SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period endedMARCH 31, ~~2018~~2019

( ) 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)

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.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files).

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 [X] 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~~Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Item 1. Financial Statements.

See accompanying notes toconsolidatedfinancialstatements.

1. Railway Operating Revenues

The ~~Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts~~following table disaggregates our revenues by major commodity group:



	First Quarter
	2019		2018
Merchandise:	($ in millions)
Chemicals	$	452	$	454
Agriculture products	385		357
Metals and construction	385		356
Automotive	251		243
Forest and consumer	213		195
Merchandise	1,686		1,605
Intermodal	719		678
Coal	435		434

Total	$	2,840	$	2,717

At the beginning of 2019, we recategorized certain commodities within Merchandise major commodity groups to better align with ~~Customers,~~”how we internally manage these commodities. Prior period amounts have been reclassified to conform to the current presentation with no net impact to overall Merchandise revenue or total railway operating revenues. Specifically, certain commodities were shifted between Chemicals, Agriculture products, Metals and ~~related amendments which are jointly referred to as Accounting Standards Codification (ASC) Topic 606. This update replaced most existing revenue recognition guidance in GAAP~~construction, and ~~requires entities to~~Forest and consumer.

We recognize the amount of revenue ~~to which it expects~~we expect to be entitled to for the transfer of promised goods or services to customers. FASB ASC Topic 606 defines a performance obligation as a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. We adopted the provisions of this standard on January 1, 2018, using the modified retrospective method. There was no cumulative effect of initially applying ASC Topic 606, nor is there any material difference in first quarter 2018 revenue as compared with the GAAP that was in effect prior to January 1, 2018.

~~The following table disaggregates our revenues by major commodity group (in millions):~~

First Quarter
2018
Merchandise:
Chemicals $ 443

Agr./consumer/gov’t 393

Metals/construction 338

Automotive 243

Paper/clay/forest 188

Merchandise 1,605

Intermodal 678

Coal 434

Total $ 2,717

A performance obligation is created when a customer under a transportation contract or public tariff submits a bill of lading to NS for the transport of goods. These performance obligations are satisfied as the shipments move from origin to destination. As such, transportation revenue is 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 ~~major~~ commodity group. The customer has an unconditional obligation to pay for the service once the service has been completed. Estimated revenue associated with in-process shipments at period-end is recorded based on the estimated percentage of service completed to total transit days. We had no material remaining performance obligations as of March 31, 2019 or December 31, 2018.

Under the typical payment 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 ($ millions):~~follows:



	March 31, 2019		December 31, 2018
	($ in millions)
Customer	$	793	$	740
Non-customer	255		269

Accounts receivable – net	$	1,048	$	1,009

March 31, 2018 December 31, 2017
($ in millions)
Customer $ 751
$ 703

Non-customer 222
252

Accounts receivable - net $ 973
$ 955

Non-customer receivables include non-revenue-related amounts due from other railroads, governmental entities, and others. “Other assets” on the Consolidated Balance Sheets includes non-current customer receivables of ~~$47 million and $39~~$55 million at both March 31, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018. We do not have any material contract assets or liabilities.

Certain of our contracts contain refunds (which are primarily volume-based incentives) that are recorded as a reduction to revenue. Refunds are recorded on the basis of management’s best estimate of projected liability, which is based on historical activity, current shipment counts and expectation of future activity.

2. Stock-Based Compensation



	First Quarter
	2019		2018
	($ in millions)
Stock-based compensation expense	$	16	$	16
Total tax benefit	23		14

First Quarter
2018 2017
($ in millions)
Stock-based compensation expense $ 16
$ 27

Total tax benefit 14
30



	First Quarter
	Granted	Weighted-Average Grant-Date Fair Value

Stock options	42,380	$	45.61
RSUs	208,320	163.33
PSUs	93,710	97.75

Granted Weighted-Average Grant-Date Fair Value

Stock options 40,960
$ 41.70
Restricted stock units 215,880
148.32
Performance share units 91,914
91.55

~~Beginning in 2018, recipients of certain RSUs and PSUs pursuant to the LTIP who retire prior to October 1st will forfeit awards received in the current year.~~



	First Quarter
	2019		2018
	($ in millions)
Stock options exercised	406,371		254,982
Cash received upon exercise	$	28	$	17
Related tax benefit realized	9		4

Restricted Stock Units

Beginning in 2018, 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). ~~Compensation cost for~~RSUs granted in previous years have a five-year restriction period and will also be settled through the ~~award is recognized on a straight-line basis over the requisite service period for the entire award.~~issuance of shares of 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
	2019		2018
	($ in millions)
RSUs vested	165,549		160,200
Common Stock issued net of tax withholding	118,881		99,968
Related tax benefit realized	$	2	$	3

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
	2019		2018
	($ in millions)
PSUs earned	331,099		154,189
Common Stock issued net of tax withholding	221,241		94,399
Related tax benefit realized	$	9	$	3

First Quarter
2018 2017
($ in millions)
PSUs earned 154,189
171,080
Common Stock issued net of tax withholding 94,399
99,805
Related tax benefit realized $ 3
$ 1

3. Earnings Per Share

($ in millions, except per share amounts,

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 (Loss)			Reclassification of Stranded Tax Effects			Reclassification Adjustments		Balance at End of Period
	($ in millions)
Three Months Ended March 31, 2019
Pensions and other
postretirement liabilities	$	(497	)	$	—		$	—		$	4	$	(493	)
Other comprehensive loss
of equity investees	(66		)	(1		)	—			—		(67		)

Accumulated other
comprehensive loss	$	(563	)	$	(1	)	$	—		$	4	$	(560	)

Three Months Ended March 31, 2018
Pensions and other
postretirement liabilities	$	(300	)	$	(11	)	$	(86	)	$	6	$	(391	)
Other comprehensive income
(loss) of equity investees	(56		)	1			(2		)	—		(57		)

Accumulated other
comprehensive loss	$	(356	)	$	(10	)	$	(88	)	$	6	$	(448	)

Balance at
Beginning
of Year

Net Income
(Loss)

Reclassification of Stranded
Tax Effects

Reclassification
Adjustments

Balance at
End of Period
($ in millions)
Three Months Ended March 31, 2018
Pensions and other
postretirement liabilities $ (300 ) $ (11 ) $ (86 ) $ 6
$ (391 )
Other comprehensive income

(loss) of equity investees (56 ) 1
(2 ) —
(57 )

Accumulated other comprehensive loss $ (356 ) $ (10 ) $ (88 ) $ 6
$ (448 )

Three Months Ended March 31, 2017

Pensions and other
postretirement liabilities $ (414 ) $ —
$ —
$ 4
$ (410 )
Other comprehensive loss
of equity investees (73 ) (2 ) —
—
(75 )

Accumulated other comprehensive loss $ (487 ) $ (2 ) $ —
$ 4
$ (485 )

In February 2018, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ~~ASU~~Accounting Standards Update (ASU) 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This update is intended to reclassify the stranded tax effects resulting from the Tax Cuts and Jobs Act (“tax reform”) that was enacted on December 22, 2017 from accumulated other comprehensive income (AOCI) to retained earnings. The amount of the reclassification is the difference between the amount initially charged or credited directly to other comprehensive income at the previously enacted U.S. federal corporate income tax rate that remains in AOCI and the amount that would have been charged or credited directly to other comprehensive income using the newly enacted U.S. federal corporate income tax rate. In the first quarter of 2018, weWe adopted the provisions of ASU 2018-02 in the first quarter of 2018 resulting in an increase to “Accumulated other comprehensive loss” of $88 million and a corresponding increase to “Retained income,” with no impact on “Total stockholders’ equity.”

5. Stock Repurchase Program

We repurchased and retired ~~2.1~~2.9 million shares and ~~1.7~~2.1 million shares of Common Stock under our stock repurchase program in the first ~~quarters~~three months of ~~2018~~2019 and ~~2017,~~2018, respectively, at a cost of $500 million and $300 million, ~~and $200 million,~~ respectively.

Since the beginning of 2006, we have repurchased and retired ~~170.6~~188.5 million shares at a total cost of ~~$11.6~~$14.6 billion.

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 $1.3 billion at both March 31, ~~2018,~~2019, and December 31, ~~2017.~~2018.

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 amounts payable to CRC for the operation of the Shared Assets Areas totaling ~~$38~~$37 million and ~~$35~~$38 million for the first quarters of ~~2018~~2019 and ~~2017,~~2018, respectively. Our equity in the earnings of Conrail, net of amortization, included in “Purchased services and rents” was ~~$16~~$8 million and ~~$10~~$16 million for the first quarters of ~~2018~~2019 and ~~2017,~~2018, respectively.

“Other liabilities” includes $280 million at both March 31, ~~2018~~, 2019, and December 31, ~~2017,~~2018, for long-term advances from Conrail, maturing 2044, that bear interest at an average rate of 2.9%.

Investment in TTX

NS and eight other North American railroads jointly own TTX Company (TTX). NS has a 19.65% ownership interest in TTX, a railcar pooling company that provides its owner-railroads with standardized fleets of intermodal, automotive, and general use railcars at stated rates.

Amounts ~~payable~~paid to TTX for use of equipment are included in “Purchased services and rents” and amounted to ~~$66~~$62 million and ~~$57~~$66 million of expense for the first quarters of ~~2018~~2019 and ~~2017,~~2018, respectively. Our equity in the earnings of TTX, also included in “Purchased services and rents,” totaled ~~$16~~$13 million and $8$16 million for the first quarters of ~~2018~~2019 and ~~2017,~~2018, respectively.

7. Debt

~~During the first quarter of 2018, we issued $500 million of 4.15% senior notes due 2048.~~

We have a ~~$350~~$400 million accounts receivable securitization program expiring in ~~June 2018. There was $50 million and $100~~May 2019. We had $250 million outstanding under this program at March 31, ~~2018, and December 31, 2017, respectively,~~2019, reflected as “Short-term debt” on the Consolidated Balance ~~Sheets.~~ Sheets, and no amounts outstanding at December 31, 2018.

The “Cash, cash equivalents, and restricted cash” line item in the Consolidated Statements of Cash Flows includes restricted cash of $88 million at March 31, 2019 and December 31, 2018 reflecting deposits held by a third-party bond agent as collateral for certain debt obligations maturing in 2019. The restricted cash balance is included as part of “Other current assets” on the Consolidated Balance Sheets in both periods.

8. Leases

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” and subsequent amendments, which replaced existing lease guidance in GAAP and requires lessees to recognize right-of-use (ROU) assets and lease liabilities on the balance sheet for leases greater than twelve months and disclose key information about leasing arrangements. We adopted the standard on January 1, 2019 using the modified retrospective method and used the effective date as our date of initial application. Financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. There were no adjustments to “Retained income” on adoption.

The new standard provides a number of optional practical expedients for transition. We elected the package of practical expedients under the transition guidance which permitted us not to reassess under the new standard our prior conclusions for lease identification and lease classification on expired or existing contracts and whether initial direct costs previously capitalized would qualify for capitalization under FASB Accounting Standards Codification (ASC) 842. We also elected the practical expedient related to land easements, which allowed us to not reassess our current accounting treatment for existing agreements on land easements, which are not accounted for as leases. We did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases.

The new standard also provides practical expedients and recognition exemptions for an entity’s ongoing accounting policy elections. We elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we do not recognize ROU assets or lease liabilities.

We are committed under long-term lease agreements for equipment, lines of road, and other property. Some of these agreements contain variable payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date, and are therefore not included in our future minimum lease payments. These variable lease agreements include usage-based payments for equipment under service contracts, lines of road, and other property. Our long-term lease agreements do not contain any material restrictive covenants.

Our equipment leases have remaining terms of less than 1 year to 9 years and our lines of road and property leases have remaining terms of less than 1 year to 138 years. Some of these leases may include options to extend the leases for up to 99 years, and some may include options to terminate the leases within 30 days. Because we are not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and associated payments are excluded from future minimum lease payments.

Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. We do not separate lease and non-lease components.

Operating lease amounts included in the Consolidated Balance Sheet are as follows:



		March 31, 2019
Assets	Classification	($ in millions)
ROU assets	Other assets	$	593

Liabilities
Current lease liabilities	Other current liabilities	$	93
Non-current lease liabilities	Other liabilities	500

Total lease liabilities		$	593

The components of operating lease expense, primarily included in“Purchased services and rents,” were as follows:



	First Quarter
	2019
	($ in millions)
Operating lease expense	$	27
Variable lease expense	12
Short-term lease expense	2

Total lease expense	$	41

At March 31, 2019, we do not have any material finance lease assets or liabilities, nor do we have any material subleases.

During March 2019, we entered into a non-cancellable lease for an office building with an estimated construction cost of $550 million. The lease will commence upon completion of the construction (for which we are a construction agent) of the office building which is expected to be in 2021. The initial term of the lease is five years, with options to renew, purchase, or sell the office building at the end of the lease term. Upon lease commencement, the ROU asset and lease liability will be determined and recorded. The lease also contains a residual value guarantee of up to ninety percent of the total construction cost.

Other information related to operating leases was as follows:



	First Quarter
	2019
	($ in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	27

Right-of-use assets obtained in exchange for new operating lease liabilities	29

Weighted-average remaining lease term (years) on operating leases	8.68

Weighted-average discount rates on operating leases	3.52		%

During the first quarter, cash proceeds from a sale and leaseback transaction were $82 million and the gain on the transaction was $15 million.

Future minimum lease payments under non-cancellable operating leases were as follows:



	March 31, 2019
	($ in millions)
2019 - 9 months	$	84
2020	105
2021	99
2022	76
2023	68
2024 and subsequent years	266
Total lease payments	$	698
Less: Interest	105

Present value of lease liabilities	$	593

Undiscounted future minimum lease payments under non-cancellable operating leases accounted for under ASC 840 “Leases” were as follows:



	December 31, 2018
	($ in millions)
2019	$	101
2020	95
2021	88
2022	75
2023	69
2024 and subsequent years	267

Total	$	695

9. Pensions and Other Postretirement Benefits

We have both funded and unfunded defined benefit pension plans covering principally salaried employees. We also provide specified health care and life insurance 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, a defined percentage of health care expenses is covered for retired employees and their dependents, reduced by any deductibles, coinsurance, and, in some cases, coverage provided under other group insurance policies. Those participants 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 for the first ~~quarters~~quarter are as follows:




							Other Postretirement
	Pension Benefits						Benefits
	First Quarter
	2019			2018			2019			2018
	($ in millions)

Service cost	$	9		$	10		$	2		$	2
Interest cost	23			20			4			4
Expected return on plan assets	(45		)	(44		)	(4		)	(4		)
Amortization of net losses	11			14			—			—
Amortization of prior service benefit	—			—			(6		)	(6		)

Net benefit	$	(2	)	$	—		$	(4	)	$	(4	)

Other Postretirement
Pension Benefits Benefits
First Quarter
2018 2017 2018 2017
($ in millions)

Service cost $ 10
$ 9
$ 2
$ 2
Interest cost 20
20
4
4
Expected return on plan assets (44 ) (43 ) (4 ) (4 )
Amortization of net losses 14
13
—
—
Amortization of prior service benefit —
—
(6 ) (6 )

Net benefit $ —
$ (1 ) $ (4 ) $ (4 )

~~In March 2017, the FASB issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~.” This update requires segregation of net benefit costs between operating and non-operating expenses and also requires retrospective application. We adopted the standard on January 1, 2018. Under the new standard, only theThe service cost component of defined benefit pension cost and postretirement benefit cost are reported within “Compensation and benefits” and all other components of net benefit cost are presented in “Other income – net” on the Consolidated Statements of ~~Income, whereas under the previous standard all components were included in “Compensation and benefits.”~~Income.

The retrospective application resulted in an offsetting increase of $16 million in “Compensation and benefits” expense and an increase in “Other income – net” on the Consolidated Statements of Income for the first quarter of 2017, with no impact on “Net income.”

9.10. Fair Values of Financial Instruments

The fair values of “Cash and cash equivalents,” “Accounts receivable – net,” “Accounts payable,” and “Short-term debt” approximate carrying values because of the short maturity of these financial instruments. The carrying value of corporate-owned life insurance is recorded at cash surrender value and, accordingly, approximates fair value. ~~Other than these assets and liabilities that approximate fair value, there~~There are no other assets or liabilities measured at fair value on a recurring basis at March 31, ~~2018,~~2019 or December 31, ~~2017.~~2018. The carrying amounts and estimated fair values, ~~for the remaining financial instruments, excluding investments accounted for under the equity method,~~based on Level 1 inputs, of long-term debt consisted of the following:



	March 31, 2019						December 31, 2018
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	($ in millions)

Long-term debt, including current maturities	$	(11,154	)	$	(12,698	)	$	(11,145	)	$	(12,203	)

March 31, 2018 December 31, 2017

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value
($ in millions)

Long-term investments $ 26
$ 43
$ 26
$ 43
Long-term debt, including current maturities (10,237 ) (11,780 ) (9,736 ) (11,771 )

Underlying net assets and future discounted cash flows were used to estimate the fair value of investments. The fair values of long-term debt were estimated based on quoted market prices or discounted cash flows using current interest rates for debt with similar terms, credit rating, and remaining maturity.

The following table sets forth the fair value of long-term investment and long-term debt balances disclosed above by valuation technique level, within the fair value hierarchy (there were no level 3 valued assets or liabilities).

Level 1 Level 2 Total
($ in millions)

March 31, 2018
Long-term investments $ 4
$ 39
$ 43
Long-term debt, including current maturities (11,685 ) (95 ) (11,780 )

December 31, 2017

Long-term investments $ 4
$ 39
$ 43
Long-term debt, including current maturities (11,676 ) (95 ) (11,771 )

~~10.~~11. 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. 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.

One of our chemical customers, Sunbelt Chlor Alkali Partnerships (Sunbelt), filed in 2011 a rate reasonableness complaint before the Surface Transportation Board (STB) alleging that our tariff rates for transportation of regulated movements are unreasonable. Since April 1, 2011, we have been billing and collecting amounts based on the challenged tariff rates. In 2014, the STB resolved this rate reasonableness complaint in our favor and, in June 2016, the STB resolved petitions for reconsideration. Sunbelt’s appeal of the STB’s decision to the United States Court of Appeal for the 11th Circuit was denied on January 26, 2018. This matter did not have a material effect on our financial position, results of operations, or liquidity.

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 findings are subject to appeal. 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.

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 consulting actuarial firm. 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 workers’ compensation system. The variability inherent in this 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 casualties and other claims expense is employee personal injury costs. The independent actuarial firm engaged by us 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. 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 ~~(including asbestosis~~include injuries and ~~other respiratory diseases,~~illnesses alleged to be caused by exposures which occur over time as ~~well as conditions allegedly related~~opposed to ~~repetitive motion) are often not~~injuries or illnesses caused by a specific accident or ~~event but rather allegedly result from a~~event. Types of occupational claims commonly seen allege exposure to asbestos and other claimed toxic substances resulting in respiratory diseases or cancer, exposure ~~over time.~~to repetitive motion resulting in various musculoskeletal disorders, and exposure to excessive noise resulting in hearing loss. 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. The actuarial firm’s 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, automobile liability, 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 ~~engineers~~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 ~~$56~~$58 million and ~~$58~~$55 million at March 31, ~~2018,~~2019 and December 31, ~~2017,~~2018, respectively, ~~(of~~of which $15 million is classified as a current liability at both ~~dates).~~dates. At March 31, ~~2018,~~2019, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at ~~128~~112 known locations and projects compared with ~~127~~114 locations and projects at December 31, ~~2017.~~2018. At March 31, ~~2018, 15~~2019, fifteen sites accounted for ~~$35~~$39 million of the liability, and no individual site was considered to be material. We anticipate that much of this liability will be paid out over five years; however, some costs will be paid out over a longer period.

At ~~thirteen~~eleven 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 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 ~~our~~ 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 obtain on behalf of ourself and our subsidiaries insurance for potential losses for third-party liability and first-party property damages. We are currently self-insured up to $50 million and above $1.1 billion ($1.5 billion for specific perils) per occurrence and/or policy year for bodily injury and property damage to third parties and up to $25 million and above $200 million per occurrence and/or policy year for property owned by us or in our care, custody, or control.

~~11.~~12. New Accounting Pronouncements

~~In February 2016, the FASB issued ASU 2016-02, “Leases~~.” This update, effective for our annual and interim reporting periods beginning January 1, 2019, will replace existing lease guidance in GAAP and will require lessees to recognize lease assets and lease liabilities on the balance sheet for leases greater than twelve months and disclose key information about leasing arrangements. When implemented, lessees will be required to measure and record leases at the present value of the remaining lease payments. The FASB approved amendments that permit the use of the effective date as the date of initial application or a modified retrospective transition approach, with application in all comparative periods presented. We are evaluating which transition approach to adopt. We are currently evaluating the effects ASU 2016-02 will have on our consolidated financial statements and related disclosures. We disclosed $660 million in undiscounted operating lease obligations in our lease commitments footnote in our most recent 10-K and we will evaluate those contracts as well as other existing arrangements to determine if they qualify for lease accounting under the new standard. We are in the process of implementing a lease management system to support the new reporting requirements. We do not anticipate a material impact on our results of operations and we do not plan to adopt the standard early.

In June 2016, the FASB issued ASU 2016-13, “Credit Losses - Measurement of Credit Losses on Financial Instruments,” which replaces the current incurred loss impairment method with a method that reflects expected credit losses. The new standard is effective as of January 1, 2020, and early adoption is permitted as of January 1, 2019. Because credit losses associated from our ~~trade~~accounts receivables have historically been insignificant, we do not expect this standard to have a material effect on our financial statements. We will not adopt the standard early.

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. Our Norfolk Southern Railway Company subsidiary operates approximately 19,500 route miles ~~of road~~ in 22 states and the District of Columbia, ~~with service to~~serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. ~~We operate~~Norfolk Southern is a major transporter of industrial products, including chemicals, agriculture, and metals and construction materials. In addition, the railroad operates the most extensive intermodal network in the East and ~~are~~is a ~~major transporter~~principal carrier of coal, automobiles, and automotive ~~and industrial products.~~ parts.

~~We continued to make progress towards~~Our first quarter 2019 results reflect the ~~goals~~initial steps in the implementation of our new strategic plan ~~posting~~that we unveiled in February. We achieved a record ~~results in the first quarter. The~~low first-quarter operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of ~~69.3% was a~~66.0%, in addition to first-quarter ~~record, as was~~records for railway operating revenues, income from railway operations, net income, and diluted earnings per share. We ~~are progressing~~have started the year with ~~initiatives to improve the fluidity~~positive momentum as we build a stronger company for our shareholders, customers, and ~~resilience of our network while simultaneously positioning it for additional growth and efficiency.~~employees.

SUMMARIZED RESULTS OF OPERATIONS

($ in millions, except per share amounts)


	First Quarter					First Quarter
	2018		2017		% change	2019		2018		% change
Income from railway operations	$	835	$	757	10%	$	966	$	835	16%
Net income	$	552	$	433	27%	$	677	$	552	23%
Diluted earnings per share	$	1.93	$	1.48	30%	$	2.51	$	1.93	30%
Railway operating ratio (percent)	69.3		70.6		(2%)	66.0		69.3		(5%)

DETAILED RESULTS OF OPERATIONS

Railway Operating Revenues

Railway Operating Expenses

Compensation and benefits expense decreased ~~reflecting changes in:~~as follows:

Other Income – Net

The first-quarter effective tax rate was ~~21.9%~~21.4% compared with ~~33.9%~~21.9% for the same period last year. ~~The decline is a result of the effects of the enactment of tax reform in 2017 that lowered the federal corporate income tax rate, as well as income~~Both periods reflect favorable tax benefits ~~for~~on stock-based compensation. The current year also benefited from higher returns on corporate-owned life insurance, while the prior year included benefits of certain 2017 tax credits enacted retroactively by the Bipartisan Budget Act of ~~2018, which was signed into law on February 9,~~ 2018. ~~We expect our full year effective rate to be around 24%.~~

FINANCIAL CONDITION AND LIQUIDITY

APPLICATION OF CRITICAL ACCOUNTING POLICIES

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 (NCCC).~~Committee. Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements.

Beginning in late 2014, the NCCC and the various unions exchanged new proposals to begin the current round of national negotiations. The unions formed three separate bargaining coalitions and the NCCC has reached agreements with 2 of these coalitions representing 10 separate unions and approximately 80% of the unionized workforce. Two of these agreements (applicable to approximately 10% of the unionized workforce) are still pending ratification by the union membership while the remainder are already final. The NCCC and the third coalition have agreed to resolve their contract dispute through binding arbitration. That arbitration decision is expected in late May and the contract will be final at that time. In accordance with the Railway Labor Act, current agreements will remain in effect during the statutory bargaining process. Separately, NS has reached agreement covering wages and work rules through 2019 with the Brotherhood of Locomotive Engineers and Trainmen (BLET), which represents approximately 4,600 NS engineers.

New Accounting Pronouncements

FORWARD-LOOKING STATEMENTS

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Changes in Internal Control Over Financial Reporting

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

~~Significant governmental legislation and regulation over commercial, operating and environmental matters could affect us, our customers, and the markets we serve~~. Congress can enact laws that could increase economic regulation of the industry. Railroads presently are subject to commercial 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. The STB also has jurisdiction over the consolidation, merger, or acquisition of control of and by rail common carriers. Additional economic regulation of the rail industry by Congress or the STB, whether under new or existing laws, could have a significant negative impact on our ability to determine prices for rail services and on the efficiency of our operations. This potential material adverse effect could also result in reduced capital spending on our rail network or abandonment of lines.

Railroads are also subject to the enactment of laws by Congress and regulation by the Department of Transportation and the Department of Homeland Security (which regulate most aspects of our operations) related to safety and security. The Rail Safety Improvement Act of 2008 (RSIA), the Surface Transportation Extension Act of 2015, and the implementing regulations promulgated by the Federal Railroad Association (collectively “the PTC laws and regulations”) require us (and each other Class I railroad) to implement, on certain mainline track where intercity and commuter passenger railroads operate and where toxic inhalation hazardous materials are transported, an interoperable positive train control system (PTC). PTC is a set of highly advanced technologies designed to prevent train-to-train collisions, speed-related derailments, and certain other accidents caused by human error, but PTC will not prevent all types of train accidents or incidents. The PTC laws and regulations require us to install all hardware and to implement the PTC system on some of those rail lines by December 31, 2018, and to implement such system on the remainder of those rail lines by December 31, 2020. In addition, other railroads’ implementation schedules could impose additional interoperability requirements and accelerated timelines on us, which could impact our operations over other railroads if not met.

Full implementation of PTC will result in additional operating costs and capital expenditures, and PTC implementation may result in reduced operational efficiency and service levels, as well as increased compensation and benefits expenses, and increased claims and litigation costs.

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.

Environmental problems that are latent or undisclosed may exist on these properties, and we could incur environmental liabilities or costs, the amount and materiality of which cannot be estimated reliably at this time, with respect to one or more of these properties. Moreover, lawsuits and claims involving other unidentified environmental sites and matters are likely to arise from time to time.

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 controls on GHG emissions, including diesel exhaust, could significantly increase our operating costs, decrease the amount of traffic handled, and decrease the value of coal reserves we own.

In addition, legislation and regulation related to GHGs could negatively affect the markets we serve and our customers. Even without legislation or regulation, government incentives and adverse publicity relating to GHGs could negatively affect the markets for certain of the commodities we carry and our customers that (1) use commodities that we carry to produce energy, including coal, (2) use significant amounts of energy in producing or delivering the commodities we carry, or (3) manufacture or produce goods that consume significant amounts of energy.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

of Shares (or Units)

NORFOLK SOUTHERN CORPORATION

~~Thomas E. Hurlbut~~Jason A. Zampi

Vice President and Controller

(Principal Accounting Officer) (Signature)

~~John M. Scheib~~Denise W. Hutson

~~Executive Vice President Law and Administration and Chief Legal Officer~~Corporate Secretary (Signature)



Virginia	52-1188014
(State or other jurisdiction of incorporation)	~~52-1188014~~ (IRS Employer Identification No.)
Three Commercial Place Norfolk, Virginia	23510-2191
(Address of principal executive offices)	~~23510-2191~~ (Zip Code)
(757) 629-2680
(Registrant’s telephone number, including area code)
No Change (Former name, former address and former fiscal year, if changed since last report)



Class	Outstanding at March 31, ~~2018~~2019
Common Stock ($1.00 par value per share)	~~282,541,886 (excluding~~265,967,039	(excluding 20,320,777 shares held by the registrant’s
	consolidated subsidiaries)



		Page
Part I.	Financial Information:
	Item 1.	Financial Statements:
		Consolidated Statements of Income First Quarter of ~~2018~~2019 and ~~2017~~2018	3
		Consolidated Statements of Comprehensive Income First Quarter of ~~2018~~2019 and ~~2017~~2018	4
		Consolidated Balance Sheets At March 31, ~~2018~~2019 and December 31, ~~2017~~2018	5
		Consolidated Statements of Cash Flows First Three Months of ~~2018~~2019 and ~~2017~~2018	6
		~~Notes to~~ Consolidated ~~Financial~~ Statements of Changes in Stockholders’ Equity First Quarter of 2019 and 2018	7
		~~Item 2.~~Notes to Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1820
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2527
	Item 4.	Controls and Procedures	2527

Part II.	Other Information:
	Item 1.	Legal Proceedings	2628
	Item 1A.	Risk Factors	2628
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2728
	Item 6.	Exhibits	2829

		Signatures	2930


	First Quarter				First Quarter
	2018		2017		2019		2018
	($ in millions, except per share amounts)				($ in millions, except per share amounts)

Railway operating revenues	$	2,717	$	2,575	$	2,840	$	2,717

Railway operating expenses:
Compensation and benefits	737		759		727		737
Purchased services and rents	401		377		424		401
Fuel	266		213		250		266
Depreciation	272		259		283		272
Materials and other	206		210		190		206

Total railway operating expenses	1,882		1,818		1,874		1,882

Income from railway operations	835		757		966		835

Other income – net	8		40		44		8
Interest expense on debt	136		142		149		136

Income before income taxes	707		655		861		707

Income taxes	155		222		184		155

Net income	$	552	$	433	$	677	$	552

Per share amounts:
Net income
Earnings per share:
Basic	$	1.94	$	1.49	$	2.53	$	1.94
Diluted	1.93		1.48		2.51		1.93

Dividends	0.72		0.61


	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
	($ in millions)						($ in millions)

Assets
Current assets:
Cash and cash equivalents	$	1,072		$	690		$	411		$	358
Accounts receivable – net	973			955			1,048			1,009
Materials and supplies	245			222			228			207
Other current assets	189			282			235			288
Total current assets	2,479			2,149			1,922			1,862

Investments	3,020			2,981			3,198			3,109
Properties less accumulated depreciation of $12,076 and
$11,909, respectively	30,396			30,330
Properties less accumulated depreciation of $12,374
at both periods							31,158			31,091
Other assets	267			251			784			177

Total assets	$	36,162		$	35,711		$	37,062		$	36,239

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,217		$	1,401		$	1,334		$	1,505
Short-term debt	50			100			250			—
Income and other taxes	217			211			338			255
Other current liabilities	304			233			378			246
Current maturities of long-term debt	600			600			585			585
Total current liabilities	2,388			2,545			2,885			2,591

Long-term debt	9,637			9,136			10,569			10,560
Other liabilities	1,352			1,347			1,759			1,266
Deferred income taxes	6,367			6,324			6,518			6,460

Total liabilities	19,744			19,352			21,731			20,877

Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 282,541,886 and 284,157,187 shares,
authorized; outstanding 265,967,039 and 268,098,472 shares,
respectively, net of treasury shares	284			285			267			269
Additional paid-in capital	2,255			2,254			2,213			2,216
Accumulated other comprehensive loss	(448		)	(356		)	(560		)	(563		)
Retained income	14,327			14,176			13,411			13,440

Total stockholders’ equity	16,418			16,359			15,331			15,362

Total liabilities and stockholders’ equity	$	36,162		$	35,711		$	37,062		$	36,239


		First Three Months							First Three Months
		2018			2017				2019			2018
		($ in millions)							($ in millions)

Cash flows from operating activities:	Cash flows from operating activities:							Cash flows from operating activities:
	Net income	$	552		$	433		Net income	$	677		$	552
	Reconciliation of net income to net cash provided by operating activities:							Reconciliation of net income to net cash provided by operating activities:
	Depreciation	272			260			Depreciation	283			272
	Deferred income taxes	45			56			Deferred income taxes	57			45
	Gains and losses on properties	(8		)	(9		)	Gains and losses on properties	(18		)	(8		)
	Changes in assets and liabilities affecting operations:							Changes in assets and liabilities affecting operations:
	Accounts receivable	(26		)	(53		)	Accounts receivable	(39		)	(26		)
	Materials and supplies	(23		)	(24		)	Materials and supplies	(21		)	(23		)
	Other current assets	13			31			Other current assets	12			13
	Current liabilities other than debt	12			188			Current liabilities other than debt	(27		)	12
	Other – net	(21		)	(36		)	Other – net	(43		)	(21		)

	Net cash provided by operating activities	816			846			Net cash provided by operating activities	881			816

Cash flows from investing activities:	Cash flows from investing activities:							Cash flows from investing activities:
	Property additions	(383		)	(438		)	Property additions	(467		)	(383		)
	Property sales and other transactions	13			35			Property sales and other transactions	152			13
	Investment purchases	(2		)	(2		)	Investment purchases	(2		)	(2		)
	Investment sales and other transactions	1			1			Investment sales and other transactions	(33		)	1

	Net cash used in investing activities	(371		)	(404		)	Net cash used in investing activities	(350		)	(371		)

Cash flows from financing activities:	Cash flows from financing activities:							Cash flows from financing activities:
	Dividends	(205		)	(177		)	Dividends	(230		)	(205		)
	Common stock transactions	(1		)	34			Common stock transactions	2			(1		)
	Purchase and retirement of common stock	(300		)	(200		)	Purchase and retirement of common stock	(500		)	(300		)
	Proceeds from borrowings – net of issuance costs	543			—			Proceeds from borrowings – net of issuance costs	250			543
	Debt repayments	(100		)	(100		)	Debt repayments	—			(100		)

	Net cash used in financing activities	(63		)	(443		)	Net cash used in financing activities	(478		)	(63		)

	Net increase (decrease) in cash and cash equivalents	382			(1		)	Net increase in cash, cash equivalents,
								and restricted cash	53			382
Cash and cash equivalents:

Cash, cash equivalents, and restricted cash:								Cash, cash equivalents, and restricted cash:
	At beginning of year	690			956			At beginning of year	446			690

	At end of period	$	1,072		$	955		At end of period	$	499		$	1,072

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:							Supplemental disclosures of cash flow information:
	Cash paid during the period for:							Cash paid during the period for:
	Interest (net of amounts capitalized)	$	69		$	70		Interest (net of amounts capitalized)	$	112		$	69
	Income taxes (net of refunds)	7			12			Income taxes (net of refunds)	9			7



	Common Stock			Additional Paid-in Capital			Accum. Other Comprehensive Loss			Retained Income			Total
	($ in millions, except per share amounts)

Balance at December 31, 2018	$	269		$	2,216		$	(563	)	$	13,440		$	15,362

Comprehensive income:
Net income										677			677
Other comprehensive income							3						3
Total comprehensive income													680
Dividends on common stock,
$0.86 per share										(230		)	(230		)
Share repurchases	(3		)	(22		)				(475		)	(500		)
Stock-based compensation	1			19						(1		)	19

Balance at March 31, 2019	$	267		$	2,213		$	(560	)	$	13,411		$	15,331



	March 31, 2018		December 31, 2017
	($ in millions)
Customer	$	751	$	703
Non-customer	222		252
Accounts receivable - net	$	973	$	955



	Level 1			Level 2			Total
	($ in millions)

March 31, 2018
Long-term investments	$	4		$	39		$	43
Long-term debt, including current maturities	(11,685		)	(95		)	(11,780		)

December 31, 2017
Long-term investments	$	4		$	39		$	43
Long-term debt, including current maturities	(11,676		)	(95		)	(11,771		)


	First Quarter					First Quarter
Revenues	2018		2017		% change	2019		2018		% change
Merchandise:
Chemicals	$	443	$	427	4%	$	452	$	454	—
Agr./consumer/gov’t	393		384		2%
Metals/construction	338		340		(1%)
Agriculture products						385		357		8%
Metals and construction						385		356		8%
Automotive	243		246		(1%)	251		243		3%
Paper/clay/forest	188		187		1%
Forest and consumer						213		195		9%
Merchandise	1,605		1,584		1%	1,686		1,605		5%
Intermodal	678		571		19%	719		678		6%
Coal	434		420		3%	435		434		—

Total	$	2,717	$	2,575	6%	$	2,840	$	2,717	5%


Units
Merchandise:
Chemicals	120.8	118.6	2%	125.9	126.6	(1%)
Agr./consumer/gov’t	148.3	149.5	(1%)
Metals/construction	164.6	168.4	(2%)
Agriculture products				130.9	129.9	1%
Metals and construction				173.9	175.9	(1%)
Automotive	102.8	110.5	(7%)	98.1	102.8	(5%)
Paper/clay/forest	69.6	70.6	(1%)
Forest and consumer				69.4	70.9	(2%)
Merchandise	606.1	617.6	(2%)	598.2	606.1	(1%)
Intermodal	1,049.2	969.4	8%	1,071.0	1,049.2	2%
Coal	249.1	259.6	(4%)	236.3	249.1	(5%)

Total	1,904.4	1,846.6	3%	1,905.5	1,904.4	—


Revenue per Unit
Merchandise:
Chemicals	$	3,663	$	3,599	2%	$	3,587	$	3,585	—
Agr./consumer/gov’t	2,650		2,568		3%
Metals/construction	2,053		2,020		2%
Agriculture products						2,945		2,744		7%
Metals and construction						2,217		2,023		10%
Automotive	2,362		2,221		6%	2,557		2,362		8%
Paper/clay/forest	2,704		2,651		2%
Forest and consumer						3,070		2,755		11%
Merchandise	2,647		2,564		3%	2,819		2,647		6%
Intermodal	647		589		10%	671		647		4%
Coal	1,743		1,617		8%	1,839		1,743		6%
Total	1,427		1,394		2%	1,490		1,427		4%


	First Quarter								First Quarter
	Increase (Decrease)								Increase (Decrease)

	Merchandise			Intermodal		Coal			Merchandise			Intermodal		Coal

Volume	$	(30	)	$	47	$	(17	)	$	(21	)	$	14	$	(22	)
Fuel surcharge revenue	18			31		2			14			9		(1		)
Rate, mix and other	33			29		29			88			18		24

Total	$	21		$	107	$	14		$	81		$	41	$	1



	(a) Total Number of Shares (or Units)	(b) Average Price Paid per Share	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be purchased under the Plans or
Period	Purchased⁽¹⁾	(or Unit)	Programs ⁽²⁾	Programs ⁽²⁾

January 1-31, 2018	661,196	151.24	661,196	55,809,039
February 1-28, 2018	670,296	142.08	668,527	55,140,512
March 1-31, 2018	757,034	138.77	756,616	54,383,896

Total	2,088,526		2,086,339


⁽¹⁾	Of this amount, ~~2,187~~8,222 represent shares tendered by employees in connection with the exercise of options under the stockholder-approved Long-Term Incentive Plan.


⁽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. As of March 31, ~~2018, 54.4~~2019, 36.5 million shares remain authorized for repurchase.




3(ii)	The Bylaws of Norfolk Southern Corporation, as amended ~~January 22, 2018,~~March 26, 2019, are incorporated by reference to Exhibit ~~99.1~~3(ii) to Norfolk Southern Corporation’s Form 8-K filed on ~~January 22, 2018. SEC File No. 001-08339.~~March 26, 2019.

~~4.1~~10.1	~~Indenture~~A Construction Agency Agreement, dated ~~as of February 28, 2018,~~March 1, 2019, between ~~the Registrant~~Norfolk Southern Railway Company (“NSRC”) and ~~U.S. Bank National Association, as Trustee. The Indenture~~BA Leasing BSC, LLS. This Agreement is incorporated by reference herein to Exhibit ~~4.1~~10.1 to Norfolk Southern Corporation’s Form 8-K filed ~~February 28, 2018. SEC File No. 001-08339.~~March 5, 2019.

~~4.2~~10.2	~~First Supplemental Indenture~~A Lease Agreement, dated ~~as of February 28, 2018,~~March 1, 2019, between ~~the Registrant~~NSRC and ~~U.S. Bank National Association, as Trustee. The Indenture~~BA Leasing BSC, LLS. This Agreement is incorporated by reference herein to Exhibit ~~4.2~~10.2 to Norfolk Southern Corporation’s Form 8-K filed ~~February 28, 2018. SEC File No. 001-08339.~~March 5, 2019.

10.1*10.3	A Participation Agreement, dated March 1, 2019, between NSRC and BA Leasing BSC, LLS, Bank of America, N.A. as Administrative Agent, and each of the Rent Assignees listed on Schedule II thereto. This Agreement is incorporated by reference herein to Exhibit 10.3 to Norfolk Southern Corporation’s Form 8-K filed March 5, 2019.

10.4	Guaranty of NSRC’s obligations under the Participation Agreement, Construction Agency Agreement, Lease Agreement and related documents by Norfolk Southern Corporation. This Agreement is incorporated by reference herein to Exhibit 10.4 to Norfolk Southern Corporation’s Form 8-K filed March 5, 2019.

10.5,*	Form of Norfolk Southern Corporation ~~Executive Management~~Long-Term Incentive Plan, Off-Cycle Award Agreement for Non-Qualified Stock Options as approved by ~~shareholders May 14, 2015, and~~the Compensation Committee on April 23, 2019.

10.6,*	Form of Norfolk Southern Corporation Long-Term Incentive Plan, Off-Cycle Award Agreement for Performance Share Units as approved by the Compensation Committee on April 23, 2019.

10.7,*	Form of Norfolk Southern Corporation Long-Term Incentive Plan, Off-Cycle Award Agreement for Restricted Stock Units as approved by the Compensation Committee on April 23, 2019.

10.8*	Norfolk Southern Corporation Executives’ Deferred Compensation Plan, as amended ~~March 27, 2018~~and restated effective January 1, 2019 is incorporated by reference to Exhibit 10(ww) to Norfolk Southern’s Form 10-K filed on February 8, 2019. (See SEC File No. 001-08339).

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 ~~2018,~~2019, formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(iXBRL) includes (i) the Consolidated Statements of Income for the first quarter of ~~2018~~2019 and ~~2017;~~2018; (ii) the Consolidated Statements of Comprehensive Income for the first quarter of ~~2018~~2019 and ~~2017;~~2018; (iii) the Consolidated Balance Sheets at March 31, ~~2018~~2019 and December 31, ~~2017;~~2018; (iv) the Consolidated Statements of Cash Flows for the first three months of ~~2018~~2019 and ~~2017;~~2018; (v) the Consolidated Statements of Changes in Stockholders’ Equity for the first quarter of 2019 and ~~(v)~~2018; and (vi) the Notes to Consolidated Financial Statements.

* Management contract or compensatory arrangement.
** Filed herewith.



		NORFOLK SOUTHERN CORPORATION Registrant



Date:	April ~~25, 2018~~24, 2019	/s/ ~~Thomas E. Hurlbut~~Jason A. Zampi
		~~Thomas E. Hurlbut~~Jason A. Zampi Vice President and Controller (Principal Accounting Officer) (Signature)


Date:	April ~~25, 2018~~24, 2019	/s/ ~~John M. Scheib~~Denise W. Hutson
		~~John M. Scheib~~Denise W. Hutson ~~Executive Vice President Law and Administration and Chief Legal Officer~~Corporate Secretary (Signature)