What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-10 compared with 2024-02-05 · 247 added, 179 removed, 1043 unchanged (29% of the section changed)

14 unchanged sentences

Notes to Consolidated Financial Statements

Index to Financial Statement Schedule s in Item 15

Index to Financial Statement Schedules in Item 15

Report of Management

7 unchanged sentences

KPMG LLP, independent registered public accounting firm, has audited our financial statements and issued an opinion on our internal control over financial reporting as of December 31, 2024.

Shaw /s/ Mark R.

George /s/ Claiborne L.

George Claiborne L.

President and Executive Vice President Vice President and

Chief Executive Officer and Chief Financial Officer Controller

George /s/ Jason A.

Zampi /s/ Claiborne L.

George Jason A.

Zampi Claiborne L.

President and Executive Vice President and Chief Vice President and

Chief Executive Officer Financial Officer Controller

Report of Independent Registered Public Accounting Firm

27 unchanged sentences

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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate 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 critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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

11 unchanged sentences

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.

Eastern Ohio Incident

As discussed in Note 17 to the consolidated financial statements, the Company has recognized $464 million of liabilities attributable to the Eastern Ohio Incident (the Incident) as of December 31, 2023.

For the year-ended December 31, 2023, the Company has recognized $1,116 million of expenses for costs directly attributable to the Incident, which is presented net of $101 million in insurance recoveries in the Consolidated Statements of Income.

As of December 31, 2023, the Company recognized probable and reasonably estimable liabilities for environmental matters and legal proceedings and claims (non-environmental).

The Company also disclosed certain legal proceedings and claims (non-environmental) where a loss is reasonably possible, but not probable, or is probable but not reasonably estimable, for which no accrual was established.

In addition, as a result of the Incident, the Company disclosed that it is subject to inquiries and investigations by various government authorities and regulatory agencies.

We identified the evaluation of the recognition and measurement of liabilities for environmental matters, legal proceedings and claims (non-environmental) and inquiries and investigations arising from the Incident and the sufficiency of the related disclosures as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate certain judgments and assumptions made by management when assessing the likelihood and magnitude of losses incurred and determining whether reasonable estimates of losses can be made.

Specifically, the key judgments and assumptions related to the following:

• the nature and extent of future cleanup and removal activities and the extent and duration of governmental oversight

• the final outcome of the legal proceedings and claims (non-environmental)

• the final outcome of any current or future inquiries and investigations arising from the Incident.

The following are the primary procedures that we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s processes to 1) recognize and measure liabilities associated with environmental matters, legal proceedings and claims (non-environmental), and inquiries and investigations and 2) prepare the related financial statement disclosures.

We evaluated the Company's assessment of the likelihood and magnitude of losses being incurred including whether the estimates of losses are reasonably estimable for liabilities associated with the Incident by:

• assessing the estimates of environmental cleanup and remediation liabilities by comparing them to incurred costs

• inquiring of management regarding the expected timeline for both probable and reasonably estimable costs for soil and water disposal and air monitoring activities as well as related governmental oversight

• obtaining a legal confirmation letter from external legal counsel, and inquiring of the Company’s internal and external legal counsel regarding the likelihood and magnitude of losses related to environmental matters, legal proceedings and claims (non-environmental) and inquiries and investigations

• obtaining and inspecting correspondence with government authorities and regulatory agencies for environmental matters, legal proceedings and claims (non-environmental) and inquiries and investigations.

We evaluated whether the Company’s disclosures were appropriate and consistent with the information obtained in our procedures.

We have served as the Company's auditor since 1982.

13 unchanged sentences

Materials and other 333 832 713

Restructuring and other charges 183 — —

Eastern Ohio incident 325 1,116 —

44 unchanged sentences

Accounts payable $ 1,704 $ 1,638

Short-term debt — 100

Income and other taxes 337 262

36 unchanged sentences

Property additions ( 2,381 ) ( 2,327 ) ( 1,948 )

Acquisition of assets of CSR ( 1,643 ) ( 22 ) —

Property sales and other transactions 558 86 263

53 unchanged sentences

( 1,221 ) ( 1,221 )

Share repurchases ( 3 ) ( 24 ) ( 600 ) ( 627 )

Stock-based compensation 1 68 ( 3 ) 66

6 unchanged sentences

Summary of Significant Accounting Policies

Description of Business

Description of Business and Operating Segments

Norfolk Southern Corporation is a Georgia-based holding company engaged principally in the rail transportation business, operating 19,200 route miles primarily in the Southeast, East, and Midwest.

6 unchanged sentences

chemicals ( 18 %);

coal ( 14 %);

metals and construction ( 14 %);

coal ( 13 %);

and automotive ( 9 %).

1 unchanged sentence

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

We manage our company as one reportable operating segment, railway operations, providing rail transportation to customers.

We define our operating segment based on the way in which internally reported financial information is regularly reviewed by the chief operating decision maker, our chief executive officer, to analyze financial performance and allocate resources.

Although we provide and analyze revenues by commodity group, the overall financial and operational performance of the railroad is analyzed as one operating segment due to the nature of our integrated rail network.

Financial information and annual operating budgets and forecasts are prepared and reviewed by the chief operating decision maker at a consolidated level, making operational decisions to maximize consolidated financial results.

The accounting policies of our railway operations segment are the same as those described in the summary of significant accounting policies herein.

The chief operating decision maker assesses performance for the railway operations segment and decides how to allocate resources based on “Net income” that is reported on the Consolidated Statements of Income.

Net income is used to monitor budget versus actual results of the organization.

Our consolidated financial results are used in assessing the performance of the segment and in establishing management’s compensation.

The measure of segment assets is reported on the Consolidated Balance Sheets as “Total assets.” The chief operating decision maker uses net income generated from our railroad operations in determining capital allocations decisions, such as whether to reinvest profits into the rail network or into other parts of the entity or utilize them for other purposes, including paying dividends or repurchasing Common Stock.

Railway operations segment revenue, expenses, and profit and loss are disclosed below as reviewed and used by the chief operating decision maker.

There are no other significant segment items or reconciling items to segment profit.

2024 2023 2022

($ in millions)

Railway operating revenues (Note 2)

$ 12,123 $ 12,156 $ 12,745

Railway operating expenses

Compensation and benefits 2,823 2,819 2,621

Purchased services 1,655 1,683 1,565

Equipment rents 393 387 357

Fuel 987 1,170 1,459

Depreciation 1,353 1,298 1,221

Materials 369 364 283

Claims 237 242 270

Other (Note 8) ( 273 ) 226 160

Restructuring and other charges (Note 3) 183 — —

Eastern Ohio incident (Note 18) 325 1,116 —

Total railway operating expenses 8,052 9,305 7,936

Income from railway operations 4,071 2,851 4,809

Other income – net (Note 4) 65 191 13

Interest expense on debt 807 722 692

Income before income taxes 3,329 2,320 4,130

Income taxes (Note 5) 707 493 860

Net income $ 2,622 $ 1,827 $ 3,270

Total equity method investments are disclosed in Note 7 “Investments,” and total expenditures for long-lived assets are disclosed as “Property additions” on the Consolidated Statement of Cash Flows.

Use of Estimates

56 unchanged sentences

New Accounting Pronouncements

In November 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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.

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

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

Improvements to Reportable Segment Disclosures.

1 unchanged sentence

The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We will not early adopt the standard and are currently evaluating the effect on our financial statements.

We adopted the ASU on January 1, 2024 and updated our segment disclosures in Note 1.

In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740):

1 unchanged sentence

” This update requires additional disclosures including greater disaggregation of information in the reconciliation of the statutory rate to the effective rate and income taxes paid disaggregated by jurisdiction.

The ASU is effective for fiscal years ending after December 15, 2024.

The ASU is effective for fiscal years beginning after December 15, 2024.

We did not adopt the standard early and are currently evaluating the effect on our financial statements.

In November 2024, the FASB issued ASU 2024-03, “ Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).

” This update requires an entity to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods.

Entities are required to provide disaggregated information about expenses to help investors better understand performance, better assess prospects for future cash flows, and compare performance over time and with that of other entities.

The ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027.

We will not early adopt the standard and are currently evaluating the effect on our financial statements.

30 unchanged sentences

Accounts receivable – net $ 1,069 $ 1,147

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

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

We do not have any material contract assets or liabilities at December 31, 2024 and 2023.

Restructuring and Other Charges

In 2024, we initiated 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” reflects separation payments and other benefits to the impacted management employees and amounted to $ 69 million.

Additionally, we evaluated the impact of these separation programs on our pension and other postretirement benefit plans, as further discussed in Note 13.

During 2024, we made strategic decisions to cease development of certain technology 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 an additional $ 79 million of expenses related to these efforts.

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

“Restructuring and other charges” in 2024 also includes $ 35 million of costs related to this appointment, including an agreement with his previous employer, CPKC, that resulted in a $ 25 million payment and certain commercial considerations to CPKC in exchange for a waiver of his non-compete provisions.

Other Income – Net

3 unchanged sentences

COLI – net 17 65 ( 77 )

Shareholder advisory costs ( 59 ) — —

Other ( 13 ) 9 ( 36 )

9 unchanged sentences

Income taxes $ 707 $ 493 $ 860

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

Reconciliation of Statutory Rate to Effective Rate

31 unchanged sentences

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 $ 10 million in 2023, decreased by $ 19 million in 2022, and increased by $ 3 million in 2021.

The total valuation allowance increased by $ 11 million in 2024, decreased by $ 10 million in 2023, and decreased by $ 19 million in 2022.

Uncertain Tax Positions

5 unchanged sentences

Reductions for tax positions of prior years ( 1 ) ( 1 )

Settlements with taxing authorities — ( 2 )

Lapse of statutes of limitations ( 1 ) ( 5 )

3 unchanged sentences

The statute of limitations on Internal Revenue Service examinations has expired for all years prior to 2019.

Our consolidated federal income tax returns for 2019 through 2021 are currently being audited by the IRS.

We anticipate that the IRS will complete its examination in 2025.

State income tax returns are generally subject to examination for a period of three to four years after the return.

14 unchanged sentences

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 COLI is recorded at cash surrender value and, accordingly, approximates fair value.

8 unchanged sentences

Conrail $ 1,748 $ 1,656

TTX 1,013 964

Other 423 428

3 unchanged sentences

Total long-term investments $ 3,370 $ 3,839

We had $ 605 million of borrowings against our COLI policies outstanding at December 31, 2024, with no amounts outstanding at December 31, 2023, which are included in the “Investment sales and other transactions” line item within investing activities in the Consolidated Statements of Cash Flows.

In January 2025, we repaid all amounts that were borrowed against these policies at December 31, 2024.

Investment in Conrail

18 unchanged sentences

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” This amounted to $ 295 million, $ 274 million, and $ 256 million, respectively, for the years ended December 31, 2024, 2023 and 2022.

Our equity in TTX’s earnings partially offsets these costs and totaled $ 47 million for 2023 and $ 53 million for both 2022 and 2021.

Our equity in TTX’s earnings partially offsets these costs and totaled $ 48 million for 2024, $ 47 million for 2023 and $ 53 million for 2022.

Equity in TTX’s earnings is included in the “Other – net” line item within operating activities in the Consolidated Statements of Cash Flows.

36 unchanged sentences

(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.

Acquisition of Assets of Cincinnati Southern Railway

On March 15, 2024, we completed the acquisition of a 337 mile railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee from the CSR for $ 1.7 billion.

We previously operated this line subject to an operating lease agreement, which was terminated upon the close of the transaction.

Lease expense associated with the prior operating lease agreement totaled $ 5 million, $ 26 million, and $ 25 million in 2024, 2023, and 2022, respectively.

The purchase price was allocated to the assets acquired in the transaction.

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.

Sales of Railway Lines

On September 5, 2024, we consummated a transaction with the 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 closed in November 2024 and

the gain recognized as a result of the transaction was $ 53 million.

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.

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.

Capitalized Interest

22 unchanged sentences

4.28 % maturing 2037 to 2064

10,847 10,847

5.22 % maturing 2097 to 2121

Securitization borrowings and finance leases 17 116

Finance leases 13 17

Discounts, premiums, and debt issuance costs ( 902 ) ( 933 )

5 unchanged sentences

Total $ 16,651

In November 2023, we issued $ 400 million of 5.55 % senior notes due 2034 and $ 600 million of 5.95 % senior notes due 2064.

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

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 December 31, 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 no amounts outstanding at December 31, 2023 and $ 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”.

Our available borrowing capacity was $ 400 million and $ 300 million at December 31, 2023 and December 31, 2022, respectively.

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

Our accounts receivable securitization program was supported by $ 790 million and $ 903 million in receivables at December 31, 2024 and December 31, 2023, respectively, 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, 2023 or December 31, 2022, and we are in compliance with all of its covenants.

Subsequent Events

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.

In January 2024, we also 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 either December 31, 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 could borrow for general corporate purposes.

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

The term loan expired undrawn in October 2024.

We are committed under long-term lease agreements for equipment, lines of road, and other property.

26 unchanged sentences

The lease contains a residual value guarantee of up to eighty-three percent of the total construction cost of $ 499 million.

We currently operate approximately 337 miles of railway that extends from Cincinnati, Ohio to Chattanooga, Tennessee under an operating lease agreement.

Lease expense associated with this agreement totaled $ 26 million, $ 25 million, and $ 24 million in 2023, 2022, and 2021, respectively.

In 2022, we entered into an asset purchase and sale agreement with the Board of Trustees of the Cincinnati Southern Railway to purchase this line (see further discussion in Note 17).

The total purchase price is expected to be approximately $ 1.7 billion and will close on March 15, 2024.

At close, the existing lease arrangement will terminate and the assets purchased will be reflected in “Properties.”

Other information related to operating leases is as follows:

19 unchanged sentences

Long-term advances from Conrail (Note 7)

Non-current operating lease liability (Note 10) 287 316

Net pension benefit obligations (Note 12) 279 255

Net pension obligations (Note 13) 252 279

Casualty and other claims (Note 18) 229 221

Non-current operating lease liability (Note 11) 191 287

Net other postretirement benefit obligations (Note 13) 133 172

17 unchanged sentences

Interest cost 107 108 15 17

Actuarial losses (gains) 122 ( 677 ) 1 ( 70 )

Actuarial (gains) losses ( 91 ) 122 ( 21 ) 1

Plan amendments — — — ( 5 )

Benefits paid ( 155 ) ( 155 ) ( 32 ) ( 33 )

Curtailment — — 2 —

Benefit obligation at end of year 2,038 2,151 278 310

31 unchanged sentences

Expected return on plan assets ( 11 ) ( 11 ) ( 13 )

Amortization of net losses — — 1

Amortization of net gains ( 1 ) — —

Amortization of prior service benefit ( 23 ) ( 26 ) ( 25 )

Curtailment gain ( 20 ) — —

Net benefit $ ( 36 ) $ ( 16 ) $ ( 23 )

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

During 2024, we commenced voluntary and involuntary separation programs to reduce our nonagreement workforce.

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

In accordance with FASB 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 not 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 recognized a curtailment gain of $ 20 million in 2024 for the impacted portion of the prior service benefit previously recorded within accumulated other comprehensive loss.

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income

3 unchanged sentences

Net gains arising during the year $ ( 69 ) $ ( 31 )

Prior service effect of plan amendment — ( 5 )

Amortization of net losses ( 4 ) —

Amortization of net gains (losses) ( 17 ) 1

Amortization of prior service benefit 1 23

Prior service benefit due to curtailment — 20

Effect of curtailment — 2

Total recognized in other comprehensive income $ ( 85 ) $ 15

Total recognized in net periodic cost and other comprehensive income $ ( 139 ) $ ( 21 )

Net gains arising during the year for both pension benefits and other postretirement benefits were due primarily to higher actual returns on plan assets offset by a decrease in discount rates.

Net gains arising during the year for both pension benefits and other postretirement benefits were due primarily to an increase in discount rates, in addition to higher actual returns on plan assets for our other postretirement benefit 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 $ 22 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.

The estimated prior service benefit and net gains for the other postretirement benefit plans that will be amortized from accumulated other comprehensive loss into net periodic benefit over the next year is $ 24 million.

Pension and Other Postretirement Benefits Assumptions

26 unchanged sentences

Asset Management

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.

Twelve 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.

43 unchanged sentences

Government and agencies securities — 4 4

Corporate bonds — 93 93

Mortgage and other asset-backed securities — 32 32

Commingled funds — 123 123

37 unchanged sentences

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 $ 11 million, $ 13 million, and $ 21 million in 2023, 2022, 2021, respectively.

Premiums under this plan are expensed as incurred and totaled $ 9 million, $ 11 million, and $ 13 million in 2024, 2023, and 2022, respectively.

Section 401(k) Plans

1 unchanged sentence

Under the plans, we match a portion of employee contributions, subject to applicable limitations.

Our matching contributions, recorded as an expense, totaled $ 25 million, $ 22 million, and $ 23 million in 2023, 2022, 2021, respectively.

Our matching contributions, recorded as an expense, totaled $ 25 million in both 2024 and 2023, and $ 22 million in 2022.

Stock-Based Compensation

4 unchanged sentences

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.

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.

7 unchanged sentences

PSUs 64,990 258.60 59,200 236.16 58,945 272.22

Recipients of certain RSUs and PSUs pursuant to the LTIP who retire prior to October 1st will forfeit awards received in the current year.

Recipients of certain RSUs and PSUs pursuant to the LTIP who retire prior to December 31st will forfeit a portion of 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.

Forfeitures are recognized as they occur.

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.

9 unchanged sentences

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.

For all years prior to 2024, 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.

Beginning in 2024, a prorated portion of the total LTIP award will vest on the first anniversary of the grant date continuing annually through the fourth anniversary of the grant date.

The fair value of each option awarded was measured on the date of grant using the Black-Scholes valuation model.

2 unchanged sentences

Historical exercise data is used to estimate the average expected option term.

The average risk-free interest rate is

based on the U.S.

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.

A dividend yield of zero was used for the LTIP

options during the vesting period.

For 2024, 2023, and 2022, a dividend yield of 2.25 %, 2.24 %, and 1.85 %, respectively, was used for the vested period during the remaining expected option term for LTIP options.

53 unchanged sentences

Earned ( 41,580 ) 240.64

Unearned ( 4,751 ) 213.12

Forfeited ( 85,095 ) 251.40

51 unchanged sentences

Stock Repurchase Programs

We repurchased and retired 2.8 million, 12.6 million, and 12.7 million shares of Common Stock under our stock repurchase programs in 2023, 2022, and 2021, respectively, at a cost of $ 627 million, $ 3.1 billion, and $ 3.4 billion, respectively, inclusive of excise taxes in 2023.

We did not repurchase any shares of Common Stock under our stock repurchase program in 2024, while we repurchased and retired 2.8 million and 12.6 million shares of Common Stock under our stock repurchase programs in 2023 and 2022, respectively, at a cost of $ 627 million and $ 3.1 billion, respectively, inclusive of excise taxes.

On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $ 10.0 billion of

20 unchanged sentences

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

0.1 million for the years ended December 31, 2023 and 2022, and none for the year ended December 31, 2021.

0.1 million for the years ended December 31, 2024, 2023, and 2022.

Commitments and Contingencies

2 unchanged sentences

The derailed equipment included 38 railcars, 11 of which were non-Company-owned tank cars containing hazardous materials.

Fires associated with the derailment threatened certain of the tank cars.

There was concern about the risk that the contents of five of the tank cars carrying vinyl chloride might polymerize, which would have posed the risk of a catastrophic explosion.

consequence, on February 6, 2023, the local incident commander (the East Palestine Fire Chief)—in consultation with the incident command that included, among others, federal, state and local officials and Norfolk Southern—opted to conduct a controlled vent and burn of five derailed tank cars, all of which contained vinyl chloride.

This procedure involved creating holes in the five tank cars to drain the vinyl chloride into adjacent trenches that had been dug into the ground where such vinyl chloride was then burned, with any material remaining after burning of the vinyl chloride being remediated.

Fires associated with the derailment threatened certain tank cars.

There was concern that the pressure inside of the tank cars carrying vinyl chloride was rising and that the pressure relief devices were no longer functioning properly, which would have

posed the risk of a catastrophic explosion.

As a consequence, on February 6, 2023, the local incident commander (the East Palestine Fire Chief)—in consultation with the incident command that included, among others, federal, state and local officials and Norfolk Southern—opted to conduct a controlled vent and burn of five derailed tank cars, all of which contained vinyl chloride.

This procedure involved creating holes in the five tank cars to drain the vinyl chloride into adjacent trenches that had been dug into the ground where the vinyl chloride was ignited and burned.

Any remaining materials released from the derailment or during the vent and burn have been or are being remediated.

The February 3rd derailment, the associated fire, and the resulting vent and burn of the tank cars containing vinyl chloride on February 6th is hereinafter referred to as the “Incident.”

In response to the Incident, we have been working to clean the site safely and thoroughly, including those activities described in the Environmental Matters section below with respect to potentially impacted air, soil, and water and to monitor for any impact on public health and the environment.

We are working with federal, state, and local officials to mitigate impacts from the Incident, including, among other efforts, conducting environmental monitoring and clean-up activities (as more fully described below), operating a family assistance center to provide financial support to affected members of the East Palestine and surrounding communities, and committing additional financial support to the community .

We are working with federal, state, and local officials to mitigate impacts from the Incident, including, among other efforts, conducting environmental monitoring and clean-up activities (as more fully described below), and operating a field office to provide support to members of East Palestine and the surrounding communities .

Financial Impact

Although we cannot predict the final outcome or estimate the reasonably possible range of loss with certainty, we recognized $ 1.1 billion of expense in 2023 for costs directly attributable to the Incident (including amounts accrued for the probable and reasonably estimable liabilities for those environmental and non-environmental matters described below) which is presented in “ Eastern Ohio incident ” on the Consolidated Statements of Income.

The total expense recognized includes the impact of $ 101 million in insurance recoveries received in 2023 from claims made under our insurance policies.

We recorded a deferred tax asset (Note 4) of $ 249 million related to the Incident expecting that certain expenses will be deductible for tax purposes in future periods or offset with insurance recoveries.

During 2023, our cash expenditures attributable to the Incident, net of insurance proceeds received, were $ 652 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 2023 of $ 464 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.

Certain costs recorded in 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 $ 101 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.

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.

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.

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

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

Amounts recorded related to the Incident, including outstanding liabilities at the end of each year, are summarized in the table below.

Our current estimates of probable and reasonably estimable liabilities principally associated with environmental matters and legal proceedings are discussed in further detail below.

Environmental Matters Legal Contingencies and Other Total Insurance Recoveries Total - Net of Recoveries

($ in millions)

At December 31, 2022 $ — $ — $ — $ — $ —

Expense/(Recoveries) 836 381 1,217 ( 101 ) 1,116

(Payments)/Receipts ( 517 ) ( 236 ) ( 753 ) 101 ( 652 )

At December 31, 2023 $ 319 $ 145 $ 464 $ — $ 464

Expense/(Recoveries) 190 785 975 ( 650 ) 325

(Payments)/Receipts ( 265 ) ( 486 ) ( 751 ) 632 ( 119 )

At December 31, 2024 $ 244 $ 444 $ 688 $ ( 18 ) $ 670

At December 31, 2024 and December 31, 2023, we have also recorded a deferred tax asset (Note 5) of $ 211 million and $ 249 million, respectively, related to the Incident expecting that certain expenses will be deductible for tax purposes in future periods or offset with insurance recoveries.

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, 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.

EPA our Notice of Intent to Comply with the UAO and are currently cooperating with U.S.

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

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.

The 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 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

We timely submitted our Notice of Intent to Comply with the CWA order and continue to cooperate with the U.S.

EPA, as well as state agencies, in compliance with the CWA order.

EPA issued a second unilateral order under Section 311(c) of the Clean Water Act (CWA Order), 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 EPA, as well as state agencies, in compliance with the CWA Order.

Once approved by the court, the proposed Consent Decree (discussed below) will supersede the UAO and CWA Order.

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

• The DOJ and the U.S.

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

The Ohio Attorney General (AG) also filed a CERCLA lawsuit (the Ohio Complaint) in the Northern District of Ohio (Eastern Division) seeking statutory damages for a variety of tort and environmental claims under CERCLA and various state laws.

DOJ filed a civil complaint on behalf of the U.S.

EPA (the DOJ Complaint) in the Northern District of Ohio (Eastern Division) seeking injunctive relief and civil penalties for alleged violations of the CWA and cost recovery under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

The Ohio Attorney General (AG) also filed a lawsuit (the Ohio Complaint) in the Northern District of Ohio (Eastern Division) seeking damages for a variety of common law and environmental statutory claims under CERCLA and various state laws.

The DOJ and Ohio AG cases have been consolidated for discovery purposes.

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

In connection with the foregoing items, we recognized $ 836 million of expense during 2023, of which $ 517 million was paid during 2023, related to probable obligations that are reasonably estimable, in accordance with FASB 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, 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.

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

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.

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.

On May 23, 2024, DOJ and the Company reached a settlement to resolve all of the government’s civil claims against the Company related to the Incident, and jointly lodged a proposed Consent Decree with the court.

As proposed, the Consent Decree will require the Company to pay for the federal government’s oversight costs of $ 57 million through November 30, 2023 as well as additional oversight costs from December 1, 2023 until the remediation is complete.

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 including medical and mental health programs, 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, ” we have recognized probable and reasonably estimable liabilities in connection with the foregoing environmental matters.

Our current estimate includes ongoing and future environmental cleanup activities and remediation efforts, governmental oversight costs (including those incurred by the 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, 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.

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) 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.

• There is a consolidated putative class action pending in the Northern District of Ohio (Eastern Division) (the Ohio Class Action) 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.

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

The court in the putative class action has established a fact discovery deadline of February 5, 2024.

Fact discovery ended on February 5, 2024.

The Court denied in part and granted in part all motions to dismiss, as to the plaintiffs’ case and as to our third-party complaint, on March 13, 2024.

On April 26, 2024, we entered into a class action settlement with the plaintiffs to resolve the Ohio Class Action for $ 600 million.

The settlement agreement resolves 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.

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

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

We made a partial payment of the settlement in 2024, in the amount of $ 315 million.

Payment of the remaining balance, 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.

On August 22, 2023, three school districts voluntarily dismissed their actions, then individual lawsuits.

On the same day, six Pennsylvania school districts and students filed a putative class action lawsuit alleging negligence, strict liability, nuisance, and trespass, and seeking damages and health monitoring.

On August 22, 2023, six Pennsylvania school districts and students filed a putative class action lawsuit alleging negligence, strict liability, nuisance, and trespass, and seeking damages and health monitoring.

On December 8, 2023, the school districts amended their complaint to add additional companies as defendants in the action.

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

In accordance with FASB ASC 450, “ Contingencies ,” we have recognized a $ 116 million loss during 2023 with respect to the Incident Lawsuits and related contingencies, of which $ 34 million has been paid.

At this time, we are unable to estimate the possible loss or range of loss in excess of the amounts accrued regarding the Incident Lawsuits.

However, 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.

While we continue to

work with parties with respect to potential resolution pathways, no assurance can be given that we will be successful in doing so and we cannot predict the outcome of these matters.

• 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 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 filed in the Southern District of New York alleging misstatements in association with our debt offerings, and a shareholder derivative complaint 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 (collectively, the Shareholder Matters).

On February 2, 2024, defendants filed a motion to dismiss the amended complaint in the Securities Act lawsuit.

On February 23, 2024, we and the other defendants filed motions to dismiss and those motions are fully briefed and currently pending before the court.

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 December 31, 2024 and December 31, 2023, we had accruals for probable and reasonably estimable liabilities principally associated with the Incident Lawsuits and related contingencies of $ 369 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.

While we continue to work with parties with respect to potential resolution, no assurance can be given that we will be successful in doing so and we cannot predict the outcome of these matters.

• 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, 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 lawsuits involving other potentially affected third parties, some of which were filed on or around February 3, 2025.

We are continuing to assess the claims and any potential impact on the Company.

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.

3 unchanged sentences

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;

4 unchanged sentences

At this time, we are unable to estimate the possible loss or range of loss in excess of the amounts accrued with respect to the matters described above.

In addition to the costs associated with environmental matters and legal proceedings and claims, we incurred $ 265 million in other expenses directly related to the Incident in 2023 pertaining to legal fees, community support, and other response-related activities.

The amounts recorded by us in 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 liabilities 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, with the exception of amounts recognized during 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.

The amounts recorded do not include any estimate of loss for which we believe a loss is either not probable or not reasonably estimable for any fines or penalties (in excess of the liabilities established for CWA-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).

Inquiries and Investigations

As set forth above, we are subject to inquiries and investigations by numerous federal, state, and local government authorities and regulatory agencies regarding the Incident, including but not limited to, the DOJ and the U.S.

EPA, the Ohio EPA, the NTSB, the FRA, the Occupational Safety and Health Administration, the Ohio AG, and the Pennsylvania AG.

Further details regarding the NTSB and FRA investigations are set forth below.

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

We are cooperating with all pending 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).

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 2023 do not include estimates of the total amount that we may incur for any such fines, penalties or settlements.

Therefore, our accruals for probable and reasonably estimable liabilities related to the Incident 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.

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

the rail crew operated the train below the track speed limit, the wayside heat detectors were operating as designed;

and once the rail crew was alerted by the wayside detector, they immediately began to stop the train.

The NTSB conducted a subsequent investigative field hearing in East Palestine, Ohio on June 22 and 23, 2023.

The NTSB’s investigation remains ongoing.

We expect the NTSB to issue a final report, with a probable cause determination and safety recommendations, in 2024.

Concurrent with the NTSB Investigation, the FRA is also investigating the Incident.

Similar in scope to the NTSB Investigation, the FRA is examining railroad equipment, track conditions, hazardous materials train placement and routing, and emergency response (the FRA Incident Investigation).

The FRA Incident Investigation may result in the assessment of civil penalties.

The NTSB concluded its investigation and adopted a final investigative report on June 25, 2024, then issued the final public report on July 12, 2024.

The NTSB found that the probable cause of the derailment was the failure of a bearing which overheated and caused the axle to separate, derailing the train and leading to a post-derailment fire.

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 in the spring of 2025.

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

Similar in scope to the NTSB Investigation, the FRA examined railroad equipment, track conditions, hazardous materials train placement and routing, and emergency response (the FRA Incident Investigation).

The FRA Incident Investigation will likely result in the assessment of civil penalties, though the amount and materiality of these penalties cannot be reasonably estimated at this time.

In addition to the FRA Incident Investigation, the FRA completed a 60-day supplemental safety assessment (the FRA Safety Assessment).

5 unchanged sentences

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

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

The FRA Incident Investigation remains ongoing.

The FRA issued a public report in early August 2023 which included its findings and related corrective actions.

We have launched initiatives to implement all of these items, and will monitor progress on these initiatives going forward.

Other Commitments and Contingencies

4 unchanged sentences

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.

5 unchanged sentences

Since that decision, various individual cases have been filed in multiple jurisdictions and also consolidated in the District of Columbia.

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.

We intend to vigorously defend the cases and 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 resolution of the litigation will not be material.

At this time, we cannot reasonably estimate the potential loss or range of loss associated with this matter.

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.

3 unchanged sentences

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.

11 unchanged sentences

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.

The actuarial firm provides the results of these analyses to aid in our estimate of the ultimate amount of liability.

We adjust the liability quarterly based upon our assessment and the results of the study.

3 unchanged sentences

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.

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.

8 unchanged sentences

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.

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

4 unchanged sentences

At December 31, 2024, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 74 known locations and projects compared with 81 locations and projects at December 31, 2023.

At December 31, 2023, twenty-one sites accounted for $ 48 million of the liability, and no individual site was considered to be material.

At December 31, 2024, twenty sites accounted for $ 56 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 ;

8 unchanged sentences

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.

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.

3 unchanged sentences

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

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

Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements.

We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee.

The latest round of national bargaining concluded in December 2022, when agreements were either ratified or enacted through legislative action for all twelve of our unions.

With the conclusion of national bargaining, neither party can compel mandatory bargaining around any new proposals until November 1, 2024.

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

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 NCCC.

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

In the months prior to the opening of the current national bargaining round, we engaged in voluntary local discussions with our labor unions and, as a result, reached local tentative agreements with ten of our thirteen unions.

A majority of those tentative agreements were subsequently ratified by union membership and became effective January 1, 2025, foreclosing the parties from serving new notices to compel mandatory bargaining until November 1, 2029.

For those unions with whom we have not yet reached a ratified agreement, the NCCC, on behalf of Norfolk Southern, sent bargaining notices on November 1, 2024, to 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 83 % 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.

Above $ 800 million per occurrence and/or policy year, we maintain approximately $ 43 million additional liability insurance limits for certain types of pollution releases.

We also purchase insurance for property damage to property owned by us or in our care, custody, or control.

Our current property insurance provides limits for approximately 82 % of covered losses above $ 75 million and below $ 275 million per occurrence and/or policy year.

With respect to the Incident, our insurance in effect at such time provided coverage above $ 75 million and below $ 800 million (or up to $ 1.1 billion for specified types of pollution releases) per occurrence and/or policy year, and with respect to property owned by us or in our care, custody, or control, our insurance covered approximately 82 % of potential losses above $ 75 million and below $ 275 million per occurrence and/or policy year.

Insurance coverage 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.

Some (re)insurers have disputed 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 $ 101 million in insurance recoveries in 2023, principally from excess liability (re)insurers.

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 $ 650 million and $ 101 million in insurance recoveries in 2024 and 2023, respectively, principally from excess liability (re)insurers.

At December 31, 2024, $ 18 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.

Purchase Commitments

At December 31, 2024, we had outstanding purchase commitments totaling $ 1.2 billion through 2053 for locomotive modernizations, long-term technology support and development contracts, track material, and vehicles.

Asset Purchase and Sale Agreement

In November 2022, we entered into an asset purchase and sale agreement with the Board of Trustees of the Cincinnati Southern Railway to purchase approximately 337 miles of railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee which we currently operate under a lease agreement.

The agreement is conditioned upon the following, among other items:

(i) approval by the voters of the City of Cincinnati (Cincinnati Voter Approval), which was obtained in November 2023, and (ii) the receipt of regulatory approval from the U.S.

Transportation Board (STB), which occurred in September 2023.

In June 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.

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 approximately $ 1.7 billion.

The transaction is scheduled to close on March 15, 2024.

Change-In-Control Arrangements

9 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data