(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) | |||||||
(Registrant’s telephone number, including area code) |
No change | |||||||||||
(Former name, former address and former fiscal year, if changed since last report) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Class | Outstanding at September 30, 2023 | ||||||||||
Common Stock ($1.00 par value per share) | (excluding 20,320,777 shares held by the registrant’s | ||||||||||
consolidated subsidiaries) |
Page | |||||||||||
Third Quarter | First Nine Months | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||||||||
Railway operating revenues | $ | $ | $ | $ | |||||||||||||||||||
Railway operating expenses | |||||||||||||||||||||||
Compensation and benefits | |||||||||||||||||||||||
Purchased services and rents | |||||||||||||||||||||||
Fuel | |||||||||||||||||||||||
Depreciation | |||||||||||||||||||||||
Materials and other | |||||||||||||||||||||||
Eastern Ohio incident | |||||||||||||||||||||||
Total railway operating expenses | |||||||||||||||||||||||
Income from railway operations | |||||||||||||||||||||||
Other income (expense) – net | ( | ( | |||||||||||||||||||||
Interest expense on debt | |||||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Income taxes | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | |||||||||||||||||||||||
Third Quarter | First Nine Months | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss), before tax: | |||||||||||||||||||||||
Pension and other postretirement benefit (expense) | ( | ( | |||||||||||||||||||||
Other comprehensive income (loss) of equity investees | ( | ( | |||||||||||||||||||||
Other comprehensive income (loss), before tax | ( | ( | |||||||||||||||||||||
Income tax benefit (expense) related to items of other | |||||||||||||||||||||||
comprehensive income (loss) | ( | ||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
Total comprehensive income | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
($ in millions) | |||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable – net | |||||||||||
Materials and supplies | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Investments | |||||||||||
Properties less accumulated depreciation of $ | |||||||||||
and $ | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Short-term debt | |||||||||||
Income and other taxes | |||||||||||
Other current liabilities | |||||||||||
Current maturities of long-term debt | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Other liabilities | |||||||||||
Deferred income taxes | |||||||||||
Total liabilities | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock $ | |||||||||||
authorized; outstanding | |||||||||||
respectively, net of treasury shares | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Retained income | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
First Nine Months | ||||||||||||||
2023 | 2022 | |||||||||||||
($ in millions) | ||||||||||||||
Cash flows from operating activities | ||||||||||||||
Net income | $ | $ | ||||||||||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||||||||
Depreciation | ||||||||||||||
Deferred income taxes | ( | |||||||||||||
Gains and losses on properties | ( | ( | ||||||||||||
Changes in assets and liabilities affecting operations: | ||||||||||||||
Accounts receivable | ( | ( | ||||||||||||
Materials and supplies | ( | ( | ||||||||||||
Other current assets | ||||||||||||||
Current liabilities other than debt | ||||||||||||||
Other – net | ( | ( | ||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash flows from investing activities | ||||||||||||||
Property additions | ( | ( | ||||||||||||
Property sales and other transactions | ||||||||||||||
Investment purchases | ( | ( | ||||||||||||
Investment sales and other transactions | ||||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities | ||||||||||||||
Dividends | ( | ( | ||||||||||||
Common stock transactions | ( | ( | ||||||||||||
Purchase and retirement of common stock | ( | ( | ||||||||||||
Proceeds from borrowings | ||||||||||||||
Debt repayments | ( | ( | ||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
Net increase in cash and cash equivalents | ||||||||||||||
Cash and cash equivalents | ||||||||||||||
At beginning of year | ||||||||||||||
At end of period | $ | $ | ||||||||||||
Supplemental disclosures of cash flow information | ||||||||||||||
Cash paid during the period for: | ||||||||||||||
Interest (net of amounts capitalized) | $ | $ | ||||||||||||
Income taxes (net of refunds) |
Common Stock | Additional Paid-in Capital | Accum. Other Comprehensive Loss | Retained Income | Total | |||||||||||||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||
Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||
Total comprehensive income | |||||||||||||||||||||||||||||
Dividends on common stock, | |||||||||||||||||||||||||||||
$ | ( | ( | |||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||
Stock-based compensation | ( | ||||||||||||||||||||||||||||
Balance at March 31, 2023 | ( | ||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||
Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||
Total comprehensive income | |||||||||||||||||||||||||||||
Dividends on common stock, | |||||||||||||||||||||||||||||
$ | ( | ( | |||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||
Balance at June 30, 2023 | ( | ||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||
Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||
Total comprehensive income | |||||||||||||||||||||||||||||
Dividends on common stock, | |||||||||||||||||||||||||||||
$ | ( | ( | |||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | ( | $ | $ |
Common Stock | Additional Paid-in Capital | Accum. Other Comprehensive Loss | Retained Income | Total | |||||||||||||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
Total comprehensive income | |||||||||||||||||||||||||||||
Dividends on common stock, | |||||||||||||||||||||||||||||
$ | ( | ( | |||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||
Stock-based compensation | ( | ||||||||||||||||||||||||||||
Balance at March 31, 2022 | ( | ||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
Total comprehensive income | |||||||||||||||||||||||||||||
Dividends on common stock, | |||||||||||||||||||||||||||||
$ | ( | ( | |||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||||||||
Balance at June 30, 2022 | ( | ||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||
Total comprehensive income | |||||||||||||||||||||||||||||
Dividends on common stock, | |||||||||||||||||||||||||||||
$ | ( | ( | |||||||||||||||||||||||||||
Share repurchases | ( | ( | ( | ( | |||||||||||||||||||||||||
Stock-based compensation | ( | ||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | ( | $ | $ |
Third Quarter | First Nine Months | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Merchandise: | ||||||||||||||||||||||||||
Agriculture, forest and consumer products | $ | $ | $ | $ | ||||||||||||||||||||||
Chemicals | ||||||||||||||||||||||||||
Metals and construction | ||||||||||||||||||||||||||
Automotive | ||||||||||||||||||||||||||
Merchandise | ||||||||||||||||||||||||||
Intermodal | ||||||||||||||||||||||||||
Coal | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
($ in millions) | ||||||||||||||
Customer | $ | $ | ||||||||||||
Non-customer | ||||||||||||||
Accounts receivable – net | $ | $ |
Third Quarter | First Nine Months | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Stock-based compensation expense | $ | $ | $ | $ | ||||||||||||||||||||||
Total tax benefit |
Third Quarter | First Nine Months | |||||||||||||||||||||||||
Granted | Weighted-Average Grant-Date Fair Value | Granted | Weighted-Average Grant-Date Fair Value | |||||||||||||||||||||||
Stock options | $ | $ | ||||||||||||||||||||||||
RSUs | ||||||||||||||||||||||||||
PSUs |
Third Quarter | First Nine Months | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Options exercised | ||||||||||||||||||||||||||
Cash received upon exercise | $ | $ | $ | $ | ||||||||||||||||||||||
Related tax benefits realized |
Third Quarter | First Nine Months | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
RSUs vested | ||||||||||||||||||||||||||
Common Stock issued net of tax withholding | ||||||||||||||||||||||||||
Related tax benefits realized | $ | $ | $ | $ |
First Nine Months | ||||||||||||||
2023 | 2022 | |||||||||||||
($ in millions) | ||||||||||||||
PSUs earned | ||||||||||||||
Common Stock issued net of tax withholding | ||||||||||||||
Related tax benefits realized | $ | $ |
Basic | Diluted | ||||||||||||||||||||||
Third Quarter | |||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
($ in millions, except per share amounts, shares in millions) | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Dividend equivalent payments | ( | ( | |||||||||||||||||||||
Income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average shares outstanding | |||||||||||||||||||||||
Dilutive effect of outstanding options and share-settled awards | |||||||||||||||||||||||
Adjusted weighted-average shares outstanding | |||||||||||||||||||||||
Earnings per share | $ | $ | $ | $ | |||||||||||||||||||
Basic | Diluted | ||||||||||||||||||||||
First Nine Months | |||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
($ in millions, except per share amounts, shares in millions) | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Dividend equivalent payments | ( | ( | ( | ( | |||||||||||||||||||
Income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average shares outstanding | |||||||||||||||||||||||
Dilutive effect of outstanding options and share-settled awards | |||||||||||||||||||||||
Adjusted weighted-average shares outstanding | |||||||||||||||||||||||
Earnings per share | $ | $ | $ | $ |
Balance at Beginning of Year | Net Income | Reclassification Adjustments | Balance at End of Period | ||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
Nine months ended September 30, 2023 | |||||||||||||||||||||||
Pensions and other postretirement liabilities | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Other comprehensive loss of equity investees | ( | ( | |||||||||||||||||||||
Accumulated other comprehensive loss | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Nine months ended September 30, 2022 | |||||||||||||||||||||||
Pensions and other postretirement liabilities | $ | ( | $ | $ | $ | ( | |||||||||||||||||
Other comprehensive income (loss) of equity investees | ( | ( | |||||||||||||||||||||
Accumulated other comprehensive loss | $ | ( | $ | $ | $ | ( |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||||||
Third Quarter | |||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
Amortization of net losses | ( | ||||||||||||||||||||||
Amortization of prior service benefit | ( | ( | |||||||||||||||||||||
Net benefit | $ | ( | $ | ( | $ | ( | $ | ( |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||||||
First Nine Months | |||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
Amortization of net losses | ( | ||||||||||||||||||||||
Amortization of prior service benefit | ( | ( | |||||||||||||||||||||
Net benefit | $ | ( | $ | ( | $ | ( | $ | ( |
September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
Long-term debt, including current maturities | $ | ( | $ | ( | $ | ( | $ | ( |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||||||||||||||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||
Income from railway operations | $ | 756 | $ | 1,272 | (41%) | $ | 2,043 | $ | 3,628 | (44%) | |||||||||||||||||||||||||
Net income | $ | 478 | $ | 958 | (50%) | $ | 1,300 | $ | 2,480 | (48%) | |||||||||||||||||||||||||
Diluted earnings per share | $ | 2.10 | $ | 4.10 | (49%) | $ | 5.70 | $ | 10.45 | (45%) | |||||||||||||||||||||||||
Railway operating ratio (percent) | 74.6 | 62.0 | 20% | 77.5 | 61.8 | 25% |
Non-GAAP Reconciliation for the Third Quarter | |||||||||||||||||
Reported 2023 (GAAP) | Eastern Ohio Incident | Adjusted 2023 (non-GAAP) | |||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||
Income from railway operations | $ | 756 | $ | 163 | $ | 919 | |||||||||||
Net income | $ | 478 | $ | 123 | $ | 601 | |||||||||||
Diluted earnings per share | $ | 2.10 | $ | 0.55 | $ | 2.65 | |||||||||||
Railway operating ratio (percent) | 74.6 | (5.5) | 69.1 | ||||||||||||||
Third Quarter | |||||||||||||||||
Adjusted 2023 (non-GAAP) | 2022 | Adjusted 2023 (non-GAAP) vs. 2022 | |||||||||||||||
($ in millions, except per share amounts) | % change | ||||||||||||||||
Income from railway operations | $ | 919 | $ | 1,272 | (28%) | ||||||||||||
Net income | $ | 601 | $ | 958 | (37%) | ||||||||||||
Diluted earnings per share | $ | 2.65 | $ | 4.10 | (35%) | ||||||||||||
Railway operating ratio (percent) | 69.1 | 62.0 | 11% |
Non-GAAP Reconciliation for First Nine Months | |||||||||||||||||
Reported 2023 (GAAP) | Eastern Ohio Incident | Adjusted 2023 (non-GAAP) | |||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||
Income from railway operations | $ | 2,043 | $ | 966 | $ | 3,009 | |||||||||||
Net income | $ | 1,300 | $ | 733 | $ | 2,033 | |||||||||||
Diluted earnings per share | $ | 5.70 | $ | 3.22 | $ | 8.92 | |||||||||||
Railway operating ratio (percent) | 77.5 | (10.6) | 66.9 | ||||||||||||||
First Nine Months | |||||||||||||||||
Adjusted 2023 (non-GAAP) | 2022 | Adjusted 2023 (non-GAAP) vs. 2022 | |||||||||||||||
($ in millions, except per share amounts) | % change | ||||||||||||||||
Income from railway operations | $ | 3,009 | $ | 3,628 | (17%) | ||||||||||||
Net income | $ | 2,033 | $ | 2,480 | (18%) | ||||||||||||
Diluted earnings per share | $ | 8.92 | $ | 10.45 | (15%) | ||||||||||||
Railway operating ratio (percent) | 66.9 | 61.8 | 8% |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
Revenues | 2023 | 2022 | % change | 2023 | 2022 | % change | |||||||||||||||||||||||||||||
Merchandise: | |||||||||||||||||||||||||||||||||||
Agriculture, forest and consumer products | $ | 611 | $ | 642 | (5%) | $ | 1,891 | $ | 1,839 | 3% | |||||||||||||||||||||||||
Chemicals | 498 | 570 | (13%) | 1,542 | 1,620 | (5%) | |||||||||||||||||||||||||||||
Metals and construction | 417 | 442 | (6%) | 1,232 | 1,237 | —% | |||||||||||||||||||||||||||||
Automotive | 274 | 276 | (1%) | 839 | 759 | 11% | |||||||||||||||||||||||||||||
Merchandise | 1,800 | 1,930 | (7%) | 5,504 | 5,455 | 1% | |||||||||||||||||||||||||||||
Intermodal | 737 | 942 | (22%) | 2,296 | 2,768 | (17%) | |||||||||||||||||||||||||||||
Coal | 434 | 471 | (8%) | 1,283 | 1,285 | —% | |||||||||||||||||||||||||||||
Total | $ | 2,971 | $ | 3,343 | (11%) | $ | 9,083 | $ | 9,508 | (4%) |
Units | |||||||||||||||||||||||||||||||||||
Merchandise: | |||||||||||||||||||||||||||||||||||
Agriculture, forest and consumer products | 175.6 | 178.0 | (1%) | 551.0 | 539.2 | 2% | |||||||||||||||||||||||||||||
Chemicals | 124.0 | 137.9 | (10%) | 386.8 | 407.3 | (5%) | |||||||||||||||||||||||||||||
Metals and construction | 164.3 | 168.3 | (2%) | 479.4 | 480.2 | —% | |||||||||||||||||||||||||||||
Automotive | 91.2 | 85.4 | 7% | 269.9 | 252.3 | 7% | |||||||||||||||||||||||||||||
Merchandise | 555.1 | 569.6 | (3%) | 1,687.1 | 1,679.0 | —% | |||||||||||||||||||||||||||||
Intermodal | 965.4 | 972.7 | (1%) | 2,807.6 | 2,945.7 | (5%) | |||||||||||||||||||||||||||||
Coal | 166.7 | 183.0 | (9%) | 506.0 | 514.7 | (2%) | |||||||||||||||||||||||||||||
Total | 1,687.2 | 1,725.3 | (2%) | 5,000.7 | 5,139.4 | (3%) | |||||||||||||||||||||||||||||
Revenue per Unit | |||||||||||||||||||||||||||||||||||
Merchandise: | |||||||||||||||||||||||||||||||||||
Agriculture, forest and consumer products | $ | 3,479 | $ | 3,606 | (4%) | $ | 3,432 | $ | 3,411 | 1% | |||||||||||||||||||||||||
Chemicals | 4,013 | 4,135 | (3%) | 3,986 | 3,978 | —% | |||||||||||||||||||||||||||||
Metals and construction | 2,535 | 2,625 | (3%) | 2,569 | 2,575 | —% | |||||||||||||||||||||||||||||
Automotive | 3,003 | 3,231 | (7%) | 3,109 | 3,008 | 3% | |||||||||||||||||||||||||||||
Merchandise | 3,241 | 3,388 | (4%) | 3,262 | 3,249 | —% | |||||||||||||||||||||||||||||
Intermodal | 764 | 968 | (21%) | 818 | 940 | (13%) | |||||||||||||||||||||||||||||
Coal | 2,602 | 2,575 | 1% | 2,535 | 2,498 | 1% | |||||||||||||||||||||||||||||
Total | 1,760 | 1,938 | (9%) | 1,816 | 1,850 | (2%) |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
Merchandise | Intermodal | Coal | Merchandise | Intermodal | Coal | ||||||||||||||||||||||||||||||
Increase (Decrease) | |||||||||||||||||||||||||||||||||||
Volume | $ | (49) | $ | (7) | $ | (42) | $ | 26 | $ | (130) | $ | (22) | |||||||||||||||||||||||
Fuel surcharge revenue | (131) | (94) | (29) | (82) | (161) | (14) | |||||||||||||||||||||||||||||
Rate, mix and other | 50 | (104) | 34 | 105 | (181) | 34 | |||||||||||||||||||||||||||||
Total | $ | (130) | $ | (205) | $ | (37) | $ | 49 | $ | (472) | $ | (2) | |||||||||||||||||||||||
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||||||||||||||||||||||||||
Domestic | 583.1 | 630.6 | (8%) | 1,747.8 | 1,954.4 | (11 | %) | ||||||||||||||||||||||||||||
International | 382.3 | 342.1 | 12% | 1,059.8 | 991.3 | 7 | % | ||||||||||||||||||||||||||||
Total | 965.4 | 972.7 | (1%) | 2,807.6 | 2,945.7 | (5 | %) |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||||||||||||||||||||||||||
Utility | 7,342 | 9,908 | (26%) | 22,404 | 27,136 | (17%) | |||||||||||||||||||||||||||||
Export | 7,563 | 6,391 | 18% | 23,466 | 19,319 | 21% | |||||||||||||||||||||||||||||
Domestic metallurgical | 2,906 | 3,232 | (10%) | 8,296 | 8,444 | (2%) | |||||||||||||||||||||||||||||
Industrial | 913 | 963 | (5%) | 2,484 | 2,849 | (13%) | |||||||||||||||||||||||||||||
Total | 18,724 | 20,494 | (9%) | 56,650 | 57,748 | (2%) |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||||||||||||||||||||||||||
Compensation and benefits | $ | 715 | $ | 735 | (3%) | $ | 2,098 | $ | 1,968 | 7% | |||||||||||||||||||||||||
Purchased services and rents | 517 | 484 | 7% | 1,519 | 1,402 | 8% | |||||||||||||||||||||||||||||
Fuel | 289 | 383 | (25%) | 867 | 1,092 | (21%) | |||||||||||||||||||||||||||||
Depreciation | 326 | 306 | 7% | 968 | 912 | 6% | |||||||||||||||||||||||||||||
Materials and other | 205 | 163 | 26% | 622 | 506 | 23% | |||||||||||||||||||||||||||||
Eastern Ohio incident | 163 | — | 966 | — | |||||||||||||||||||||||||||||||
Total | $ | 2,215 | $ | 2,071 | 7% | $ | 7,040 | $ | 5,880 | 20% |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||||||||||||||||||||||||||
Purchased services | $ | 426 | $ | 397 | 7% | $ | 1,232 | $ | 1,133 | 9% | |||||||||||||||||||||||||
Equipment rents | 91 | 87 | 5% | 287 | 269 | 7% | |||||||||||||||||||||||||||||
Total | $ | 517 | $ | 484 | 7% | $ | 1,519 | $ | 1,402 | 8% |
Third Quarter | First Nine Months | ||||||||||||||||||||||||||||||||||
2023 | 2022 | % change | 2023 | 2022 | % change | ||||||||||||||||||||||||||||||
Materials | $ | 94 | $ | 83 | 13% | $ | 273 | $ | 215 | 27% | |||||||||||||||||||||||||
Claims | 57 | 58 | (2%) | 171 | 171 | —% | |||||||||||||||||||||||||||||
Other | 54 | 22 | 145% | 178 | 120 | 48% | |||||||||||||||||||||||||||||
Total | $ | 205 | $ | 163 | 26% | $ | 622 | $ | 506 | 23% |
Period | (a) Total Number of Shares (or Units) Purchased(1) | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be purchased under the Plans or Programs (2) | |||||||||||||||||||||||||
July 1-31, 2023 | 551,674 | $ | 232.18 | 551,417 | $ | 7,058,649,038 | |||||||||||||||||||||||
August 1-31, 2023 | 208,859 | 219.90 | 208,859 | 7,012,721,854 | |||||||||||||||||||||||||
September 1-30, 2023 | 130,078 | 200.70 | 129,754 | 6,986,680,595 | |||||||||||||||||||||||||
Total | 890,611 | 890,030 |
3(ii) | |||||
4.1 | |||||
31-A* | |||||
31-B* | |||||
32* | |||||
101* | The following financial information from Norfolk Southern Corporation’s Quarterly Report on Form 10-Q for the third quarter of 2023, formatted in Inline Extensible Business Reporting Language (iXBRL) includes (i) the Consolidated Statements of Income for the third quarter and first nine months of 2023 and 2022; (ii) the Consolidated Statements of Comprehensive Income for the third quarter and first nine months of 2023 and 2022; (iii) the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022; (iv) the Consolidated Statements of Cash Flows for the first nine months of 2023 and 2022; (v) the Consolidated Statements of Changes in Stockholders’ Equity for the third quarter and first nine months of 2023 and 2022; and (vi) the Notes to Consolidated Financial Statements. | ||||
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||||
* Filed herewith. |
NORFOLK SOUTHERN CORPORATION Registrant | ||||||||
Date: | October 25, 2023 | /s/ Claiborne L. Moore | ||||||
Claiborne L. Moore Vice President and Controller (Principal Accounting Officer) (Signature) | ||||||||
Date: | October 25, 2023 | /s/ Denise W. Hutson | ||||||
Denise W. Hutson Corporate Secretary (Signature) |
/s/ Alan H. Shaw | |||||
Alan H. Shaw | |||||
President and Chief Executive Officer |
/s/ Mark R. George | |||||
Mark R. George | |||||
Executive Vice President and Chief Financial Officer |
Signed: | /s/ Alan H. Shaw | ||||
Alan H. Shaw | |||||
President and Chief Executive Officer | |||||
Norfolk Southern Corporation |
Signed: | /s/ Mark R. George | ||||
Mark R. George | |||||
Executive Vice President and Chief Financial Officer | |||||
Norfolk Southern Corporation |
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Consolidated Statements of Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Statement [Abstract] | ||||
Railway operating revenues | $ 2,971 | $ 3,343 | $ 9,083 | $ 9,508 |
Railway operating expenses | ||||
Compensation and benefits | 715 | 735 | 2,098 | 1,968 |
Purchased services and rents | 517 | 484 | 1,519 | 1,402 |
Fuel | 289 | 383 | 867 | 1,092 |
Depreciation | 326 | 306 | 968 | 912 |
Materials and other | 205 | 163 | 622 | 506 |
Eastern Ohio incident | 163 | 0 | 966 | 0 |
Total railway operating expenses | 2,215 | 2,071 | 7,040 | 5,880 |
Income from railway operations | 756 | 1,272 | 2,043 | 3,628 |
Other income (expense) – net | 40 | (2) | 153 | (21) |
Interest expense on debt | 182 | 177 | 527 | 515 |
Income before income taxes | 614 | 1,093 | 1,669 | 3,092 |
Income taxes | 136 | 135 | 369 | 612 |
Net income | $ 478 | $ 958 | $ 1,300 | $ 2,480 |
Earnings per share | ||||
Basic (in dollars per share) | $ 2.11 | $ 4.11 | $ 5.71 | $ 10.49 |
Diluted (in dollars per share) | $ 2.10 | $ 4.10 | $ 5.70 | $ 10.45 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 478 | $ 958 | $ 1,300 | $ 2,480 |
Other comprehensive income (loss), before tax: | ||||
Pension and other postretirement benefit (expense) | (6) | 6 | (17) | 17 |
Other comprehensive income (loss) of equity investees | (1) | 5 | (1) | 13 |
Other comprehensive income (loss), before tax | (7) | 11 | (18) | 30 |
Income tax benefit (expense) related to items of other comprehensive income (loss) | 2 | 0 | 5 | (5) |
Other comprehensive income (loss), net of tax | (5) | 11 | (13) | 25 |
Total comprehensive income | $ 473 | $ 969 | $ 1,287 | $ 2,505 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 13,162 | $ 12,592 |
Common stock, par or stated value per share (in dollars per share) | $ 1.00 | $ 1.00 |
Common stock, shares authorized (in shares) | 1,350,000,000 | 1,350,000,000 |
Common stock, shares outstanding, net of treasury shares (in shares) | 226,136,334 | 228,076,415 |
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
|
Statement of Stockholders' Equity [Abstract] | ||||||
Common stock, dividends, per share, declared (in dollars per share) | $ 1.35 | $ 1.35 | $ 1.35 | $ 1.24 | $ 1.24 | $ 1.24 |
Railway Operating Revenues |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Railway Operating Revenues | Railway Operating Revenues The following table disaggregates our revenues by major commodity group:
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 September 30, 2023 and December 31, 2022. We may provide customers ancillary services, such as switching, demurrage and other incidental activities, under their transportation contracts. The revenues associated with these distinct performance obligations are recognized when the services are performed or as contractual obligations are met. These revenues are included within each of the commodity groups and represent approximately 5% of total “Railway operating revenues” on the Consolidated Statements of Income for the third quarter and first nine months of 2023, and 7% for the third quarter and first nine months of 2022. 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:
Non-customer receivables include non-revenue-related amounts due from other railroads, governmental entities, and others. We do not have any material contract assets or liabilities at September 30, 2023 and December 31, 2022.
|
Stock-Based Compensation |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation
During 2023, we granted stock options, restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP), as follows:
Stock Options
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.
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. No PSUs were earned or paid out during the third quarters of 2023 and 2022.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On July 8, 2022, House Bill 1342 was signed into law in the Commonwealth of Pennsylvania, which reduced its corporate income tax rate from 9.99% to 4.99%, through a series of phased reductions beginning each tax year from January 1, 2023 through January 1, 2031. GAAP requires companies to recognize the effect of tax law changes in the period of enactment. As a result, in the third quarter of 2022 we recognized a $136 million benefit in “Income taxes” with a corresponding reduction in “Deferred income taxes.” |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table sets forth the calculation of basic and diluted earnings per share:
During the third quarters and first nine months of 2023 and 2022, dividend equivalent payments were made to certain holders of stock options and RSUs. For purposes of computing basic earnings per share, dividend equivalent payments made to holders of stock options and RSUs were deducted from net income to determine income available to common stockholders. For purposes of computing diluted earnings per share, we evaluate on a grant-by-grant basis those stock options and RSUs receiving dividend equivalent payments under the two-class and treasury stock methods to determine which method is more dilutive for each grant. For those grants for which the two-class method was more dilutive, net income was reduced by dividend equivalent payments to determine income available to common stockholders. The dilution calculations exclude options having exercise prices exceeding the average market price of Common Stock as follows: 0.1 million in the third quarters and first nine months ended September 30, 2023 and 2022.
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Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive LossThe changes in the cumulative balances of “Accumulated other comprehensive loss” reported in the Consolidated Balance Sheets consisted of the following:
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Stock Repurchase Program |
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Sep. 30, 2023 | |
Equity [Abstract] | |
Stock Repurchase Program | Stock Repurchase Program We repurchased and retired 2.2 million and 9.2 million shares of Common Stock under our stock repurchase programs in the first nine months of 2023 and 2022, respectively, at a cost of $508 million and $2.3 billion, inclusive of excise taxes. |
Investments |
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Sep. 30, 2023 | |
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 $1.6 billion at both September 30, 2023 and December 31, 2022. 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 $39 million and $42 million for the third quarters of 2023 and 2022, respectively, and $123 million and $116 million for the first nine months of 2023 and 2022, respectively. Our equity in Conrail’s earnings, net of amortization, was $15 million for both the third quarters of 2023 and 2022 and $50 million and $40 million for the first nine months of 2023 and 2022, respectively. These amounts partially offset the costs of operating the Shared Assets Areas and are included in “Purchased services and rents.” “Other liabilities” includes $534 million at both September 30, 2023 and December 31, 2022 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of 1.31%. Investment in TTX We and six 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 19.78% ownership interest in TTX. Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” These expenses amounted to $66 million and $63 million for the third quarters of 2023 and 2022, respectively, and $201 million and $193 million for the first nine months of 2023 and 2022, respectively. Our equity in TTX’s earnings partially offsets these costs and totaled $13 million and $18 million for the third quarters of 2023 and 2022, respectively, and $34 million and $39 million in the first nine months of 2023 and 2022, respectively.
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Debt |
9 Months Ended |
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Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt In August 2023, we issued $600 million of 5.05% senior notes due 2030 and $1.0 billion of 5.35% senior notes due 2054. In May 2023, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $400 million. Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program expires in May 2024. Amounts received under this facility are accounted for as borrowings. We had no amounts outstanding under this program at September 30, 2023 and our available borrowing capacity was $400 million. At December 31, 2022, we had $100 million (at an average variable interest rate of 5.05%) outstanding and our available borrowing capacity was $300 million. Our accounts receivable securitization program was supported by $911 million and $883 million in receivables at September 30, 2023 and December 31, 2022, respectively, which are included in “Accounts receivable – net”. In February 2023, we issued $500 million of 4.45% senior notes due 2033.
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Pensions and Other Postretirement Benefits |
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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:
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Fair Values of Financial Instruments |
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Fair Values of Financial Instruments | 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. There are no other assets or liabilities measured at fair value on a recurring basis at September 30, 2023 or December 31, 2022. The carrying amounts and estimated fair values, based on Level 1 inputs, of long-term debt consist of the following:
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Eastern Ohio Incident Summary On February 3, 2023, a train we operated derailed in East Palestine, Ohio. The derailed equipment included 38 railcars, 11 of which were non-Company-owned tank cars containing hazardous materials. Fires associated with the derailment threatened certain of the tank cars. There was concern about the risk that the contents of five of the tank cars carrying vinyl chloride might polymerize, which would have posed the risk of a catastrophic explosion. As a consequence, on February 6, 2023, the local incident commander—in consultation with the incident command that included, among others, federal, state and local officials and Norfolk Southern—opted to conduct a controlled vent and burn of five derailed tank cars, all of which contained vinyl chloride. This procedure involved creating holes in the five tank cars to drain the vinyl chloride into adjacent trenches that had been dug into the ground where such vinyl chloride was then burned, with any material remaining after burning of the vinyl chloride being remediated. The February 3rd derailment, the associated fire, and the resulting vent and burn of the tank cars containing vinyl chloride on February 6th is hereinafter referred to as the “Incident.” In response to the Incident, we have been working to clean the site safely and thoroughly, including those activities described in the Environmental Matters section below with respect to potentially impacted air, soil and water and to monitor for any impact on public health and the environment. We are working with federal, state, and local officials to mitigate impacts from the Incident, including, among other efforts, conducting environmental monitoring and clean-up activities (as more fully described below), and operating a family assistance center to provide financial support to affected members of the East Palestine and surrounding communities. Financial Impact Although we cannot predict the final outcome or estimate the reasonably possible range of loss with certainty, during the first nine months of 2023 we have recognized $966 million of expense for costs directly attributable to the Incident ($163 million of which was recognized in the third quarter), which is presented in “Eastern Ohio incident” on the Consolidated Statements of Income. These amounts are net of $25 million in insurance recoveries recorded during the third quarter related to the Incident. During the first nine months of 2023, our cash expenditures attributable to the Incident were $511 million, which are presented in “Net cash provided by operating activities” on the Consolidated Statements of Cash Flows. The difference between the recognized expense and cash expenditures during the first nine months of 2023, $455 million comprises primarily of our current estimates of probable and reasonably estimable liabilities principally associated with environmental matters and legal proceedings, which are discussed in further detail below. While certain costs recorded during the first nine months of 2023 may be recoverable under our insurance policies in effect at the date of the Incident or, from third parties, to date we have recognized $25 million in insurance recoveries. Any additional amounts recoverable under our insurance policies or from third parties will be reflected in future periods in which recovery is considered probable. For additional information about our insurance coverage, see “Insurance” below. Environmental Matters – In response to the Incident, we have been working with federal, state, and local officials such as the U.S. Environmental Protection Agency (EPA), the Ohio EPA, the Pennsylvania Department of Environmental Protection (DEP), and the Columbiana County Health District to conduct environmental response and remediation activities, including but not limited to, air monitoring, indoor air quality screenings, municipal water and private water well testing, residential, commercial, and agricultural soil sampling, surface water and groundwater sampling, re-routing a local waterway around the affected site, capturing and shipping stormwater that enters the impacted derailment site to proper disposal facilities, and excavating and disposing of potentially affected soil at hazardous waste landfills or incinerators. The U.S. EPA issued a Unilateral Administrative Order (UAO) on February 21, 2023, containing various requirements, including the submission of numerous work plans to assess and remediate various environmental media and performance of certain removal actions at the affected site. On February 24, 2023, we submitted to the U.S. EPA our Notice of Intent to Comply with the UAO and are currently cooperating with U.S. EPA as well as the Ohio EPA and Pennsylvania DEP, pursuant to the UAO and the directives issued thereunder. We are also subject to the following legal proceedings that principally relate to the environmental impact of the Incident: •The U.S. Department of Justice (DOJ) and the U.S. EPA filed a civil complaint (the DOJ Complaint) in the Northern District of Ohio (Eastern Division) seeking injunctive relief, cost recovery and civil penalties for violations of the Clean Water Act and seeking cost recovery under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The Ohio Attorney General (AG) also filed a CERCLA lawsuit (the Ohio Complaint) in the Northern District of Ohio (Eastern Division) seeking statutory damages for a variety of tort and environmental claims under CERCLA and various state laws. The DOJ and Ohio AG cases have been consolidated for discovery purposes. We have filed an answer, and on June 30, 2023, we filed a third-party complaint bringing in numerous parties involved in the Incident. In connection with the foregoing items, we recognized $699 million of expense during the first nine months of 2023 ($118 million of which was recognized in the third quarter), of which $372 million was paid during the first nine months of 2023, related to probable obligations that are reasonably estimable, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 410-30, “Environmental Obligations.” Our current estimate includes ongoing and future environmental cleanup activities and remediation efforts, governmental oversight costs (including those incurred by the U.S. EPA and the Ohio EPA), and other related costs, including those in connection with the DOJ Complaint (including potential civil penalties related to violations of the Clean Water Act). Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, when activities at the site transition from extensive soil and water disposal and air monitoring activities to additional assessment and investigative efforts, the nature and extent of required future cleanup activities (including those resulting from additional assessment and investigative activities that will be conducted at the site), and the extent and duration of governmental oversight, amongst other factors. As clean-up efforts progress and more information is available, we will review these estimates and revise as appropriate. Legal Proceedings and Claims (Non-Environmental) – To date, numerous non-environmental legal actions have commenced with respect to the Incident, including those more specifically set forth below. •There is a consolidated putative class action pending in the Northern District of Ohio (Eastern Division) in which plaintiffs allege various claims, including negligence, gross negligence, strict liability, and nuisance, and seeking as relief compensatory and punitive damages, medical monitoring and business losses. The putative class is defined by reference to a class area covering a 30-mile radius. On July 12, 2023, we filed a third-party complaint bringing in numerous parties involved in the Incident. The court in the putative class action has established a fact discovery deadline in January 2024. Additional lawsuits are also pending in the same court and others, such as lawsuits pending in the Western District of Pennsylvania brought by three local school districts and including claims such as negligence, nuisance, trespass, and future health monitoring. On August 22, 2023, the three school districts voluntarily dismissed their actions. On the same day, those three Pennsylvania school districts along with four others filed a class action lawsuit on behalf of school students alleging negligence, nuisance, and trespass, and seeking damages and health monitoring. The putative class action and individual lawsuits are collectively referred to herein as the Incident Lawsuits. In accordance with ASC 450, “Contingencies,” we have recognized a $105 million loss during the first nine months of 2023 with respect to the Incident Lawsuits. We have made $30 million in payments during the first nine months of 2023 with respect to these matters. •We have received securities litigation and demands and multiple shareholder document and litigation demand letters, including a securities class action lawsuit under the Securities Exchange Act of 1934 initially filed in the Southern District of Ohio alleging multiple securities law violations but since transferred to the Northern District of Georgia, and a securities class action lawsuit under the Securities Act of 1933 filed in the Southern District of New York alleging misstatements in association with our debt offerings, (collectively, the Shareholder Matters). No responsive pleadings have been filed yet with respect to the Shareholder Matters. If and when we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it will be accrued through a charge to earnings and, if material, disclosed. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known. Because the final outcome of any of these legal proceedings cannot be predicted with certainty, developments related to the progress of such legal proceedings or other unfavorable or unexpected developments or outcomes could result in additional costs or new or additionally accrued amounts that could be material to our results of operations in a particular year or quarter. For legal proceedings 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. In addition to the costs associated with environmental matters and legal proceedings and claims, we incurred other expenses directly related to the Incident of $187 million during the first nine months of 2023 ($70 million of which was recognized in the third quarter) pertaining to legal fees, community support, and other response-related activities. The reserves established by us during the first nine months of 2023 do not include any estimate of loss for the following additional items, for which we believe a loss is either not probable or not reasonably estimable for the reasons noted: (i) the overall cost to us for the healthcare fund being developed in conjunction with relevant stakeholders, including the Ohio AG, for affected residents (given the preliminary nature of such discussions), which amount will impact our loss contingency analysis with respect to the Incident Lawsuits described above, or (ii) any fines or penalties (in excess of the reserves established for Clean Water Act-related civil penalties) that may be imposed as a result of the Incident Inquiries and Investigations, as more specifically set forth and defined below (the outcome of which are uncertain at this time). Additionally, with the exception of amounts recognized during the first nine months of 2023, potential recoveries under our insurance coverage, which may apply to various Incident-related expenses or liabilities as more specifically set forth further below, have not yet been recorded (given the preliminary nature of discussions with our insurers). No amounts have been recorded related to potential recoveries from other third parties, which may reduce amounts payable by our insurers under our applicable insurance coverage. Inquiries and Investigations As set forth above, we are subject to inquiries and investigations by numerous federal, state, and local government authorities and regulatory agencies regarding the Incident, including but not limited to, the DOJ and the U.S. EPA, the Ohio EPA, the National Transportation Safety Board (NTSB), the Federal Railroad Administration (FRA), the Occupational Safety and Health Administration, the Ohio AG, and the Pennsylvania AG. Further details regarding the NTSB and FRA investigations are set forth below. We are cooperating with all inquiries and investigations, including responding to civil and criminal subpoenas and other requests for information (the aforementioned inquiries and investigations, as well as the civil and criminal subpoenas are collectively referred to herein as the Incident Inquiries and Investigations). Aside from the FRA Safety Assessment (defined and described below), the outcome of any current or future Incident Inquiries and Investigations is uncertain at this time, including any related fines, penalties or settlements. Therefore, our expenses for the first nine months of 2023 do not include estimates of the total amount that we may incur for any such fines, penalties or settlements. Subsequent to the Incident, investigators from the NTSB examined railroad equipment and track conditions; reviewed data from the signal system, wayside defect detectors, local surveillance cameras, and the lead locomotive’s event recorder and forward-facing and inward-facing image recorders; and completed certain interviews (the NTSB Investigation). The NTSB issued a preliminary report indicating that one of the cars involved in the derailment appeared to have a wheel bearing in the final stage of overheat failure moments before the derailment. Their preliminary report also indicates that the rail crew was operating the train within our rules; the rail crew operated the train below the track speed limit, the wayside heat detectors were operating as designed; and once the rail crew was alerted by the wayside detector, they immediately began to stop the train. The NTSB conducted a subsequent investigative field hearing in East Palestine, Ohio on June 22 and 23, 2023. The NTSB’s investigation remains ongoing. We expect the NTSB to issue a final report, with a probable cause determination and safety recommendations, in 2024. Concurrent with the NTSB Investigation, the FRA is also investigating the Incident. Similar in scope to the NTSB Investigation, the FRA is examining railroad equipment, track conditions, hazardous materials train placement and routing, and emergency response (the FRA Incident Investigation). The FRA Incident Investigation may result in the assessment of civil penalties. In addition to the FRA Incident Investigation, the FRA recently completed a 60-day supplemental safety assessment (the FRA Safety Assessment). The FRA Safety Assessment included a review of findings from a previously completed 2022 system audit and an assessment of operational elements including, but not limited to: track, signal, and rolling stock maintenance, inspection and repair practices; protection of employees; communications between transportation departments and mechanical and engineering staff; operation control center procedures and dispatcher training. The overall scope of the FRA Safety Assessment was to examine our safety culture. The FRA issued a public report in early August and included its findings and recommended corrective actions. The FRA Incident Investigation remains ongoing. Other 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 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. On January 3, 2023, the court granted summary judgment to us on all of the compensatory claims but denied summary judgment for all equitable relief claims. On January 18, 2023, the court dismissed the federal equitable relief claims, leaving the state equitable relief claims as the sole remaining issue under consideration. On April 19, 2023, the court disposed of all remaining state equitable relief claims. The court’s dismissals were appealed and the case is currently before the United States Court of Appeals for the Fourth Circuit. We will continue to vigorously defend the lawsuit and, although it is reasonably possible we could incur a loss in the case, we believe that we will prevail. However, given that litigation is inherently unpredictable and subject to uncertainties, there can be no assurances that the final outcome of the litigation (including the related appeal) will not be material. Until such appeal is final, we cannot reasonably estimate the potential loss or range of loss associated with this matter. 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. 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 – Other than Incident-related matters noted above, 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. In addition to environmental claims associated with the Incident, our Consolidated Balance Sheets include liabilities for other environmental exposures of $59 million at September 30, 2023 and $66 million at December 31, 2022, of which $15 million is classified as a current liability at the end of both periods. At September 30, 2023, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at 81 known locations and projects compared with 85 locations and projects at December 31, 2022. At September 30, 2023, twenty sites accounted for $47 million of the liability, and no individual site was considered to be material. We anticipate that most of this liability will be paid out over five years; however, some costs will be paid out over a longer period. At eight locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under CERCLA or comparable state statutes that impose joint and several liability for cleanup costs. We calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not solely on the basis of the potential for joint liability. As set forth above, with respect to known environmental sites (whether identified by us or by the U.S. EPA or comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the aggregate for all such sites can change over time because of the widely varying costs of currently available cleanup techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies, the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full extent of contamination and each potential participant’s share of any estimated loss (and that participant’s ability to bear it), and evolving statutory and regulatory standards governing liability. 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. Labor Agreements Approximately 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. Pursuant to the Railway Labor Act, these agreements remain in effect until new agreements are reached, or until the bargaining procedures mandated by the Railway Labor Act are completed. Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements. We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee. The latest round of national bargaining concluded in December 2022, when agreements were either ratified or enacted through legislative action for all twelve of our unions. With the conclusion of national bargaining, neither party can compel mandatory bargaining around any new proposals until November 1, 2024. In addition, we understand the imperative to continue improving quality of life for our craft employees and remain actively engaged with our unions in voluntary local discussions (none of which carry the risk of a work stoppage) on this important issue. Insurance We purchase insurance covering legal liabilities for bodily injury and property damage to third parties. This insurance provides coverage above $75 million and below $800 million (or up to $1.1 billion for specified types of pollution releases) per occurrence and/or policy year. In addition, we purchase insurance covering damage to property owned by us or in our care, custody, or control. This insurance covers approximately 82% of potential losses above $75 million and below $275 million per occurrence and/or policy year. Our ability to recoup any of the foregoing amounts under our insurance coverage, including any amounts that may be recoverable with respect to the Incident, is subject to certain conditions, including but not limited to our insurers’ reservation of rights to further investigate and contest coverage, the express restrictions and sub-limits of coverage, and various policy exclusions, including those for some governmental fines or penalties, as well as potential coverage disputes over payments we make as part of our effort to mitigate the impact to the community and affected residents. We are working with our insurers to confirm applicable coverage with respect to the Incident, and we have recognized $25 million in insurance recoveries in the first nine months of 2023. Asset Purchase and Sale Agreement In November 2022, we entered into an asset purchase and sale agreement with the Board of Trustees of the Cincinnati Southern Railway to purchase approximately 337 miles of railway line that extends from Cincinnati, Ohio to Chattanooga, Tennessee which we currently operate under a lease agreement. The agreement is conditioned upon the following, among other items: (i) approval by the voters of the City of Cincinnati (Cincinnati Voter Approval), and (ii) the receipt of regulatory approval from the U.S. Surface Transportation Board (STB). On June 28, 2023, we entered into an amended and restated asset purchase and sale agreement which increased the purchase price by $500,000 and clarified the impact of Cincinnati Voter Approval on the closing timeline. Following the June 2023 amendment, the total purchase price for the line and other associated real and personal property included in the transaction is expected to be between $1.6 billion and $1.7 billion. On September 20, 2023, the STB authorized the acquisition of the Cincinnati Southern Railway by Norfolk Southern Railway Company. If Cincinnati Voter Approval is obtained in November 2023, the transaction will close on the later of the date that is five days after all conditions have been satisfied or March 15, 2024.
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Pay vs Performance Disclosure - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
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Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Pay vs Performance Disclosure | ||||||||
Net income | $ 478 | $ 356 | $ 466 | $ 958 | $ 819 | $ 703 | $ 1,300 | $ 2,480 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Railway Operating Revenues (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table disaggregates our revenues by major commodity group:
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Schedule of Accounts Receivable | “Accounts receivable – net” on the Consolidated Balance Sheets includes both customer and non-customer receivables as follows:
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Stock-Based Compensation (Tables) |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock-based compensation cost |
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Schedule of LTIP awards | During 2023, we granted stock options, restricted stock units (RSUs) and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP), as follows:
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Schedule of cash proceeds received from share-based payment awards |
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Restricted Stock Units (RSUs) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share-based compensation, activity |
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Performance Share Units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share-based compensation, activity |
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share Calculation | The following table sets forth the calculation of basic and diluted earnings per share:
|
Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Pensions and Other Postretirement Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Fair Values of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Railway Operating Revenues - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | |||||
Revenue, payment terms | 15 days | ||||
Contract assets | $ 0 | $ 0 | $ 0 | ||
Contract liabilities | $ 0 | $ 0 | $ 0 | ||
Accessorial Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Accessorial services percent of total railway operating revenues | 5.00% | 7.00% | 5.00% | 7.00% |
Railway Operating Revenues - Schedule of Account Receivables (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable – net | $ 1,210 | $ 1,148 |
Customer | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable – net | 883 | 895 |
Non-customer | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accounts receivable – net | $ 327 | $ 253 |
Stock-Based Compensation - Schedule of Stock-Based Compensation Expense and Related Tax Benefits (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-Based Payment Arrangement [Abstract] | ||||
Stock-based compensation expense | $ 10 | $ 13 | $ 32 | $ 49 |
Total tax benefit | $ 2 | $ 7 | $ 11 | $ 24 |
Stock-Based Compensation - Schedule of Grants and Weighted-Average Grant-Date Fair Values (Details) - $ / shares |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
Stock options | ||
Granted | ||
Stock options (in shares) | 0 | 69,580 |
Weighted-Average Grant-Date Fair Value | ||
Stock options (in dollars per shares) | $ 0 | $ 77.60 |
RSUs | ||
Granted | ||
Other than stock options (in shares) | 6,448 | 199,819 |
Weighted-Average Grant-Date Fair Value | ||
Other than stock options (in dollars per share) | $ 230.82 | $ 233.61 |
PSUs | ||
Granted | ||
Other than stock options (in shares) | 110 | 59,070 |
Weighted-Average Grant-Date Fair Value | ||
Other than stock options (in dollars per share) | $ 234.37 | $ 236.25 |
Stock-Based Compensation - Schedule of Options Exercised, Cash Received, and Related Tax Benefits (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-Based Payment Arrangement [Abstract] | ||||
Options exercised (in shares) | 9,934 | 116,881 | 87,206 | 275,770 |
Cash received upon exercise | $ 1 | $ 9 | $ 7 | $ 23 |
Related tax benefits realized | $ 0 | $ 5 | $ 3 | $ 11 |
Stock-Based Compensation - Narrative (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period (in years) | 4 years | |||
PSUs earned (in shares) | 2,587 | 557 | 155,617 | 247,510 |
PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards measurement cycle (in years) | 3 years | |||
PSUs earned (in shares) | 0 | 0 | 58,599 | 86,420 |
Stock-Based Compensation - Schedule of RSU Activity (Details) - Restricted Stock Units (RSUs) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
RSUs vested (in shares) | 2,587 | 557 | 155,617 | 247,510 |
Common Stock issued net of tax withholding (in shares) | 1,734 | 397 | 109,153 | 175,373 |
Related tax benefits realized | $ 0 | $ 0 | $ 1 | $ 5 |
Stock-Based Compensation - Schedule of PSU Activity (Details) - PSUs - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
PSUs earned (in shares) | 0 | 0 | 58,599 | 86,420 |
Common Stock issued net of tax withholding (in shares) | 40,255 | 54,651 | ||
Related tax benefits realized | $ 0 | $ 1 |
Income Taxes (Details) $ in Millions |
3 Months Ended |
---|---|
Sep. 30, 2022
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Decrease in deferred income taxes, change in tax rate | $ 136 |
Decrease in income taxes benefit, change in tax rate | $ 136 |
Earnings Per Share - Calculation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Earnings Per Share [Abstract] | ||||||||
Net income | $ 478 | $ 356 | $ 466 | $ 958 | $ 819 | $ 703 | $ 1,300 | $ 2,480 |
Dividend equivalent payments, basic | (1) | 0 | (2) | (1) | ||||
Dividend equivalent payments, diluted | (1) | 0 | (2) | (1) | ||||
Income available to common stockholders, basic | 477 | 958 | 1,298 | 2,479 | ||||
Income available to common stockholders, diluted | $ 477 | $ 958 | $ 1,298 | $ 2,479 | ||||
Weighted-average shares outstanding (in shares) | 226.4 | 233.2 | 227.2 | 236.4 | ||||
Dilutive effect of outstanding options and share-settled awards (in shares) | 0.6 | 0.8 | 0.6 | 0.8 | ||||
Adjusted weighted-average shares outstanding (in shares) | 227.0 | 234.0 | 227.8 | 237.2 | ||||
Basic (in dollars per share) | $ 2.11 | $ 4.11 | $ 5.71 | $ 10.49 | ||||
Diluted (in dollars per share) | $ 2.10 | $ 4.10 | $ 5.70 | $ 10.45 |
Earnings Per Share - Narrative (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.1 | 0.1 | 0.1 | 0.1 |
Stock Repurchase Program (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Equity [Abstract] | ||||||||
Stock repurchased and retired during period (in shares) | 2.2 | 9.2 | ||||||
Stock repurchased and retired during period, cost | $ 205 | $ 140 | $ 163 | $ 830 | $ 854 | $ 600 | $ 508 | $ 2,300 |
Debt (Details) - USD ($) |
Sep. 30, 2023 |
Aug. 31, 2023 |
May 31, 2023 |
Feb. 28, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|---|
Debt Instrument [Line Items] | |||||
Accounts receivable securitization balance | $ 0 | $ 100,000,000 | |||
Securitization Borrowings | |||||
Debt Instrument [Line Items] | |||||
Accounts receivable securitization program, maximum borrowing capacity | $ 400,000,000 | ||||
Average interest rate of borrowings outstanding | 5.05% | ||||
Available borrowing capacity | 400,000,000 | $ 300,000,000 | |||
Accounts receivable securitization program | $ 911,000,000 | $ 883,000,000 | |||
5.05% Senior Notes Due 2030 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes issued | $ 600,000,000 | ||||
Stated rates | 5.05% | ||||
5.35% Senior Notes Due 2054 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes issued | $ 1,000,000,000 | ||||
Stated rates | 5.35% | ||||
4.45% Senior Notes Due 2033 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes issued | $ 500,000,000 | ||||
Stated rates | 4.45% |
Pensions and Other Postretirement Benefits (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Pension Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 7 | $ 10 | $ 19 | $ 30 |
Interest cost | 27 | 17 | 81 | 51 |
Expected return on plan assets | (53) | (53) | (157) | (160) |
Amortization of net losses | 1 | 12 | 3 | 36 |
Amortization of prior service benefit | 0 | 0 | 0 | 0 |
Net benefit | (18) | (14) | (54) | (43) |
Other Postretirement Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 1 | 1 | 3 | 4 |
Interest cost | 4 | 3 | 13 | 7 |
Expected return on plan assets | (2) | (3) | (8) | (9) |
Amortization of net losses | (1) | 0 | (1) | 0 |
Amortization of prior service benefit | (6) | (6) | (19) | (19) |
Net benefit | $ (4) | $ (5) | $ (12) | $ (17) |
Fair Values of Financial Instruments - Schedule of Carrying Amounts and Estimated Fair Values (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, including current maturities | $ (16,584) | $ (15,082) |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, including current maturities | $ (14,405) | $ (13,846) |
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