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for the fiscal year ended December 31, 2022

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)

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

Title of each class			Trading Symbol(s)			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 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 ☐

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant’s definitive proxy statement to be filed electronically pursuant to Regulation 14A not later than 120 days after the end of the fiscal year, are incorporated herein by reference in Part III.

									Page
Part I.			Items 1 and 2.			Business and Properties			K3
			Item 1A.			Risk Factors			K11
			Item 1B.			Unresolved Staff Comments			K15
			Item 3.			Legal Proceedings			K16
			Item 4.			Mine Safety Disclosures			K16
						Information About Our Executive Officers			K17
Part II.			Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and
						Issuer Purchases of Equity Securities			K18
			Item 7.			Management’s Discussion and Analysis of Financial Condition and
						Results of Operations			K19
			Item 7A.			Quantitative and Qualitative Disclosures About Market Risk			K32
			Item 8.			Financial Statements and Supplementary Data			K33
			Item 9.			Changes in and Disagreements with Accountants on Accounting and
						Financial Disclosure			K77
			Item 9A.			Controls and Procedures			K77
			Item 9B.			Other Information			K77
			Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			K77
Part III.			Item 10.			Directors, Executive Officers and Corporate Governance			K78
			Item 11.			Executive Compensation			K78
			Item 12.			Security Ownership of Certain Beneficial Owners and Management
						and Related Stockholder Matters			K79
			Item 13.			Certain Relationships and Related Transactions, and Director Independence			K81
			Item 14.			Principal Accountant Fees and Services			K81
Part IV.			Item 15.			Exhibits and Financial Statement Schedule			K82
			Item 16.			Form 10-K Summary			K90
						Power of Attorney			K91
						Signatures			K91

GENERAL – Norfolk Southern Corporation (Norfolk Southern) is an Atlanta, Georgia-based company that owns a major freight railroad, Norfolk Southern Railway Company (NSR).  We were incorporated on July 23, 1980, under the laws of the Commonwealth of Virginia.  Our common stock (Common Stock) is listed on the New York Stock Exchange (NYSE) under the symbol “NSC.”

RAILROAD OPERATIONS – At December 31, 2022, we operated approximately 19,100 route miles in 22 states and the District of Columbia.

 

			Mileage Operated at December 31, 2022
			Route Miles						Second and Other Main Track						Passing Track, Crossovers and Turnouts						Way and Yard Switching						Total
Owned			14,312						2,676						1,957						8,158						27,103
Operated under lease, contract or trackage
rights			4,825						1,889						406						841						7,961
Total			19,137						4,565						2,363						8,999						35,064

 

			Years ended December 31,
			2022						2021						2020						2019						2018
Revenue ton miles (billions)			179						178						164						194						207
Revenue per thousand revenue ton miles			$	71.35					$	62.56					$	59.67					$	58.21					$	55.25
Revenue ton miles (thousands) per railroad employee			9,513						9,694						8,191						7,939						7,822
Ratio of railway operating expenses to railway
operating revenues (railway operating ratio)			62.3%						60.1%						69.3%						64.7%						65.4%

RAILWAY OPERATING REVENUES – Total railway operating revenues were $12.7 billion in 2022.  Following is an overview of our three commodity groups. See the discussion of merchandise revenues by major commodity group, intermodal revenues, and coal revenues and tonnage in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

MERCHANDISE – Our merchandise commodity group is composed of four groupings: 

INTERMODAL – Our intermodal commodity group consists of shipments moving in domestic and international containers and trailers.  These shipments are handled on behalf of intermodal marketing companies, international steamship lines, premium customers and asset-owning companies. In 2022, we handled 3.9 million intermodal units, which accounted for 29% of our total railway operating revenues.

COAL – Coal revenues accounted for 14% of our total railway operating revenues in 2022.  We handled 77 million tons, or 0.7 million carloads, most of which originated on our lines from major eastern coal basins, with the balance from major western coal basins received via the Memphis and Chicago gateways. Our coal franchise supports the electric generation market, directly serving approximately 30 coal-fired power plants, as well as the export, domestic metallurgical and industrial markets, primarily through direct rail and river, lake, and coastal facilities, including various terminals on the Ohio River, at Lamberts Point in Norfolk, Virginia, at the Port of Baltimore, and on Lake Erie.

FREIGHT RATES – Our predominant pricing mechanisms, private contracts and exempt price quotes, are not subject to regulation. In general, market forces are the primary determinant of rail service prices.

Property Additions – Property additions for the past five years were as follows:

			2022						2021						2020						2019						2018
			($ in millions)
Road and other property			$	1,345					$	1,041					$	1,046					$	1,371					$	1,276
Equipment			603						429						448						648						675
Total			$	1,948					$	1,470					$	1,494					$	2,019					$	1,951

Equipment – At December 31, 2022, we owned or leased the following units of equipment:

 

			Owned						Leased						Total						Capacity of Equipment
Locomotives:																					(Horsepower)
Multiple purpose			3,046						—						3,046						11,845,600
Auxiliary units			140						—						140						—
Switching			4						—						4						4,400
Total locomotives			3,190						—						3,190						11,850,000
Freight cars:																					(Tons)
Gondola			17,391						2,836						20,227						2,265,085
Hopper			7,818						—						7,818						892,800
Covered hopper			5,571						—						5,571						619,424
Box			2,530						703						3,233						295,536
Flat			1,390						676						2,066						152,719
Other			1,555						—						1,555						69,649
Total freight cars			36,255						4,215						40,470						4,295,213
Other:
Chassis			35,393						1,100						36,493
Containers			18,047						—						18,047
Work equipment			5,408						243						5,651
Vehicles			2,976						14						2,990
Miscellaneous			2,243						—						2,243
Total other			64,067						1,357						65,424

 

			2022						2021						2020						2019						2018						2013- 2017						2008- 2012						2007 & Before						Total
Locomotives:
No. of units			—						1						10						36						15						260						231						2,637						3,190
% of fleet			—		%				—		%				—		%				1		%				1		%				8		%				7		%				83		%				100		%
Freight cars:
No. of units			236						—						—						200						—						4,202						8,843						22,774						36,255
% of fleet			1		%				—		%				—		%				—		%				—		%				12		%				24		%				63		%				100		%

 

			Locomotives						Freight Cars
Average age – in service			27.6 years						25.9 years
Retirements			22 units						1,209 units
Average age – retired			25.2 years						45.5 years

Track Maintenance – Of the 35,100 total miles of track on which we operate, we are responsible for maintaining 28,400 miles, with the remainder being operated under trackage rights from other parties responsible for maintenance.

The following table summarizes several measurements regarding our track roadway additions and replacements during the past five years:

			2022						2021						2020						2019						2018
Track miles of rail installed			541						458						418						449						416
Miles of track surfaced			4,155						4,225						4,785						5,012						4,594
Crossties installed (millions)			2.2						2.0						1.8						2.4						2.2

Traffic Control – Of the 16,200 route miles we dispatch, 11,300 miles are signalized, including 8,500 miles of centralized traffic control (CTC) and 2,800 miles of automatic block signals.  Of the 8,500 miles of CTC, 7,600 miles are controlled by data radio originating at 355 base station radio sites.

ENVIRONMENTAL MATTERS – Compliance with federal, state, and local laws and regulations relating to the protection of the environment is one of our principal goals.  To date, such compliance has not had a material effect on our financial position, results of operations, liquidity, or competitive position. See Note 17 to the Consolidated Financial Statements.

Workforce – We employed an average of 18,900 employees during 2022, and 19,300 employees at the end of 2022. Approximately 80% of our railroad employees – referred to as “craft” employees – are covered by collective bargaining agreements with various labor unions. See the discussion of “Labor Agreements” in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  The remainder of our workforce is composed of management employees.

Craft Workforce Levels and Productivity – Maintaining appropriate headcount levels for our craft-employee workforce is critical to our on-time and consistent delivery of customers’ goods and operational efficiency goals. We manage this human capital metric through forecasting tools designed to ensure the optimal level of staffing to meet business demands. We measure and monitor employee productivity based on various factors, including gross ton miles per train and engine employee.

Safety – We are dedicated to providing employees with a safe workplace and the knowledge and tools they need to work safely and return home safely every day. Our commitment to an injury-free workplace is outlined in our Foundation of Safety policy which focuses on rules compliance, responsibility, relationships, and responsiveness. Our safety programs, practices, and messaging further reinforces the importance of working safely. We measure

Attracting and Retaining Management Employees – Our talent strategy for management employees is essential to attracting strong candidates in a competitive talent environment. We evaluate the effectiveness of that strategy by studying market trends, benchmarking the attractiveness of our employee value proposition, maintaining a competitive compensation package, and analyzing retention data.

Employee Development and Training – We provide a range of developmental programs, opportunities, skills, and resources for our employees to be successful in their careers. We provide classroom instruction, hands-on training and simulation-based training designed to improve training effectiveness and safety outcomes.

Diversity, Equity, and Inclusion – As a leading transportation service company, we understand that competing in the global marketplace requires recruiting the most qualified, talented, and diverse people. We strive to create a diverse, equitable, and inclusive workplace where a wide range of perspectives and experiences are represented, valued, and empowered to thrive.

GOVERNMENT REGULATION – In addition to environmental, safety, securities, and other regulations generally applicable to all business, our railroads are subject to regulation by the U.S. Surface Transportation Board (STB).  The STB has jurisdiction to varying extents over rates, routes, customer access provisions, fuel surcharges, conditions of service, and the extension or abandonment of rail lines.  The STB has jurisdiction to determine whether we are “revenue adequate” on an annual basis based on the results of the prior year. A railroad is “revenue adequate” on an annual basis under the applicable law when its return on net investment exceeds the rail industry’s composite cost of capital.  This determination is made pursuant to a statutory requirement. The STB also has jurisdiction over the consolidation, merger, or acquisition of control of and by rail common carriers. 

COMPETITION – There is continuing strong competition among rail, water, and highway carriers.  Price is usually only one factor of importance as shippers and receivers choose a transport mode and specific hauling company. Inventory carrying costs, service reliability, ease of handling, and the desire to avoid loss and damage during transit are also important considerations, especially for higher-valued finished goods, machinery, and consumer products.  Even for raw materials, semi-finished goods, and work-in-progress, users are increasingly sensitive to transport arrangements that minimize problems at successive production stages.

SECURITY OF OPERATIONS – We continue to enhance the security of our rail system. Our comprehensive security plan is modeled on and was developed in conjunction with the security plan prepared by the Association of American Railroads (AAR) post September 11, 2001. The AAR Security Plan defines four Alert Levels and details the actions and countermeasures that are being applied across the railroad industry to mitigate the risk of terrorist, violent extremist or seriously disruptive cyber-attack increases or decreases. The Alert Level actions include countermeasures that will be applied in three general areas: (1) operations (including transportation, engineering, and mechanical); (2) information technology and communications; and, (3) railroad police. All of our Operations Division employees are advised by their supervisors or train dispatchers, as appropriate, of any change in Alert Level and any additional responsibilities they may incur due to such change.

Governmental legislation, regulation, and Executive Orders over commercial, operational, tax, safety, security, or cybersecurity matters could negatively affect us, our customers, the rail industry or the markets we serve. Congress can enact laws, agencies can promulgate regulations, and Executive Orders can be issued that increase or alter regulation that negatively affects us, our customers, the rail industry or the markets we serve. Railroads presently are subject to commercial and operational regulation by the STB, which has jurisdiction to varying extents over rates, routes, customer access provisions, fuel surcharges, conditions of service, and the extension or abandonment of rail lines.

Federal and state environmental laws and regulations could negatively impact us and our operations. Our operations are subject to extensive federal and state environmental laws and regulations concerning, among other things: emissions to the air; discharges to waterways or groundwater supplies; handling, storage, transportation, and disposal of waste and other materials; and, the cleanup of hazardous material or petroleum releases. The risk of incurring environmental liability, for acts and omissions, past, present, and future, is inherent in the railroad business. This risk includes property owned by us, whether currently or in the past, that is or has been subject to a variety of uses, including our railroad operations and other industrial activity by past owners or our past and present tenants.

Pandemics, epidemics or endemic diseases could further negatively impact us, our customers, our supply chain and our operations. The magnitude and duration of a pandemic, epidemic or endemic disease, and its impact on our customers and general economic conditions can influence the demand for our services and affect our revenues. In addition, such outbreaks could affect our operations and business continuity if a significant number of our essential employees, overall or in a key location, are quarantined from contraction of or exposure to the disease or if governmental orders prevent our employees or critical suppliers from working. To the extent such diseases adversely affect our business and financial results, they may also have the effect of heightening many of the other risks described in the risk factors included herein, or may affect our operating and financial results in a manner that is not presently known to us.

A significant cybersecurity incident or other disruption to our technology infrastructure could disrupt our business operations. We rely on information technology, and improvements in that technology, in all aspects of our business. If we experience significant disruption or failure of one or more of information technology systems operated by us or under control of third parties, including computer hardware, software, and communications equipment, we could experience a service interruption, data breach, or other operational difficulties. Although we maintain comprehensive security programs designed to protect our information technology systems, we are continually targeted by threat actors attempting to access our networks. While we have previously experienced cybersecurity events that have had minimal impact, future events may result in more significant impacts to our operations, reputation or results of operations. These potentially impactful events could include unauthorized access to our systems, viruses, ransomware, and/or compromise, acquisition, or destruction of our data. We also could be impacted by cybersecurity events targeting third parties that we rely on for business operations, including third party vendors that have access to our systems or data and third parties in our supply chain. Such a direct or indirect cybersecurity incident could interrupt our service, cause safety failures or operational difficulties, decrease revenues, increase operating costs, impact our efficiency, damage our corporate reputation, and/or expose us to litigation or government action or increased regulation, which could result in penalties, fines or judgments. In addition, our failure to comply with privacy-related or data protection laws and regulations could result in government investigations and proceedings against us, or litigation, resulting in adverse reputational impacts, penalties, and legal liability.

Our business may be seriously harmed if we fail to develop, implement, maintain, upgrade, enhance, protect and integrate our information technology systems. If we fail to develop, acquire or implement new technology, or otherwise fail to maintain, protect or integrate our information technology systems, we may suffer a competitive disadvantage within the rail industry and with companies providing alternative modes of transportation service.

As a common carrier by rail, we must offer to transport hazardous materials, regardless of risk. Transportation of certain hazardous materials could create catastrophic losses in terms of personal injury and property (including environmental) damage and compromise critical parts of our rail network. The costs of a catastrophic rail accident involving hazardous materials could exceed our insurance coverage. We have obtained insurance for potential losses for third-party liability and first-party property damages (see Note 17 to the Consolidated Financial Statements); however, insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to us.

We face competition from other transportation providers. We are subject to competition from motor carriers, railroads and, to a lesser extent, ships, barges, and pipelines, on the basis of transit time, pricing, and quality and reliability of service. While we have primarily used internal resources to build or acquire and maintain our rail system, trucks and barges have been able to use public rights-of-way maintained by public entities. Any future improvements, expenditures, legislation, or regulation changing or materially increasing the efficiency or reducing the cost of one or more alternative modes of transportation in the regions in which we operate (such as granting materially greater latitude for motor carriers with respect to size or weight limitations or adoption and utilization of autonomous commercial vehicles) could have a material adverse effect on our ability to compete with other modes of transportation.

Capacity constraints could negatively impact our service and operating efficiency. We have experienced and may again experience capacity constraints on our rail network related to employee or equipment shortages, increased demand for rail services, severe weather, congestion on other railroads, including passenger activities, or impacts from changes to our network structure or composition. Such constraints could result in operational inefficiencies or adversely affect our operations.

Constraints on the supply chain or the operations of carriers with which we interchange may adversely affect our operations. Our ability to provide rail service to our customers depends in large part upon a functioning global supply chain and our ability to maintain collaborative relationships with connecting carriers (including shortlines and regional railroads) with respect to, among other matters, freight rates, revenue division, car supply and locomotive availability, data exchange and communications, reciprocal switching, interchange, and trackage rights. Deterioration in the supply chain or operations of or service provided by connecting carriers, or in our relationship with those connecting carriers, could result in our inability to meet our customers’ demands or require us to use alternate train routes, which could result in significant additional costs and network inefficiencies. Additionally, any significant consolidations, mergers or operational changes among other railroads may significantly redefine our market access and reach.

We may be negatively affected by terrorism or war. Any terrorist attack, or other similar event, any government response thereto, and war or risk of war could cause significant business interruption. Because we play a critical role in the nation’s transportation system, we could become the target of such an attack or have a significant role in the government’s preemptive approach or response to an attack or war.

We may be negatively affected by supply constraints resulting from disruptions in the fuel markets or the nature of some of our supplier markets. We consumed approximately 376 million gallons of diesel fuel in 2022. Fuel availability could be affected by limitation in the fuel supply or by imposition of mandatory allocation or rationing regulations. A severe fuel supply shortage arising from production curtailments, increased demand in existing or emerging foreign markets, disruption of oil imports, disruption of domestic refinery production, damage to refinery or pipeline infrastructure, political unrest, war or other factors could impact us as well as our customers and other transportation companies.

We may be subject to various claims and lawsuits that could result in significant expenditures. The nature of our business exposes us to the potential for various claims and litigation related to labor and employment, personal injury, commercial disputes, freight loss and other property damage, and other matters. Job-related personal injury and occupational claims are subject to the Federal Employer’s Liability Act (FELA), which is applicable only to railroads. FELA’s fault-based tort system produces results that are unpredictable and inconsistent as compared with a no-fault worker’s compensation system. The variability inherent in this system could result in actual costs being different from the liability recorded.

The vast majority of our employees belong to labor unions, and the renegotiation of labor agreements or any provisions thereof, or any strikes or work stoppages (including any entered into in connection with any such negotiations), could adversely affect our operations. Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. Although we recently entered into updated labor agreements with these labor unions, future national labor agreements, or renegotiation of labor agreements or provisions of labor agreements, could significantly increase our costs for health care, wages, and other benefits. Additionally, if our craft employees were to engage in a strike, work stoppage, or other slowdown, including in connection with the renegotiation of any such agreements or any provisions thereof, we could experience a significant disruption in our operations, thereby adversely impacting our results of operations.

Failure to attract and retain key executive officers, or skilled professional or technical employees could adversely impact our business and operations. Our success depends on our ability to attract and retain skilled employees, including a sufficient number of craft employees to enable us to efficiently conduct our operations.

Severe weather and disasters have caused, and could again cause, significant business interruptions and expenditures. Severe weather conditions and other natural phenomena resulting from changing weather patterns and rising sea levels or other causes, including hurricanes, floods, fires, landslides, extreme temperatures, significant precipitation, and earthquakes, have caused, and may again cause damage to our network, our workforce to be unavailable and us to be unable to use our equipment. Additionally, shifts in weather patterns caused by climate change are expected to increase the frequency, severity or duration of certain adverse weather conditions, which could cause more significant business interruptions that result in increased costs, increased liabilities, and decreased revenues.

Concern over climate change has led to significant federal, state, and international legislative and regulatory efforts to limit greenhouse gas (GHG) emissions. Restrictions, caps, taxes, or other legislative or regulatory controls on GHG emissions, including diesel exhaust, could significantly increase our operating costs and decrease the amount of traffic we handle.

We may be negatively impacted by changes in general economic conditions. Negative changes in domestic and global economic conditions, including reduced import and export volumes, could affect the producers and consumers of the freight we carry. Economic conditions could also result in bankruptcies of one or more large customers.

We may be negatively affected by energy prices. Volatility in energy prices could have a significant effect on a variety of items including, but not limited to: the economy; demand for transportation services; business related to the energy sector, including crude oil, natural gas, and coal; fuel prices; and, fuel surcharges.

The state of capital markets could adversely affect our liquidity. We rely on the capital markets to provide some of our capital requirements, including the issuance of debt instruments and the sale of certain receivables. Significant instability or disruptions of the capital markets, including the credit markets, or deterioration of our financial position due to internal or external factors could restrict or eliminate our access to, and/or significantly increase the cost of, various financing sources, including bank credit facilities and issuance of corporate bonds. Instability or disruptions of the capital markets and deterioration of our financial position, alone or in combination, could also result in a reduction of our credit rating to below investment grade, which could prohibit or restrict us from accessing external sources of short- and long-term debt financing and/or significantly increase the associated costs.

 

Name, Age, Present Position			Business Experience During Past Five Years
Alan H. Shaw, 55, President and Chief Executive Officer			Present position since May 1, 2022. Served as President from December 1, 2021 to May 1, 2022. Served as Executive Vice President and Chief Marketing Officer from May 16, 2015 to December 1, 2021.
Ann A. Adams, 52,   Executive Vice President and   Chief Transformation Officer			Present position since April 1, 2019. Served as Vice President Human Resources from April 1, 2016 to April 1, 2019.
Paul B. Duncan, 43, Executive Vice President and Chief Operating Officer			Present position since January 1, 2023. Served as Senior Vice President Transportation & Network Operations from September 1, 2022 to January 1, 2023. Served as Vice President Network Planning & Operations from March 1, 2022 to September 1, 2022. Prior to joining Norfolk Southern, served as Vice President of Service Design and Performance for BNSF Railway from October 1, 2018 to March 1, 2022 and as Assistant Vice President for Capacity Planning from June 1, 2015 to October 1, 2018.
Claude E. Elkins, Jr., 57, Executive Vice President and Chief Marketing Officer			Present position since December 1, 2021. Served as Vice President Industrial Products from April 1, 2018 to December 1, 2021. Served as Group Vice President Chemicals from March 1, 2016 to April 1, 2018.
Mark R. George, 55,   Executive Vice President and   Chief Financial Officer			Present position since November 1, 2019. Prior to joining Norfolk Southern, served as Vice President, Finance and Chief Financial Officer at segments of United Technologies Corporation. The positions were Vice President Finance, Strategy, IT and Chief Financial Officer at Otis Elevator Company from October 2015 to May 2019, and Vice President Finance and Chief Financial Officer at Carrier Corporation from June 2019 until joining Norfolk Southern.
Nabanita C. Nag, 47,   Executive Vice President and   Chief Legal Officer			Present position since July 1, 2022. Served as Senior Vice President & Chief Legal Officer from March 1, 2022 to July 1, 2022. Served as General Counsel - Corporate from August 31, 2020 to March 1, 2022. Prior to joining Norfolk Southern, served as Vice President & Corporate Counsel in the Financial Management Law Group at Prudential Financial from March 3, 2014 to August 1, 2020.
Claiborne L. Moore, 43, Vice President and Controller			Present position since March 1, 2022. Served as Assistant Vice President Corporate Accounting from March 15, 2019 to March 1, 2022. Served as Director Investor Relations from July 1, 2017 to March 15, 2019.

Period						Total Number of Shares (or Units) Purchased(1)						Average Price Paid per Share (or Unit)						Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(2)						Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased under the Plans or Programs(2)
October 1-31, 2022						1,027,142						$	217.12					1,027,142						$	8,092,825,748
November 1-30, 2022						1,023,706						243.00						1,023,706						7,844,066,906
December 1-31, 2022						1,422,612						249.05						1,422,438						7,489,805,905
Total						3,473,460												3,473,286

																					2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			($ in millions, except per share amounts)																		(% change)
Income from railway operations			$	4,809					$	4,447					$	3,002					8		%				48		%
Net income			$	3,270					$	3,005					$	2,013					9		%				49		%
Diluted earnings per share			$	13.88					$	12.11					$	7.84					15		%				54		%
Railway operating ratio (percent)			62.3						60.1						69.3						4		%				(13		%)

			Non-GAAP Reconciliation for 2020
			Reported (GAAP)						Loss on Asset Disposal						Investment Impairment						Adjusted (non-GAAP)
			($ in millions, except per share amounts)
Railway operating expenses			$	6,787					$	(385)					$	(99)					$	6,303
Income from railway operations			$	3,002					$	385					$	99					$	3,486
Income before income taxes			$	2,530					$	385					$	99					$	3,014
Income taxes			$	517					$	97					$	25					$	639
Net income			$	2,013					$	288					$	74					$	2,375
Diluted earnings per share			$	7.84					$	1.12					$	0.29					$	9.25
Railway operating ratio (percent)			69.3						(3.9)						(1.0)						64.4

																											2021
															Adjusted						2022						vs. Adjusted
															2020						vs.						2020
			2022						2021						(non-GAAP)						2021						(non-GAAP)
			($ in millions, except per share amounts)																		(% change)
Railway operating expenses			$	7,936					$	6,695					$	6,303					19		%				6		%
Income from railway operations			$	4,809					$	4,447					$	3,486					8		%				28		%
Income before income taxes			$	4,130					$	3,878					$	3,014					6		%				29		%
Income taxes			$	860					$	873					$	639					(1		%)				37		%
Net income			$	3,270					$	3,005					$	2,375					9		%				27		%
Diluted earnings per share			$	13.88					$	12.11					$	9.25					15		%				31		%
Railway operating ratio (percent)			62.3						60.1						64.4						4		%				(7		%)

The following tables present a three-year comparison of revenues, volumes (units), and average revenue per unit by commodity group.

			Revenues																		2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			($ in millions)																		(% change)
Merchandise:
Agriculture, forest and consumer     products			$	2,493					$	2,251					$	2,116					11		%				6		%
Chemicals			2,148						1,951						1,809						10		%				8		%
Metals and construction			1,652						1,562						1,333						6		%				17		%
Automotive			1,038						905						830						15		%				9		%
Merchandise			7,331						6,669						6,088						10		%				10		%
Intermodal			3,681						3,163						2,654						16		%				19		%
Coal			1,733						1,310						1,047						32		%				25		%
Total			$	12,745					$	11,142					$	9,789					14		%				14		%

			Units																		2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			(in thousands)																		(% change)
Merchandise:
Agriculture, forest and consumer     products			723.0						725.5						704.4						—		%				3		%
Chemicals			540.1						529.7						482.0						2		%				10		%
Metals and construction			634.6						669.0						601.2						(5		%)				11		%
Automotive			339.1						345.4						329.7						(2		%)				5		%
Merchandise			2,236.8						2,269.6						2,117.3						(1		%)				7		%
Intermodal			3,913.1						4,104.1						3,992.1						(5		%)				3		%
Coal			684.6						658.0						574.1						4		%				15		%
Total			6,834.5						7,031.7						6,683.5						(3		%)				5		%

			Revenue per Unit																		2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			($ per unit)																		(% change)
Merchandise:
Agriculture, forest and consumer     products			$	3,448					$	3,102					$	3,004					11		%				3		%
Chemicals			3,978						3,684						3,753						8		%				(2		%)
Metals and construction			2,604						2,334						2,216						12		%				5		%
Automotive			3,059						2,621						2,518						17		%				4		%
Merchandise			3,277						2,938						2,875						12		%				2		%
Intermodal			941						771						665						22		%				16		%
Coal			2,532						1,991						1,824						27		%				9		%
Total			1,865						1,584						1,465						18		%				8		%

			2022 vs. 2021																		2021 vs. 2020
			Increase (Decrease)																		Increase (Decrease)
			($ in millions)
			Merchandise						Intermodal						Coal						Merchandise						Intermodal						Coal
Volume			$	(96)					$	(147)					$	53					$	438					$	75					$	153
Fuel surcharge
revenue			455						417						79						91						178						4
Rate, mix and
other			303						248						291						52						256						106
Total			$	662					$	518					$	423					$	581					$	509					$	263

MERCHANDISE revenues increased in both 2022 and 2021 compared with the prior years. In 2022, revenues rose due to higher average revenue per unit, driven by higher fuel surcharge revenue and increased pricing, partially offset by lower volume. Decreased volumes in metal and construction and automotive shipments more than offset higher chemical shipments. In 2021, revenues rose due to increased volume and higher average revenue per unit driven by increased fuel surcharge revenue and pricing. Volumes increased in all merchandise commodity groups, reflecting economic recovery following the onset of the COVID-19 pandemic.

Agriculture, forest and consumer products revenues increased in both 2022 and 2021 compared with the prior years. In 2022, the rise was the result of increased average revenue per unit, the result of higher fuel surcharge revenue and pricing gains, while volumes were nearly flat. Declines in pulpboard, fertilizer, and pulp, were offset by increases in soybeans, feed, and corn. Pulpboard and pulp shipments declined due to decreased demand, equipment availability, service disruptions, and production down time. Lower fertilizer shipments were driven by high fertilizer prices causing customers to draw down on existing inventories or delay purchases as well as production disruptions. Soybean volumes were higher due to increased opportunity for exports. Feed shipments were higher due to increased customer demand. Increased corn shipments were due to improved equipment cycle times. In 2021, higher revenues were the result of higher volume across almost all markets, as the economy improved from the early months of the pandemic in 2020, and increased average revenue per unit, the result of pricing gains and higher fuel surcharge revenue. Gains in ethanol, pulpboard, beverages, lumber and wood, and woodchips more than offset declines in soybeans and pulp.

Chemicals revenues increased in both 2022 and 2021 compared with the prior years. In 2022, the increase was the result of higher average revenue per unit, driven by fuel surcharge revenue and pricing gains, and volume growth.

Metals and construction revenues were higher in both 2022 and 2021 compared with the prior years. In 2022, revenue growth was driven by higher average revenue per unit, the result of higher fuel surcharge revenue and pricing gains, partially offset by lower volume. Volumes fell largely as a result of decreased shipments of coil steel, iron and steel, and scrap metal driven by service disruptions and slower equipment cycle times. In 2021, revenue growth was driven by increased volumes and higher average revenue per unit, the result of pricing gains and higher fuel surcharge revenue. Volume increased across almost all markets due to economic improvement since the beginning of the pandemic. The commodities serving the metal production industry, including coil steel, scrap metal, and iron and steel, experienced the largest gains.

Automotive revenues rose in both 2022 and 2021 compared with the prior years. The increase in revenues in 2022 was driven by higher average revenue per unit, due to higher fuel surcharge revenue and pricing gains, partially offset by volume declines. Volume declines were the result of slower equipment cycle times partially offset by fewer parts supply issues due to easing supply chain congestion when compared to the prior year. In 2021, the increase in revenues was driven by volume growth and higher average revenue per unit, a result of an increase in fuel surcharge revenue and pricing gains. Automotive volumes were higher due primarily to increased retail demand and the impact of prior-year pandemic-induced production shutdowns. This was partially offset by the impact of the microchip shortage on production.

INTERMODAL revenues increased in both 2022 and 2021 compared with the prior years. The increase in 2022 was the result of higher average revenue per unit, driven by higher fuel surcharge revenue, pricing gains, and increased storage service charges, partially offset by decreased volume. The rise in 2021 was primarily the result of higher average revenue per unit driven by increased storage service charges, higher fuel surcharge revenue and pricing gains.

Intermodal units by market were as follows:

																					2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			(units in thousands)																		(% change)
Domestic			2,573.6						2,630.6						2,568.7						(2		%)				2		%
International			1,339.5						1,473.5						1,423.4						(9		%)				4		%
Total			3,913.1						4,104.1						3,992.1						(5		%)				3		%

Domestic volume decreased in 2022 but increased in 2021 compared with the prior years. In 2022, volume declined due to service disruptions, terminal congestion, strong over-the-road competition, and increased truck availability. In 2021, volume rose due to strong consumer demand which was partially offset by overall supply chain congestion, including equipment availability issues.

International volume fell in 2022 but rose in 2021. The decline in 2022 was the result of supply chain constraints, chassis shortages, and excess retail inventory. The increase in 2021 was the result of strong import demand despite being limited by various supply chain constraints, including chassis availability issues.

COAL revenues increased in both 2022 and 2021 compared with the prior years. The increase in 2022 was due to higher average revenue per unit, driven by pricing gains and higher fuel surcharge revenue, and increased volumes. The increase in 2021 was due to increased volumes and higher average revenue per unit driven by pricing gains and positive mix.

																					2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			(tons in thousands)																		(% change)
Utility			35,705						33,169						32,479						8		%				2		%
Export			25,887						24,886						18,900						4		%				32		%
Domestic metallurgical			11,307						11,804						9,441						(4		%)				25		%
Industrial			3,765						3,595						3,566						5		%				1		%
Total			76,664						73,454						64,386						4		%				14		%

    

Utility coal tonnage increased in both 2022 and 2021 compared with the prior years. The increase in 2022 was due to increased demand and service improvements. The increase in 2021 was due to higher natural gas prices and increased demand from coal-sourced electrical generation.

Export coal tonnage increased in both periods compared with prior years. The increase in 2022 was a result of strong global demand and increased coal supply. The increase in 2021 was a result of strong seaborne pricing, improved global economic conditions, and greater global demand.

Domestic metallurgical coal tonnage decreased in 2022 but increased in 2021 compared with the prior years. The decrease in 2022 was the result of reduced coke shipments related to customer sourcing changes and idled customer facilities. The increase in 2021 was the result of strong recovery in the steel market.

Industrial coal tonnage increased in both 2022 and 2021 compared with the prior year as a result of increased demand.

																					2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			($ in millions)																		(% change)
Compensation and benefits			$	2,621					$	2,442					$	2,373					7		%				3		%
Purchased services and rents			1,922						1,726						1,687						11		%				2		%
Fuel			1,459						799						535						83		%				49		%
Depreciation			1,221						1,181						1,154						3		%				2		%
Materials and other			713						547						653						30		%				(16		%)
Loss on asset disposal			—						—						385
Total			$	7,936					$	6,695					$	6,787					19		%				(1		%)

Compensation and benefits increased in 2022, reflecting changes in:

Purchased services and rents includes the costs of services purchased from external vendors and contractors, including the net costs of operating joint (or leased) facilities with other railroads and the net cost of equipment rentals.

																					2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			($ in millions)																		(% change)
Purchased services			$	1,565					$	1,409					$	1,387					11		%				2		%
Equipment rents			357						317						300						13		%				6		%
Total			$	1,922					$	1,726					$	1,687					11		%				2		%

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, increased in both periods. The change in both years was due to higher locomotive fuel prices (up 87% in 2022 and 43% in 2021) which increased expenses by $634 million in 2022 and $224 million in 2021. Locomotive fuel consumption decreased 2% in 2022, but increased 4% in 2021. We consumed 376 million gallons of diesel fuel in 2022, compared with 384 million gallons in 2021 and 368 million gallons in 2020.

Depreciation expense increased in both periods, a reflection of reinvestment in our infrastructure, rolling stock, and technology.

Materials and other expenses increased in 2022 but decreased in 2021 as shown in the following table.

																					2022						2021
			2022						2021						2020						vs. 2021						vs. 2020
			($ in millions)																		(% change)
Materials			$	283					$	250					$	274					13		%				(9		%)
Claims			270						165						179						64		%				(8		%)
Other			160						132						200						21		%				(34		%)
Total			$	713					$	547					$	653					30		%				(16		%)

Cash provided by operating activities, our principal source of liquidity, was $4.2 billion in 2022, $4.3 billion in 2021, and $3.6 billion in 2020. The decrease in 2022 reflected changes in working capital, offset in part by improved operating results. The increase in 2021 was primarily the result of improved operating results. We had negative working capital of $642 million at December 31, 2022 and $354 million at December 31, 2021. Cash and cash equivalents totaled $456 million and $839 million at December 31, 2022, and 2021, respectively. We expect that 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 property additions and shareholder distributions, including share repurchases, provides us additional flexibility to meet our ongoing obligations.

Contractual obligations at December 31, 2022, including those that may have material cash requirements, include interest on fixed-rate long-term debt, long-term debt (Note 9), unconditional purchase obligations (Note 17), long-term advances from Conrail (Note 6), operating leases (Note 10), agreements with Consolidated Rail Corporation (CRC) (Note 6), and unrecognized tax benefits (Note 4).

			Total						2023						2024 - 2025						2026 - 2027						2028 and Subsequent
			($ in millions)
Interest on fixed-rate long-term debt			$	17,085					$	643					$	1,239					$	1,144					$	14,059
Long-term debt principal			16,012						603						957						1,223						13,229
Unconditional purchase obligations			1,650						757						736						80						77
Long-term advances from Conrail			534						—						—						—						534
Operating leases			462						103						182						96						81
Agreements with CRC			272						42						84						84						62
Unrecognized tax benefits*			22						—						—						—						22
Total			$	36,037					$	2,148					$	3,198					$	2,627					$	28,064

Off balance sheet arrangements consist primarily of unrecognized obligations, including unconditional purchase obligations and future interest payments on fixed-rate long-term debt, which are included in the table above.

Cash used in investing activities was $1.6 billion in 2022, and $1.2 billion in both 2021 and 2020.  The increase in 2022 is due to higher property additions partially offset by increased proceeds from property sales. In 2021, lower proceeds from property sales were mostly offset by reduced COLI policy loan repayments and lower property additions.

Cash used in financing activities was $3.0 billion in 2022, compared with $3.3 billion in 2021, and $1.9 billion in 2020.  The decrease in 2022 reflects lower repurchases of Common Stock, and increased proceeds from borrowings, partially offset by higher dividends. In 2021, the increase reflects higher repurchases of Common Stock and debt repayments, partially offset by increased proceeds from borrowings.

INDEX TO FINANCIAL STATEMENTS

			Page
Report of Management			K34
Reports of Independent Registered Public Accounting Firm			K35
Consolidated Statements of Income Years ended December 31, 2022, 2021, and 2020			K39
Consolidated Statements of Comprehensive Income Years ended December 31, 2022, 2021, and 2020			K40
Consolidated Balance Sheets At December 31, 2022 and 2021			K41
Consolidated Statements of Cash Flows Years ended December 31, 2022, 2021, and 2020			K42
Consolidated Statements of Changes in Stockholders’ Equity Years ended December 31, 2022, 2021, and 2020			K43
Notes to Consolidated Financial Statements			K44
Index to Financial Statement Schedule in Item 15			K82

Management is responsible for establishing and maintaining adequate internal control over financial reporting.  In order to ensure that Norfolk Southern’s internal control over financial reporting is effective, management regularly assesses such controls and did so most recently as of December 31, 2022.  This assessment was based on criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this assessment, management has concluded that we maintained effective internal control over financial reporting as of December 31, 2022.

 

/s/ Alan H. Shaw

/s/ Mark R. George

/s/ Claiborne L. Moore

Alan H. Shaw

Mark R. George

Claiborne L. Moore

President and

Executive Vice President

Vice President and

Chief Executive Officer

and Chief Financial Officer

Controller

We have audited Norfolk Southern Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 3, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

 

			Years ended December 31,
			2022						2021						2020
			($ in millions, except per share amounts)
Railway operating revenues			$	12,745					$	11,142					$	9,789
Railway operating expenses
Compensation and benefits			2,621						2,442						2,373
Purchased services and rents			1,922						1,726						1,687
Fuel			1,459						799						535
Depreciation			1,221						1,181						1,154
Materials and other			713						547						653
Loss on asset disposal			—						—						385
Total railway operating expenses			7,936						6,695						6,787
Income from railway operations			4,809						4,447						3,002
Other income – net			13						77						153
Interest expense on debt			692						646						625
Income before income taxes			4,130						3,878						2,530
Income taxes			860						873						517
Net income			$	3,270					$	3,005					$	2,013
Earnings per share
Basic			$	13.92					$	12.16					$	7.88
Diluted			13.88						12.11						7.84