What changed in this filing

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Item 1. Financial Statements

2025-04-23 compared with 2024-10-22 · 173 added, 238 removed, 424 unchanged (49% of the section changed)

2 unchanged sentences

Consolidated Statements of Income

Third Quarter First Nine Months

2024 2023 2024 2023

First Quarter

($ in millions, except per share amounts)

3 unchanged sentences

Purchased services and rents 498 528

Fuel 216 289 757 867

Depreciation 346 337

15 unchanged sentences

Consolidated Statements of Comprehensive Income

Third Quarter First Nine Months

2024 2023 2024 2023

First Quarter

($ in millions)

Net income $ 750 $ 53

Other comprehensive loss, before tax:

Other comprehensive income (loss), before tax:

Pension and other postretirement expense — ( 2 )

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

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

Other comprehensive income of equity investees 1 —

Other comprehensive income (loss), before tax 1 ( 2 )

Income tax benefit related to items of other

comprehensive loss — 2 2 5

Other comprehensive loss, net of tax ( 2 ) ( 5 ) ( 12 ) ( 13 )

comprehensive income — —

Other comprehensive income (loss), net of tax 1 ( 2 )

Total comprehensive income $ 751 $ 51

2 unchanged sentences

Consolidated Balance Sheets

September 30,

2025 December 31,

35 unchanged sentences

Consolidated Statements of Cash Flows

First Nine Months

First Three Months

($ in millions)

15 unchanged sentences

Acquisition of assets of CSR

( 1,643 ) ( 5 )

Property sales and other transactions 18 32

8 unchanged sentences

Debt repayments ( 1 ) —

Net cash used in financing activities ( 903 ) ( 62 )

Net increase (decrease) in cash and cash equivalents ( 593 ) 1,050

Net cash provided by (used in) financing activities ( 564 ) 89

Net decrease in cash and cash equivalents ( 635 ) ( 916 )

Cash and cash equivalents

16 unchanged sentences

Net income 750 750

Other comprehensive loss ( 2 ) ( 2 )

Other comprehensive income 1 1

Total comprehensive income 751

2 unchanged sentences

( 306 ) ( 306 )

Share repurchases ( 1 ) ( 9 ) ( 240 ) ( 250 )

Stock-based compensation 11 ( 1 ) 10

Balance at March 31, 2025 $ 227 $ 2,249 $ ( 261 ) $ 12,296 $ 14,511

Comprehensive income:

Net income 737 737

Other comprehensive loss ( 8 ) ( 8 )

Total comprehensive income 729

Dividends on common stock,

$ 1.35 per share

( 305 ) ( 305 )

Stock-based compensation 20 ( 1 ) 19

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.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Stock Additional

11 unchanged sentences

( 305 ) ( 305 )

Share repurchases ( 1 ) ( 6 ) ( 156 ) ( 163 )

Stock-based compensation 9 9

Balance at March 31, 2024 $ 227 $ 2,188 $ ( 322 ) $ 10,443 $ 12,536

Comprehensive income:

Net income 356 356

Other comprehensive loss ( 4 ) ( 4 )

Total comprehensive income 352

Dividends on common stock,

$ 1.35 per share

( 308 ) ( 308 )

Share repurchases ( 1 ) ( 4 ) ( 135 ) ( 140 )

Stock-based compensation 9 9

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 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.

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly Norfolk Southern Corporation (Norfolk Southern) and subsidiaries’ (collectively, NS, we, us, and our) financial position at March 31, 2025 and December 31, 2024, our results of operations, comprehensive income and changes in stockholders’ equity for the first quarters of 2025 and 2024, and our cash flows for the first three months of 2025 and 2024 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.

Segment Reporting

The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07 “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ” which requires additional reportable segment disclosures related to significant segment expenses and information used to assess performance.

We adopted the provisions of this standard and updated our segment disclosures herein.

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

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.

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.

The measure of segment assets is reported on the Consolidated Balance Sheets as “Total assets.” Total expenditures for long-lived assets are disclosed as “Property additions” on the Consolidated Statement of Cash Flows.

Railway operations segment revenues, expenses, and profit 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.

First Quarter

($ in millions)

Railway operating revenues (Note 2)

$ 2,993 $ 3,004

Railway operating expenses

Compensation and benefits 739 736

Purchased services 401 420

Equipment rents 97 108

Depreciation 346 337

Materials 100 98

Restructuring and other charges — 99

Eastern Ohio incident ( 185 ) 592

Total railway operating expenses 1,847 2,791

Income from railway operations 1,146 213

Other income – net 31 18

Interest expense on debt 199 201

Income before income taxes 978 30

Income taxes 228 ( 23 )

Net income $ 750 $ 53

Railway Operating Revenues

The following table disaggregates our revenues by major commodity group:

Third Quarter First Nine Months

2024 2023 2024 2023

First Quarter

($ in millions)

5 unchanged sentences

Intermodal 760 745

Coal 427 434 1,221 1,283

Total $ 2,993 $ 3,004

6 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 September 30, 2024 and December 31, 2023.

We had no material remaining performance obligations at March 31, 2025 and December 31, 2024.

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 third quarter and first nine months of 2024 and 5 % for the third quarter and first nine months of 2023.

These revenues are included within each of the commodity groups and represent approximately 5 % and 4 % of total “Railway operating revenues” on the Consolidated Statements of Income for the first quarters of 2025 and 2024, respectively.

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,

2025 December 31, 2024

4 unchanged sentences

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.

We do no t have any material contract assets or liabilities at March 31, 2025 and December 31, 2024.

Stock-Based Compensation

Third Quarter First Nine Months

2024 2023 2024 2023

First Quarter

($ in millions)

Stock-based compensation expense $ 18 $ 19

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:

Third Quarter First Nine Months

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

Total tax benefit 5 5

During the first quarter of 2025, we granted stock options, restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP), as follows:

First Quarter

Granted Weighted-Average Grant-Date Fair Value

Stock options 80,067 $ 87.33

2 unchanged sentences

Stock Options

Third Quarter First Nine Months

2024 2023 2024 2023

First Quarter

($ in millions)

3 unchanged sentences

Restricted Stock Units

RSUs granted primarily have a four-year ratable restriction period and will be settled through the issuance of shares of Norfolk Southern common stock (Common Stock).

RSUs granted primarily have three - and four-year ratable restriction periods and will be settled through the issuance of shares of Norfolk Southern common stock (Common Stock).

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

Third Quarter First Nine Months

2024 2023 2024 2023

First Quarter

($ in millions)

6 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 third quarters of 2024 and 2023.

First Nine Months

First Quarter

($ 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 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.

During the first quarter of 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 $ 61 million for the first nine months of 2024.

“Restructuring and other charges” reflects separation payments and other benefits to the impacted management employees and amounted to $ 64 million.

Additionally, we evaluated the impact of these separation programs on our pension and other postretirement benefit plans, as further discussed in Note 10.

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 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.

“Restructuring and other charges” 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.

Earnings Per Share

1 unchanged sentence

Basic Diluted

Third Quarter

2024 2023 2024 2023

($ in millions, except per share amounts,

shares in millions)

Net income $ 1,099 $ 478 $ 1,099 $ 478

Dividend equivalent payments — ( 1 ) — ( 1 )

Income available to common stockholders $ 1,099 $ 477 $ 1,099 $ 477

Weighted-average shares outstanding 226.2 226.4 226.2 226.4

Dilutive effect of outstanding options and share-settled awards 0.3 0.6

Adjusted weighted-average shares outstanding 226.5 227.0

Earnings per share $ 4.86 $ 2.11 $ 4.85 $ 2.10

Basic Diluted

First Nine Months

First Quarter

2025 2024 2025 2024

8 unchanged sentences

Earnings per share $ 3.31 $ 0.23 $ 3.31 $ 0.23

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.

During the first quarters of 2025 and 2024, 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 third quarters and first nine months ended September 30, 2024 and 2023.

0.1 million in both the first quarters ended March 31, 2025 and 2024, respectively .

Accumulated Other Comprehensive Loss

4 unchanged sentences

($ in millions)

Nine months ended September 30, 2024

Three months ended March 31, 2025

Pensions and other postretirement liabilities $ ( 240 ) $ — $ — $ ( 240 )

Other comprehensive income (loss) of equity investees ( 28 ) 1 — ( 27 )

Other comprehensive income of equity investees ( 22 ) 1 — ( 21 )

Accumulated other comprehensive loss $ ( 262 ) $ 1 $ — $ ( 261 )

Nine months ended September 30, 2023

Three months ended March 31, 2024

Pensions and other postretirement liabilities $ ( 292 ) $ — $ ( 2 ) $ ( 294 )

2 unchanged sentences

Stock Repurchase Program

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.

We repurchased and retired 1.0 million shares of Common Stock under our stock repurchase program in the first three months of 2025 at a cost of $ 250 million, inclusive of excise taxes, while w e did not repurchase any shares of Common Stock in the first three months of 2024.

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 September 30, 2024 and December 31, 2023.

Our investment in Conrail was $ 1.8 billion and $ 1.7 billion at March 31, 2025 and December 31, 2024, respectively.

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 $ 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.

“Purchased services and rents” and “Fuel” include expenses payable to CRC for operation of the Shared Assets Areas totaling $ 49 million and $ 52 million for the first quarters of 2025 and 2024, respectively.

Our equity in Conrail’s earnings, net of amortization, was $ 16 million and $ 21 million for the first quarters of 2025 and 2024, 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 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 %.

“Other liabilities” includes $ 534 million at both March 31, 2025 and December 31, 2024 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 $ 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

On March 15, 2024, we completed the acquisition of a 337 mile railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee from the Cincinnati Southern Railway (CSR) for $ 1.7 billion (of which $ 0.1 billion was paid in 2023).

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

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.

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.

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” These expenses amounted to $ 74 million for both the first quarters of 2025 and 2024.

Our equity in TTX’s earnings partially offsets these costs and totaled $ 11 million and $ 13 million for the first quarters of 2025 and 2024, 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 September 30, 2024, we had no outstanding commercial paper.

At March 31, 2025 and 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 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”.

We had no amounts outstanding under this program and our available borrowing capacity was $ 400 million at both March 31, 2025, and December 31, 2024.

Our accounts receivable securitization program was supported by $ 870 million and $ 790 million in receivables at March 31, 2025 and December 31, 2024, 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 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 September 30, 2024.

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

The term loan expired undrawn on October 22, 2024.

We had no amounts outstanding under this facility at either March 31, 2025 or December 31, 2024, and we are in compliance with all of its covenants.

Pensions and Other Postretirement Benefits

6 unchanged sentences

Pension Benefits Other Postretirement Benefits

Third Quarter

2024 2023 2024 2023

($ in millions)

Service cost $ 7 $ 7 $ — $ 1

Interest cost 26 27 4 4

Expected return on plan assets ( 51 ) ( 53 ) ( 2 ) ( 2 )

Amortization of net losses 4 1 — ( 1 )

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

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

Pension Benefits Other Postretirement Benefits

First Nine Months

First Quarter

2025 2024 2025 2024

5 unchanged sentences

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

Curtailment gain — — ( 20 ) —

Net benefit $ ( 11 ) $ ( 14 ) $ ( 4 ) $ ( 5 )

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

During 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.

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 %.

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.

Additionally, we recognized a curtailment gain of $ 20 million in the second quarter of 2024, the period in which the employees departed the Company, for the impacted portion of the prior service benefit previously recorded within accumulated other comprehensive loss.

The service cost component of defined benefit pension cost and 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 the first quarter of 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 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 %.

As a result, we recognized a curtailment gain of $ 20 million in the second quarter of 2024, the period in which the employees departed the Company, for the impacted portion of the prior service benefit previously recorded within accumulated other comprehensive loss.

Fair Values of Financial Instruments

1 unchanged sentence

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 September 30, 2024 or December 31, 2023.

There are no other assets or liabilities measured at fair value on a recurring basis at March 31, 2025 or December 31, 2024.

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Value Carrying

12 unchanged sentences

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 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 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 $ 1.5 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.

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

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

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 period, are summarized in the tables 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, 2024 $ 244 $ 444 $ 688 $ ( 18 ) $ 670

Expense/(Recoveries) — 39 39 ( 224 ) ( 185 )

(Payments)/Receipts ( 17 ) ( 47 ) ( 64 ) 122 58

At March 31, 2025 $ 227 $ 436 $ 663 $ ( 120 ) $ 543

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

($ in millions)

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

Expense/(Recoveries) 60 640 700 ( 108 ) 592

(Payments)/Receipts ( 87 ) ( 40 ) ( 127 ) 10 ( 117 )

At March 31, 2024 $ 292 $ 745 $ 1,037 $ ( 98 ) $ 939

From the inception of the Incident, we have recognized a total of $ 1.3 billion in net expenses directly attributable to the Incident, which includes $ 975 million of insurance recoveries from claims made under our insurance policies.

At March 31, 2025 and December 31, 2024, we have also recorded a deferred tax asset of $ 158 million and $ 211 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, 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.

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.

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, most 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 activities required by the UAO and the directives issued thereunder.

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 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.

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 (if needed based on assessment results) 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.

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

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

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 Court denied the motion on March 24, 2025.

On May 23, 2024, the 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.

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, 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.

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 the DOJ filed a motion on October 10, 2024 seeking entry of the Consent Decree.

That motion remains pending before the Court.

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).

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.

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 $ 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.

• 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.

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

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

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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 9, 2024, we announced that we reached an agreement in principle to settle the Ohio Class Action for $ 600 million.

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 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.

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.

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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 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.

In accordance with FASB ASC 450, “ Contingencies, ” as of March 31, 2025 and December 31, 2024, we had accruals for probable and reasonably estimable liabilities principally associated with the Incident Lawsuits and related contingencies of $ 394 million and $ 369 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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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.

On February 27, 2025, the district judge granted defendants’ motion to dismiss in its entirety, and closed the case.

On March 28, 2025, plaintiffs in the Securities Act lawsuit filed a notice of appeal of the decision to the U.S.

Court of Appeals for the Second Circuit.

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

On March 24, 2025, the district court denied defendants’ motion to dismiss, and ordered defendants to file their answer to the complaint within thirty days of the order, and the parties to file their joint preliminary report and discovery plan within thirty days of the answer.

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.

• We are also named as a defendant in various other Incident-related lawsuits involving other potentially affected third parties, a number of which were filed in the first quarter of 2025.

We are continuing to assess the claims and their 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.

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.

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) certain legal and regulatory proceedings are in early stages;

regulatory proceedings are in early stages;

(2) discovery may not be completed;

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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 National Transportation Safety Board (NTSB), the Federal Railroad Administration (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).

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.

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) and the OSHA investigation (which has been completed), 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 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.

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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 spring of 2025.

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.

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

We 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.

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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.

However, given that litigation is inherently unpredictable and subject to uncertainties, there can be no assurances that the final outcome of the litigation (including the related appeal) will not be material.

Until such appeal is final, we cannot reasonably estimate the potential loss or range of loss associated with this matter.

In April 2025, the U.S.

Supreme Court denied to grant certiorari, exhausting all appellate rights.

Casualty Claims

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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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The independent actuarial firm we engage provides quarterly studies to aid in valuing our employee personal injury liability and estimating personal injury expense.

The actuarial firm studies our historical patterns of reserving for claims and subsequent settlements, taking into account relevant outside influences.

The actuarial firm studies our historical patterns of reserving for claims and subsequent settlements, taking into account

relevant outside influences.

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

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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 $ 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.

In addition to environmental claims associated with the Incident, our Consolidated Balance Sheets include liabilities for other environmental exposures of $ 65 million at both March 31, 2025 and December 31, 2024, of which $ 15 million is classified as a current liability at the end of both periods.

At March 31, 2025, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 73 known locations and projects compared with 74 locations and projects at December 31, 2024.

At March 31, 2025, twenty-one 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 ;

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

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

several liability for cleanup costs.

We calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not solely on the basis of the potential for joint liability.

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

EPA or comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the aggregate for all such sites can change over time because of the widely varying costs of currently available cleanup techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies, the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to bear it), and evolving statutory and regulatory standards governing liability.

extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to bear it), and evolving statutory and regulatory standards governing liability.

The risk of incurring environmental liability for acts and omissions, past, present, and future, is inherent in the railroad business.

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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.

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

Under moratorium provisions from the last round of negotiations, 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.

Since then, the NCCC has reached several additional agreements, subject to ratification, on behalf of Norfolk Southern and other members of the bargaining coalition.

For unions where bargaining currently remains open, even if the parties are unable to reach voluntary ratified 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.

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.

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.

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.

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 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 $ 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.

We are pursuing coverage with respect to the Incident, and we have recognized $ 975 million in insurance recoveries (including $ 224 million and $ 108 million during the first quarters of 2025 and 2024, respectively), principally from excess liability (re)insurers.

At March 31, 2025 and December 31, 2024, $ 120 million and $ 18 million was outstanding and is included in “Accounts receivable – net” on the Consolidated Balance Sheets.

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).

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New Accounting Pronouncements

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

Improvements to Reportable Segment Disclosures.

” This update requires additional reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses and information used to assess performance.

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

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

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

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” 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 beginning after December 15, 2024.

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

The ASU is effective for fiscal years beginning after December 15, 2024, and we did not adopt the standard early.

We are currently evaluating the impact of this amendment on our disclosures.

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.

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