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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to___________
Commission File Number: 1-8339
NORFOLK SOUTHERN CORPORATION
(Exact name of registrant as specified in its charter)

Virginia | 52-1188014 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

650 West Peachtree Street NW | 30308-1925
Atlanta, | Georgia
(Address of principal executive offices) | (Zip Code)
(855) | 667-3655
(Registrant’s telephone number, including area code)

No change
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol | Name of each exchange on which registered
Norfolk Southern Corporation Common Stock (Par Value $1.00) | NSC | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class |  | Outstanding at March 31, 2022
Common Stock ($1.00 par value per share) |  | 238,332,514 |  | (excluding 20,320,777 shares held by the registrant’s
|  | consolidated subsidiaries)

TABLE OF CONTENTS
NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES

|  | Page
Part I. | Financial Information: |
| Item 1. | Financial Statements: |
|  | Consolidated Statements of Income First Quarter of 2022 and 2021 | 3
|  | Consolidated Statements of Comprehensive Income First Quarter of 2022 and 2021 | 4
|  | Consolidated Balance Sheets At March 31, 2022 and December 31, 2021 | 5
|  | Consolidated Statements of Cash Flows First Three Months of 2022 and 2021 | 6
|  | Consolidated Statements of Changes in Stockholders’ Equity First Quarter of 2022 and 2021 | 7
|  | Notes to Consolidated Financial Statements | 8
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 24
| Item 4. | Controls and Procedures | 24
Part II. | Other Information: |
| Item 1. | Legal Proceedings | 25
| Item 1A. | Risk Factors | 25
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 25
| Item 3. | Defaults Upon Senior Securities | 25
| Item 4. | Mine Safety Disclosures | 25
| Item 5. | Other Information | 26
| Item 6. | Exhibits | 27
|  | Signatures | 28

2

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)

| First Quarter |  |
| 2022 |  | 2021 |  |  |  |
| ($ in millions, except per share amounts)
Railway operating revenues | $ | 2,915 |  |  | $ | 2,639 |  |  |  |  |
Railway operating expenses |  |  |  |  |  |  |
Compensation and benefits | 619 |  |  | 611 |  |  |  |  |
Purchased services and rents | 437 |  |  | 393 |  |  |  |  |
Fuel | 301 |  |  | 177 |  |  |  |  |
Depreciation | 302 |  |  | 292 |  |  |  |  |
Materials and other | 171 |  |  | 151 |  |  |  |  |
Total railway operating expenses | 1,830 |  |  | 1,624 |  |  |  |  |
Income from railway operations | 1,085 |  |  | 1,015 |  |  |  |  |
Other income (expense) – net | (5) |  |  | 7 |  |  |  |  |
Interest expense on debt | 168 |  |  | 156 |  |  |  |  |
Income before income taxes | 912 |  |  | 866 |  |  |  |  |
Income taxes | 209 |  |  | 193 |  |  |  |  |
Net income | $ | 703 |  |  | $ | 673 |  |  |  |  |
Earnings per share |  |  |  |  |  |  |
Basic | $ | 2.94 |  |  | $ | 2.67 |  |  |  |  |
Diluted | 2.93 |  |  | 2.66 |  |  |  |  |

See accompanying notes to consolidated financial statements.
3

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)

| First Quarter |  |
| 2022 |  | 2021 |  |  |  |
| ($ in millions)
Net income | $ | 703 |  |  | $ | 673 |  |  |  |  |
Other comprehensive income, before tax: |  |  |  |  |  |  |
Pension and other postretirement benefits | 6 |  |  | 11 |  |  |  |  |
Other comprehensive income of equity investees | 6 |  |  | — |  |  |  |  |
Other comprehensive income, before tax | 12 |  |  | 11 |  |  |  |  |
Income tax expense related to items of other comprehensive income | (4) |  |  | (3) |  |  |  |  |
Other comprehensive income, net of tax | 8 |  |  | 8 |  |  |  |  |
Total comprehensive income | $ | 711 |  |  | $ | 681 |  |  |  |  |

See accompanying notes to consolidated financial statements.
4

Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)

| March 31, 2022 |  | December 31, 2021
| ($ in millions)
Assets |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 1,571 |  |  | $ | 839 |
Accounts receivable – net | 1,070 |  |  | 976 |
Materials and supplies | 264 |  |  | 218 |
Other current assets | 110 |  |  | 134 |
Total current assets | 3,015 |  |  | 2,167 |
Investments | 3,697 |  |  | 3,707 |
Properties less accumulated depreciation of $12,123 |  |  |
and $12,031, respectively | 31,657 |  |  | 31,653 |
Other assets | 992 |  |  | 966 |
Total assets | $ | 39,361 |  |  | $ | 38,493 |
Liabilities and stockholders’ equity |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 1,181 |  |  | $ | 1,351 |
Income and other taxes | 443 |  |  | 305 |
Other current liabilities | 370 |  |  | 312 |
Current maturities of long-term debt | 1,153 |  |  | 553 |
Total current liabilities | 3,147 |  |  | 2,521 |
Long-term debt | 13,691 |  |  | 13,287 |
Other liabilities | 1,845 |  |  | 1,879 |
Deferred income taxes | 7,217 |  |  | 7,165 |
Total liabilities | 25,900 |  |  | 24,852 |
Stockholders’ equity: |  |  |
Common stock $1.00 per share par value, 1,350,000,000 shares |  |  |
authorized; outstanding 238,332,514 and 240,162,790 shares, |  |  |
respectively, net of treasury shares | 240 |  |  | 242 |
Additional paid-in capital | 2,203 |  |  | 2,215 |
Accumulated other comprehensive loss | (394) |  |  | (402) |
Retained income | 11,412 |  |  | 11,586 |
Total stockholders’ equity | 13,461 |  |  | 13,641 |
Total liabilities and stockholders’ equity | $ | 39,361 |  |  | $ | 38,493 |

See accompanying notes to consolidated financial statements.
5

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

|  | First Three Months
|  | 2022 |  | 2021
|  | ($ in millions)
Cash flows from operating activities |  |  |
| Net income | $ | 703 |  |  | $ | 673 |
| Reconciliation of net income to net cash provided by operating activities: |  |  |
| Depreciation | 302 |  |  | 292 |
| Deferred income taxes | 48 |  |  | 52 |
| Gains and losses on properties | (6) |  |  | (8) |
| Changes in assets and liabilities affecting operations: |  |  |
| Accounts receivable | (94) |  |  | (95) |
| Materials and supplies | (46) |  |  | (20) |
| Other current assets | 21 |  |  | 9 |
| Current liabilities other than debt | 83 |  |  | 158 |
| Other – net | (17) |  |  | (46) |
| Net cash provided by operating activities | 994 |  |  | 1,015 |
Cash flows from investing activities |  |  |
| Property additions | (389) |  |  | (265) |
| Property sales and other transactions | 36 |  |  | 37 |
| Investment purchases | (1) |  |  | — |
| Investment sales and other transactions | 19 |  |  | 26 |
| Net cash used in investing activities | (335) |  |  | (202) |
Cash flows from financing activities |  |  |
| Dividends | (297) |  |  | (249) |
| Common stock transactions | (18) |  |  | (6) |
| Purchase and retirement of common stock | (600) |  |  | (591) |
| Proceeds from borrowings | 989 |  |  | — |
| Debt repayments | (1) |  |  | (84) |
| Net cash provided by (used in) financing activities | 73 |  |  | (930) |
| Net increase (decrease) in cash and cash equivalents | 732 |  |  | (117) |
Cash and cash equivalents |  |  |
| At beginning of year | 839 |  |  | 1,115 |
| At end of period | $ | 1,571 |  |  | $ | 998 |
Supplemental disclosures of cash flow information |  |  |
| Cash paid during the period for: |  |  |
| Interest (net of amounts capitalized) | $ | 114 |  |  | $ | 110 |
| Income taxes (net of refunds) | 9 |  |  | 27 |

See accompanying notes to consolidated financial statements.
6

Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

| Common Stock |  | Additional Paid-in Capital |  | Accum. Other Comprehensive Loss |  | Retained Income |  | Total |
| ($ in millions, except per share amounts) |
Balance at December 31, 2021 | $ | 242 |  |  | $ | 2,215 |  |  | $ | (402) |  |  | $ | 11,586 |  |  | $ | 13,641 |  |
Comprehensive income: |  |  |  |  |  |  |  |  |  |
Net income |  |  |  |  |  |  | 703 |  |  | 703 |  |
Other comprehensive income |  |  |  |  | 8 |  |  |  |  | 8 |  |
Total comprehensive income |  |  |  |  |  |  |  |  | 711 |  |
Dividends on common stock, |  |  |  |  |  |  |  |  |  |
$1.24 per share |  |  |  |  |  |  | (297) |  |  | (297) |  |
Share repurchases | (2) |  |  | (19) |  |  |  |  | (579) |  |  | (600) |  |
Stock-based compensation |  |  | 7 |  |  |  |  | (1) |  |  | 6 |  |
Balance at March 31, 2022 | $ | 240 |  |  | $ | 2,203 |  |  | $ | (394) |  |  | $ | 11,412 |  |  | $ | 13,461 |  |

| Common Stock |  | Additional Paid-in Capital |  | Accum. Other Comprehensive Loss |  | Retained Income |  | Total
| ($ in millions, except per share amounts)
Balance at December 31, 2020 | $ | 254 |  |  | $ | 2,248 |  |  | $ | (594) |  |  | $ | 12,883 |  |  | $ | 14,791 |
Comprehensive income: |  |  |  |  |  |  |  |  |
Net income |  |  |  |  |  |  | 673 |  |  | 673 |
Other comprehensive income |  |  |  |  | 8 |  |  |  |  | 8 |
Total comprehensive income |  |  |  |  |  |  |  |  | 681 |
Dividends on common stock, |  |  |  |  |  |  |  |  |
$0.99 per share |  |  |  |  |  |  | (249) |  |  | (249) |
Share repurchases | (3) |  |  | (19) |  |  |  |  | (569) |  |  | (591) |
Stock-based compensation |  |  | 12 |  |  |  |  | (1) |  |  | 11 |
Balance at March 31, 2021 | $ | 251 |  |  | $ | 2,241 |  |  | $ | (586) |  |  | $ | 12,737 |  |  | $ | 14,643 |

See accompanying notes to consolidated financial statements.
7

Norfolk Southern Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
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, 2022 and December 31, 2021, our results of operations, comprehensive income and changes in stockholders’ equity for the first quarters of 2022 and 2021, and our cash flows for the first three months of 2022 and 2021 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.
1. Railway Operating Revenues
The following table disaggregates our revenues by major commodity group:

|  | First Quarter |  |
|  | 2022 |  | 2021 |  |  |  |
|  | ($ in millions)
Merchandise: |  |
Agriculture, forest and consumer products |  | $ | 573 |  |  | $ | 539 |  |  |  |  |
Chemicals |  | 498 |  |  | 459 |  |  |  |  |
Metals and construction |  | 375 |  |  | 370 |  |  |  |  |
Automotive |  | 226 |  |  | 240 |  |  |  |  |
Merchandise |  | 1,672 |  |  | 1,608 |  |  |  |  |
Intermodal |  | 854 |  |  | 719 |  |  |  |  |
Coal |  | 389 |  |  | 312 |  |  |  |  |
Total |  | $ | 2,915 |  |  | $ | 2,639 |  |  |  |  |

We recognize the amount of revenues to which we expect to be entitled for the transfer of promised goods or services to customers. A performance obligation is created when a customer under a transportation contract or public tariff submits a bill of lading to us for the transport of goods. These performance obligations are satisfied as the shipments move from origin to destination. As such, transportation revenues are recognized proportionally as a shipment moves, and related expenses are recognized as incurred. These performance obligations are generally short-term in nature with transit days averaging approximately one week or less for each commodity group. The customer has an unconditional obligation to pay for the service once the service has been completed. Estimated revenues associated with in-process shipments at period-end are recorded based on the estimated percentage of service completed. We had no material remaining performance obligations at March 31, 2022 and December 31, 2021.
We may provide customers ancillary services, such as switching, demurrage and other incidental activities, under their transportation contracts. These are distinct performance obligations that are recognized at a point in time when the services are performed or as contractual obligations are met. These revenues are included within each of the commodity groups and represent approximately 7% and 6% of total “Railway operating revenues” on the Consolidated Statements of Income for the first quarters ended March 31, 2022 and 2021, respectively.
Revenues related to interline transportation services that involve another railroad are reported on a net basis. Therefore, the portion of the amount that relates to another party is not reflected in revenues.
8

Under the typical terms of our freight contracts, payment for services is due within fifteen days of billing the customer, thus there are no significant financing components. “Accounts receivable – net” on the Consolidated Balance Sheets includes both customer and non-customer receivables as follows:

|  | March 31, 2022 |  | December 31, 2021
|  | ($ in millions)
Customer |  | $ | 830 |  |  | $ | 741 |
Non-customer |  | 240 |  |  | 235 |
Accounts receivable – net |  | $ | 1,070 |  |  | $ | 976 |

Non-customer receivables include non-revenue related amounts due from other railroads, governmental entities, and others. There were no non-current customer receivables at March 31, 2022, while “Other assets” on the Consolidated Balance Sheets includes $23 million at December 31, 2021. We do not have any material contract assets or liabilities at March 31, 2022 and December 31, 2021.
2. Stock-Based Compensation

|  | First Quarter |  |
|  | 2022 |  | 2021 |  |  |  |
|  | ($ in millions)
Stock-based compensation expense |  | $ | 23 |  |  | $ | 16 |  |  |  |  |
Total tax benefit |  | 13 |  |  | 17 |  |  |  |  |

During the first quarter of 2022, 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 |  | 132,170 |  |  | $ | 60.40 |  |  |  |  |
RSUs |  | 154,901 |  |  | 268.48 |  |  |  |  |
PSUs |  | 49,025 |  |  | 274.84 |  |  |  |  |

9

Stock Options

|  | First Quarter |  |
|  | 2022 |  | 2021 |  |  |  |
|  | ($ in millions)
Options exercised |  | 119,343 |  | 212,546 |  |  |  |  |
Cash received upon exercise |  | $ | 10 |  |  | $ | 19 |  |  |  |  |
Related tax benefits realized |  | 5 |  |  | 7 |  |  |  |  |

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). 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.

|  | First Quarter |  |
|  | 2022 |  | 2021 |  |  |  |
|  | ($ in millions)
RSUs vested |  | 243,301 |  |  | 257,397 |  |  |  |  |
Common Stock issued net of tax withholding |  | 172,364 |  |  | 182,289 |  |  |  |  |
Related tax benefits realized |  | $ | 5 |  |  | $ | 7 |  |  |  |  |

Performance Share Units
PSUs provide for awards based on the achievement of certain predetermined corporate performance goals at the end of a three-year cycle and are settled through the issuance of shares of Common Stock. All PSUs will earn out based on the achievement of performance conditions and some will also earn out based on a market condition. The market condition fair value was measured on the date of grant using a Monte Carlo simulation model.

|  | First Quarter
|  | 2022 |  | 2021
|  | ($ in millions)
PSUs earned |  | 86,420 |  |  | 78,727
Common Stock issued net of tax withholding |  | 54,651 |  |  | 49,967
Related tax benefits realized |  | $ | 1 |  |  | $ | 1 |

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3. Earnings Per Share
The following table sets forth the calculation of basic and diluted earnings per share:

| Basic |  | Diluted
| First Quarter
| 2022 |  | 2021 |  | 2022 |  | 2021
| ($ in millions, except per share amounts, shares in millions)
Net income | $ | 703 |  |  | $ | 673 |  |  | $ | 703 |  |  | $ | 673 |
Dividend equivalent payments | — |  |  | (1) |  |  | — |  |  | — |
Income available to common stockholders | $ | 703 |  |  | $ | 672 |  |  | $ | 703 |  |  | $ | 673 |
Weighted-average shares outstanding | 239.3 |  |  | 251.4 |  |  | 239.3 |  |  | 251.4 |
Dilutive effect of outstanding options and share-settled awards |  |  |  |  | 0.9 |  |  | 1.2 |
Adjusted weighted-average shares outstanding |  |  |  |  | 240.2 |  |  | 252.6 |
Earnings per share | $ | 2.94 |  |  | $ | 2.67 |  |  | $ | 2.93 |  |  | $ | 2.66 |

During the first quarters of 2022 and 2021, dividend equivalent payments were made to certain holders of stock options and RSUs. For purposes of computing basic earnings per share, dividend equivalent payments made to holders of stock options and RSUs were deducted from net income to determine income available to common stockholders. For purposes of computing diluted earnings per share, we evaluate on a grant-by-grant basis those stock options and RSUs receiving dividend equivalent payments under the two-class and treasury stock methods to determine which method is more dilutive for each grant. For those grants for which the two-class method was more dilutive, net income was reduced by dividend equivalent payments to determine income available to common stockholders. The dilution calculations exclude options having exercise prices exceeding the average market price of Common Stock as follows: 0.1 million and none in the first quarters ended March 31, 2022 and 2021, respectively.
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4. Accumulated Other Comprehensive Loss
The changes in the cumulative balances of “Accumulated other comprehensive loss” reported in the Consolidated Balance Sheets consisted of the following:

| Balance at Beginning of Year |  | Net Income |  | Reclassification Adjustments |  | Balance at End of Period
| ($ in millions)
Three months ended March 31, 2022 |  |  |  |  |  |  |
Pensions and other postretirement liabilities | $ | (356) |  |  | $ | — |  |  | $ | 4 |  |  | $ | (352) |
Other comprehensive income (loss) of equity investees | (46) |  |  | 4 |  |  | — |  |  | (42) |
Accumulated other comprehensive loss | $ | (402) |  |  | $ | 4 |  |  | $ | 4 |  |  | $ | (394) |
Three months ended March 31, 2021 |  |  |  |  |  |  |
Pensions and other postretirement liabilities | $ | (526) |  |  | $ | — |  |  | $ | 8 |  |  | $ | (518) |
Other comprehensive loss of equity investees | (68) |  |  | — |  |  | — |  |  | (68) |
Accumulated other comprehensive loss | $ | (594) |  |  | $ | — |  |  | $ | 8 |  |  | $ | (586) |

5. Stock Repurchase Program
We repurchased and retire d 2.2 million and 2.3 million shares of Common Stock under our stock repurchase program during the first three months of 2022 and 2021, respectively, at a cost of $600 million and $591 million, respectively. On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $10.0 billion of Common Stock beginning April 1, 2022. Our previous share repurchase program terminated on March 31, 2022.
6. Investments
Investment in Conrail
Through a limited liability company, we and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC). We have a 58% economic and 50% voting interest in the jointly-owned entity, and CSX has the remainder of the economic and voting interests. Our investment in Conrail was $1.5 billion at both March 31, 2022 and December 31, 2021.
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. (CSXT). The costs of operating the Shared Assets Areas are borne by NSR and CSXT based on usage. In addition, NSR and CSXT pay CRC a fee for access to the Shared Assets Areas. “Purchased services and rents” and “Fuel” include expenses payable to CRC for operation of the Shared Assets Areas totaling $38 million and $34 million for the first quarters of 2022 and 2021, respectively. Our equity in Conrail’s earnings, net of amortization, was $14 million for both the first quarters of 2022 and 2021. 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 March 31, 2022, and December 31, 2021 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of 1.31%.
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Investment in TTX
We and eight other North American railroads collectively own TTX Company (TTX), a railcar pooling company that provides its owner-railroads with standardized fleets of intermodal, automotive, and general use railcars at stated rates. We have a 19.65% ownership interest in TTX.
Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” This amounted to $64 million and $63 million for the first quarters of 2022 and 2021, respectively. Our equity in TTX’s earnings partially offsets these costs and totaled $10 million and $17 million for the first quarters of 2022 and 2021, respectively.
7. Debt
In February 2022, we issued $600 million of 3.00% senior notes due 2032 and $400 million of 3.70% senior notes due 2053.
We have in place an accounts receivable securitization program with a maximum borrowing capacity of $400 million and a term that expires in May 2022. We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both March 31, 2022 and December 31, 2021.
8. Pensions and Other Postretirement Benefits
We have both funded and unfunded defined benefit pension plans covering eligible employees. We also provide specified health care benefits to eligible retired employees; these plans can be amended or terminated at our option. Under our self-insured retiree health care plan, for those participants who are not Medicare-eligible, certain health care expenses are covered for retired employees and their dependents, reduced by any deductibles, coinsurance, and, in some cases, coverage provided under other group insurance policies. Eligible retired participants and their spouses who are Medicare-eligible are not covered under the self-insured retiree health care plan, but instead are provided with an employer-funded health reimbursement account which can be used for reimbursement of health insurance premiums or eligible out-of-pocket medical expenses.
Pension and postretirement benefit cost components were as follows:

| Pension Benefits |  | Other Postretirement Benefits
| First Quarter
| 2022 |  | 2021 |  | 2022 |  | 2021
| ($ in millions)
Service cost | $ | 10 |  |  | $ | 11 |  |  | $ | 1 |  |  | $ | 2 |
Interest cost | 17 |  |  | 13 |  |  | 2 |  |  | 2 |
Expected return on plan assets | (53) |  |  | (48) |  |  | (3) |  |  | (3) |
Amortization of net losses | 12 |  |  | 17 |  |  | — |  |  | — |
Amortization of prior service benefit | — |  |  | — |  |  | (6) |  |  | (6) |
Net benefit | $ | (14) |  |  | $ | (7) |  |  | $ | (6) |  |  | $ | (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 (expense) – net” on the Consolidated Statements of Income.
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9. Fair Values of Financial Instruments
The fair values of “Cash and cash equivalents,” “Accounts receivable – net,” and “Accounts payable,” approximate carrying values because of the short maturity of these financial instruments. The carrying value of corporate-owned life insurance 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 March 31, 2022 or December 31, 2021. The carrying amounts and estimated fair values, based on Level 1 inputs, of long-term debt consist of the following:

| March 31, 2022 |  | December 31, 2021
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
| ($ in millions)
Long-term debt, including current maturities | $ | (14,844) |  |  | $ | (16,251) |  |  | $ | (13,840) |  |  | $ | (17,033) |

10. Commitments and Contingencies
Lawsuits
We and/or certain subsidiaries are defendants in numerous lawsuits and other claims relating principally to railroad operations. When we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings and, if material, disclosed below. While the ultimate amount of liability incurred in any of these lawsuits and claims is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payment of such liability and claims. However, the final outcome of any of these lawsuits and claims cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known. For lawsuits and other claims where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed below. We routinely review relevant information with respect to our lawsuits and other claims and update our accruals, disclosures and estimates of reasonably possible loss based on such reviews.
In 2007, various antitrust class actions filed against us and other Class I railroads in various Federal district courts regarding fuel surcharges were consolidated in the District of Columbia by the Judicial Panel on Multidistrict Litigation. In 2012, the court certified the case as a class action. The defendant railroads appealed this certification, and the Court of Appeals for the District of Columbia vacated the District Court’s decision and remanded the case for further consideration. On October 10, 2017, the District Court denied class certification. The decision was upheld by the Court of Appeals on August 16, 2019. Since that decision, various individual cases have been filed in multiple jurisdictions and also consolidated in the District of Columbia. We believe the allegations in the complaints are without merit and intend to vigorously defend the cases. We do not believe the outcome of these proceedings will have a material effect on our financial position, results of operations, or liquidity.
In 2018, a lawsuit was filed against one of our subsidiaries by the minority owner in a jointly-owned terminal railroad company in which our subsidiary has the majority ownership. The lawsuit alleged violations of various state laws and federal antitrust laws. It is reasonably possible that we could incur a loss in the case; however, we intend to vigorously defend the case and believe that we will prevail. The potential range of loss cannot be estimated at this time.
Casualty Claims
Casualty claims include employee personal injury and occupational claims as well as third-party claims, all exclusive of legal costs. To aid in valuing our personal injury liability and determining the amount to accrue with respect to such claims during the year, we utilize studies prepared by an independent actuarial consulting firm. Job-
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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. While the ultimate amount of claims incurred is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payments of claims and is supported by the most recent actuarial study. In all cases, we record a liability when the expected loss for the claim is both probable and reasonably estimable.
Employee personal injury claims – The largest component of claims expense is employee personal injury costs. The independent actuarial firm we engage provides quarterly studies to aid in valuing our employee personal injury liability and estimating personal injury expense. The actuarial firm studies our historical patterns of reserving for claims and subsequent settlements, taking into account relevant outside influences. The actuarial firm uses the results of these analyses to estimate the ultimate amount of liability. We adjust the liability quarterly based upon our assessment and the results of the study. The accuracy of our estimate of the liability is subject to inherent limitation given the difficulty of predicting future events such as jury decisions, court interpretations, or legislative changes. As a result, actual claim settlements may vary from the estimated liability recorded.
Occupational claims – Occupational claims include injuries and illnesses alleged to be caused by exposures which occur over time as opposed to injuries or illnesses caused by a specific accident or event. Types of occupational claims commonly seen allege exposure to asbestos and other claimed toxic substances resulting in respiratory diseases or cancer. Many such claims are being asserted by former or retired employees, some of whom have not been employed in the rail industry for decades. The independent actuarial firm provides an estimate of the occupational claims liability based upon our history of claim filings, severity, payments, and other pertinent facts. The liability is dependent upon judgments we make as to the specific case reserves as well as judgments of the actuarial firm in the quarterly studies. Our estimate of ultimate loss includes a provision for those claims that have been incurred but not reported. This provision is derived by analyzing industry data and projecting our experience. We adjust the liability quarterly based upon our assessment and the results of the study. However, it is possible that the recorded liability may not be adequate to cover the future payment of claims. Adjustments to the recorded liability are reflected in operating expenses in the periods in which such adjustments become known.
Third-party claims – We record a liability for third-party claims including those for highway crossing accidents, trespasser and other injuries, property damage, and lading damage. The actuarial firm assists us with the calculation of potential liability for third-party claims, except lading damage, based upon our experience including the number and timing of incidents, amount of payments, settlement rates, number of open claims, and legal defenses. We adjust the liability quarterly based upon our assessment and the results of the study. Given the inherent uncertainty in regard to the ultimate outcome of third-party claims, it is possible that the actual loss may differ from the estimated liability recorded.
Environmental Matters
We are subject to various jurisdictions’ environmental laws and regulations. We record a liability where such liability or loss is probable and reasonably estimable. Environmental specialists regularly participate in ongoing evaluations of all known sites and in determining any necessary adjustments to liability estimates.
Our Consolidated Balance Sheets include liabilities for environmental exposures of $49 million at both March 31, 2022 and December 31, 2021, of which $15 million is classified as a current liability at the end of both periods. At March 31, 2022, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 89 known locations and projects compared with 88 locations and projects at December 31, 2021. At March 31, 2022, eighteen sites accounted for $37 million of the liability, and no individual site was considered to be material. We anticipate that most of this liability will be paid out over five years; however, some costs will be paid out over a longer period.
At eight locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under the Comprehensive Environmental Response, Compensation and
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Liability Act of 1980 or comparable state statutes that impose joint and several liability for cleanup costs. We calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not solely on the basis of the potential for joint liability.
With respect to known environmental sites (whether identified by us or by the Environmental Protection Agency or comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the aggregate for all such sites can change over time because of the widely varying costs of currently available cleanup techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies, the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to bear it), and evolving statutory and regulatory standards governing liability.
The risk of incurring environmental liability for acts and omissions, past, present, and future, is inherent in the railroad business. Some of the commodities we transport, particularly those classified as hazardous materials, pose special risks that we work diligently to reduce. In addition, several of our subsidiaries own, or have owned, land used as operating property, or which is leased and operated by others, or held for sale. Because environmental problems that are latent or undisclosed may exist on these properties, there can be no assurance that we will not incur environmental liabilities or costs with respect to one or more of them, the amount and materiality of which cannot be estimated reliably at this time. Moreover, lawsuits and claims involving these and potentially other unidentified environmental sites and matters are likely to arise from time to time. The resulting liabilities could have a significant effect on financial position, results of operations, or liquidity in a particular year or quarter.
Based on our assessment of the facts and circumstances now known, we believe we have recorded the probable and reasonably estimable costs for dealing with those environmental matters of which we are aware. Further, we believe that it is unlikely that any known matters, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, or liquidity.
Insurance
We purchase insurance covering legal liabilities for bodily injury and property damage to third parties. This insurance provides coverage above $75 million and below $800 million ($1.1 billion for specific perils) per occurrence and/or policy year. In addition, we purchase insurance covering damage to property owned by us or in our care, custody, or control. This insurance covers approximately 87% of potential losses above $75 million and below $275 million per occurrence and/or policy year.
11. New Accounting Pronouncements
In November 2021, the Financial Accounting Standards Board issued Accounting Standards Update 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. The new standard is effective for annual periods beginning after December 15, 2021, and early adoption is permitted. We do not expect this standard to have a material effect on our disclosures. We did not adopt the standard early.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Norfolk Southern Corporation and Subsidiaries
The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes.
OVERVIEW
We are one of the nation’s premier transportation companies, moving goods and materials that help drive the U.S. economy. We connect customers to markets and communities to economic opportunity with safe, reliable, and cost-effective shipping solutions. Our Norfolk Southern Railway Company subsidiary operates in 22 states and the District of Columbia. We are a major transporter of industrial products, including agriculture, forest and consumer products, chemicals, and metals and construction materials. In addition, in the East we serve every major container port and operate the most extensive intermodal network. We are also a principal carrier of coal, automobiles, and automotive parts.
Revenue grew 10% in the first quarter as a result of stronger average revenue per unit. Volumes declined compared to the prior year, partly attributable to lower network velocity, and we are progressing with initiatives to improve network fluidity and resiliency for our customers. We experienced an increase in fuel commodity prices, which led to higher fuel surcharge revenues and fuel expense. The overall increase in revenue drove improvements in income from railway operations, net income and diluted earnings per share. However, the net impact of fuel prices on revenues and expenses contributed to the degradation of the operating ratio.
The COVID-19 pandemic continues to impact the U.S. and global economies and has resulted in ongoing supply chain challenges. We are monitoring and reacting to the evolving nature of the pandemic, governmental responses, and their impacts on our business, including employee availability. We remain committed to protecting our employees, operating safely, and providing excellent transportation service products for our customers.
SUMMARIZED RESULTS OF OPERATIONS

| First Quarter |  |
| 2022 |  | 2021 |  | % change |  |  |  |  |  |
| ($ in millions, except per share amounts)
Income from railway operations | $ | 1,085 |  |  | $ | 1,015 |  |  | 7% |  |  |  |  |  |
Net income | $ | 703 |  |  | $ | 673 |  |  | 4% |  |  |  |  |  |
Diluted earnings per share | $ | 2.93 |  |  | $ | 2.66 |  |  | 10% |  |  |  |  |  |
Railway operating ratio (percent) | 62.8 |  |  | 61.5 |  |  | 2% |  |  |  |  |  |

Income from railway operations increased due to higher railway operating revenues. Revenue growth was driven by higher fuel surcharge revenues and pricing gains, which exceeded the impact of a 5% volume decline. The rise in revenues was offset in part by increased railway operating expenses, driven by higher fuel prices, other inflationary pressures, and service-related costs. Our share repurchase activity resulted in the increase in diluted earnings per share that exceeded the increase in net income.
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DETAILED RESULTS OF OPERATIONS
Railway Operating Revenues
The following tables present a comparison of revenues ($ in millions), units (in thousands), and average revenue per unit ($ per unit) by commodity group.

| First Quarter |  |
Revenues | 2022 |  | 2021 |  | % change |  |  |  |  |  |
Merchandise: |  |  |  |  |  |  |  |  |  |  |
Agriculture, forest and consumer products | $ | 573 |  |  | $ | 539 |  |  | 6% |  |  |  |  |  |
Chemicals | 498 |  |  | 459 |  |  | 8% |  |  |  |  |  |
Metals and construction | 375 |  |  | 370 |  |  | 1% |  |  |  |  |  |
Automotive | 226 |  |  | 240 |  |  | (6%) |  |  |  |  |  |
Merchandise | 1,672 |  |  | 1,608 |  |  | 4% |  |  |  |  |  |
Intermodal | 854 |  |  | 719 |  |  | 19% |  |  |  |  |  |
Coal | 389 |  |  | 312 |  |  | 25% |  |  |  |  |  |
Total | $ | 2,915 |  |  | $ | 2,639 |  |  | 10% |  |  |  |  |  |

Units |  |  |  |  |  |  |
Merchandise: |  |  |  |  |  |  |  |  |  |  |
Agriculture, forest and consumer products | 177.6 |  |  | 178.3 |  |  | —% |  |  |  |  |  |
Chemicals | 129.4 |  |  | 127.0 |  |  | 2% |  |  |  |  |  |
Metals and construction | 148.0 |  |  | 155.0 |  |  | (5%) |  |  |  |  |  |
Automotive | 81.2 |  |  | 93.7 |  |  | (13%) |  |  |  |  |  |
Merchandise | 536.2 |  |  | 554.0 |  |  | (3%) |  |  |  |  |  |
Intermodal | 956.5 |  |  | 1,016.4 |  |  | (6%) |  |  |  |  |  |
Coal | 165.6 |  |  | 166.5 |  |  | (1%) |  |  |  |  |  |
Total | 1,658.3 |  |  | 1,736.9 |  |  | (5%) |  |  |  |  |  |

Revenue per Unit |  |  |  |  |  |  |
Merchandise: |  |  |  |  |  |  |  |  |  |  |
Agriculture, forest and consumer products | $ | 3,228 |  |  | $ | 3,026 |  |  | 7% |  |  |  |  |  |
Chemicals | 3,850 |  |  | 3,615 |  |  | 7% |  |  |  |  |  |
Metals and construction | 2,535 |  |  | 2,386 |  |  | 6% |  |  |  |  |  |
Automotive | 2,776 |  |  | 2,557 |  |  | 9% |  |  |  |  |  |
Merchandise | 3,118 |  |  | 2,903 |  |  | 7% |  |  |  |  |  |
Intermodal | 893 |  |  | 708 |  |  | 26% |  |  |  |  |  |
Coal | 2,347 |  |  | 1,872 |  |  | 25% |  |  |  |  |  |
Total | 1,758 |  |  | 1,519 |  |  | 16% |  |  |  |  |  |

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Railway operating revenues increased $276 million compared with the same period last year. The table below reflects the components of the revenue change by major commodity group ($ in millions).

| First Quarter |  |
| Merchandise |  | Intermodal |  | Coal |  |  |  |  |  |
| Increase (Decrease)
Volume | $ | (51) |  |  | $ | (42) |  |  | $ | (2) |  |  |  |  |  |  |
Fuel surcharge revenue | 67 |  |  | 73 |  |  | 7 |  |  |  |  |  |  |
Rate, mix and other | 48 |  |  | 104 |  |  | 72 |  |  |  |  |  |  |
Total | $ | 64 |  |  | $ | 135 |  |  | $ | 77 |  |  |  |  |  |  |

Approximately 90% of our revenue base is covered by contracts that include negotiated fuel surcharges. Revenues associated with these surcharges totaled $244 million and $97 million in 2022 and 2021, respectively. The increase in fuel surcharge revenues is driven by higher fuel commodity prices. Should the current fuel price environment persist for the remainder of 2022, we expect fuel surcharge revenue to be higher than 2021.
Merchandise
Merchandise revenues increased due to higher average revenue per unit driven by higher fuel surcharge revenue and increased pricing partially offset by decreased volume. Volumes fell as declines in automotive and metals and construction shipments more than offset higher chemical shipments.
Agriculture, forest and consumer products volume decreased, as declines in corn, soybeans, and fertilizers more than offset increases in ethanol and feed. Decreased corn and fertilizer shipments were due to decreased customer demand. Soybean volumes were lower due to slower equipment cycle times. Ethanol and feed shipments were higher due to increased demand in those markets.
Chemicals volume rose as growth in shipments of solid waste and natural gas liquids more than offset declines in petroleum. Volume gains for solid waste and natural gas liquids were driven by increased growth with existing customers. Petroleum volume declined as a result of reduced demand.
Metals and construction volume fell, largely the result of decreased shipments of coil steel, iron and steel driven by commodity pricing and slower equipment cycle times. These declines were partially offset by higher aggregates traffic due to strong demand and rebuilding inventories.
Automotive volume declined due to plant shutdowns, as a result of the global microchip shortage, and slower equipment cycle times.
Merchandise revenues for the remainder of the year are expected to be higher due to increased average revenue per unit, driven by higher fuel surcharge revenue and pricing gains, and volume growth.
Intermodal
Intermodal revenues increased, driven by higher average revenue per unit, a result of higher fuel surcharge revenues, pricing gains and storage service charges, partially offset by lower volume.
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Intermodal units (in thousands) by market were as follows:

| First Quarter |  |
| 2022 |  | 2021 |  | % change |  |  |  |  |  |
Domestic | 653.4 |  |  | 639.0 |  |  | 2% |  |  |  |  |  |
International | 303.1 |  |  | 377.4 |  |  | (20%) |  |  |  |  |  |
Total | 956.5 |  |  | 1,016.4 |  |  | (6%) |  |  |  |  |  |

Domestic volume rose due to strong demand, partially offset by labor and capacity constraints, overall supply chain congestion, and limited chassis availability. International volume decreased as supply chain constraints with warehousing, drayage, terminals, ports, labor, and equipment more than offset strong consumer demand.
Intermodal revenues for the remainder of the year are expected to rise, driven by increased fuel surcharge revenue, pricing gains, and volume growth, partially offset by lower storage service revenues.
Coal
Coal revenues increased due to higher average revenue per unit, driven by pricing gains and higher fuel surcharge revenue.
Coal tonnage (in thousands) by market was as follows:

| First Quarter |  |
| 2022 |  | 2021 |  | % change |  |  |  |  |  |
Utility | 8,961 |  |  | 8,546 |  |  | 5% |  |  |  |  |  |
Export | 6,414 |  |  | 6,693 |  |  | (4%) |  |  |  |  |  |
Domestic metallurgical | 2,430 |  |  | 2,487 |  |  | (2%) |  |  |  |  |  |
Industrial | 803 |  |  | 899 |  |  | (11%) |  |  |  |  |  |
Total | 18,608 |  |  | 18,625 |  |  | —% |  |  |  |  |  |

Coal tonnage was flat due to increased utility volume, offset by reduced export, domestic metallurgical, and industrial tonnage. Utility tonnage increased due to strengthened market conditions driven by increased natural gas prices and the need to replenish depleted inventories. Export tonnage decreased due to service disruptions and tight coal supply. Domestic metallurgical coal tonnage fell due to reduced coke shipments related to customer sourcing changes. Industrial coal tonnage decreased due to sourcing challenges with coal supply.
Coal revenues for the remainder of the year are expected to rise due to increased revenue per unit, driven by increased fuel surcharge revenue and pricing gains. Volumes are expected to remain flat.
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Railway Operating Expenses
Railway operating expenses summarized by major classifications follow ($ in millions):

| First Quarter |  |
| 2022 |  | 2021 |  | % change |  |  |  |  |  |
Compensation and benefits | $ | 619 |  |  | $ | 611 |  |  | 1% |  |  |  |  |  |
Purchased services and rents | 437 |  |  | 393 |  |  | 11% |  |  |  |  |  |
Fuel | 301 |  |  | 177 |  |  | 70% |  |  |  |  |  |
Depreciation | 302 |  |  | 292 |  |  | 3% |  |  |  |  |  |
Materials and other | 171 |  |  | 151 |  |  | 13% |  |  |  |  |  |
Total | $ | 1,830 |  |  | $ | 1,624 |  |  | 13% |  |  |  |  |  |

Compensation and benefits expense increased as follows:
•increased pay rates (up $10 million),
•overtime (up $9 million),
•stock-based and incentive compensation (up $8 million),
•employee activity levels (down $17 million), and
•other (down $2 million).
Average rail headcount for the quarter was down by over 500 compared with the first quarter of 2021, but up over 200 compared to the fourth quarter of 2021.
Purchased services and rents increased as follows ($ in millions):

| First Quarter |  |
| 2022 |  | 2021 |  | % change |  |  |  |  |  |
Purchased services | $ | 349 |  |  | $ | 318 |  |  | 10% |  |  |  |  |  |
Equipment rents | 88 |  |  | 75 |  |  | 17% |  |  |  |  |  |
Total | $ | 437 |  |  | $ | 393 |  |  | 11% |  |  |  |  |  |

Purchased services increased due to higher intermodal-related expenses, technology costs, as well as, increased operational and transportation expenses. Equipment rents increased due to lower equity in TTX earnings, increased automotive equipment expenses and greater time-and-mileage expense, partially offset by decreased intermodal equipment expenses.
Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, increased due to higher locomotive fuel prices (up 77%), partially offset by decreased consumption (down 2%). Should the current fuel price environment persist for the remainder of 2022, we expect higher fuel expenses compared to 2021.
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Materials and other expenses increased as follows ($ in millions):

| First Quarter |  |
| 2022 |  | 2021 |  | % change |  |  |  |  |  |
Materials | $ | 62 |  |  | $ | 61 |  |  | 2% |  |  |  |  |  |
Claims | 49 |  |  | 38 |  |  | 29% |  |  |  |  |  |
Other | 60 |  |  | 52 |  |  | 15% |  |  |  |  |  |
Total | $ | 171 |  |  | $ | 151 |  |  | 13% |  |  |  |  |  |

Materials expense remained relatively flat. Claims expense increased as a result of higher costs associated with personal injuries. Other expense increased due to higher sales and use taxes and travel expenses. Gains from operating property sales, included in Other, totaled $6 million and $4 million in 2022 and 2021, respectively.
Other income (expense) – net
Other income (expense) – net decreased $12 million due to lower net returns on corporate-owned life insurance (COLI) partially offset by a higher net pension benefit.
Income taxes
The first-quarter effective tax rate was 22.9% compared with 22.3% in the same period last year. The effective rate for 2022 reflects lower tax benefits on stock-based compensation and returns on COLI.
FINANCIAL CONDITION AND LIQUIDITY
Cash provided by operating activities, our principal source of liquidity, was $1.0 billion for both the first three months of 2022 and 2021. We had negative working capital of $132 million and $354 million at March 31, 2022 and December 31, 2021, respectively. Cash and cash equivalents totaled $1.6 billion at March 31, 2022.
Cash used in investing activities was $335 million for the first three months of 2022, compared with $202 million for the same period last year. The increase was primarily driven by higher property additions.
Cash provided by financing activities was $73 million for the first three months of 2022, while $930 million was used in financing activities for the same period last year, reflecting increased proceeds from borrowing and lower debt repayments, partially offset by higher dividends. We repurchased $600 million of Common Stock in the first three months of 2022 compared to $591 million in the same period last year. On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to an additional $10.0 billion of Common Stock beginning April 1, 2022. Our previous share repurchase program terminated on March 31, 2022. The timing and volume of future share repurchases will be guided by our assessment of market conditions and other pertinent factors. Repurchases may be executed in the open market, through derivatives, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) under the Securities and Exchange Act of 1934. Any near-term purchases under the program are expected to be made with internally-generated cash, cash on hand, or proceeds from borrowings.
In February 2022, we issued $600 million of 3.00% senior notes due 2032 and $400 million of 3.70% senior notes due 2053.
Our debt-to-total capitalization ratio was 52.4% at March 31, 2022, and 50.4% at December 31, 2021. We have in place and available an $800 million credit agreement expiring in March 2025, which provides for borrowings at
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prevailing rates and includes covenants. We had no amounts outstanding under this facility at March 31, 2022 or December 31, 2021. We also have in place an accounts receivable securitization program with a maximum borrowing capacity of $400 million. The term expires in May 2022. We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both March 31, 2022, and December 31, 2021.
In addition, we have investments in general purpose corporate-owned life insurance policies and had the ability to borrow against these policies up to $675 million and $715 million at March 31, 2022 and December 31, 2021, respectively.
We expect cash on hand combined with cash provided by operating activities will be sufficient to meet our ongoing obligations. In addition, we believe our currently-available borrowing capacity, access to additional financing, and ability to reduce or defer expenditures on property additions and decrease shareholder distributions, including share repurchases, provide additional flexibility to meet our ongoing obligations. Nonetheless, we are monitoring the ongoing impacts of the COVID-19 pandemic, which could lead to a decline of cash inflows from operations. There have been no material changes to the information on future contractual obligations, including those that may have material cash requirements, contained in our Form 10-K for the year ended December 31, 2021, with the exception of additional senior notes (see Note 7) and $1.0 billion of additional unconditional purchase obligations, which extend through 2025.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. These estimates and assumptions may require judgment about matters that are inherently uncertain, and future events are likely to occur that may require us to make changes to these estimates and assumptions. Accordingly, we regularly review these estimates and assumptions based on historical experience, changes in the business environment, and other factors we believe to be reasonable under the circumstances. There have been no significant changes to the critical accounting estimates contained in our Form 10-K at December 31, 2021.
OTHER MATTERS
Labor Agreements
Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. Pursuant to the Railway Labor Act, these agreements remain in effect until new agreements are reached, or until the bargaining procedures mandated by the Railway Labor Act are completed. We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee. Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements. The current round of bargaining commenced on November 1, 2019, with both management and the unions serving their formal proposals for changes to the collective bargaining agreements, and negotiations are ongoing with the assistance of mediators assigned by the National Mediation Board.
New Accounting Pronouncements
For a detailed discussion of new accounting pronouncements, see Note 11.
Inflation
In preparing financial statements, GAAP requires the use of historical cost that disregards the effects of inflation on the replacement cost of property. As a capital-intensive company, we have most of our capital invested in long-
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lived assets. The replacement cost of these assets, as well as the related depreciation expense, would be substantially greater than the amounts reported on the basis of historical cost.
FORWARD-LOOKING STATEMENTS
Certain statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “project,” “consider,” “predict,” “potential,” “feel,” or other comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates, beliefs, and projections. While we believe these expectations, assumptions, estimates, beliefs, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond our control. These and other important factors, including those discussed under “Risk Factors” in our latest Form 10-K, as well as our subsequent filings with the Securities and Exchange Commission, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements herein are made only as of the date they were first issued, and unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Additional Information
Investors and others should note that we routinely use the Investor Relations, Performance Metrics, and Sustainability sections of our website (www.norfolksouthern.com/content/nscorp/en/investor-relations.html, http://www.nscorp.com/content/nscorp/en/investor-relations/performance-metrics.html & www.nscorp.com/content/nscorp/en/about-ns/sustainability.html) to post presentations to investors and other important information, including information that may be deemed material to investors. Information about us, including information that may be deemed material, may also be announced by posts on our social media channels, including Twitter (www.twitter.com/nscorp) and LinkedIn (www.linkedin.com/company/norfolk-southern). We may also use our website and social media channels for the purpose of complying with our disclosure obligations under Regulation FD. As a result, we encourage investors, the media, and others interested in Norfolk Southern to review the information posted on our website and social media channels. The information posted on our website and social media channels is not incorporated by reference in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is included in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Financial Condition and Liquidity.”
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer, with the assistance of management, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) at March 31, 2022. Based on such evaluation, our officers have concluded that, at March 31, 2022, our disclosure controls and procedures were effective in alerting them on a timely basis to material information required to be included in our periodic filings under the Exchange Act.
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Changes in Internal Control Over Financial Reporting
During the first quarter of 2022, we have not identified any changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For information on our legal proceedings, see Note 10 “Commitments and Contingencies” in the Consolidated Financial Statements.
Item 1A. Risk Factors
The risks set forth in “Risk Factors” included in our 2021 Form 10-K could have a material adverse effect on our financial position, results of operations, or liquidity in a particular year or quarter, and could cause those results to differ materially from those expressed or implied in our forward-looking statements. Those risks remain unchanged and are incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Period |  | (a) Total Number of Shares (or Units) Purchased (1) |  | (b) Average Price Paid per Share (or Unit) |  | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) |  | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be purchased under the Plans or Programs (2) |
January 1-31, 2022 |  | 710,845 |  |  | $ | 282.97 |  |  | 710,641 |  |  | 7,329,432 |  |
February 1-28, 2022 |  | 713,439 |  |  | 268.21 |  |  | 713,439 |  |  | 6,615,993 |  |
March 1-31, 2022 |  | 755,546 |  |  | 274.63 |  |  | 754,866 |  |  | 5,861,127 |  |
Total |  | 2,179,830 |  |  |  |  | 2,178,946 |  |  |  |

(1)Of this amount, 884 represent shares tendered by employees in connection with the exercise of options under the stockholder-approved LTIP.
(2)On September 26, 2017, our Board of Directors authorized the repurchase of up to an additional 50 million shares of Common Stock through December 31, 2022. On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $10.0 billion of Common Stock beginning April 1, 2022. Our previous share repurchase program terminated on March 31, 2022.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
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Item 5. Other Information
None.
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Item 6. Exhibits

1.1 | Underwriting Agreement, dated February 15, 2022, among the Registrant and Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and U.S. Bancorp Investments, Inc., is incorporated by reference to Exhibit 1.1 of the Registrant’s Current Report on Form 8-K filed on February 17, 2022.
4.1 | Eighth Supplemental Indenture, dated February 25, 2022, between the Registrant and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee, is incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed on February 25, 2022.
31-A* | Rule 13a-14(a)/15d-014(a) CEO Certifications.
31-B* | Rule 13a-14(a)/15d-014(a) CFO Certifications.
32* | Section 1350 Certifications.
101* | The following financial information from Norfolk Southern Corporation’s Quarterly Report on Form 10-Q for the first quarter of 2022, formatted in Inline Extensible Business Reporting Language (iXBRL) includes (i) the Consolidated Statements of Income for the first quarter of 2022 and 2021; (ii) the Consolidated Statements of Comprehensive Income for the first quarter of 2022 and 2021; (iii) the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021; (iv) the Consolidated Statements of Cash Flows for the first three months of 2022 and 2021; (v) the Consolidated Statements of Changes in Stockholders’ Equity for the first quarter of 2022 and 2021; and (vi) the Notes to Consolidated Financial Statements.
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | NORFOLK SOUTHERN CORPORATION Registrant
Date: | April 27, 2022 | /s/ Claiborne L. Moore
|  | Claiborne L. Moore Vice President and Controller (Principal Accounting Officer) (Signature)
Date: | April 27, 2022 | /s/ Denise W. Hutson
|  | Denise W. Hutson Corporate Secretary (Signature)

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