Cover Page
Cover Page | 3 Months Ended |
Mar. 31, 2022shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2022 |
Document Transition Report | false |
Entity File Number | 1-8339 |
Entity Registrant Name | NORFOLK SOUTHERN CORPORATION |
Entity Incorporation, State or Country Code | VA |
Entity Tax Identification Number | 52-1188014 |
Entity Address, Address Line One | 650 West Peachtree Street NW |
Entity Address, City or Town | Atlanta, |
Entity Address, State or Province | GA |
Entity Address, Postal Zip Code | 30308-1925 |
City Area Code | (855) |
Local Phone Number | 667-3655 |
Title of 12(b) Security | Norfolk Southern Corporation Common Stock (Par Value $1.00) |
Trading Symbol | NSC |
Security Exchange Name | NYSE |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 238,332,514 |
Entity Central Index Key | 0000702165 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Railway operating revenues | $ 2,915 | $ 2,639 |
Railway operating expenses | ||
Compensation and benefits | 619 | 611 |
Purchased services and rents | 437 | 393 |
Fuel | 301 | 177 |
Depreciation | 302 | 292 |
Materials and other | 171 | 151 |
Total railway operating expenses | 1,830 | 1,624 |
Income from railway operations | 1,085 | 1,015 |
Other income (expense) – net | (5) | 7 |
Interest expense on debt | 168 | 156 |
Income before income taxes | 912 | 866 |
Income taxes | 209 | 193 |
Net income | $ 703 | $ 673 |
Earnings per share | ||
Basic (in dollars per share) | $ 2.94 | $ 2.67 |
Diluted (in dollars per share) | $ 2.93 | $ 2.66 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 703 | $ 673 |
Other comprehensive income, before tax: | ||
Pension and other postretirement benefits | 6 | 11 |
Other comprehensive income of equity investees | 6 | 0 |
Other comprehensive income, before tax | 12 | 11 |
Income tax expense related to items of other comprehensive income | (4) | (3) |
Other comprehensive income, net of tax | 8 | 8 |
Total comprehensive income | $ 711 | $ 681 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,571 | $ 839 |
Accounts receivable – net | 1,070 | 976 |
Materials and supplies | 264 | 218 |
Other current assets | 110 | 134 |
Total current assets | 3,015 | 2,167 |
Investments | 3,697 | 3,707 |
Properties less accumulated depreciation of $12,123 and $12,031, respectively | 31,657 | 31,653 |
Other assets | 992 | 966 |
Total assets | 39,361 | 38,493 |
Current liabilities: | ||
Accounts payable | 1,181 | 1,351 |
Income and other taxes | 443 | 305 |
Other current liabilities | 370 | 312 |
Current maturities of long-term debt | 1,153 | 553 |
Total current liabilities | 3,147 | 2,521 |
Long-term debt | 13,691 | 13,287 |
Other liabilities | 1,845 | 1,879 |
Deferred income taxes | 7,217 | 7,165 |
Total liabilities | 25,900 | 24,852 |
Stockholders’ equity: | ||
Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 238,332,514 and 240,162,790 shares, respectively, net of treasury shares | 240 | 242 |
Additional paid-in capital | 2,203 | 2,215 |
Accumulated other comprehensive loss | (394) | (402) |
Retained income | 11,412 | 11,586 |
Total stockholders’ equity | 13,461 | 13,641 |
Total liabilities and stockholders’ equity | $ 39,361 | $ 38,493 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Properties, accumulated depreciation | $ 12,123 | $ 12,031 |
Common stock, par or stated value per share (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 1,350,000,000 | 1,350,000,000 |
Common stock, shares outstanding, net of treasury shares (in shares) | 238,332,514 | 240,162,790 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities | ||
Net income | $ 703 | $ 673 |
Reconciliation of net income to net cash provided by operating activities: | ||
Depreciation | 302 | 292 |
Deferred income taxes | 48 | 52 |
Gains and losses on properties | (6) | (8) |
Changes in assets and liabilities affecting operations: | ||
Accounts receivable | (94) | (95) |
Materials and supplies | (46) | (20) |
Other current assets | 21 | 9 |
Current liabilities other than debt | 83 | 158 |
Other – net | (17) | (46) |
Net cash provided by operating activities | 994 | 1,015 |
Cash flows from investing activities | ||
Property additions | (389) | (265) |
Property sales and other transactions | 36 | 37 |
Investment purchases | (1) | 0 |
Investment sales and other transactions | 19 | 26 |
Net cash used in investing activities | (335) | (202) |
Cash flows from financing activities | ||
Dividends | (297) | (249) |
Common stock transactions | (18) | (6) |
Purchase and retirement of common stock | (600) | (591) |
Proceeds from borrowings | 989 | 0 |
Debt repayments | (1) | (84) |
Net cash provided by (used in) financing activities | 73 | (930) |
Net increase (decrease) in cash and cash equivalents | 732 | (117) |
Cash and cash equivalents | ||
At beginning of year | 839 | 1,115 |
At end of period | 1,571 | 998 |
Supplemental disclosures of cash flow information | ||
Interest (net of amounts capitalized) | 114 | 110 |
Income taxes (net of refunds) | $ 9 | $ 27 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accum. Other Comprehensive Loss | Retained Income |
Balance at Beginning of Year at Dec. 31, 2020 | $ 14,791 | $ 254 | $ 2,248 | $ (594) | $ 12,883 |
Comprehensive income: | |||||
Net income | 673 | 673 | |||
Other comprehensive income | 8 | 8 | |||
Total comprehensive income | 681 | ||||
Dividends on common stock, | (249) | (249) | |||
Share repurchases | (591) | (3) | (19) | (569) | |
Stock-based compensation | 11 | 12 | (1) | ||
Balance at End of Period at Mar. 31, 2021 | 14,643 | 251 | 2,241 | (586) | 12,737 |
Balance at Beginning of Year at Dec. 31, 2021 | 13,641 | 242 | 2,215 | (402) | 11,586 |
Comprehensive income: | |||||
Net income | 703 | 703 | |||
Other comprehensive income | 8 | 8 | |||
Total comprehensive income | 711 | ||||
Dividends on common stock, | (297) | (297) | |||
Share repurchases | (600) | (2) | (19) | (579) | |
Stock-based compensation | 6 | 7 | (1) | ||
Balance at End of Period at Mar. 31, 2022 | $ 13,461 | $ 240 | $ 2,203 | $ (394) | $ 11,412 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Common stock, dividends, per share, declared (in dollars per share) | $ 1.24 | $ 0.99 |
Railway Operating Revenues
Railway Operating Revenues | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Railway Operating Revenues | Railway Operating Revenues The following table disaggregates our revenues by major commodity group: First Quarter 2022 2021 ($ in millions) Merchandise: Agriculture, forest and consumer products $ 573 $ 539 Chemicals 498 459 Metals and construction 375 370 Automotive 226 240 Merchandise 1,672 1,608 Intermodal 854 719 Coal 389 312 Total $ 2,915 $ 2,639 We recognize the amount of revenues to which we expect to be entitled for the transfer of promised goods or services to customers. A performance obligation is created when a customer under a transportation contract or public tariff submits a bill of lading to us for the transport of goods. These performance obligations are satisfied as the shipments move from origin to destination. As such, transportation revenues are recognized proportionally as a shipment moves, and related expenses are recognized as incurred. These performance obligations are generally short-term in nature with transit days averaging approximately one week or less for each commodity group. The customer has an unconditional obligation to pay for the service once the service has been completed. Estimated revenues associated with in-process shipments at period-end are recorded based on the estimated percentage of service completed. We had no material remaining performance obligations at March 31, 2022 and December 31, 2021. We may provide customers ancillary services, such as switching, demurrage and other incidental activities, under their transportation contracts. These are distinct performance obligations that are recognized at a point in time when the services are performed or as contractual obligations are met. These revenues are included within each of the commodity groups and represent approximately 7% and 6% of total “Railway operating revenues” on the Consolidated Statements of Income for the first quarters ended March 31, 2022 and 2021, respectively. Revenues related to interline transportation services that involve another railroad are reported on a net basis. Therefore, the portion of the amount that relates to another party is not reflected in revenues. Under the typical terms of our freight contracts, payment for services is due within fifteen days of billing the customer, thus there are no significant financing components. “Accounts receivable – net” on the Consolidated Balance Sheets includes both customer and non-customer receivables as follows: March 31, December 31, 2021 ($ in millions) Customer $ 830 $ 741 Non-customer 240 235 Accounts receivable – net $ 1,070 $ 976 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation First Quarter 2022 2021 ($ in millions) Stock-based compensation expense $ 23 $ 16 Total tax benefit 13 17 During the first quarter of 2022, we granted stock options, restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP), as follows: First Quarter Granted Weighted-Average Grant-Date Fair Value Stock options 132,170 $ 60.40 RSUs 154,901 268.48 PSUs 49,025 274.84 Stock Options First Quarter 2022 2021 ($ in millions) Options exercised 119,343 212,546 Cash received upon exercise $ 10 $ 19 Related tax benefits realized 5 7 Restricted Stock Units RSUs granted primarily have a four-year ratable restriction period and will be settled through the issuance of shares of Norfolk Southern common stock (Common Stock). Certain RSU grants include cash dividend equivalent payments during the restriction period in an amount equal to the regular quarterly dividends paid on Common Stock. First Quarter 2022 2021 ($ in millions) RSUs vested 243,301 257,397 Common Stock issued net of tax withholding 172,364 182,289 Related tax benefits realized $ 5 $ 7 Performance Share Units PSUs provide for awards based on the achievement of certain predetermined corporate performance goals at the end of a three-year cycle and are settled through the issuance of shares of Common Stock. All PSUs will earn out based on the achievement of performance conditions and some will also earn out based on a market condition. The market condition fair value was measured on the date of grant using a Monte Carlo simulation model. First Quarter 2022 2021 ($ in millions) PSUs earned 86,420 78,727 Common Stock issued net of tax withholding 54,651 49,967 Related tax benefits realized $ 1 $ 1 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table sets forth the calculation of basic and diluted earnings per share: Basic Diluted First Quarter 2022 2021 2022 2021 ($ in millions, except per share amounts, Net income $ 703 $ 673 $ 703 $ 673 Dividend equivalent payments — (1) — — Income available to common stockholders $ 703 $ 672 $ 703 $ 673 Weighted-average shares outstanding 239.3 251.4 239.3 251.4 Dilutive effect of outstanding options and share-settled awards 0.9 1.2 Adjusted weighted-average shares outstanding 240.2 252.6 Earnings per share $ 2.94 $ 2.67 $ 2.93 $ 2.66 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | 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 Net Income Reclassification Balance at ($ in millions) Three months ended March 31, 2022 Pensions and other postretirement liabilities $ (356) $ — $ 4 $ (352) Other comprehensive income (loss) of equity investees (46) 4 — (42) Accumulated other comprehensive loss $ (402) $ 4 $ 4 $ (394) Three months ended March 31, 2021 Pensions and other postretirement liabilities $ (526) $ — $ 8 $ (518) Other comprehensive loss of equity investees (68) — — (68) Accumulated other comprehensive loss $ (594) $ — $ 8 $ (586) |
Stock Repurchase Program
Stock Repurchase Program | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Stock Repurchase Program | Stock Repurchase Program We repurchased and retire d 2.2 million and 2.3 million shares of Common Stock under our stock repurchase program during the first three months of 2022 and 2021, respectively, at a cost of $600 million and $591 million, respectively. On March 29, 2022, our Board of Directors authorized a new program for the repurchase of up to $10.0 billion of Common Stock beginning April 1, 2022. Our previous share repurchase program terminated on March 31, 2022. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Investments | Investments Investment in Conrail Through a limited liability company, we and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC). We have a 58% economic and 50% voting interest in the jointly-owned entity, and CSX has the remainder of the economic and voting interests. Our investment in Conrail was $1.5 billion at both March 31, 2022 and December 31, 2021. CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of Norfolk Southern Railway Company (NSR) and CSX Transportation, Inc. (CSXT). The costs of operating the Shared Assets Areas are borne by NSR and CSXT based on usage. In addition, NSR and CSXT pay CRC a fee for access to the Shared Assets Areas. “Purchased services and rents” and “Fuel” include expenses payable to CRC for operation of the Shared Assets Areas totaling $38 million and $34 million for the first quarters of 2022 and 2021, respectively. Our equity in Conrail’s earnings, net of amortization, was $14 million for both the first quarters of 2022 and 2021. These amounts partially offset the costs of operating the Shared Assets Areas and are included in “Purchased services and rents.” “Other liabilities” includes $534 million at both March 31, 2022, and December 31, 2021 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of 1.31%. Investment in TTX We and eight other North American railroads collectively own TTX Company (TTX), a railcar pooling company that provides its owner-railroads with standardized fleets of intermodal, automotive, and general use railcars at stated rates. We have a 19.65% ownership interest in TTX. Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” This amounted to $64 million and $63 million for the first quarters of 2022 and 2021, respectively. Our equity in TTX’s earnings partially offsets these costs and totaled $10 million and $17 million for the first quarters of 2022 and 2021, respectively. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | DebtIn February 2022, we issued $600 million of 3.00% senior notes due 2032 and $400 million of 3.70% senior notes due 2053.We have in place an accounts receivable securitization program with a maximum borrowing capacity of $400 million and a term that expires in May 2022. We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both March 31, 2022 and December 31, 2021. |
Pensions and Other Postretireme
Pensions and Other Postretirement Benefits | 3 Months Ended |
Mar. 31, 2022 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Pensions and Other Postretirement Benefits | Pensions and Other Postretirement Benefits We have both funded and unfunded defined benefit pension plans covering eligible employees. We also provide specified health care benefits to eligible retired employees; these plans can be amended or terminated at our option. Under our self-insured retiree health care plan, for those participants who are not Medicare-eligible, certain health care expenses are covered for retired employees and their dependents, reduced by any deductibles, coinsurance, and, in some cases, coverage provided under other group insurance policies. Eligible retired participants and their spouses who are Medicare-eligible are not covered under the self-insured retiree health care plan, but instead are provided with an employer-funded health reimbursement account which can be used for reimbursement of health insurance premiums or eligible out-of-pocket medical expenses. Pension and postretirement benefit cost components were as follows: Pension Benefits Other Postretirement Benefits First Quarter 2022 2021 2022 2021 ($ in millions) Service cost $ 10 $ 11 $ 1 $ 2 Interest cost 17 13 2 2 Expected return on plan assets (53) (48) (3) (3) Amortization of net losses 12 17 — — Amortization of prior service benefit — — (6) (6) Net benefit $ (14) $ (7) $ (6) $ (5) |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Values of Financial Instruments | Fair Values of Financial Instruments The fair values of “Cash and cash equivalents,” “Accounts receivable – net,” and “Accounts payable,” approximate carrying values because of the short maturity of these financial instruments. The carrying value of corporate-owned life insurance is recorded at cash surrender value and, accordingly, approximates fair value. There are no other assets or liabilities measured at fair value on a recurring basis at March 31, 2022 or December 31, 2021. The carrying amounts and estimated fair values, based on Level 1 inputs, of long-term debt consist of the following: March 31, 2022 December 31, 2021 Carrying Fair Carrying Fair ($ in millions) Long-term debt, including current maturities $ (14,844) $ (16,251) $ (13,840) $ (17,033) |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lawsuits We and/or certain subsidiaries are defendants in numerous lawsuits and other claims relating principally to railroad operations. When we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings and, if material, disclosed below. While the ultimate amount of liability incurred in any of these lawsuits and claims is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payment of such liability and claims. However, the final outcome of any of these lawsuits and claims cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known. For lawsuits and other claims where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed below. We routinely review relevant information with respect to our lawsuits and other claims and update our accruals, disclosures and estimates of reasonably possible loss based on such reviews. In 2007, various antitrust class actions filed against us and other Class I railroads in various Federal district courts regarding fuel surcharges were consolidated in the District of Columbia by the Judicial Panel on Multidistrict Litigation. In 2012, the court certified the case as a class action. The defendant railroads appealed this certification, and the Court of Appeals for the District of Columbia vacated the District Court’s decision and remanded the case for further consideration. On October 10, 2017, the District Court denied class certification. The decision was upheld by the Court of Appeals on August 16, 2019. Since that decision, various individual cases have been filed in multiple jurisdictions and also consolidated in the District of Columbia. We believe the allegations in the complaints are without merit and intend to vigorously defend the cases. We do not believe the outcome of these proceedings will have a material effect on our financial position, results of operations, or liquidity. In 2018, a lawsuit was filed against one of our subsidiaries by the minority owner in a jointly-owned terminal railroad company in which our subsidiary has the majority ownership. The lawsuit alleged violations of various state laws and federal antitrust laws. It is reasonably possible that we could incur a loss in the case; however, we intend to vigorously defend the case and believe that we will prevail. The potential range of loss cannot be estimated at this time. Casualty Claims Casualty claims include employee personal injury and occupational claims as well as third-party claims, all exclusive of legal costs. To aid in valuing our personal injury liability and determining the amount to accrue with respect to such claims during the year, we utilize studies prepared by an independent actuarial consulting firm. Job- related personal injury and occupational claims are subject to the Federal Employer’s Liability Act (FELA), which is applicable only to railroads. The variability inherent in FELA’s fault-based tort system could result in actual costs being different from the liability recorded. While the ultimate amount of claims incurred is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payments of claims and is supported by the most recent actuarial study. In all cases, we record a liability when the expected loss for the claim is both probable and reasonably estimable. Employee personal injury claims – The largest component of claims expense is employee personal injury costs. The independent actuarial firm we engage provides quarterly studies to aid in valuing our employee personal injury liability and estimating personal injury expense. The actuarial firm studies our historical patterns of reserving for claims and subsequent settlements, taking into account relevant outside influences. The actuarial firm uses the results of these analyses to estimate the ultimate amount of liability. We adjust the liability quarterly based upon our assessment and the results of the study. The accuracy of our estimate of the liability is subject to inherent limitation given the difficulty of predicting future events such as jury decisions, court interpretations, or legislative changes. As a result, actual claim settlements may vary from the estimated liability recorded. Occupational claims – Occupational claims include injuries and illnesses alleged to be caused by exposures which occur over time as opposed to injuries or illnesses caused by a specific accident or event. Types of occupational claims commonly seen allege exposure to asbestos and other claimed toxic substances resulting in respiratory diseases or cancer. Many such claims are being asserted by former or retired employees, some of whom have not been employed in the rail industry for decades. The independent actuarial firm provides an estimate of the occupational claims liability based upon our history of claim filings, severity, payments, and other pertinent facts. The liability is dependent upon judgments we make as to the specific case reserves as well as judgments of the actuarial firm in the quarterly studies. Our estimate of ultimate loss includes a provision for those claims that have been incurred but not reported. This provision is derived by analyzing industry data and projecting our experience. We adjust the liability quarterly based upon our assessment and the results of the study. However, it is possible that the recorded liability may not be adequate to cover the future payment of claims. Adjustments to the recorded liability are reflected in operating expenses in the periods in which such adjustments become known. Third-party claims – We record a liability for third-party claims including those for highway crossing accidents, trespasser and other injuries, property damage, and lading damage. The actuarial firm assists us with the calculation of potential liability for third-party claims, except lading damage, based upon our experience including the number and timing of incidents, amount of payments, settlement rates, number of open claims, and legal defenses. We adjust the liability quarterly based upon our assessment and the results of the study. Given the inherent uncertainty in regard to the ultimate outcome of third-party claims, it is possible that the actual loss may differ from the estimated liability recorded. Environmental Matters We are subject to various jurisdictions’ environmental laws and regulations. We record a liability where such liability or loss is probable and reasonably estimable. Environmental specialists regularly participate in ongoing evaluations of all known sites and in determining any necessary adjustments to liability estimates. Our Consolidated Balance Sheets include liabilities for environmental exposures of $49 million at both March 31, 2022 and December 31, 2021, of which $15 million is classified as a current liability at the end of both periods. At March 31, 2022, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 89 known locations and projects compared with 88 locations and projects at December 31, 2021. At March 31, 2022, eighteen sites accounted for $37 million of the liability, and no individual site was considered to be material. We anticipate that most of this liability will be paid out over five years; however, some costs will be paid out over a longer period. At eight locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or comparable state statutes that impose joint and several liability for cleanup costs. We calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not solely on the basis of the potential for joint liability. With respect to known environmental sites (whether identified by us or by the Environmental Protection Agency or comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the aggregate for all such sites can change over time because of the widely varying costs of currently available cleanup techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies, the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to bear it), and evolving statutory and regulatory standards governing liability. The risk of incurring environmental liability for acts and omissions, past, present, and future, is inherent in the railroad business. Some of the commodities we transport, particularly those classified as hazardous materials, pose special risks that we work diligently to reduce. In addition, several of our subsidiaries own, or have owned, land used as operating property, or which is leased and operated by others, or held for sale. Because environmental problems that are latent or undisclosed may exist on these properties, there can be no assurance that we will not incur environmental liabilities or costs with respect to one or more of them, the amount and materiality of which cannot be estimated reliably at this time. Moreover, lawsuits and claims involving these and potentially other unidentified environmental sites and matters are likely to arise from time to time. The resulting liabilities could have a significant effect on financial position, results of operations, or liquidity in a particular year or quarter. Based on our assessment of the facts and circumstances now known, we believe we have recorded the probable and reasonably estimable costs for dealing with those environmental matters of which we are aware. Further, we believe that it is unlikely that any known matters, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, or liquidity. Insurance |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In November 2021, the Financial Accounting Standards Board issued Accounting Standards Update 2021-10, “ Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements | In November 2021, the Financial Accounting Standards Board issued Accounting Standards Update 2021-10, “ Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance |
Railway Operating Revenues (Tab
Railway Operating Revenues (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table disaggregates our revenues by major commodity group: First Quarter 2022 2021 ($ in millions) Merchandise: Agriculture, forest and consumer products $ 573 $ 539 Chemicals 498 459 Metals and construction 375 370 Automotive 226 240 Merchandise 1,672 1,608 Intermodal 854 719 Coal 389 312 Total $ 2,915 $ 2,639 |
Schedule of Accounts Receivable | “Accounts receivable – net” on the Consolidated Balance Sheets includes both customer and non-customer receivables as follows: March 31, December 31, 2021 ($ in millions) Customer $ 830 $ 741 Non-customer 240 235 Accounts receivable – net $ 1,070 $ 976 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of stock-based compensation cost | First Quarter 2022 2021 ($ in millions) Stock-based compensation expense $ 23 $ 16 Total tax benefit 13 17 |
Schedule of LTIP awards | During the first quarter of 2022, we granted stock options, restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP), as follows: First Quarter Granted Weighted-Average Grant-Date Fair Value Stock options 132,170 $ 60.40 RSUs 154,901 268.48 PSUs 49,025 274.84 |
Schedule of cash proceeds received from share-based payment awards | First Quarter 2022 2021 ($ in millions) Options exercised 119,343 212,546 Cash received upon exercise $ 10 $ 19 Related tax benefits realized 5 7 |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of share-based compensation, activity | First Quarter 2022 2021 ($ in millions) RSUs vested 243,301 257,397 Common Stock issued net of tax withholding 172,364 182,289 Related tax benefits realized $ 5 $ 7 |
Performance Share Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of share-based compensation, activity | First Quarter 2022 2021 ($ in millions) PSUs earned 86,420 78,727 Common Stock issued net of tax withholding 54,651 49,967 Related tax benefits realized $ 1 $ 1 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the calculation of basic and diluted earnings per share: Basic Diluted First Quarter 2022 2021 2022 2021 ($ in millions, except per share amounts, Net income $ 703 $ 673 $ 703 $ 673 Dividend equivalent payments — (1) — — Income available to common stockholders $ 703 $ 672 $ 703 $ 673 Weighted-average shares outstanding 239.3 251.4 239.3 251.4 Dilutive effect of outstanding options and share-settled awards 0.9 1.2 Adjusted weighted-average shares outstanding 240.2 252.6 Earnings per share $ 2.94 $ 2.67 $ 2.93 $ 2.66 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
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 Net Income Reclassification Balance at ($ in millions) Three months ended March 31, 2022 Pensions and other postretirement liabilities $ (356) $ — $ 4 $ (352) Other comprehensive income (loss) of equity investees (46) 4 — (42) Accumulated other comprehensive loss $ (402) $ 4 $ 4 $ (394) Three months ended March 31, 2021 Pensions and other postretirement liabilities $ (526) $ — $ 8 $ (518) Other comprehensive loss of equity investees (68) — — (68) Accumulated other comprehensive loss $ (594) $ — $ 8 $ (586) |
Pensions and Other Postretire_2
Pensions and Other Postretirement Benefits (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Pension and Other Postretirement Benefit Cost Components | Pension and postretirement benefit cost components were as follows: Pension Benefits Other Postretirement Benefits First Quarter 2022 2021 2022 2021 ($ in millions) Service cost $ 10 $ 11 $ 1 $ 2 Interest cost 17 13 2 2 Expected return on plan assets (53) (48) (3) (3) Amortization of net losses 12 17 — — Amortization of prior service benefit — — (6) (6) Net benefit $ (14) $ (7) $ (6) $ (5) |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Amounts and Estimated Fair Values | The carrying amounts and estimated fair values, based on Level 1 inputs, of long-term debt consist of the following: March 31, 2022 December 31, 2021 Carrying Fair Carrying Fair ($ in millions) Long-term debt, including current maturities $ (14,844) $ (16,251) $ (13,840) $ (17,033) |
Railway Operating Revenues - Di
Railway Operating Revenues - Disaggregation of Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 2,915 | $ 2,639 |
Merchandise | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 1,672 | 1,608 |
Merchandise | Agriculture, forest and consumer products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 573 | 539 |
Merchandise | Chemicals | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 498 | 459 |
Merchandise | Metals and construction | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 375 | 370 |
Merchandise | Automotive | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 226 | 240 |
Intermodal | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 854 | 719 |
Coal | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 389 | $ 312 |
Railway Operating Revenues - Na
Railway Operating Revenues - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Revenue, payment terms | 15 days | ||
Contract assets | $ 0 | $ 0 | |
Contract liabilities | 0 | 0 | |
Other Noncurrent Receivables | |||
Disaggregation of Revenue [Line Items] | |||
Accounts receivable, net, noncurrent | $ 0 | $ 23,000,000 | |
Accessorial Services | |||
Disaggregation of Revenue [Line Items] | |||
Accessorial services percent of total railway operating revenues | 7.00% | 6.00% |
Railway Operating Revenues - Sc
Railway Operating Revenues - Schedule of Account Receivables (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable – net | $ 1,070 | $ 976 |
Customer | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable – net | 830 | 741 |
Non-customer | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable – net | $ 240 | $ 235 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock-Based Compensation Expense and Related Tax Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | ||
Stock-based compensation expense | $ 23 | $ 16 |
Total tax benefit | $ 13 | $ 17 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Grants and Weighted-Average Grant-Date Fair Values (Details) | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Stock options | |
Granted | |
Stock options (in shares) | shares | 132,170 |
Weighted-Average Grant-Date Fair Value | |
Stock options (in dollars per shares) | $ / shares | $ 60.40 |
RSUs | |
Granted | |
Other than stock options (in shares) | shares | 154,901 |
Weighted-Average Grant-Date Fair Value | |
Other than stock options (in dollars per share) | $ / shares | $ 268.48 |
PSUs | |
Granted | |
Other than stock options (in shares) | shares | 49,025 |
Weighted-Average Grant-Date Fair Value | |
Other than stock options (in dollars per share) | $ / shares | $ 274.84 |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Options Exercised, Cash Received, and Related Tax Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | ||
Options exercised (in shares) | 119,343 | 212,546 |
Cash received upon exercise | $ 10 | $ 19 |
Related tax benefits realized | $ 5 | $ 7 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) | 3 Months Ended |
Mar. 31, 2022 | |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period (in years) | 4 years |
PSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards measurement cycle (in years) | 3 years |
Stock-Based Compensation - Sc_4
Stock-Based Compensation - Schedule of RSU Activity (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Related tax benefits realized | $ 5 | $ 7 |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs vested (in shares) | 243,301 | 257,397 |
Common Stock issued net of tax withholding (in shares) | 172,364 | 182,289 |
Related tax benefits realized | $ 5 | $ 7 |
Stock-Based Compensation - Sc_5
Stock-Based Compensation - Schedule of PSU Activity (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Related tax benefits realized | $ 5 | $ 7 |
PSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PSUs earned (in shares) | 86,420 | 78,727 |
Common Stock issued net of tax withholding (in shares) | 54,651 | 49,967 |
Related tax benefits realized | $ 1 | $ 1 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Net income | $ 703 | $ 673 |
Dividend equivalent payments, basic | 0 | (1) |
Dividend equivalent payments, diluted | 0 | 0 |
Income available to common stockholders, basic | 703 | 672 |
Income available to common stockholders, diluted | $ 703 | $ 673 |
Weighted-average shares outstanding (in shares) | 239.3 | 251.4 |
Dilutive effect of outstanding options and share-settled awards (in shares) | 0.9 | 1.2 |
Adjusted weighted-average shares outstanding (in shares) | 240.2 | 252.6 |
Basic (in dollars per share) | $ 2.94 | $ 2.67 |
Diluted (in dollars per share) | $ 2.93 | $ 2.66 |
Earnings Per Share - Antidiluti
Earnings Per Share - Antidilutive Securities Excluded From Computation Of Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.1 | 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Balance at Beginning of Year | $ 13,641 | $ 14,791 |
Net Income | 4 | 0 |
Reclassification Adjustments | 4 | 8 |
Balance at End of Period | 13,461 | 14,643 |
Accum. Other Comprehensive Loss | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Balance at Beginning of Year | (402) | (594) |
Balance at End of Period | (394) | (586) |
Pensions and other postretirement liabilities | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Balance at Beginning of Year | (356) | (526) |
Net Income | 0 | 0 |
Reclassification Adjustments | 4 | 8 |
Balance at End of Period | (352) | (518) |
Other comprehensive income (loss) of equity investees | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Balance at Beginning of Year | (46) | (68) |
Net Income | 4 | 0 |
Reclassification Adjustments | 0 | 0 |
Balance at End of Period | $ (42) | $ (68) |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details) - USD ($) shares in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 29, 2022 | |
Equity [Abstract] | |||
Stock repurchased and retired during period (in shares) | 2.2 | 2.3 | |
Stock repurchased and retired during period, cost | $ 600,000,000 | $ 591,000,000 | |
Stock repurchase program, authorized amount | $ 10,000,000,000 |
Investments (Details)
Investments (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022USD ($)railroad | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) | |
Schedule of Investments [Line Items] | |||
Number of railroads | railroad | 8 | ||
Equity Method Investee | |||
Schedule of Investments [Line Items] | |||
Equity method investment, ownership percentage | 58.00% | ||
Conrail Voting | |||
Schedule of Investments [Line Items] | |||
Equity method investment, ownership percentage | 50.00% | ||
Conrail Inc | |||
Schedule of Investments [Line Items] | |||
Equity method investments | $ 1,500 | $ 1,500 | |
Expenses from transactions with related party | 38 | $ 34 | |
Equity in the earnings of investee | 14 | 14 | |
Due to affiliate, noncurrent | $ 534 | $ 534 | |
Due to affiliate, average interest rate | 1.31% | 1.31% | |
TTX Company | |||
Schedule of Investments [Line Items] | |||
Equity method investment, ownership percentage | 19.65% | ||
Expenses from transactions with related party | $ 64 | 63 | |
Equity in the earnings of investee | $ 10 | $ 17 |
Debt (Details)
Debt (Details) - USD ($) | Mar. 31, 2022 | Feb. 28, 2022 | Dec. 31, 2021 |
Securitization Borrowings | |||
Debt Instrument [Line Items] | |||
Accounts receivable securitization program, maximum borrowing capacity | $ 400,000,000 | ||
Accounts receivable securitization balance | 0 | $ 0 | |
Available borrowing capacity | $ 400,000,000 | $ 400,000,000 | |
Senior Notes Due 2032 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Senior notes issued | $ 600,000,000 | ||
Stated rates | 3.00% | ||
Senior Notes Due 2053 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Senior notes issued | $ 400,000,000 | ||
Stated rates | 3.70% |
Pensions and Other Postretire_3
Pensions and Other Postretirement Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Pension Benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 10 | $ 11 |
Interest cost | 17 | 13 |
Expected return on plan assets | (53) | (48) |
Amortization of net losses | 12 | 17 |
Amortization of prior service benefit | 0 | 0 |
Net benefit | (14) | (7) |
Other Postretirement Benefits | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 1 | 2 |
Interest cost | 2 | 2 |
Expected return on plan assets | (3) | (3) |
Amortization of net losses | 0 | 0 |
Amortization of prior service benefit | (6) | (6) |
Net benefit | $ (6) | $ (5) |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments - Schedule of Carrying Amounts and Estimated Fair Values (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, including current maturities | $ (14,844) | $ (13,840) |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, including current maturities | $ (16,251) | $ (17,033) |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 3 Months Ended | |
Mar. 31, 2022USD ($)location | Dec. 31, 2021USD ($)location | |
Commitments and Contingencies Disclosure [Abstract] | ||
Environmental liability | $ 49,000,000 | $ 49,000,000 |
Current environmental liability | $ 15,000,000 | $ 15,000,000 |
Known cleanup and remediation locations and projects | location | 89 | 88 |
Number of sites - representative sample | location | 18 | |
Liability associated with those sites | $ 37,000,000 | |
Environmental locations representative sample liability payout period, in years | 5 years | |
Responsible locations with another party | location | 8 | |
Self-insured injury/damage to third parties - and above, per occurrence | $ 75,000,000 | |
Self-insured injury/damage to third party - up to | 800,000,000 | |
Self-insured injury/damage to third parties - and above, per occurrence for specific perils | $ 1,100,000,000 | |
Percentage of potential losses covered | 87.00% | |
Self-insured NS owned property - and above, per occurrence | $ 75,000,000 | |
Self-insured NS owned property - up to | $ 275,000,000 |