

The reserves established by us during the first nine months of 2023 do not include any estimate of loss for the following additional items, for which we believe a loss is either not probable or not reasonably estimable for the reasons noted:

(i) the overall cost to us for the healthcare fund being developed in conjunction with relevant stakeholders, including the Ohio AG, for affected residents (given the preliminary nature of such discussions), which amount will impact our loss contingency analysis with respect to the Incident Lawsuits described above, or (ii) any fines or penalties (in excess of the reserves established for Clean Water Act-related civil penalties) that may be imposed as a result of the Incident Inquiries and Investigations, as more specifically set forth and defined below (the outcome of which are uncertain at this time).

Additionally, as noted above, amounts recognized during the first six months of 2023 do not include potential recoveries from third parties, including but not limited to the impact of our insurance coverage, which may apply to various Incident-related expenses or liabilities, as more specifically set forth further below (given the preliminary nature of any related discussions with our insurers).

Additionally, with the exception of amounts recognized during the first nine months of 2023, potential recoveries under our insurance coverage, which may apply to various Incident-related expenses or liabilities as more specifically set forth further below, have not yet been recorded (given the preliminary nature of discussions with our insurers).

No amounts have been recorded related to potential recoveries from other third parties, which may reduce amounts payable by our insurers under our applicable insurance coverage.

Inquiries and Investigations

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We are cooperating with all inquiries and investigations, including responding to civil and criminal subpoenas and other requests for information (the aforementioned inquiries and investigations, as well as the civil and criminal subpoenas are collectively referred to herein as the Incident Inquiries and Investigations).

The outcome of any current or future Incident Inquiries and Investigations is uncertain at this time, including any related fines, penalties or settlements.

Therefore, our expenses for the first six months of 2023 do not include estimates of the total amount that we may incur for any such fines, penalties or settlements.

Aside from the FRA Safety Assessment (defined and described below), the outcome of any current or future Incident Inquiries and Investigations is uncertain at this time, including any related fines, penalties or settlements.

Therefore, our expenses for the first nine months of 2023 do not include estimates of the total amount that we may incur for any such fines, penalties or settlements.

Subsequent to the Incident, investigators from the NTSB examined railroad equipment and track conditions;

1 unchanged sentence

and completed certain interviews (the NTSB Investigation).

The NTSB issued a preliminary report indicating that one of the cars involved

in the derailment appeared to have a wheel bearing in the final stage of overheat failure moments before the derailment.

The NTSB issued a preliminary report indicating that one of the cars involved in the derailment appeared to have a wheel bearing in the final stage of overheat failure moments before the derailment.

Their preliminary report also indicates that the rail crew was operating the train within our rules;

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The overall scope of the FRA Safety Assessment was to examine our safety culture.

We expect the FRA to issue a public report in early August including its findings and recommended corrective actions.

The FRA issued a public report in early August and included its findings and recommended corrective actions.

The FRA Incident Investigation remains ongoing.

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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 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.

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.

1 unchanged sentence

On April 19, 2023, the court disposed of all remaining state equitable relief claims.

of appeal was filed on May 16, 2023.

The court’s dismissals were appealed and the case is currently before the United States Court of Appeals for the Fourth Circuit.

We will continue to vigorously defend the lawsuit and, although it is reasonably possible we could incur a loss in the case, we believe that we will prevail.

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Environmental specialists regularly participate in ongoing evaluations of all known sites and in determining any necessary adjustments to liability estimates.

In addition to environmental claims associated with the Incident, our Consolidated Balance Sheets include liabilities for other environmental exposures of $ 60 million at June 30, 2023 and $ 66 million at December 31, 2022, of which $ 15 million is classified as a current liability at the end of both periods.

At June 30, 2023, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 82 known locations and projects compared with 85 locations and projects at December 31, 2022.

At June 30, 2023, nineteen sites accounted for $ 49 million of the liability, and no individual site was considered to be material.

In addition to environmental claims associated with the Incident, our Consolidated Balance Sheets include liabilities for other environmental exposures of $ 59 million at September 30, 2023 and $ 66 million at December 31, 2022, of which $ 15 million is classified as a current liability at the end of both periods.

At September 30, 2023, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 81 known locations and projects compared with 85 locations and projects at December 31, 2022.

At September 30, 2023, twenty sites accounted for $ 47 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 ;

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Our ability to recoup any of the foregoing amounts under our insurance coverage, including any amounts that may be recoverable with respect to the Incident, is subject to certain conditions, including but not limited to our insurers’ reservation of rights to further investigate and contest coverage, the express restrictions and sub-limits of coverage, and various policy exclusions, including those for some governmental fines or penalties, as well as potential coverage disputes over payments we make as part of our effort to mitigate the impact to the community and affected residents.

We are working with our insurers to confirm applicable coverage with respect to the Incident, but no estimate for potential insurance recovery has been accrued at this time.

We are working with our insurers to confirm applicable coverage with respect to the Incident, and we have recognized $ 25 million in insurance recoveries in the first nine months of 2023.

Asset Purchase and Sale Agreement

4 unchanged sentences

On June 28, 2023, we entered into an amended and restated asset purchase and sale agreement which increased the purchase price by $ 500,000 and clarified the impact of Cincinnati Voter Approval on the closing timeline.

If Cincinnati Voter Approval is obtained in November 2023, the transaction will close on the later of the date that is five days after all conditions have been satisfied (including potential STB regulatory approval) or March 15, 2024.

Following the June 2023 amendment, the total purchase price for the line and other associated real and personal property included in the transaction is expected to be between $ 1.6 billion and $ 1.7 billion.

On September 20, 2023, the STB authorized the acquisition of the Cincinnati Southern Railway by Norfolk Southern Railway Company.

If Cincinnati Voter Approval is obtained in November 2023, the transaction will close on the later of the date that is five days after all conditions have been satisfied or March 15, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements