What changed in this filing

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Item 1. Financial Statements

2024-10-22 compared with 2024-07-26 · 139 added, 100 removed, 523 unchanged (31% of the section changed)

2 unchanged sentences

Consolidated Statements of Income

Second Quarter First Six Months

Third Quarter First Nine Months

2024 2023 2024 2023

22 unchanged sentences

Consolidated Statements of Comprehensive Income

Second Quarter First Six Months

Third Quarter First Nine Months

2024 2023 2024 2023

3 unchanged sentences

Pension and other postretirement expense ( 2 ) ( 6 ) ( 15 ) ( 17 )

Other comprehensive income of equity investees 1 1 1 —

Other comprehensive income (loss) of equity investees — ( 1 ) 1 ( 1 )

Other comprehensive loss, before tax ( 2 ) ( 7 ) ( 14 ) ( 18 )

6 unchanged sentences

Consolidated Balance Sheets

September 30,

2024 December 31,

15 unchanged sentences

Accounts payable $ 1,614 $ 1,638

Short-term debt 400 —

Income and other taxes 179 262

18 unchanged sentences

Consolidated Statements of Cash Flows

First Six Months

First Nine Months

($ in millions)

15 unchanged sentences

Acquisition of assets of CSR

( 1,643 ) ( 5 )

Property sales and other transactions 527 62

44 unchanged sentences

Balance at June 30, 2024 $ 227 $ 2,208 $ ( 330 ) $ 10,874 $ 12,979

Comprehensive income:

Net income 1,099 1,099

Other comprehensive loss ( 2 ) ( 2 )

Total comprehensive income 1,097

Dividends on common stock,

$ 1.35 per share

( 305 ) ( 305 )

Stock-based compensation 1 15 ( 2 ) 14

Balance at September 30, 2024 $ 228 $ 2,223 $ ( 332 ) $ 11,666 $ 13,785

See accompanying notes to consolidated financial statements.

27 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.

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, 2024 and December 31, 2023, our results of operations, comprehensive income and changes in stockholders’ equity for the second quarters and first six months of 2024 and 2023, and our cash flows for the first six months of 2024 and 2023 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, 2024 and December 31, 2023, our results of operations, comprehensive income and changes in stockholders’ equity for the third quarters and first nine months of 2024 and 2023, and our cash flows for the first nine months of 2024 and 2023 in conformity with U.S.

Generally Accepted Accounting Principles (GAAP).

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

Certain prior year information has been reclassified to conform to current year presentation.

Railway Operating Revenues

The following table disaggregates our revenues by major commodity group:

Second Quarter First Six Months

Third Quarter First Nine Months

2024 2023 2024 2023

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, 2024 and December 31, 2023.

We had no material remaining performance obligations at September 30, 2024 and December 31, 2023.

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 % of total “Railway operating revenues” on the Consolidated Statements of Income for the second quarters of 2024 and 2023 and first six months of 2024, an d 5 % for the first six months of 2023.

These revenues are included within each of the commodity groups and represent approximately 4 % of total “Railway operating revenues” on the Consolidated Statements of Income for the third quarter and first nine months of 2024 and 5 % for the third quarter and first nine months of 2023.

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,

2024 December 31, 2023

3 unchanged sentences

Accounts receivable – net $ 1,302 $ 1,147

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, 2024 and December 31, 2023.

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

We do no t have any material contract assets or liabilities at September 30, 2024 and December 31, 2023.

Stock-Based Compensation

Second Quarter First Six Months

Third Quarter First Nine Months

2024 2023 2024 2023

1 unchanged sentence

Stock-based compensation expense $ ( 5 ) $ 10 $ 27 $ 32

Total tax benefit 3 3 8 9

Total tax benefit (expense) ( 1 ) 2 7 11

During 2024, 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

2024 2023 2024 2023

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

2024 2023 2024 2023

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 2024 and 2023.

First Six Months

No PSUs were earned or paid out during the third quarters of 2024 and 2023.

First Nine Months

($ in millions)

2 unchanged sentences

Related tax benefits realized $ — $ —

Sales of Railway Lines

On September 5, 2024, we consummated a transaction with the Virginia Passenger Rail Authority (VPRA) to sell a railway line (“Manassas Line”) to support the expansion of passenger rail service in the Commonwealth of Virginia.

The total purchase price to be paid by the VPRA is $ 357 million and we received $ 315 million in cash proceeds at closing.

The remainder of the proceeds are expected to be received by the end of 2027.

The total gain recognized as a result of the transaction was $ 323 million.

Additionally, the VPRA also agreed to exchange a railway line (“V-Line”) in consideration for the land and above ground assets described as the “Seminary Passage.” This transaction is expected to close in the fourth quarter of 2024.

On September 6, 2024, we consummated an agreement with the City of Charlotte to sell a railway line between Charlotte and Mecklenburg County, NC in exchange for $ 74 million.

The cash proceeds from the transaction were received at closing and the transaction resulted in a gain of $ 57 million.

Gains on the disposal of the operating land included as part of the railway line sales discussed above are included in “Materials and other” expenses on the Consolidated Statement of Income.

The gains from these transactions are reflected in “Gains and losses on properties” and cash proceeds are included in “Property sales and other transactions” on the Consolidated Statement of Cash Flows.

Restructuring and Other Charges

During the first quarter of 2024, we commenced voluntary and involuntary separation programs to reduce our management workforce.

During the third quarter of 2024, we made strategic decisions to rationalize certain software development projects that had not been placed into service and which resulted in a write-down of these assets.

Additionally, we discontinued the use of our Triple Crown Road Railer assets, and, with a planned disposition of the entire asset class, we incurred expenses to reflect these assets at their net realizable value.

As a result, “Restructuring and other charges” includes $ 60 million of expenses related to these efforts for both the third quarter and the first nine months of 2024.

In the first quarter of 2024, we commenced voluntary and involuntary separation programs to reduce our management workforce.

Through these programs, approximately 350 management employees were separated from service by May 2024.

“Restructuring and other charges” in the first six months includes $ 61 million in “Total railway operating expenses” related to these programs, which primarily consists of separation payments to the impacted management employees.

“Restructuring and other charges” reflects separation payments and other benefits to the impacted management employees and amounted to $ 61 million for the first nine months of 2024.

Additionally, we evaluated the impact of these separation programs on our pension and other postretirement benefit plans, as further discussed in Note 12.

In March 2024, we appointed John Orr as Executive Vice President and Chief Operating Officer of the Company.

“Restructuring and other charges” in the first six months also includes $ 35 million of costs related to this appointment, including an agreement with his previous employer, Canadian Pacific Kansas City (CPKC), that resulted in a $ 25 million payment and certain commercial considerations to CPKC in exchange for a waiver of his noncompete provisions.

During the first six months of 2024, we recorded a $ 27 million deferred income tax benefit as a result of a subsidiary restructuring.

“Restructuring and other charges” in the first nine months also includes $ 35 million of costs related to this appointment, including an agreement with his previous employer, Canadian Pacific Kansas City (CPKC), that resulted in a $ 25 million payment and certain commercial considerations to CPKC in exchange for a waiver of his non-compete provisions.

During the first nine months of 2024, we recorded a $ 27 million deferred income tax benefit as a result of a subsidiary restructuring.

Earnings Per Share

1 unchanged sentence

Basic Diluted

Second Quarter

Third Quarter

2024 2023 2024 2023

9 unchanged sentences

Basic Diluted

First Six Months

First Nine Months

2024 2023 2024 2023

8 unchanged sentences

Earnings per share $ 8.35 $ 5.71 $ 8.34 $ 5.70

During the second quarters and first six months of 2024 and 2023, dividend equivalent payments were made to certain holders of stock options and RSUs.

During the third quarters and first nine months of 2024 and 2023, 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 the second quarters and first six months ended June 30, 2024 and 2023.

0.1 million in the third quarters and first nine months ended September 30, 2024 and 2023.

Accumulated Other Comprehensive Loss

4 unchanged sentences

($ in millions)

Six months ended June 30, 2024

Nine months ended September 30, 2024

Pensions and other postretirement liabilities $ ( 292 ) $ ( 7 ) $ ( 6 ) $ ( 305 )

1 unchanged sentence

Accumulated other comprehensive loss $ ( 320 ) $ ( 6 ) $ ( 6 ) $ ( 332 )

Six months ended June 30, 2023

Nine months ended September 30, 2023

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

2 unchanged sentences

Stock Repurchase Program

We did not repurchase any shares of Common Stock under our stock repurchase program in the first six months of 2024, while we repurchased and retire d 1.3 million shares of Common Stock at a cost of $ 305 million in the first six months of 2023, inclusive of excise taxes.

We did not repurchase any shares of Common Stock under our stock repurchase program in the first nine months of 2024, while we repurchased and retire d 2.2 million shares of Common Stock at a cost of $ 508 million in the first nine months of 2023, 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 $ 1.7 billion at both June 30, 2024 and December 31, 2023.

Our investment in Conrail was $ 1.7 billion at both September 30, 2024 and December 31, 2023.

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 $ 50 million and $ 39 million for the second quarters of 2024 and 2023,

respectively, and $ 102 million and $ 84 million for the first six months of 2024 and 2023, respectively.

Our equity in Conrail’s earnings, net of amortization, was $ 22 million and $ 19 million for the second quarters of 2024 and 2023, respectively, and $ 43 million and $ 35 million for the first six months of 2024 and 2023, respectively.

“Purchased services and rents” and “Fuel” include expenses payable to CRC for operation of the Shared Assets Areas totaling $ 44 million and $ 39 million for the third quarters of 2024 and 2023, respectively, and $ 146 million and $ 123 million for the first nine months of 2024 and 2023, respectively.

Our equity in Conrail’s earnings, net of amortization, was $ 19 million and $ 15 million for the third quarters of 2024 and 2023, respectively, and $ 62 million and $ 50 million for the first nine months of 2024 and 2023, 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, 2024 and December 31, 2023 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, 2024 and December 31, 2023 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 $ 74 million and $ 69 million for the second quarters of 2024 and 2023, respectively, and $ 148 million and $ 135 million for the first six months of 2024 and 2023, respectively.

Our equity in TTX’s earnings partially offsets these costs and totaled $ 14 million and $ 12 million for the second quarters of 2024 and 2023, respectively, and $ 27 million and $ 21 million for the first six months of 2024 and 2023, respectively.

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” These expenses amounted to $ 72 million and $ 66 million for the third quarters of 2024 and 2023, respectively, and $ 220 million and $ 201 million for the first nine months of 2024 and 2023, respectively.

Our equity in TTX’s earnings partially offsets these costs and totaled $ 13 million for both the third quarters of 2024 and 2023 and $ 40 million and $ 34 million for the first nine months of 2024 and 2023, respectively.

Acquisition of Assets of Cincinnati Southern Railway

3 unchanged sentences

The asset purchase is reflected in “Properties less accumulated depreciation” on the Consolidated Balance Sheet and is distinctly identified in the “Cash flows from investing activities” section of the Consolidated Statement of Cash Flows.

The lease expense recognized pursuant to the previous operating lease agreement was $ 6 million in the second quarter of 2023, and $ 5 million and $ 12 million for the first six months of 2024 and 2023, respectively.

The lease expense recognized pursuant to the previous operating lease agreement was $ 7 million in the third quarter of 2023, and $ 5 million and $ 19 million for the first nine months of 2024 and 2023, respectively.

In June 2024, we entered into an agreement that provides us the ability to issue up to $ 800 million of unsecured commercial paper and is backed by our credit agreement.

The unsecured short-term commercial paper program provides for borrowing at prevailing rates and includes covenants.

At June 30, 2024, we had no outstanding commercial paper.

During July 2024, we issued $ 300 million of unsecured commercial paper.

At September 30, 2024, we had no outstanding commercial paper.

In May 2024, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $ 400 million.

2 unchanged sentences

Amounts received under this facility are accounted for as borrowings.

We had $ 400 million (at an interest rate of 6.06 %) outstanding under this program at June 30, 2024, which is included within “Short-term debt”, and no amounts outstanding under this program at December 31, 2023.

We had fully utilized our borrowing capacity under the program at June 30, 2024, while we had $ 400 million of available borrowing capacity at December 31, 2023.

Our accounts receivable securitization program was supported by $ 847 million and $ 903 million in receivables at June 30, 2024 and December 31, 2023, respectively, which are included in “Accounts receivable – net”.

During July 2024, we repaid $ 400 million that was outstanding under this program.

We had no amounts outstanding under this program and our available borrowing capacity was $ 400 million at both September 30, 2024, and December 31, 2023.

Our accounts receivable securitization program was supported by $ 836 million and $ 903 million in receivables at September 30, 2024 and December 31, 2023, respectively, which are included in “Accounts receivable – net”.

In January 2024, we renewed and amended our $ 800 million credit agreement.

The amended agreement expires in January 2029, and provides for borrowings at prevailing rates and includes covenants.

We had no amounts

outstanding under this facility at either June 30, 2024 or December 31, 2023, and we are in compliance with all of its covenants.

We had no amounts outstanding under this facility at either September 30, 2024 or December 31, 2023, and we are in compliance with all of its covenants.

In January 2024, we entered into a term loan credit agreement that established a 364-day , $ 1.0 billion, unsecured delayed draw term loan facility under which we can borrow for general corporate purposes.

The term loan credit agreement provides for borrowing at prevailing rates and includes covenants that align with the $ 800 million credit agreement.

We had no amounts outstanding under this facility at June 30, 2024.

We had no amounts outstanding under this facility at September 30, 2024.

During July 2024, we extended the availability period of the term loan agreement.

If left undrawn, the term loan will be available until October 2024.

The term loan expired undrawn on October 22, 2024.

Pensions and Other Postretirement Benefits

6 unchanged sentences

Pension Benefits Other Postretirement Benefits

Second Quarter

Third Quarter

2024 2023 2024 2023

5 unchanged sentences

Amortization of prior service benefit — — ( 6 ) ( 6 )

Curtailment gain — — ( 20 ) —

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

Pension Benefits Other Postretirement Benefits

First Six Months

First Nine Months

2024 2023 2024 2023

11 unchanged sentences

In accordance with Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) Topic 715, “ Compensation-Retirement Benefits ,” we evaluated whether a curtailment of our pension and other postretirement benefit plans had occurred.

While the reduction in our workforce did no t result in a curtailment to our pension benefit plans, a curtailment to our other postretirement benefit plan did occur as the future years of service of plan participants were reduced in excess of 10 %.

While the reduction in our workforce did no t result in

a curtailment to our pension benefit plans, a curtailment to our other postretirement benefit plan did occur as the future years of service of plan participants were reduced in excess of 10 %.

As a result, we remeasured the other postretirement benefit obligation using a discount rate of 5.74 % and recorded an $ 11 million reduction to the obligation.

1 unchanged sentence

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 fair values of “Cash and cash equivalents,” “Accounts receivable – net,” and “Accounts payable,” approximate carrying values because of the short maturity of these financial instruments.

The carrying value of corporate-owned life insurance (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 June 30, 2024 or December 31, 2023.

There are no other assets or liabilities measured at fair value on a recurring basis at September 30, 2024 or December 31, 2023.

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Value Carrying

15 unchanged sentences

Although we cannot predict the final outcome or estimate the reasonably possible range of loss related to the Incident with certainty, we have accrued amounts for probable and reasonably estimable liabilities for those environmental and non-environmental matters described below.

As of June 30, 2024 and December 31, 2023, our probable and reasonably estimable liabilities principally associated with environmental matters and legal proceedings were $ 858 million and $ 464 million, respectively, which are discussed in further detail below.

As of September 30, 2024 and December 31, 2023, our probable and reasonably estimable liabilities principally associated with environmental matters and legal proceedings were $ 800 million and $ 464 million, respectively, which are discussed in further detail below.

These amounts represent the difference between the recognized expense and cash expenditures (net of insurance recoveries) related to the Incident as of each respective date.

From the inception of the Incident, we have

recognized a total of $ 1.6 billion in expenses directly attributable to the Incident, which included $ 365 million of insurance recoveries from claims made under our insurance policies.

We have also recorded a deferred tax asset of $ 232 million and $ 249 million at June 30, 2024 and December 31, 2023, respectively, related to the Incident expecting that certain expenses will be deductible for tax purposes in future periods or offset with insurance recoveries.

From the inception of the Incident, we have recognized a total of $ 1.5 billion in net expenses directly attributable to the Incident, which included $ 653 million of insurance recoveries from claims made under our insurance policies.

We have also recorded a deferred tax asset of $ 197 million and $ 249 million at September 30, 2024 and December 31, 2023, respectively, related to the Incident expecting that certain expenses will be deductible for tax purposes in future periods or offset with insurance recoveries.

Certain costs incurred thus far and related to the Incident may be recoverable under our insurance policies in effect at the date of the Incident or from third parties.

2 unchanged sentences

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, the Pennsylvania Department of Environmental Protection (DEP), and the Columbiana County Health District to conduct environmental response and remediation activities, some of which have concluded and some which are continuing, 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.

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, some of which have concluded and some which are continuing, including but not limited to, excavating and disposing of potentially affected soil (based on sampling results), 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, and capturing and shipping stormwater that enters the impacted derailment site to proper disposal facilities.

EPA issued a Unilateral Administrative Order (UAO) on February 21, 2023, containing various requirements, including the submission of numerous work plans to assess and remediate various environmental media and performance of certain removal actions at the affected site.

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

EPA our Notice of Intent to Comply with the UAO and we continue to conduct environmental assessment and remediation, as required by U.S.

EPA as well as the Ohio EPA and Pennsylvania DEP, pursuant to the UAO and the directives issued thereunder.

EPA our Notice of Intent to Comply with the UAO.

We continue to conduct environmental assessment and remediation activities pursuant to the UAO and the directives issued thereunder, including sampling and excavating soil (if needed based on sampling results) at the affected site, including areas beneath our tracks.

On October 18, 2023, the U.S.

EPA issued a second unilateral order under Section 311(c) of the Clean Water Act (CWA), requiring preparation of additional environmental work plans.

EPA issued a second unilateral order under Section 311(c) of the Clean Water Act (CWA), requiring preparation of additional environmental work plans to address local waterways.

We timely submitted our Notice of Intent to Comply with the CWA order and continue to complete environmental assessment and remediation as required by the U.S.

7 unchanged sentences

We have filed an answer, and discovery is ongoing in the Ohio AG case.

On June 30, 2023, we filed third-party claims against certain railcar defendants and shippers involved in the Incident.

June 30, 2023, we filed third-party claims against certain railcar defendants and shippers involved in the Incident.

The Court dismissed the third party claims on March 6, 2024, and on March 26, 2024, we filed a motion requesting the Court to enter partial final judgment as to the third party claims.

2 unchanged sentences

The proposed Consent Decree also requires the Company to pay a civil penalty of $ 15 million for alleged violations of the CWA.

Other provisions of the proposed Consent Decree relate to

injunctive relief for safety, community support, and environmental support, which provisions, if approved by the court, will be in effect between five years to twenty years .

The proposed Consent Decree is subject to a mandatory public comment period and then will be subject to review by the judge, prior to entry of the Consent Decree.

The Ohio AG did not join this settlement.

In accordance with FASB ASC 410-30 “ Environmental Liabilities, ” as of June 30, 2024 and December 31, 2023, we had recognized probable and reasonably estimable liabilities in connection with the foregoing environmental matters of $ 265 million and $ 319 million, respectively, and which are primarily included in “Other current liabilities” on the Consolidated Balance Sheet.

We recognized $ 53 million and $ 264 million of expense during the second quarters of 2024 and 2023, respectively, and $ 113 million and $ 581 million during the first six months of 2024 and 2023, respectively.

We made $ 80 million and $ 177 million in payments during the second quarters of 2024 and 2023, respectively, and $ 167 million and $ 208 million during the first six months of 2024 and 2023, respectively, related to these matters.

Other provisions of the proposed Consent Decree relate to injunctive relief for safety, community support, and environmental support, which provisions, if approved by the court, will be in effect between five years to twenty years .

The proposed Consent Decree was subject to a mandatory public comment period, which ended on August 2, 2024, and DOJ filed a motion on October 10, 2024 seeking entry of the Consent Decree.

The Ohio AG did not join this settlement and its claims remain outstanding and are proceeding.

In accordance with FASB ASC 410-30 “ Environmental Liabilities, ” as of September 30, 2024 and December 31, 2023, we had recognized probable and reasonably estimable liabilities in connection with the foregoing environmental matters of $ 264 million and $ 319 million, respectively, and which are primarily included in “Other current liabilities” on the Consolidated Balance Sheet.

We recognized $ 51 million and $ 118 million of expense during the third quarters of 2024 and 2023, respectively, and $ 164 million and $ 699 million during the first nine months of 2024 and 2023, respectively.

We made $ 52 million and $ 164 million in payments during the third quarters of 2024 and 2023, respectively, and $ 219 million and $ 372 million during the first nine months of 2024 and 2023, respectively, related to these matters.

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 proposed DOJ Consent Decree (including civil penalties related to alleged violations of the CWA).

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, the nature and extent of required future cleanup and removal activities (including those resulting from soil, water, sediment, and air assessment and investigative activities that are currently being, and will continue to be, conducted at the site), and the extent and duration of governmental oversight, amongst other factors.

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, the nature and extent of required future cleanup and removal activities (including those resulting from soil, water, and sediment remediation activities that are currently being, and will continue to 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.

Since the date of the Incident, we have recognized a total of $ 949 million in expenses related to environmental matters, of which $ 684 million has been paid.

Since the date of the Incident, we have recognized a total of $ 1.0 billion in expenses related to environmental matters, of which $ 736 million has been paid.

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.

6 unchanged sentences

The settlement agreement does not resolve, and expressly preserves, our third-party claims in the third-party complaint.

The court granted preliminary approval of the settlement on May 21, 2024.

The court will consider whether to grant final approval of the settlement on September 25, 2024.

If approved by the court, the terms of the agreement will resolve all class action claims within a 20 -mile radius from the derailment and, for those residents who choose to participate, personal injury claims within a 10 -mile radius from the derailment.

Subject to final court approval, payments to class members under the settlement could begin by the end of this year.

The court granted final approval of the settlement on September 27, 2024, which was subsequently appealed to the Sixth Circuit.

The settlement agreement will resolve all class action claims within a 20 -mile radius from the derailment and, for those residents who choose to participate, personal injury claims within a 10 -mile radius from the derailment.

We made a partial payment of the

settlement on October 11, 2024 in the amount of $ 310 million and the remaining balance could be paid as early as November 8, 2024;

however, that payment, including timing, is dependent upon resolution of any appeals to the settlement.

Another putative class action is pending in the Western District of Pennsylvania, brought by Pennsylvania school districts and students.

3 unchanged sentences

Combined with the Ohio Class Action, these lawsuits are collectively referred to herein as the Incident Lawsuits.

In accordance with FASB ASC 450, “ Contingencies, ” as of June 30, 2024 and December 31, 2023, we had accruals for probable and reasonably estimable liabilities principally associated with the Incident Lawsuits and related contingencies of $ 644 million and $ 82 million, respectively.

In accordance with FASB ASC 450, “ Contingencies, ” as of September 30, 2024 and December 31, 2023, we had accruals for probable and reasonably estimable liabilities principally associated with the Incident Lawsuits and related contingencies of $ 688 million and $ 82 million, respectively.

For the reasons set forth below, our estimated loss or range of loss with respect to the Incident Lawsuits may change from time to time, and it is reasonably possible that we will incur actual losses in excess of the amounts currently accrued and such additional amounts may be material.

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• We have received securities and derivative litigation and multiple shareholder document and litigation demand letters, including a securities class action lawsuit under the Securities Exchange Act of 1934 (Exchange Act) initially filed in the Southern District of Ohio alleging multiple securities law violations but since transferred to the Northern District of Georgia, a securities class action lawsuit under the Securities Act of 1933 (Securities Act) filed in the Southern District of New York alleging misstatements in association with our debt offerings, and six shareholder derivative complaints filed in Virginia state court asserting claims for breach of fiduciary duties, waste of corporate assets, and unjust enrichment in connection with safety of the Company’s operations, among other claims (collectively, the Shareholder Matters).

On February 2, 2024, defendants filed a motion to dismiss the complaint in the Securities Act lawsuit, the court held oral argument regarding the motion to dismiss on May 29, 2024, and a decision is pending.

On February 2, 2024, defendants filed a motion to dismiss the complaint in the Securities Act lawsuit, and on July 26, 2024, the magistrate judge issued a Report and Recommendation to the district judge, recommending that the defendants’ motion to dismiss be granted in part and denied in part.

Defendants’ objections to the Report and Recommendation were filed on August 9, 2024, and plaintiffs’ response to defendants’ objections were filed on August 23, 2024.

A decision on the motion to dismiss remains pending.

The plaintiffs filed an amended complaint in the Exchange Act lawsuit on April 25, 2024, and the defendants filed a motion to dismiss on June 24, 2024.

A decision on the motion to dismiss remains pending.

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

• We are also named as a defendant in various other Incident-related litigation involving other potentially affected third parties.

We do not currently believe the outcome of these proceedings will have a material effect on our financial position, results of operations, or liquidity.

With respect to the Incident-related litigation and regulatory matters, we record a liability for loss contingencies through a charge to earnings when we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated and disclose such liability if we conclude it to be material.

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, 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.

year or quarter.

In addition, if it is reasonably possible that we will incur Incident-related losses in excess of the amounts currently recorded as a loss contingency, we disclose the potential range of loss, if reasonably estimable, or we disclose that we cannot reasonably estimate such an amount at this time.

For Incident-related litigation and regulatory matters where a loss may be reasonably possible, but not probable, or probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed.

Our estimates of probable losses and reasonably possible losses are based upon currently available information and involve significant judgement and a variety of assumptions, given that (1) these legal and regulatory proceedings are in early stages;

Our estimates of probable losses and reasonably possible losses are based upon currently available information and involve significant judgement and a variety of assumptions, given that (1) certain legal and regulatory proceedings are in early stages;

(2) discovery may not be completed;

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The NTSB issued over 30 recommendations, of which four were issued to Norfolk Southern.

The NTSB continues to work on a safety culture investigation, and a report on this part of the investigation is expected to be issued by the fall of 2024.

The NTSB continues to work on a safety culture investigation, and a report on this part of the investigation is expected to be issued by the spring of 2025.

Concurrent with the NTSB Investigation, the FRA also investigated the Incident.

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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.

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

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

On August 29, 2024, the United States Court of Appeals for the Fourth Circuit affirmed the opinion of the lower court.

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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Job-related personal injury and occupational claims are subject to the Federal Employer’s Liability Act (FELA), which is applicable only to railroads.

The variability inherent in FELA’s fault-based tort system could result in actual costs being different from the liability recorded.

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.

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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 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.

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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 $ 58 million at June 30, 2024 and $ 60 million at December 31, 2023, of which $ 15 million is classified as a current liability at the end of both periods.

At June 30, 2024, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 77 known locations and projects compared with 81 locations and projects at December 31, 2023.

At June 30, 2024, twenty sites accounted for $ 47 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 $ 57 million at September 30, 2024 and $ 60 million at December 31, 2023, of which $ 15 million is classified as a current liability at the end of both periods.

At September 30, 2024, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 75 known locations and projects compared with 81 locations and projects at December 31, 2023.

At September 30, 2024, twenty-one 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 ;

however, some costs will be paid out over a longer period.

At eight locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under CERCLA or comparable state statutes that impose joint and several liability for cleanup costs.

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.

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Approximately 80 % of our railroad employees are covered by collective bargaining agreements with various labor unions.

Pursuant to the Railway Labor Act, these agreements remain in effect until new agreements are reached, or until the bargaining procedures mandated by the Railway Labor Act are completed.

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.

Under current moratorium provisions, neither party can serve notice to compel a new round of mandatory collective bargaining until November 1, 2024, and any agreements reached would take effect no earlier than January 1, 2025.

When the moratoriums expire, the parties will exchange bargaining notices and commence direct negotiations.

Even if the parties are unable to reach voluntary agreement during this first phase of negotiations, self-help, e.g., a strike or other work stoppage, related to this collective bargaining process remains prohibited by law until a lengthy series of additional procedures mandated by the Railway Labor Act, including federal mediation, are exhausted.

Under current moratorium provisions, neither party can serve notice to compel a new round of mandatory collective bargaining until November 1, 2024.

That said, over the past several months, we engaged in voluntary local discussions with our labor unions and, as a result, reached local tentative agreements with a majority of our unions prior to the opening of the national bargaining round.

These new tentative agreements are subject to ratification by union membership.

If ratified, they will take effect January 1, 2025, and will foreclose the parties from serving new notices to compel mandatory bargaining until November 1, 2029.

We will continue local discussions with the unions with whom we have not yet reached agreement.

If no local agreement has been reached with one or more of these unions when the moratoriums in their contracts expire on November 1, 2024, the parties will exchange bargaining notices and commence mandatory direct negotiations as prescribed under the RLA.

Even if the parties are unable to reach voluntary agreement during this first phase of RLA-bargaining, self-help (e.g., a strike or other work stoppage) related to this collective bargaining process remains prohibited by law until a lengthy series of additional procedures mandated by the RLA, including federal mediation, are exhausted.

We purchase insurance covering legal liabilities for bodily injury and property damage to third parties.

Our current liability insurance provides limits for approximately 93 % of covered losses above $ 75 million and below $ 734 million per occurrence and/or policy year.

liability insurance provides limits for approximately 93 % of covered losses above $ 75 million and below $ 734 million per occurrence and/or policy year.

In addition, we purchase insurance for damage to property owned by us or in our care, custody, or control.

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Some (re)insurers have questioned certain payments we have made, for example, as part of our effort to respond to, mitigate, and compensate for the impact to the community and affected residents and businesses.

We are pursuing coverage with respect to the Incident, and we have recognized $ 365 million in insurance recoveries (including $ 156 million and $ 264 million during the second quarter and first six months of 2024, respectively), principally from excess liability (re)insurers.

At June 30, 2024, $ 119 million was outstanding and is included in “Accounts receivable – net” on the Consolidated Balance Sheets.

With the exception of amounts that have been previously recognized, potential recoveries under our insurance coverage have not yet been recorded (given the insurers ongoing evaluation of our claims).

We are pursuing coverage with respect to the Incident, and we have recognized $ 653 million in insurance recoveries (including $ 288 million and $ 552 million during the third quarter and first nine months of 2024, respectively, and $ 25 million during the third quarter and first nine months of 2023), principally from excess liability (re)insurers.

At September 30, 2024, $ 223 million was outstanding and is included in “Accounts receivable – net” on the Consolidated Balance Sheets while no amounts were outstanding at December 31, 2023.

With the exception of amounts that have been recognized, potential recoveries under our insurance coverage have not yet been recorded (given the insurers ongoing evaluation of our claims).

In addition, 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.

New Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280):

In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

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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