Virginia (State or other jurisdiction of incorporation) | 52-1188014 (IRS Employer Identification No.) | |
Three Commercial Place Norfolk, Virginia (Address of principal executive offices) | 23510-2191 Zip Code | |
Registrant’s telephone number, including area code: | (757) 629-2680 | |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each Class | Name of each exchange on which registered | |
Norfolk Southern Corporation | ||
Common Stock (Par Value $1.00) | New York Stock Exchange |
Page | |||
• | Corporate Governance Guidelines |
• | Charters of the Committees of the Board of Directors |
• | The Thoroughbred Code of Ethics |
• | Code of Ethical Conduct for Senior Financial Officers |
• | Categorical Independence Standards for Directors |
• | Norfolk Southern Corporation Bylaws |
• | New York City area to Chicago (via Allentown and Pittsburgh) |
• | Chicago to Macon (via Cincinnati, Chattanooga, and Atlanta) |
• | Appalachian coal fields of Virginia, West Virginia, and Kentucky to Norfolk, Virginia and Sandusky, Ohio |
• | Cleveland to Kansas City |
• | Birmingham to Meridian |
• | Memphis to Chattanooga |
Mileage Operated at December 31, 2015 | ||||||||||||||
Miles of Road | Second and Other Main Track | Passing Track, Crossovers and Turnouts | Way and Yard Switching | Total | ||||||||||
Owned | 15,194 | 2,754 | 1,976 | 8,381 | 28,305 | |||||||||
Operated under lease, contract or trackage | ||||||||||||||
rights | 4,768 | 1,916 | 398 | 834 | 7,916 | |||||||||
Total | 19,962 | 4,670 | 2,374 | 9,215 | 36,221 |
Years ended December 31, | |||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
Revenue ton miles (billions) | 200 | 205 | 194 | 186 | 192 | ||||||||||||||
Revenue per ton mile | $ | 0.0526 | $ | 0.0567 | $ | 0.0581 | $ | 0.0595 | $ | 0.0582 | |||||||||
Revenue ton miles per employee-hour worked | 3,467 | 3,576 | 3,376 | 3,153 | 3,207 | ||||||||||||||
Ratio of railway operating expenses to railway operating | |||||||||||||||||||
revenues | 72.6% | 69.2% | 71.0% | 71.7% | 71.2% |
• | Chemicals includes sulfur and related chemicals, petroleum products (including crude oil), chlorine and bleaching compounds, plastics, rubber, industrial chemicals, and chemical wastes. |
• | Agriculture, consumer products, and government includes soybeans, wheat, corn, fertilizer, livestock and poultry feed, food oils, flour, beverages, canned goods, sweeteners, consumer products, ethanol, transportation equipment, and items for the U.S. military. |
• | Metals and construction includes steel, aluminum products, machinery, scrap metals, cement, aggregates, sand, and minerals. |
• | Automotive includes finished vehicles for BMW, Chrysler, Ford, General Motors, Honda, Hyundai, Mercedes-Benz, Mitsubishi, Subaru, Tesla, Toyota, and Volkswagen, and auto parts for BMW, Chrysler, Ford, General Motors, Honda, Hyundai, Mazda, Nissan, Subaru, Toyota, and Volkswagen. |
• | Paper, clay and forest products includes lumber and wood products, pulp board and paper products, wood fibers, wood pulp, scrap paper, and clay. |
• | Alexandria and Lynchburg, Virginia |
• | Alexandria, Virginia and New Orleans, Louisiana |
• | Alexandria and Orange, Virginia |
• | Petersburg and Norfolk, Virginia |
• | Raleigh and Charlotte, North Carolina |
• | Selma and Charlotte, North Carolina |
• | Chicago, Illinois, and Porter, Indiana |
• | Chicago, Illinois, and Cleveland, Ohio |
• | Chicago, Illinois, and Pittsburgh, Pennsylvania |
• | Pittsburgh and Harrisburg, Pennsylvania |
• | Amtrak |
• | New Jersey Transit |
• | Southeastern Pennsylvania Transportation Authority |
• | Metro-North Commuter Railroad Company |
• | Maryland Department of Transportation |
• | Michigan Department of Transportation |
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
($ in millions) | |||||||||||||||||||
Road and other property | $ | 1,514 | $ | 1,406 | $ | 1,421 | $ | 1,465 | $ | 1,222 | |||||||||
Equipment | 658 | 712 | 550 | 776 | 938 | ||||||||||||||
Delaware & Hudson acquisition | 213 | — | — | — | — | ||||||||||||||
Total | $ | 2,385 | $ | 2,118 | $ | 1,971 | $ | 2,241 | $ | 2,160 |
• | The Crescent Corridor consists of a program of projects for infrastructure and other facility improvements geared toward creating seamless, high-capacity intermodal routes spanning 11 states from New Jersey to Louisiana and offering truck-competitive service along several major interstate highway corridors, including I-81, I-85, I-20, I-40, I-59, I-78, and I-75. |
• | The Heartland Corridor is a seamless, high-capacity intermodal route across Virginia and West Virginia to Midwest markets. |
• | Meridian Speedway LLC, a joint venture with Kansas City Southern, owns and operates a 320-mile rail line between Meridian, Mississippi and Shreveport, Louisiana designed to increase capacity and improve service. |
• | Pan Am Southern LLC, a joint venture with Pan Am Railways, Inc., designed to increase intermodal and automotive capacity, owns and operates a 155-mile main line track that runs between Mechanicville, New York and Ayer, Massachusetts, along with 281 miles of secondary and branch lines, including trackage rights in New York, Connecticut, Massachusetts, New Hampshire, and Vermont. |
• | The CREATE project is a public-private partnership to reduce rail and highway congestion and add freight and passenger capacity in the metropolitan Chicago area. We and other railroads have agreed to participate in CREATE. |
Owned(1) | Leased(2) | Total | Capacity of Equipment | ||||||||
(Horsepower) | |||||||||||
Locomotives: | |||||||||||
Multiple purpose | 4,068 | 31 | 4,099 | 15,292,800 | |||||||
Auxiliary units | 155 | — | 155 | — | |||||||
Switching | 99 | — | 99 | 148,750 | |||||||
Total locomotives | 4,322 | 31 | 4,353 | 15,441,550 | |||||||
(Tons) | |||||||||||
Freight cars: | |||||||||||
Gondola | 30,392 | 3,017 | 33,409 | 3,643,031 | |||||||
Hopper | 12,516 | — | 12,516 | 1,402,161 | |||||||
Box | 10,811 | 1,363 | 12,174 | 1,022,107 | |||||||
Covered hopper | 10,267 | 85 | 10,352 | 1,144,496 | |||||||
Flat | 2,091 | 1,489 | 3,580 | 342,252 | |||||||
Other | 4,596 | 14 | 4,610 | 221,362 | |||||||
Total freight cars | 70,673 | 5,968 | 76,641 | 7,775,409 | |||||||
Other: | |||||||||||
Chassis | 24,493 | 4,245 | 28,738 | ||||||||
Containers | 21,019 | 1,939 | 22,958 | ||||||||
Work equipment | 4,666 | 318 | 4,984 | ||||||||
Vehicles | 3,828 | — | 3,828 | ||||||||
Miscellaneous | 7,295 | 27 | 7,322 | ||||||||
Total other | 61,301 | 6,529 | 67,830 |
(1) | Includes equipment leased to outside parties and equipment subject to equipment trusts, conditional sale agreements, and capitalized leases. |
(2) | Includes short-term and long-term operating leases. |
2015 | 2014 | 2013 | 2012 | 2011 | 2006- 2010 | 2001- 2005 | 2000 & Before | Total | ||||||||||||||||||
Locomotives: | ||||||||||||||||||||||||||
No. of units | 8 | 83 | 50 | 60 | 90 | 315 | 553 | 3,163 | 4,322 | |||||||||||||||||
% of fleet | 1 | % | 2 | % | 1 | % | 1 | % | 2 | % | 7 | % | 13 | % | 73 | % | 100 | % | ||||||||
Freight cars: | ||||||||||||||||||||||||||
No. of units | 2,033 | 900 | — | 2,017 | 3,820 | 4,695 | 165 | 57,043 | 70,673 | |||||||||||||||||
% of fleet | 3 | % | 1 | % | — | % | 3 | % | 5 | % | 6 | % | 1 | % | 81 | % | 100 | % |
Locomotives | Freight Cars | ||
Average age – in service | 23.9 years | 29.6 years | |
Retirements | 13 units | 2,661 units | |
Average age – retired | 43.4 years | 45.8 years |
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||
Track miles of rail installed | 523 | 507 | 549 | 509 | 484 | |||||||||
Miles of track surfaced | 5,074 | 5,248 | 5,475 | 5,642 | 5,441 | |||||||||
New crossties installed (millions) | 2.4 | 2.7 | 2.5 | 2.6 | 2.7 |
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
Average number of employees | 30,456 | 29,482 | 30,103 | 30,943 | 30,329 | ||||||||||||||
Average wage cost per employee | $ | 77,000 | $ | 76,000 | $ | 72,000 | $ | 69,000 | $ | 71,000 | |||||||||
Average benefit cost per employee | $ | 32,000 | $ | 35,000 | $ | 40,000 | $ | 38,000 | $ | 39,000 |
Name, Age, Present Position | Business Experience During Past Five Years |
James A. Squires, 54, Chairman, President, and Chief Executive Officer | Present position since June 1, 2015. Served as President since June 1, 2013. Served as Executive Vice President – Administration from August 1, 2012 to June 1, 2013. Served as Executive Vice President – Finance and Chief Financial Officer from July 1, 2007 to August 1, 2012. |
Cindy C. Earhart, 54, Executive Vice President – Administration and Chief Information Officer | Present position since June 1, 2013. Served as Vice President Human Resources from March 1, 2007 to June 1, 2013. |
James A. Hixon, 62, Executive Vice President – Law and Corporate Relations | Present position since October 1, 2005. |
Alan H. Shaw, 48 Executive Vice President and Chief Marketing Officer | Present position since May 16, 2015. Served as Vice President Intermodal Operations from November 1, 2013 to May 15, 2015. Served as Group Vice President Industrial Products from November 16, 2009 to October 31, 2013. |
Marta R. Stewart, 58, Executive Vice President – Finance and Chief Financial Officer | Present position since November 1, 2013. Served as Vice President and Treasurer from April 1, 2009 to November 1, 2013. |
Michael J. Wheeler, 53, Executive Vice President and Chief Operating Officer | Present position since February 1, 2016. Served as Senior Vice President Operations October 1, 2015 to January 31, 2016. Served as Vice President Engineering November 1, 2012 to September 30, 2015. Served as Vice President Transportation February 1, 2009 to October 31, 2012. |
Thomas E. Hurlbut, 51, Vice President and Controller | Present position since November 1, 2013. Served as Vice President Audit and Compliance from February 1, 2010 to November 1, 2013. |
Quarter | |||||||||||||||
2015 | 1st | 2nd | 3rd | 4th | |||||||||||
Market Price | |||||||||||||||
High | $ | 111.63 | $ | 106.47 | $ | 88.03 | $ | 97.07 | |||||||
Low | 100.14 | 87.24 | 73.57 | 77.19 | |||||||||||
Dividends per share | 0.59 | 0.59 | 0.59 | 0.59 | |||||||||||
2014 | 1st | 2nd | 3rd | 4th | |||||||||||
Market Price | |||||||||||||||
High | $ | 97.58 | $ | 104.09 | $ | 112.34 | $ | 117.24 | |||||||
Low | 87.20 | 92.78 | 100.11 | 101.98 | |||||||||||
Dividends per share | 0.54 | 0.54 | 0.57 | 0.57 |
Period | Total Number of Shares (or Units) Purchased(1) | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(2) | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased under the Plans or Programs(2) | |||||||||
October 1-31, 2015 | 749,906 | $ | 79.74 | 746,144 | 24,159,632 | ||||||||
November 1-30, 2015 | 241,117 | 80.10 | 241,117 | 23,918,515 | |||||||||
December 1-31, 2015 | — | — | — | 23,918,515 | |||||||||
Total | 991,023 | 987,261 |
(1) | Of this amount, 3,762 represents shares tendered by employees in connection with the exercise of stock options under the stockholder-approved Long-Term Incentive Plan. |
(2) | Our Board of Directors authorized a share repurchase program, pursuant to which up to 50 million shares of Common Stock through December 31, 2017. |
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||||
RESULTS OF OPERATIONS | |||||||||||||||||||
Railway operating revenues | $ | 10,511 | $ | 11,624 | $ | 11,245 | $ | 11,040 | $ | 11,172 | |||||||||
Railway operating expenses | 7,627 | 8,049 | 7,988 | 7,916 | 7,959 | ||||||||||||||
Income from railway operations | 2,884 | 3,575 | 3,257 | 3,124 | 3,213 | ||||||||||||||
Other income – net | 103 | 104 | 233 | 129 | 160 | ||||||||||||||
Interest expense on debt | 545 | 545 | 525 | 495 | 455 | ||||||||||||||
Income before income taxes | 2,442 | 3,134 | 2,965 | 2,758 | 2,918 | ||||||||||||||
Provision for income taxes | 886 | 1,134 | 1,055 | 1,009 | 1,002 | ||||||||||||||
Net income | $ | 1,556 | $ | 2,000 | $ | 1,910 | $ | 1,749 | $ | 1,916 | |||||||||
PER SHARE DATA | |||||||||||||||||||
Net income – basic | $ | 5.13 | $ | 6.44 | $ | 6.10 | $ | 5.42 | $ | 5.52 | |||||||||
– diluted | 5.10 | 6.39 | 6.04 | 5.37 | 5.45 | ||||||||||||||
Dividends | 2.36 | 2.22 | 2.04 | 1.94 | 1.66 | ||||||||||||||
Stockholders’ equity at year end | 40.93 | 40.25 | 36.55 | 31.08 | 30.00 | ||||||||||||||
FINANCIAL POSITION | |||||||||||||||||||
Total assets | $ | 34,260 | $ | 33,200 | $ | 32,439 | $ | 30,302 | $ | 28,505 | |||||||||
Total debt | 10,093 | 8,985 | 9,404 | 8,642 | 7,507 | ||||||||||||||
Stockholders’ equity | 12,188 | 12,408 | 11,289 | 9,760 | 9,911 | ||||||||||||||
OTHER | |||||||||||||||||||
Property additions | $ | 2,385 | $ | 2,118 | $ | 1,971 | $ | 2,241 | $ | 2,160 | |||||||||
Average number of shares outstanding (thousands) | 301,873 | 309,367 | 311,916 | 320,864 | 345,484 | ||||||||||||||
Number of stockholders at year end | 28,443 | 29,575 | 30,990 | 32,347 | 33,381 | ||||||||||||||
Average number of employees: | |||||||||||||||||||
Rail | 30,057 | 29,063 | 29,698 | 30,543 | 29,933 | ||||||||||||||
Nonrail | 399 | 419 | 405 | 400 | 396 | ||||||||||||||
Total | 30,456 | 29,482 | 30,103 | 30,943 | 30,329 |
Revenues | Units | Revenue per Unit | ||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||
($ in millions) | (in thousands) | ($ per unit) | ||||||||||||||||||||||||||||||
Coal | $ | 1,823 | $ | 2,382 | $ | 2,543 | 1,079.7 | 1,284.4 | 1,346.7 | $ | 1,688 | $ | 1,855 | $ | 1,888 | |||||||||||||||||
General merchandise: | ||||||||||||||||||||||||||||||||
Chemicals | 1,760 | 1,863 | 1,667 | 527.6 | 502.6 | 449.2 | 3,335 | 3,707 | 3,711 | |||||||||||||||||||||||
Agr./consumer/gov’t. | 1,516 | 1,498 | 1,467 | 609.0 | 603.8 | 594.3 | 2,489 | 2,481 | 2,468 | |||||||||||||||||||||||
Metals/construction | 1,263 | 1,521 | 1,405 | 672.4 | 725.6 | 666.9 | 1,879 | 2,096 | 2,106 | |||||||||||||||||||||||
Automotive | 969 | 1,004 | 984 | 429.3 | 410.1 | 402.1 | 2,258 | 2,447 | 2,448 | |||||||||||||||||||||||
Paper/clay/forest | 771 | 794 | 795 | 299.9 | 303.2 | 309.4 | 2,573 | 2,619 | 2,570 | |||||||||||||||||||||||
General merchandise | 6,279 | 6,680 | 6,318 | 2,538.2 | 2,545.3 | 2,421.9 | 2,474 | 2,624 | 2,609 | |||||||||||||||||||||||
Intermodal | 2,409 | 2,562 | 2,384 | 3,861.0 | 3,845.2 | 3,572.3 | 624 | 666 | 667 | |||||||||||||||||||||||
Total | $ | 10,511 | $ | 11,624 | $ | 11,245 | 7,478.9 | 7,674.9 | 7,340.9 | 1,405 | 1,515 | 1,532 |
Revenue Variance Analysis Increase (Decrease) | |||||||
2015 vs. 2014 | 2014 vs. 2013 | ||||||
($ in millions) | |||||||
Revenue per unit | $ | (816 | ) | $ | (133 | ) | |
Volume (units) | (297 | ) | 512 | ||||
Total | $ | (1,113 | ) | $ | 379 |
Coal Tonnage by Market | ||||||||
2015 | 2014 | 2013 | ||||||
(tons in thousands) | ||||||||
Utility | 81,137 | 93,884 | 97,146 | |||||
Export | 16,193 | 23,218 | 28,631 | |||||
Domestic metallurgical | 14,450 | 16,130 | 16,905 | |||||
Industrial | 8,201 | 8,599 | 7,388 | |||||
Total | 119,981 | 141,831 | 150,070 |
Operating Expense Variances Increase (Decrease) | |||||||
2015 vs. 2014 | 2014 vs. 2013 | ||||||
($ in millions) | |||||||
Fuel | $ | (640 | ) | $ | (39 | ) | |
Compensation and benefits | 14 | (105 | ) | ||||
Materials and other | 36 | 112 | |||||
Purchased services and rents | 65 | 58 | |||||
Depreciation | 103 | 35 | |||||
Total | $ | (422 | ) | $ | 61 |
• | pay rates (up $83 million), |
• | payroll taxes (up $37 million), |
• | labor agreement payments ($24 million), |
• | employee levels, including overtime and increased trainees (up $21 million), and |
• | incentive compensation (down $151 million). |
• | postretirement and pension benefit costs (down $152 million), |
• | health and welfare benefit costs (down $25 million), |
• | pay rates (up $57 million), and |
• | payroll taxes (up $21 million). |
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Materials | $ | 469 | $ | 470 | $ | 422 | |||||
Casualties and other claims | 137 | 135 | 90 | ||||||||
Other | 370 | 335 | 316 | ||||||||
Total | $ | 976 | $ | 940 | $ | 828 |
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Purchased services | $ | 1,433 | $ | 1,394 | $ | 1,353 | |||||
Equipment rents | 319 | 293 | 276 | ||||||||
Total | $ | 1,752 | $ | 1,687 | $ | 1,629 |
Total | 2016 | 2017 - 2018 | 2019 - 2020 | 2021 and Subsequent | Other | ||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
Interest on fixed-rate long-term debt | |||||||||||||||||||||||
and capital lease principal | $ | 13,780 | $ | 543 | $ | 992 | $ | 851 | $ | 11,394 | $ | — | |||||||||||
Long-term debt and capital lease principal | 10,398 | 500 | 1,150 | 899 | 7,849 | — | |||||||||||||||||
Operating leases | 664 | 77 | 138 | 101 | 348 | — | |||||||||||||||||
Agreements with CRC | 304 | 36 | 72 | 72 | 124 | — | |||||||||||||||||
Unconditional purchase obligations | 909 | 552 | 347 | 10 | — | — | |||||||||||||||||
Long-term advances from Conrail | 280 | — | — | — | 280 | — | |||||||||||||||||
Unrecognized tax benefits* | 25 | — | — | — | — | 25 | |||||||||||||||||
Total | $ | 26,360 | $ | 1,708 | $ | 2,699 | $ | 1,933 | $ | 19,995 | $ | 25 |
Property Additions | |||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
($ in millions) | |||||||||||||||||||
Road and other property | $ | 1,514 | $ | 1,406 | $ | 1,421 | $ | 1,465 | $ | 1,222 | |||||||||
Equipment | 658 | 712 | 550 | 776 | 938 | ||||||||||||||
Delaware & Hudson acquisition | 213 | — | — | — | — | ||||||||||||||
Total | $ | 2,385 | $ | 2,118 | $ | 1,971 | $ | 2,241 | $ | 2,160 |
Track Structure Statistics (Capital and Maintenance) | ||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||
Track miles of rail installed | 523 | 507 | 549 | 509 | 484 | |||||||||
Miles of track surfaced | 5,074 | 5,248 | 5,475 | 5,642 | 5,441 | |||||||||
New crossties installed (millions) | 2.4 | 2.7 | 2.5 | 2.6 | 2.7 |
Average Age of Owned Railway Equipment | ||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||
(years) | ||||||||||||||
Freight cars | 29.6 | 30.1 | 30.2 | 30.2 | 30.3 | |||||||||
Locomotives | 23.9 | 23.1 | 22.5 | 21.6 | 21.0 | |||||||||
Retired locomotives | 43.4 | 35.3 | 38.7 | 41.2 | 31.7 |
Page | |
/s/James A. Squires | /s/Marta R. Stewart | /s/Thomas E. Hurlbut | ||
James A. Squires | Marta R. Stewart | Thomas E. Hurlbut | ||
Chairman, President and | Executive Vice President Finance | Vice President and | ||
Chief Executive Officer | and Chief Financial Officer | Controller |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
($ in millions, except per share amounts) | |||||||||||
Railway operating revenues | $ | 10,511 | $ | 11,624 | $ | 11,245 | |||||
Railway operating expenses: | |||||||||||
Compensation and benefits | 2,911 | 2,897 | 3,002 | ||||||||
Purchased services and rents | 1,752 | 1,687 | 1,629 | ||||||||
Fuel | 934 | 1,574 | 1,613 | ||||||||
Depreciation | 1,054 | 951 | 916 | ||||||||
Materials and other | 976 | 940 | 828 | ||||||||
Total railway operating expenses | 7,627 | 8,049 | 7,988 | ||||||||
Income from railway operations | 2,884 | 3,575 | 3,257 | ||||||||
Other income – net | 103 | 104 | 233 | ||||||||
Interest expense on debt | 545 | 545 | 525 | ||||||||
Income before income taxes | 2,442 | 3,134 | 2,965 | ||||||||
Provision for income taxes | 886 | 1,134 | 1,055 | ||||||||
Net income | $ | 1,556 | $ | 2,000 | $ | 1,910 | |||||
Per share amounts: | |||||||||||
Net income | |||||||||||
Basic | $ | 5.13 | $ | 6.44 | $ | 6.10 | |||||
Diluted | 5.10 | 6.39 | 6.04 |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Net income | $ | 1,556 | $ | 2,000 | $ | 1,910 | |||||
Other comprehensive income (loss), before tax: | |||||||||||
Pension and other postretirement benefits | (76 | ) | (15 | ) | 1,122 | ||||||
Other comprehensive income (loss) of equity investees | — | (8 | ) | 42 | |||||||
Other comprehensive income (loss), before tax | (76 | ) | (23 | ) | 1,164 | ||||||
Income tax benefit (expense) related to items of | |||||||||||
other comprehensive income (loss) | 29 | 6 | (436 | ) | |||||||
Other comprehensive income (loss), net of tax | (47 | ) | (17 | ) | 728 | ||||||
Total comprehensive income | $ | 1,509 | $ | 1,983 | $ | 2,638 |
At December 31, | |||||||
2015 | 2014 | ||||||
($ in millions) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,101 | $ | 973 | |||
Accounts receivable – net | 946 | 1,055 | |||||
Materials and supplies | 271 | 236 | |||||
Deferred income taxes | 121 | 167 | |||||
Other current assets | 194 | 347 | |||||
Total current assets | 2,633 | 2,778 | |||||
Investments | 2,572 | 2,679 | |||||
Properties less accumulated depreciation of $11,478 and | |||||||
$10,814, respectively | 28,992 | 27,694 | |||||
Other assets | 63 | 49 | |||||
Total assets | $ | 34,260 | $ | 33,200 | |||
Liabilities and stockholdersʼ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,091 | $ | 1,233 | |||
Short-term debt | 200 | 100 | |||||
Income and other taxes | 203 | 217 | |||||
Other current liabilities | 237 | 228 | |||||
Current maturities of long-term debt | 500 | 2 | |||||
Total current liabilities | 2,231 | 1,780 | |||||
Long-term debt | 9,393 | 8,883 | |||||
Other liabilities | 1,385 | 1,312 | |||||
Deferred income taxes | 9,063 | 8,817 | |||||
Total liabilities | 22,072 | 20,792 | |||||
Stockholdersʼ equity: | |||||||
Common Stock $1.00 per share par value, 1,350,000,000 shares | |||||||
authorized; outstanding 297,795,016 and 308,240,130 shares, | |||||||
respectively, net of treasury shares | 299 | 310 | |||||
Additional paid-in capital | 2,143 | 2,148 | |||||
Accumulated other comprehensive loss | (445 | ) | (398 | ) | |||
Retained income | 10,191 | 10,348 | |||||
Total stockholdersʼ equity | 12,188 | 12,408 | |||||
Total liabilities and stockholdersʼ equity | $ | 34,260 | $ | 33,200 |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 1,556 | $ | 2,000 | $ | 1,910 | |||||
Reconciliation of net income to net cash | |||||||||||
provided by operating activities: | |||||||||||
Depreciation | 1,059 | 956 | 922 | ||||||||
Deferred income taxes | 320 | 294 | 262 | ||||||||
Gains and losses on properties and investments | (30 | ) | (13 | ) | (104 | ) | |||||
Changes in assets and liabilities affecting operations: | |||||||||||
Accounts receivable | 109 | (31 | ) | 85 | |||||||
Materials and supplies | (35 | ) | (13 | ) | (7 | ) | |||||
Other current assets | 192 | (260 | ) | (5 | ) | ||||||
Current liabilities other than debt | (183 | ) | 53 | 5 | |||||||
Other – net | (111 | ) | (134 | ) | 10 | ||||||
Net cash provided by operating activities | 2,877 | 2,852 | 3,078 | ||||||||
Cash flows from investing activities: | |||||||||||
Property additions | (2,385 | ) | (2,118 | ) | (1,971 | ) | |||||
Property sales and other transactions | 63 | 114 | 144 | ||||||||
Investments, including short-term | (5 | ) | (104 | ) | (130 | ) | |||||
Investment sales and other transactions | 240 | 106 | 63 | ||||||||
Net cash used in investing activities | (2,087 | ) | (2,002 | ) | (1,894 | ) | |||||
Cash flows from financing activities: | |||||||||||
Dividends | (713 | ) | (687 | ) | (637 | ) | |||||
Common Stock issued | 43 | 130 | 131 | ||||||||
Purchase and retirement of Common Stock | (1,075 | ) | (318 | ) | (627 | ) | |||||
Proceeds from borrowings – net | 1,185 | 200 | 989 | ||||||||
Debt repayments | (102 | ) | (645 | ) | (250 | ) | |||||
Net cash used in financing activities | (662 | ) | (1,320 | ) | (394 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 128 | (470 | ) | 790 | |||||||
Cash and cash equivalents: | |||||||||||
At beginning of year | 973 | 1,443 | 653 | ||||||||
At end of year | $ | 1,101 | $ | 973 | $ | 1,443 | |||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid during the year for: | |||||||||||
Interest (net of amounts capitalized) | $ | 518 | $ | 522 | $ | 492 | |||||
Income taxes (net of refunds) | 386 | 1,102 | 735 |
Common Stock | Additional Paid-in Capital | Accum. Other Comprehensive Loss | Retained Income | Total | |||||||||||||||
($ in millions, except per share amounts) | |||||||||||||||||||
Balance at December 31, 2012 | $ | 315 | $ | 1,911 | $ | (1,109 | ) | $ | 8,643 | $ | 9,760 | ||||||||
Comprehensive income: | |||||||||||||||||||
Net income | 1,910 | 1,910 | |||||||||||||||||
Other comprehensive income | 728 | 728 | |||||||||||||||||
Total comprehensive income | 2,638 | ||||||||||||||||||
Dividends on Common Stock, | |||||||||||||||||||
$2.04 per share | (637 | ) | (637 | ) | |||||||||||||||
Share repurchases | (8 | ) | (49 | ) | (570 | ) | (627 | ) | |||||||||||
Stock-based compensation, | |||||||||||||||||||
including tax benefit of $38 | 3 | 159 | (7 | ) | 155 | ||||||||||||||
Balance at December 31, 2013 | 310 | 2,021 | (381 | ) | 9,339 | 11,289 | |||||||||||||
Comprehensive income: | |||||||||||||||||||
Net income | 2,000 | 2,000 | |||||||||||||||||
Other comprehensive loss | (17 | ) | (17 | ) | |||||||||||||||
Total comprehensive income | 1,983 | ||||||||||||||||||
Dividends on Common Stock, | |||||||||||||||||||
$2.22 per share | (687 | ) | (687 | ) | |||||||||||||||
Share repurchases | (3 | ) | (20 | ) | (295 | ) | (318 | ) | |||||||||||
Stock-based compensation, | |||||||||||||||||||
including tax benefit of $37 | 3 | 147 | (6 | ) | 144 | ||||||||||||||
Other | (3 | ) | (3 | ) | |||||||||||||||
Balance at December 31, 2014 | 310 | 2,148 | (398 | ) | 10,348 | 12,408 | |||||||||||||
Comprehensive income: | |||||||||||||||||||
Net income | 1,556 | 1,556 | |||||||||||||||||
Other comprehensive loss | (47 | ) | (47 | ) | |||||||||||||||
Total comprehensive income | 1,509 | ||||||||||||||||||
Dividends on Common Stock, | |||||||||||||||||||
$2.36 per share | (713 | ) | (713 | ) | |||||||||||||||
Share repurchases | (11 | ) | (75 | ) | (989 | ) | (1,075 | ) | |||||||||||
Stock-based compensation, | |||||||||||||||||||
including tax benefit of $14 | 70 | (8 | ) | 62 | |||||||||||||||
Other | (3 | ) | (3 | ) | |||||||||||||||
Balance at December 31, 2015 | $ | 299 | $ | 2,143 | $ | (445 | ) | $ | 10,191 | $ | 12,188 |
• | statistical analysis of historical retirement data and surviving asset records; |
• | review of historical salvage received and current market rates; |
• | review of our operations including expected changes in technology, customer demand, maintenance practices and asset management strategies; |
• | review of accounting policies and assumptions; and |
• | industry review and analysis. |
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Income from natural resources: | |||||||||||
Royalties from coal | $ | 19 | $ | 33 | $ | 50 | |||||
Nonoperating depletion and depreciation | (5 | ) | (5 | ) | (6 | ) | |||||
Subtotal | 14 | 28 | 44 | ||||||||
Rental income | 80 | 75 | 61 | ||||||||
Gains and losses from sale of properties (including joint venture sales) | 55 | 13 | 101 | ||||||||
Interest income | 8 | 9 | 8 | ||||||||
Equity in earnings of Conrail Inc. (Note 5) | — | — | 42 | ||||||||
Corporate-owned life insurance – net | (1 | ) | 24 | 25 | |||||||
Other interest expense – net | (4 | ) | (12 | ) | (12 | ) | |||||
Charitable contributions | (9 | ) | (9 | ) | (11 | ) | |||||
Taxes on nonoperating property | (10 | ) | (9 | ) | (10 | ) | |||||
Other | (30 | ) | (15 | ) | (15 | ) | |||||
Total | $ | 103 | $ | 104 | $ | 233 |
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Current: | |||||||||||
Federal | $ | 505 | $ | 729 | $ | 695 | |||||
State | 61 | 111 | 98 | ||||||||
Total current taxes | 566 | 840 | 793 | ||||||||
Deferred: | |||||||||||
Federal | 292 | 299 | 270 | ||||||||
State | 28 | (5 | ) | (8 | ) | ||||||
Total deferred taxes | 320 | 294 | 262 | ||||||||
Provision for income taxes | $ | 886 | $ | 1,134 | $ | 1,055 |
2015 | 2014 | 2013 | ||||||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||||
($ in millions) | ||||||||||||||||||||
Federal income tax at statutory rate | $ | 855 | 35 | $ | 1,097 | 35 | $ | 1,038 | 35 | |||||||||||
State income taxes, net of federal tax effect | 72 | 3 | 88 | 3 | 69 | 2 | ||||||||||||||
State tax law changes, net of federal tax effect | (14 | ) | (1 | ) | (20 | ) | (1 | ) | (11 | ) | — | |||||||||
Other, net | (27 | ) | (1 | ) | (31 | ) | (1 | ) | (41 | ) | (1 | ) | ||||||||
Provision for income taxes | $ | 886 | 36 | $ | 1,134 | 36 | $ | 1,055 | 36 |
December 31, | |||||||
2015 | 2014 | ||||||
($ in millions) | |||||||
Deferred tax assets: | |||||||
Compensation and benefits, including postretirement | $ | 430 | $ | 454 | |||
Accruals, including casualty and other claims | 108 | 107 | |||||
Other | 65 | 45 | |||||
Total gross deferred tax assets | 603 | 606 | |||||
Less valuation allowance | (35 | ) | (33 | ) | |||
Net deferred tax asset | 568 | 573 | |||||
Deferred tax liabilities: | |||||||
Property | (9,072 | ) | (8,768 | ) | |||
Other | (438 | ) | (455 | ) | |||
Total gross deferred tax liabilities | (9,510 | ) | (9,223 | ) | |||
Net deferred tax liability | (8,942 | ) | (8,650 | ) | |||
Net current deferred tax asset | 121 | 167 | |||||
Net long-term deferred tax liability | $ | (9,063 | ) | $ | (8,817 | ) |
December 31, | |||||||
2015 | 2014 | ||||||
($ in millions) | |||||||
Balance at beginning of year | $ | 61 | $ | 65 | |||
Additions based on tax positions related to the current year | 4 | 6 | |||||
Additions for tax positions of prior years | — | 1 | |||||
Reductions for tax positions of prior years | (34 | ) | (8 | ) | |||
Settlements with taxing authorities | (5 | ) | (1 | ) | |||
Lapse of statutes of limitations | (1 | ) | (2 | ) | |||
Balance at end of year | $ | 25 | $ | 61 |
Level 1 | Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access. |
Level 2 | Inputs to the valuation methodology include: |
• quoted prices for similar assets or liabilities in active markets; • quoted prices for identical or similar assets or liabilities in inactive markets; • inputs other than quoted prices that are observable for the asset or liability; • inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. | |
Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
2015 | 2014 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
($ in millions) | |||||||||||||||
Long-term investments | $ | 162 | $ | 190 | $ | 162 | $ | 193 | |||||||
Long-term debt, including current maturities | (9,893 | ) | (11,124 | ) | (8,885 | ) | (10,962 | ) |
December 31, 2015 | |||||||||||
Level 1 | Level 2 | Total | |||||||||
($ in millions) | |||||||||||
Long-term investments | $ | 49 | $ | 141 | $ | 190 | |||||
Long-term debt, including current maturities | (11,022 | ) | (102 | ) | (11,124 | ) | |||||
December 31, 2014 | |||||||||||
Level 1 | Level 2 | Total | |||||||||
($ in millions) | |||||||||||
Long-term investments | $ | 50 | $ | 143 | $ | 193 | |||||
Long-term debt, including current maturities | (10,754 | ) | (208 | ) | (10,962 | ) |
December 31, | |||||||
2015 | 2014 | ||||||
($ in millions) | |||||||
Long-term investments: | |||||||
Equity method investments: | |||||||
Conrail Inc. | $ | 1,147 | $ | 1,102 | |||
TTX Company | 445 | 425 | |||||
Meridian Speedway LLC | 274 | 277 | |||||
Pan Am Southern LLC | 153 | 152 | |||||
Other | 83 | 91 | |||||
Total equity method investments | 2,102 | 2,047 | |||||
Company-owned life insurance at net cash surrender value | 308 | 470 | |||||
Other investments | 162 | 162 | |||||
Total long-term investments | $ | 2,572 | $ | 2,679 |
Accumulated | Net Book | Depreciation | ||||||||||||
At December 31, 2015 | Cost | Depreciation | Value | Rate (1) | ||||||||||
($ in millions) | ||||||||||||||
Land | $ | 2,327 | $ | — | $ | 2,327 | — | |||||||
Roadway: | ||||||||||||||
Rail and other track material | 6,467 | (1,944 | ) | 4,523 | 2.46 | % | ||||||||
Ties | 4,846 | (1,229 | ) | 3,617 | 3.26 | % | ||||||||
Ballast | 2,468 | (539 | ) | 1,929 | 2.64 | % | ||||||||
Construction in process | 686 | — | 686 | — | ||||||||||
Other roadway | 12,662 | (3,225 | ) | 9,437 | 2.54 | % | ||||||||
Total roadway | 27,129 | (6,937 | ) | 20,192 | ||||||||||
Equipment: | ||||||||||||||
Locomotives | 5,291 | (2,126 | ) | 3,165 | 3.31 | % | ||||||||
Freight cars | 3,437 | (1,422 | ) | 2,015 | 2.87 | % | ||||||||
Computers and software | 500 | (296 | ) | 204 | 11.25 | % | ||||||||
Construction in process | 237 | — | 237 | — | ||||||||||
Other equipment | 1,074 | (421 | ) | 653 | 6.09 | % | ||||||||
Total equipment | 10,539 | (4,265 | ) | 6,274 | ||||||||||
Other property | 475 | (276 | ) | 199 | 0.95 | % | ||||||||
Total properties | $ | 40,470 | $ | (11,478 | ) | $ | 28,992 |
Accumulated | Net Book | Depreciation | ||||||||||||
At December 31, 2014 | Cost | Depreciation | Value | Rate (1) | ||||||||||
($ in millions) | ||||||||||||||
Land | $ | 2,260 | $ | — | $ | 2,260 | — | |||||||
Roadway: | ||||||||||||||
Rail and other track material | 6,173 | (1,848 | ) | 4,325 | 2.46 | % | ||||||||
Ties | 4,628 | (1,156 | ) | 3,472 | 3.25 | % | ||||||||
Ballast | 2,360 | (498 | ) | 1,862 | 2.63 | % | ||||||||
Construction in process | 500 | — | 500 | — | ||||||||||
Other roadway | 12,078 | (2,989 | ) | 9,089 | 2.55 | % | ||||||||
Total roadway | 25,739 | (6,491 | ) | 19,248 | ||||||||||
Equipment: | ||||||||||||||
Locomotives | 5,120 | (2,010 | ) | 3,110 | 3.27 | % | ||||||||
Freight cars | 3,276 | (1,411 | ) | 1,865 | 2.82 | % | ||||||||
Computers and software | 487 | (281 | ) | 206 | 11.60 | % | ||||||||
Construction in process | 199 | — | 199 | — | ||||||||||
Other equipment | 952 | (349 | ) | 603 | 6.09 | % | ||||||||
Total equipment | 10,034 | (4,051 | ) | 5,983 | ||||||||||
Other property | 475 | (272 | ) | 203 | 1.04 | % | ||||||||
Total properties | $ | 38,508 | $ | (10,814 | ) | $ | 27,694 |
(1) | Composite annual depreciation rate for the underlying assets, excluding the effects of the amortization of any deficiency (or excess) that resulted from our depreciation studies. |
December 31, | |||||||
2015 | 2014 | ||||||
($ in millions) | |||||||
Accounts payable: | |||||||
Accounts and wages payable | $ | 602 | $ | 748 | |||
Casualty and other claims (Note 16) | 174 | 187 | |||||
Vacation liability | 135 | 132 | |||||
Due to Conrail (Note 5) | 71 | 56 | |||||
Other | 109 | 110 | |||||
Total | $ | 1,091 | $ | 1,233 | |||
Other current liabilities: | |||||||
Interest payable | $ | 123 | $ | 118 | |||
Pension benefit obligations (Note 11) | 16 | 14 | |||||
Other | 98 | 96 | |||||
Total | $ | 237 | $ | 228 |
December 31, | |||||||
2015 | 2014 | ||||||
($ in millions) | |||||||
Notes and debentures: | |||||||
6.78% maturing to 2020 | $ | 2,464 | $ | 2,464 | |||
3.37% maturing 2021 to 2023 | 1,783 | 1,783 | |||||
5.71% maturing 2024 to 2027 | 1,019 | 1,019 | |||||
6.83% maturing 2029 to 2037 | 783 | 783 | |||||
4.71% maturing 2041 to 2046 | 2,934 | 1,833 | |||||
6.39% maturing 2097 to 2111 | 1,328 | 1,328 | |||||
Securitization borrowings, 1.48% | 200 | 200 | |||||
Other debt, 8.21% maturing to 2024 | 87 | 90 | |||||
Discounts and premiums, net | (458 | ) | (474 | ) | |||
Debt issuance costs (reclassified, see Note 1) | (47 | ) | (41 | ) | |||
Total debt | 10,093 | 8,985 | |||||
Less current maturities and short-term debt | (700 | ) | (102 | ) | |||
Long-term debt excluding current maturities and short-term debt | $ | 9,393 | $ | 8,883 |
Long-term debt maturities subsequent to 2016 are as follows: | |||
2017 | $ | 550 | |
2018 | 600 | ||
2019 | 585 | ||
2020 | 314 | ||
2021 and subsequent years | 7,344 | ||
Total | $ | 9,393 |
Operating Leases | |||
($ in millions) | |||
2016 | $ | 77 | |
2017 | 73 | ||
2018 | 65 | ||
2019 | 51 | ||
2020 | 50 | ||
2021 and subsequent years | 348 | ||
Total | $ | 664 |
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Minimum rents | $ | 111 | $ | 109 | $ | 121 | |||||
Contingent rents | 84 | 92 | 82 | ||||||||
Total | $ | 195 | $ | 201 | $ | 203 |
December 31, | |||||||
2015 | 2014 | ||||||
($ in millions) | |||||||
Net retiree other postretirement benefit obligations (Note 11) | $ | 347 | $ | 309 | |||
Net pension benefit obligations (Note 11) | 318 | 260 | |||||
Long-term advances from Conrail (Note 5) | 280 | 280 | |||||
Casualty and other claims (Note 16) | 191 | 199 | |||||
Deferred compensation | 117 | 116 | |||||
Other | 132 | 148 | |||||
Total | $ | 1,385 | $ | 1,312 |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
($ in millions) | |||||||||||||||
Change in benefit obligations: | |||||||||||||||
Benefit obligation at beginning of year | $ | 2,429 | $ | 2,091 | $ | 571 | $ | 855 | |||||||
Service cost | 41 | 34 | 7 | 7 | |||||||||||
Interest cost | 93 | 93 | 21 | 24 | |||||||||||
Actuarial losses (gains) | (64 | ) | 335 | (7 | ) | 102 | |||||||||
Plan amendments | — | — | (8 | ) | (367 | ) | |||||||||
Benefits paid | (127 | ) | (124 | ) | (48 | ) | (50 | ) | |||||||
Benefit obligation at end of year | 2,372 | 2,429 | 536 | 571 | |||||||||||
Change in plan assets: | |||||||||||||||
Fair value of plan assets at beginning of year | 2,167 | 2,115 | 262 | 239 | |||||||||||
Actual return on plan assets | (14 | ) | 163 | 2 | 26 | ||||||||||
Employer contribution (reimbursement)1 | 14 | 13 | (27 | ) | 47 | ||||||||||
Benefits paid | (127 | ) | (124 | ) | (48 | ) | (50 | ) | |||||||
Fair value of plan assets at end of year | 2,040 | 2,167 | 189 | 262 | |||||||||||
Funded status at end of year | $ | (332 | ) | $ | (262 | ) | $ | (347 | ) | $ | (309 | ) | |||
Amounts recognized in the Consolidated | |||||||||||||||
Balance Sheets: | |||||||||||||||
Noncurrent assets | $ | 2 | $ | 12 | $ | — | $ | — | |||||||
Current liabilities | (16 | ) | (14 | ) | — | — | |||||||||
Noncurrent liabilities | (318 | ) | (260 | ) | (347 | ) | (309 | ) | |||||||
Net amount recognized | $ | (332 | ) | $ | (262 | ) | $ | (347 | ) | $ | (309 | ) | |||
Amounts included in accumulated other comprehensive | |||||||||||||||
loss (before tax): | |||||||||||||||
Net loss | $ | 904 | $ | 854 | $ | 16 | $ | 6 | |||||||
Prior service cost (benefit) | 3 | 3 | (331 | ) | (347 | ) |
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Pension benefits: | |||||||||||
Service cost | $ | 41 | $ | 34 | $ | 41 | |||||
Interest cost | 93 | 93 | 81 | ||||||||
Expected return on plan assets | (165 | ) | (151 | ) | (142 | ) | |||||
Amortization of net losses | 65 | 54 | 89 | ||||||||
Amortization of prior service cost | — | 1 | — | ||||||||
Net cost | $ | 34 | $ | 31 | $ | 69 | |||||
Other postretirement benefits: | |||||||||||
Service cost | $ | 7 | $ | 7 | $ | 16 | |||||
Interest cost | 21 | 24 | 50 | ||||||||
Expected return on plan assets | (19 | ) | (18 | ) | (16 | ) | |||||
Amortization of net losses | — | — | 58 | ||||||||
Amortization of prior service benefit | (24 | ) | (20 | ) | — | ||||||
Net cost (benefit) | $ | (15 | ) | $ | (7 | ) | $ | 108 |
2015 | |||||||
Pension Benefits | Other Postretirement Benefits | ||||||
($ in millions) | |||||||
Net loss arising during the year | $ | 115 | $ | 10 | |||
Prior service effect of plan amendment | — | (8 | ) | ||||
Amortization of net losses | (65 | ) | — | ||||
Amortization of prior service benefit | — | 24 | |||||
Total recognized in other comprehensive loss | $ | 50 | $ | 26 | |||
Total recognized in net periodic cost | |||||||
and other comprehensive loss | $ | 84 | $ | 11 |
2015 | 2014 | 2013 | ||||||
Pension funded status: | ||||||||
Discount rate | 4.30 | % | 3.95 | % | 4.60 | % | ||
Future salary increases | 4.50 | % | 4.50 | % | 4.50 | % | ||
Other postretirement benefits funded status: | ||||||||
Discount rate | 4.02 | % | 3.70 | % | 4.65 | % | ||
Pension cost: | ||||||||
Discount rate | 3.95 | % | 4.60 | % | 3.65 | % | ||
Return on assets in plans | 8.25 | % | 8.25 | % | 8.25 | % | ||
Future salary increases | 4.50 | % | 4.50 | % | 4.50 | % | ||
Other postretirement benefits cost: | ||||||||
Discount rate1 | 3.70 | % | 3.90 | % | 3.80 | % | ||
Return on assets in plans | 8.00 | % | 8.00 | % | 8.00 | % | ||
Health care trend rate | 6.56 | % | 6.94 | % | 7.33 | % |
One-percentage point | |||||||
Increase | Decrease | ||||||
($ in millions) | |||||||
Increase (decrease) in: | |||||||
Total service and interest cost components | $ | 1 | $ | (1 | ) | ||
Postretirement benefit obligation | 11 | (10 | ) |
Percentage of plan assets at December 31, | |||||
2015 | 2014 | ||||
Domestic equity securities | 50 | % | 50 | % | |
Debt securities | 25 | % | 25 | % | |
International equity securities | 23 | % | 23 | % | |
Cash and cash equivalents | 2 | % | 2 | % | |
Total | 100 | % | 100 | % |
December 31, 2015 | |||||||||||
Level 1 | Level 2 | Total | |||||||||
($ in millions) | |||||||||||
Common stock | $ | 1,119 | $ | — | $ | 1,119 | |||||
Common collective trusts: | |||||||||||
Debt securities | — | 505 | 505 | ||||||||
International equity securities | — | 301 | 301 | ||||||||
Commingled funds | — | 77 | 77 | ||||||||
Interest bearing cash | 34 | — | 34 | ||||||||
U.S. government and agencies securities | — | 4 | 4 | ||||||||
Total investments | $ | 1,153 | $ | 887 | $ | 2,040 |
December 31, 2014 | |||||||||||
Level 1 | Level 2 | Total | |||||||||
($ in millions) | |||||||||||
Common stock | $ | 1,180 | $ | — | $ | 1,180 | |||||
Common collective trusts: | |||||||||||
Debt securities | — | 532 | 532 | ||||||||
International equity securities | — | 327 | 327 | ||||||||
Commingled funds | — | 81 | 81 | ||||||||
Interest bearing cash | 41 | — | 41 | ||||||||
U.S. government and agencies securities | — | 4 | 4 | ||||||||
Preferred stock | — | 2 | 2 | ||||||||
Total investments | $ | 1,221 | $ | 946 | $ | 2,167 |
Pension Benefits | Other Postretirement Benefits | ||||||
($ in millions) | |||||||
2016 | $ | 135 | $ | 44 | |||
2017 | 137 | 43 | |||||
2018 | 140 | 42 | |||||
2019 | 142 | 42 | |||||
2020 | 143 | 41 | |||||
Years 2021 – 2025 | 731 | 185 |
2015 | 2014 | 2013 | |||||||||
Expected volatility range | 19% – 27% | 23% – 27% | 24% – 30% | ||||||||
Average expected volatility | 25% | 25% | 26% | ||||||||
Average risk-free interest rate | 1.83% | 2.79% | 1.88% | ||||||||
Average expected option term LTIP | 9.3 years | 8.9 years | 9.0 years | ||||||||
Per-share grant-date fair value LTIP | $ | 30.35 | $ | 29.87 | $ | 20.40 | |||||
Average expected option term TSOP | 9.1 years | 8.8 years | 8.9 years | ||||||||
Per-share grant-date fair value TSOP | $ | 24.71 | $ | 24.38 | $ | 15.84 | |||||
Options granted (LTIP and TSOP) | 825,210 | 696,310 | 1,016,700 |
Stock Options | Weighted Avg. Exercise Price | |||||
Outstanding at December 31, 2014 | 5,831,317 | $ | 61.57 | |||
Granted | 825,210 | 102.38 | ||||
Exercised | (589,081 | ) | 52.99 | |||
Forfeited | (18,710 | ) | 86.70 | |||
Outstanding at December 31, 2015 | 6,048,736 | 67.90 |
2015 | 2014 | 2013 | |||||||||
($ in millions) | |||||||||||
Options exercised | 589,081 | 2,009,461 | 2,570,088 | ||||||||
Total intrinsic value | $ | 27 | $ | 106 | $ | 106 | |||||
Cash received upon exercise | 29 | 93 | 93 | ||||||||
Related tax benefits realized | 7 | 26 | 31 |
RSUs | Weighted- Average Grant-Date Fair Value | |||||
Nonvested at December 31, 2014 | 756,505 | $ | 67.94 | |||
Granted | 101,470 | 104.23 | ||||
Vested | (166,750 | ) | 47.76 | |||
Forfeited | (2,500 | ) | 78.07 | |||
Nonvested at December 31, 2015 | 688,725 | 78.14 |
PSUs | Weighted- Average Grant-Date Fair Value | |||||
Balance at December 31, 2014 | 1,414,780 | $ | 72.26 | |||
Granted | 413,770 | 71.66 | ||||
Earned | (236,601 | ) | 75.14 | |||
Unearned | (229,149 | ) | 75.14 | |||
Forfeited | (1,750 | ) | 70.98 | |||
Balance at December 31, 2015 | 1,361,050 | 71.09 |
2015 | 2014 | 2013 | ||||||
Available for future grants: | ||||||||
LTIP | 11,769,796 | 4,899,428 | 5,945,033 | |||||
TSOP | 832,676 | 998,896 | 1,172,256 | |||||
Issued: | ||||||||
LTIP | 708,059 | 2,168,641 | 2,765,986 | |||||
TSOP | 121,745 | 252,042 | 331,282 |
Balance at Beginning of Year | Net Loss | Reclassification Adjustments | Balance at End of Year | ||||||||||||
($ in millions) | |||||||||||||||
Year ended December 31, 2015 | |||||||||||||||
Pensions and other postretirement | |||||||||||||||
liabilities | $ | (320 | ) | $ | (72 | ) | $ | 25 | (1) | $ | (367 | ) | |||
Other comprehensive loss | |||||||||||||||
of equity investees | (78 | ) | — | — | (78 | ) | |||||||||
Accumulated other comprehensive loss | $ | (398 | ) | $ | (72 | ) | $ | 25 | $ | (445 | ) | ||||
Year ended December 31, 2014 | |||||||||||||||
Pensions and other postretirement | |||||||||||||||
liabilities | $ | (310 | ) | $ | (31 | ) | $ | 21 | (1) | $ | (320 | ) | |||
Other comprehensive loss | |||||||||||||||
of equity investees | (71 | ) | (7 | ) | — | (78 | ) | ||||||||
Accumulated other comprehensive loss | $ | (381 | ) | $ | (38 | ) | $ | 21 | $ | (398 | ) |
(1) | These items are included in the computation of net periodic pension and postretirement benefit costs. See Note 11, “Pensions and Other Postretirement Benefits,” for additional information. |
Pretax Amount | Tax (Expense) Benefit | Net-of-Tax Amount | |||||||||
($ in millions) | |||||||||||
Year ended December 31, 2015 | |||||||||||
Net gain (loss) arising during the year: | |||||||||||
Pensions and other postretirement benefits | $ | (117 | ) | $ | 45 | $ | (72 | ) | |||
Reclassification adjustments for costs | |||||||||||
included in net income | 41 | (16 | ) | 25 | |||||||
Other comprehensive loss | $ | (76 | ) | $ | 29 | $ | (47 | ) | |||
Year ended December 31, 2014 | |||||||||||
Net gain (loss) arising during the year: | |||||||||||
Pensions and other postretirement benefits | $ | (50 | ) | $ | 19 | $ | (31 | ) | |||
Reclassification adjustments for costs | |||||||||||
included in net income | 35 | (14 | ) | 21 | |||||||
Subtotal | (15 | ) | 5 | (10 | ) | ||||||
Other comprehensive loss of equity investees | (8 | ) | 1 | (7 | ) | ||||||
Other comprehensive loss | $ | (23 | ) | $ | 6 | $ | (17 | ) | |||
Year ended December 31, 2013 | |||||||||||
Net gain (loss) arising during the year: | |||||||||||
Pensions and other postretirement benefits | $ | 975 | $ | (375 | ) | $ | 600 | ||||
Reclassification adjustments for costs | |||||||||||
included in net income | 147 | (58 | ) | 89 | |||||||
Subtotal | 1,122 | (433 | ) | 689 | |||||||
Other comprehensive income of equity investees | 42 | (3 | ) | 39 | |||||||
Other comprehensive income | $ | 1,164 | $ | (436 | ) | $ | 728 |
Basic | Diluted | ||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | ||||||||||||||||||
($ in millions except per share amounts, shares in millions) | |||||||||||||||||||||||
Net income | $ | 1,556 | $ | 2,000 | $ | 1,910 | $ | 1,556 | $ | 2,000 | $ | 1,910 | |||||||||||
Dividend equivalent payments | (6 | ) | (6 | ) | (7 | ) | (5 | ) | (4 | ) | (4 | ) | |||||||||||
Income available to common stockholders | $ | 1,550 | $ | 1,994 | $ | 1,903 | $ | 1,551 | $ | 1,996 | $ | 1,906 | |||||||||||
Weighted-average shares outstanding | 301.9 | 309.4 | 311.9 | 301.9 | 309.4 | 311.9 | |||||||||||||||||
Dilutive effect of outstanding options | |||||||||||||||||||||||
and share-settled awards | 2.5 | 3.1 | 3.6 | ||||||||||||||||||||
Adjusted weighted-average shares outstanding | 304.4 | 312.5 | 315.5 | ||||||||||||||||||||
Earnings per share | $ | 5.13 | $ | 6.44 | $ | 6.10 | $ | 5.10 | $ | 6.39 | $ | 6.04 |
Period | 2015 | 2014 | 2013 | |||||||
(in millions) | ||||||||||
1st Quarter | — | 0.7 | 0.8 | |||||||
2nd Quarter | 0.7 | — | — | |||||||
3rd Quarter | 1.5 | — | 0.8 | |||||||
4th Quarter | 1.5 | — | — |
Three Months Ended | |||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||
($ in millions, except per share amounts) | |||||||||||||||
2015 | |||||||||||||||
Railway operating revenues | $ | 2,567 | $ | 2,713 | $ | 2,713 | $ | 2,518 | |||||||
Income from railway operations | 606 | 814 | 822 | 642 | |||||||||||
Net income | 310 | 433 | 452 | 361 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | 1.01 | 1.43 | 1.50 | 1.21 | |||||||||||
Diluted | 1.00 | 1.41 | 1.49 | 1.20 | |||||||||||
2014 | |||||||||||||||
Railway operating revenues | $ | 2,689 | $ | 3,042 | $ | 3,023 | $ | 2,870 | |||||||
Income from railway operations | 667 | 1,019 | 998 | 891 | |||||||||||
Net income | 368 | 562 | 559 | 511 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | 1.18 | 1.81 | 1.80 | 1.65 | |||||||||||
Diluted | 1.17 | 1.79 | 1.79 | 1.64 |
• | under the caption “Corporate Governance and the Board”, including “Compensation of Directors” and “Non-Employee Director Compensation;” |
• | appearing under the caption “Executive Compensation” for executives, including the “Compensation Discussion and Analysis,” the information appearing in the “Summary Compensation Table” and the “2015 Grants of Plan-Based Awards” table, including the narrative to such tables, the “Outstanding Equity Awards at Fiscal Year-End 2015” and “Option Exercises and Stock Vested in 2015” tables, and the tabular and narrative information appearing under the subcaptions “Retirement Benefits,” “Deferred Compensation,” and “Potential Payments Upon a Change in Control or Other Termination of Employment;” and |
• | appearing under the captions “Compensation Committee Interlocks and Insider Participation,” “Compensation Policy Risk Assessment,” and “Compensation Committee Report,” |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (1) | ||||||||
(a) | (b) | (c) | |||||||||
Equity compensation plans | |||||||||||
approved by securities holders(2) | 7,291,016 | (4) | $ | 66.63 | (5) | 11,769,796 | |||||
Equity compensation plans | |||||||||||
not approved by securities holders(3) | 1,129,379 | 73.46 | 841,676 | (6) | |||||||
Total | 8,420,395 | 12,611,472 |
(1) | Excludes securities reflected in column (a). |
(2) | LTIP. |
(3) | TSOP and the Director's Restricted Stock Plan. |
(4) | Includes options, RSUs and PSUs granted under LTIP that will be settled in shares of stock. |
(5) | Calculated without regard to 2,372,159 outstanding RSUs and PSUs at December 31, 2015. |
(6) | Of the shares remaining available for grant under plans not approved by stockholders, 9,000 are available for grant as restricted stock under the Directors’ Restricted Stock Plan. |
Page | |||
(A) | The following documents are filed as part of this report: | ||
1. | |||
2. | Financial Statement Schedule: | ||
The following consolidated financial statement schedule should be read in connection with the consolidated financial statements: | |||
Index to Consolidated Financial Statement Schedule | |||
Schedules other than the one listed above are omitted either because they are not required or are inapplicable, or because the information is included in the consolidated financial statements or related notes. | |||
3. | Exhibits | ||
Exhibit Number | Description | ||
3 | Articles of Incorporation and Bylaws – | ||
3(i) | The Restated Articles of Incorporation of Norfolk Southern Corporation are incorporated by reference to Exhibit 3(i) to Norfolk Southern Corporation’s 10-K filed on March 5, 2001. | ||
3(ii) | An amendment to the Articles of Incorporation of Norfolk Southern Corporation is incorporated by reference to Exhibit 3(i) to Norfolk Southern Corporation’s Form 8-K filed on May 18, 2010. | ||
3(iii) | The Bylaws of Norfolk Southern Corporation, as amended January 21, 2014, are incorporated by reference to Exhibit 3(ii) to Norfolk Southern Corporation’s Form 8-K filed on January 21, 2014. | ||
3(iv) | The Bylaws of Norfolk Southern Corporation, as amended September 22, 2015, are incorporated by reference to Exhibit 3(iii) to Norfolk Southern Corporation’s Form 8-K filed on September 22, 2015. |
4 | Instruments Defining the Rights of Security Holders, Including Indentures: |
(a) | Indenture, dated as of January 15, 1991, from Norfolk Southern Corporation to First Trust of New York, National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Registration Statement on Form S-3 (No. 33-38595). | |
(b) | First Supplemental Indenture, dated May 19, 1997, between Norfolk Southern Corporation and First Trust of New York, National Association, as Trustee, related to the issuance of notes in the principal amount of $4.3 billion, is incorporated by reference to Exhibit 1.1(d) to Norfolk Southern Corporation’s Form 8-K filed on May 21, 1997. | |
(c) | Second Supplemental Indenture, dated April 26, 1999, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 1.1(c) to Norfolk Southern Corporation’s Form 8-K filed on April 30, 1999. | |
(d) | Fourth Supplemental Indenture, dated as of February 6, 2001, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $1 billion, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on February 7, 2001. | |
(e) | Indenture, dated August 27, 2004, among PRR Newco, Inc., as Issuer, and Norfolk Southern Railway Company, as Guarantor, and The Bank of New York, as Trustee, is incorporated by reference to Exhibit 4(1) to Norfolk Southern Corporation’s Form 10-Q filed on October 28, 2004. | |
(f) | First Supplemental Indenture, dated August 27, 2004, among PRR Newco, Inc., as Issuer, and Norfolk Southern Railway Company, as Guarantor, and The Bank of New York, as Trustee, related to the issuance of notes in the principal amount of approximately $451.8 million, is incorporated by reference to Exhibit 4(m) to Norfolk Southern Corporation’s Form 10-Q filed on October 28, 2004. | |
(g) | Ninth Supplemental Indenture, dated as of March 11, 2005, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $300 million, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on March 15, 2005. | |
(h) | Tenth Supplemental Indenture, dated as of May 17, 2005, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $366.6 million, is incorporated by reference to Exhibit 99.1 to Norfolk Southern Corporation's Form 8-K filed on May 18, 2005. | |
(i) | Eleventh Supplemental Indenture, dated as of May 17, 2005, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $350 million, is incorporated by reference to Exhibit 99.2 to Norfolk Southern Corporation’s Form 8-K filed on May 18, 2005. | |
(j) | Twelfth Supplemental Indenture, dated as of August 26, 2010, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $250 million, is incorporated by reference to Exhibit 4.2 to Norfolk Southern Corporation’s Form 8-K filed on August 26, 2010. |
(k) | Indenture, dated as of April 4, 2008, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $600 million, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’sForm 8-K filed on April 9, 2008. | |
(l) | Indenture, dated as of January 15, 2009, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of$500 million, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’sForm 8-K filed on January 20, 2009. | |
(m) | Indenture, dated as of June 1, 2009, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on June 1, 2009. | |
(n) | First Supplemental Indenture, dated as of June 1, 2009, between Norfolk Southern Corporation and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $500 million, is incorporated by reference to Exhibit 4.2 to Norfolk Southern Corporation’s Form 8-K filed on June 1, 2009. | |
(o) | Second Supplemental Indenture, dated as of May 23, 2011, between the Registrant and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $400 million, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on May 23, 2011. | |
(p) | Indenture, dated as of September 14, 2011, between the Registrant and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $595,504,000, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on September 15, 2011. | |
(q) | Third Supplemental Indenture, dated as of September 14, 2011, between the Registrant and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $4,492,000, is incorporated by reference to Exhibit 4.2 to Norfolk Southern Corporation’s Form 8-K filed on September 15, 2011. | |
(r) | Fourth Supplemental Indenture, dated as of November 17, 2011, between the Registrant and U.S. Bank Trust National Association, as Trustee, related to the issuance of two series of notes, one in the principal amount of $500 million and one in the principal amount of $100 million, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on November 17, 2011. | |
(s) | Indenture, dated as of March 15, 2012, between the Registrant and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on March 15, 2012. | |
(t) | First Supplemental Indenture, dated as of March 15, 2012, between the Registrant and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.2 to Norfolk Southern Corporation’s Form 8-K filed on March 15, 2012. | |
(u) | Indenture, dated as of August 20, 2012, between the Registrant and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on August 21, 2012. | |
(v) | Second Supplemental Indenture, dated as of September 7, 2012, between the Registrant and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on September 7, 2012. |
(w) | Third Supplemental Indenture, dated as of August 13, 2013, between the Registrant and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $500,000,000, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on August 13, 2013. | |
(x) | Fourth Supplemental Indenture, dated as of November 21, 2013, between the Registrant and U.S. Bank Trust National Association, as Trustee, related to the issuance of notes in the principal amount of $400,000,000, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on November 21, 2013. | |
(y) | Indenture dated as of June 2, 2015, between Registrant and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on June 2, 2015. | |
(z) | First Supplemental Indenture, dated as of June 2, 2015, between the Registrant and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.2 to Norfolk Southern Corporation’s Form 8-K filed on June 2, 2015. | |
(aa) | Second Supplemental Indenture, dated as of November 3, 2015, between the Registrant and U.S. Bank Trust National Association, as Trustee, is incorporated by reference to Exhibit 4.1 to Norfolk Southern Corporation’s Form 8-K filed on November 3, 2015. | |
In accordance with Item 601(b)(4)(iii) of Regulation S-K, copies of other instruments of Norfolk Southern Corporation and its subsidiaries with respect to the rights of holders of long-term debt are not filed herewith, or incorporated by reference, but will be furnished to the Commission upon request. | ||
10 | Material Contracts - | |
(a) | The Transaction Agreement, dated as of June 10, 1997, by and among CSX and CSX Transportation, Inc., Registrant, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation, and CRR Holdings LLC, with certain schedules thereto, previously filed, is incorporated by reference to Exhibit 10(a) to Norfolk Southern Corporation’s Form 10-K filed on February 24, 2003. | |
(b) | Amendment No. 1 dated as of August 22, 1998, to the Transaction Agreement, dated as of June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail, Inc., Consolidated Rail Corporation, and CRR Holdings LLC, is incorporated by reference from Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on August 11, 1999. | |
(c) | Amendment No. 2 dated as of June 1, 1999, to the Transaction Agreement, dated June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail, Inc., Consolidated Rail Corporation, and CRR Holdings LLC, is incorporated by reference from Exhibit 10.2 to Norfolk Southern Corporation’s Form 10-Q filed on August 11, 1999. | |
(d) | Amendment No. 3 dated as of June 1, 1999, and executed in April 2004, to the Transaction Agreement, dated June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail, Inc., Consolidated Rail Corporation, and CRR Holdings LLC, is incorporated by reference from Exhibit 10(dd) to Norfolk Southern Corporation’s Form 10-Q filed on July 30, 2004. | |
(e) | Amendment No. 5 to the Transaction Agreement, dated as of August 27, 2004, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail, Inc., Consolidated Rail Corporation, and CRR Holdings LLC, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 8-K filed on September 2, 2004. | |
(f) | Amendment No. 6 dated as of April 1, 2007, to the Transaction Agreement, dated June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Railway Company, Conrail, Inc., Consolidated Rail Corporation, and CRR Holdings LLC, is incorporated by reference to Exhibit 10.5 to Norfolk Southern Corporation’s Form 10-Q filed on July 27, 2007. | |
(g) | Shared Assets Area Operating Agreement for North Jersey, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibit thereto, is incorporated by reference from Exhibit 10.4 to Norfolk Southern Corporation’s Form 10-Q filed on August 11, 1999. | |
(h) | Shared Assets Area Operating Agreement for Detroit, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibit thereto, is incorporated by reference from Exhibit 10.6 to Norfolk Southern Corporation’s Form 10-Q filed on August 11, 1999. | |
(i) | Shared Assets Area Operating Agreement for South Jersey/Philadelphia, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibit thereto, is incorporated by reference from Exhibit 10.5 to Norfolk Southern Corporation’s Form 10-Q filed on August 11, 1999. | |
(j) | Amendment No. 1, dated as of June 1, 2000, to the Shared Assets Area Operating Agreements for North Jersey, South Jersey/Philadelphia, and Detroit, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibits thereto, is incorporated by reference to Exhibit 10(h) to Norfolk Southern Corporation’s Form 10-K filed on March 5, 2001. | |
(k) | Amendment No. 2, dated as of January 1, 2001, to the Shared Assets Area Operating Agreements for North Jersey, South Jersey/Philadelphia, and Detroit, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibits thereto, is incorporated by reference to Exhibit 10(j) to Norfolk Southern Corporation’s Form 10-K filed on February 21, 2002. | |
(l) | Amendment No. 3, dated as of June 1, 2001, and executed in May of 2002, to the Shared Assets Area Operating Agreements for North Jersey, South Jersey/Philadelphia, and Detroit, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibits thereto, is incorporated by reference to Exhibit 10(k) to Norfolk Southern Corporation’s Form 10-K filed on February 24, 2003. | |
(m) | Amendment No. 4, dated as of June 1, 2005, and executed in late June 2005, to the Shared Assets Area Operating Agreements for North Jersey, South Jersey/Philadelphia, and Detroit, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibits thereto, is incorporated by reference to Exhibit 99 to Norfolk Southern Corporation’s Form 8-K filed on July 1, 2005. | |
(n) | Monongahela Usage Agreement, dated as of June 1, 1999, by and among CSX Transportation, Inc., Norfolk Southern Railway Company, Pennsylvania Lines LLC, and New York Central Lines LLC, with exhibit thereto, is incorporated by reference from -Exhibit 10.7 to Norfolk Southern Corporation’s Form 10-Q filed on August 11, 1999. | |
(o) | The Agreement, entered into as of July 27, 1999, between North Carolina Railroad Company and Norfolk Southern Railway Company, is incorporated by reference from Exhibit 10(i) to Norfolk Southern Corporation’s Form 10-K filed on March 6, 2000. | |
(p) | First Amendment, dated March 19, 2007, to the Master Agreement dated July 27, 1999, by and between North Carolina Railroad Company and Norfolk Southern Railway Company, is incorporated by reference to Exhibit 10.3 to Norfolk Southern Corporation’s Form 10-Q filed on July 27, 2007. | |
(q) | Second Amendment, dated December 28, 2009, to the Master Agreement dated July 27, 1999, by and between North Carolina Railroad Company and Norfolk Southern Railway Company, is incorporated by reference to Exhibit 10(q) to Norfolk Southern Corporation’s Form 10-K filed on February 17, 2010 (Exhibits, annexes and schedules omitted. The Registrant will furnish supplementary copies of such materials to the SEC upon request). | |
(r) | The Supplementary Agreement, entered into as of January 1, 1987, between the Trustees of the Cincinnati Southern Railway and The Cincinnati, New Orleans and Texas Pacific Railway Company (the latter a wholly owned subsidiary of Norfolk Southern Railway Company) – extending and amending a Lease, dated as of October 11, 1881 – is incorporated by reference to Exhibit 10(k) to Norfolk Southern Corporation’s Form 10-K filed on March 5, 2001. | |
(s)* | Norfolk Southern Corporation Executive Management Incentive Plan, as approved by shareholders May 14, 2015, is incorporated by reference to Exhibit 10-A to Norfolk Southern Corporation’s Form 10-Q filed on July 27, 2015. | |
(t)* | The Norfolk Southern Corporation Officers’ Deferred Compensation Plan, as amended effective September 26, 2000, is incorporated by reference to Exhibit 10(n) to Norfolk Southern Corporation’s Form 10-K filed on March 5, 2001. | |
(u)* | The Norfolk Southern Corporation Directors’ Restricted Stock Plan, adopted January 1, 1994, and amended and restated effective as of January 23, 2014. | |
(v)* | Supplemental Benefit Plan of Norfolk Southern Corporation and Participating Subsidiary Companies, adopted June 1, 1982, and as amended and restated effective as of September 30, 2014. | |
(w)* | The Norfolk Southern Corporation Directors’ Charitable Award Program, as amended effective July 2007, is incorporated by reference to Exhibit 10.6 to Norfolk Southern Corporation’s Form 10-Q filed on July 27, 2007. | |
(x) | The Norfolk Southern Corporation Thoroughbred Stock Option Plan, as amended effective July 22, 2013, is incorporated by reference to Exhibit 10.2 to Norfolk Southern Corporation’s Form 10-Q filed on July 24, 2013. | |
(y)* | The Norfolk Southern Corporation Executive Life Insurance Plan, as amended and restated effective November 1, 2009, is incorporated by reference to Exhibit 10(cc) to Norfolk Southern Corporation’s Form 10-K filed on February 17, 2010. | |
(z) | Distribution Agreement, dated as of July 26, 2004, by and among CSX Corporation, CSX Transportation, Inc., CSX Rail Holding Corporation, CSX Northeast Holdings Corporation, Norfolk Southern Corporation, Norfolk Southern Railway Company, CRR Holdings LLC, Green Acquisition Corp., Conrail Inc., Consolidated Rail Corporation, New York Central Lines LLC, Pennsylvania Lines LLC, NYC Newco, Inc., and PRR Newco, Inc., is incorporated by reference to Exhibit 2.1 to Norfolk Southern Corporation’s Form 8-K filed on September 2, 2004. | |
(aa) | Tax Agreement, dated as of August 27, 2004, by and among Green Acquisition Corp., Conrail Inc., Consolidated Rail Corporation, New York Central Lines LLC, and Pennsylvania Lines LLC, is incorporated by reference to Exhibit 10.2 to Norfolk Southern Corporation’s Form 8-K filed on September 2, 2004. | |
(bb)* | The description of Norfolk Southern Corporation’s executive physical reimbursement for non-employee directors and certain executives is incorporated by reference to Norfolk Southern Corporation’s Form 8-K filed on July 28, 2005. | |
(cc)* | The Norfolk Southern Corporation Long-Term Incentive Plan, as approved by shareholders effective May 14, 2015, is incorporated by reference to Exhibit 10-B to Norfolk Southern’s Form 10-Q filed on July 27, 2015. | |
(dd) | The Transaction Agreement, dated as of December 1, 2005, by and among Norfolk Southern Corporation, The Alabama Great Southern Railroad Company, Kansas City Southern, and The Kansas City Southern Railway Company, is incorporated by reference to Exhibit 10(II) to Norfolk Southern Corporation’s Form 10-K filed on February 23, 2006 (Exhibits, annexes, and schedules omitted. The Registrant will furnish supplementary copies of such materials to the SEC upon request). | |
(ee) | Amendment No. 1, dated as of January 17, 2006, by and among Norfolk Southern Corporation, The Alabama Great Southern Railroad Company, Kansas City Southern, and The Kansas City Southern Railroad , is incorporated by reference to Exhibit 10(mm) to Norfolk Southern Corporation’s Form 10-K filed on February 23, 2006. | |
(ff) | Amendment No. 2, dated as of May 1, 2006, to the Transaction Agreement, dated as of December 1, 2005, by and among Norfolk Southern Corporation, The Alabama Great Southern Railroad Company, Kansas City Southern, and The Kansas City Southern Railway Company is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 8-K filed on May 4, 2006. | |
(gg) | Limited Liability Agreement of Meridian Speedway, LLC, dated as of May 1, 2006, by and among the Alabama Great Southern Railroad Company and Kansas City Southern, is incorporated by reference to Exhibit 10.2 to Norfolk Southern Corporation’s Form 8-K filed on May 4, 2006. | |
(hh)*,** | Retirement Plan of Norfolk Southern Corporation and Participating Subsidiary Companies effective June 1, 1982, as amended and restated effective November 1, 2015. | |
(ii) | Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 99 to Norfolk Southern Corporation’s Form 8-K filed on November 14, 2007. | |
(jj) | Amendment No. 2, dated as of May 19, 2009, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on July 31, 2009. | |
(kk) | Amendment No. 3, dated as of August 21, 2009, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on October 30, 2009. | |
(ll) | Amendment No. 4, dated as of October 22, 2009, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 99 to Norfolk Southern Corporation’s Form 8-K filed on October 22, 2009. | |
(mm) | Amendment No. 5, dated as of December 23, 2009, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 10(xx) to Norfolk Southern Corporation’s Form 10-K filed on February 17, 2010. | |
(nn) | Amendment No. 6, dated as of August 30, 2010, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on October 29, 2010. |
(oo) | Amendment No. 7, dated as of October 21, 2010, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 99 to Norfolk Southern Corporation’s Form 8-K filed on October 22, 2010. | |
(pp) | Amendment No. 8, dated as of October 20, 2011, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 99 to Norfolk Southern Corporation’s Form 8-K filed on October 20, 2011. | |
(qq) | Amendment No. 9, dated as of October 18, 2012, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 99 to Norfolk Southern Corporation’s Form 8-K filed on October 22, 2012. | |
(rr) | Amendment No. 10, dated as of October 17, 2013, to Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 8-K filed on October 18, 2013. | |
(ss) | Dealer Agreement dated as of January 23, 2008, between the Registrant and J. P. Morgan Securities Inc. is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 8-K filed on January 25, 2008. | |
(tt) | Dealer Agreement dated as of January 23, 2008, between the Registrant and Goldman, Sachs & Co. is incorporated by reference to Exhibit 10.2 to Norfolk Southern Corporation’s Form 8-K filed on January 25, 2008. | |
(uu) | Omnibus Amendment, dated as of March 18, 2008, to the Transfer and Administration Agreement dated as of November 8, 2007, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on April 23, 2008. | |
(vv) | Transaction Agreement (Pan Am Transaction Agreement), dated May 15, 2008, by and among Norfolk Southern Railway Company, Pan Am Railways, Inc., Boston and Maine Corporation, and Springfield Terminal Railway Company, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on July 24, 2008 (Exhibits, annexes and schedules omitted. The Registrant will furnish supplementary copies of such materials to the SEC upon request). | |
(ww) | Letter Agreement, dated October 21, 2008, by and among Norfolk Southern Railway Company, Pan Am Railways, Inc., Boston and Maine Corporation, and Springfield Terminal Railway Company amending certain terms of the Pan Am Transaction Agreement, is incorporated by reference to Exhibit 10(rrr) to Norfolk Southern Corporation’s Form 10-K filed on February 18, 2009. | |
(xx)* | Directors’ Deferred Fee Plan of Norfolk Southern Corporation, adopted June 1, 1982 and as amended and restated effective October 3, 2014, is incorporated by reference to Exhibit 10 to Norfolk Southern Corporation’s Form 10-Q filed on October 22, 2014. | |
(yy)* | Norfolk Southern Corporation Executives’ Deferred Compensation Plan, as amended effective June 26, 2013, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on July 24, 2013. | |
(zz)* | Amendment to Norfolk Southern Corporation Officers’ Deferred Compensation Plan, effective January 1, 2008, is incorporated by reference to Exhibit 10.03 to Norfolk Southern Corporation’s Form 8-K filed on July 24, 2008. | |
(aaa)* | Norfolk Southern Corporation Restricted Stock Unit Plan, as amended effective January 1, 2009, is incorporated by reference to Exhibit 10.05 to Norfolk Southern Corporation’s Form 8-K filed on July 24, 2008. |
(bbb) | Amendment No. 1 to Transfer and Administration Agreement dated as of October 22, 2008, and effective as of October 23, 2008, is incorporated by reference to Exhibit 99 to Norfolk Southern Corporation’s Form 8-K filed on October 23, 2006. | |
(ccc)* | Stock Unit Plan of Norfolk Southern Corporation dated as of July 24, 2001, as amended on August 21, 2008, with an effective date of January 1, 2009, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on October 24, 2008. | |
(ddd)* | Form of Amended and Restated Change in Control Agreement between Norfolk Southern Corporation and certain executive officers (including those defined as “named executive officers” and identified in the Corporation’s Proxy Statement for the 2016 annual Meeting of Stockholders), is incorporated by reference to Exhibit 10(aaaa) to Norfolk Southern Corporation’s Form 10-K filed on February 18, 2009. | |
(eee) | Limited Liability Company Agreement of Pan Am Southern LLC, dated as of April 9, 2009, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 8-K filed on April 9, 2009 (exhibits, annexes, and schedules omitted – the Registrant will furnish supplementary copies of such materials to the SEC upon request). | |
(fff) | Credit Agreement dated as of December 14, 2011, is incorporated by reference to Exhibit 99 to Norfolk Southern Corporation’s Form 8-K filed on December 15, 2011. | |
(ggg)*,** | Form of Norfolk Southern Corporation Long-Term Incentive Plan, Award Agreement for Outside Directors as approved by the Compensation Committee on November 30, 2015. | |
(hhh)*,** | Form of Norfolk Southern Corporation Long-Term Incentive Plan, Award Agreement for performance share units approved by the Compensation Committee on November 30, 2015. | |
(iii)*,** | Form of Norfolk Southern Corporation Long-Term Incentive Plan, Award Agreement for non-qualified stock options approved by the Compensation Committee on November 30, 2015. | |
(jjj)*,** | Form of Norfolk Southern Corporation Long-Term Incentive Plan, Award Agreement for restricted stock units approved by the Compensation Committee on November 30, 2015. | |
(kkk)* | Form of Norfolk Southern Corporation Long-Term Incentive Plan, Non-Compete Agreement Associated with Award Agreement, approved by the Compensation Committee on January 22, 2015. | |
(lll) | Performance Criteria for bonuses payable in 2017 for the 2016 incentive year. On November 30, 2015, the Compensation Committee of the Norfolk Southern Corporation Board of Directors adopted the following performance criteria for determining bonuses payable in 2017 for the 2016 incentive year under the Norfolk Southern Corporation Executive Management Incentive Plan: 50% based on operating income; 35% based on operating ratio; and 15% based on a composite of three transportation service measures, consisting of adherence to operating plan, connection performance, and train performance. | |
(mmm) | Omnibus Amendment, dated as of January 17, 2011, to Pan Am Transaction Agreement dated as of May 15, 2008, and Limited Liability Company Agreement of Pan Am Southern LLC dated as of April 9, 2009, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 10-Q filed on April 27, 2012. |
(nnn)* | Form of Amendment to Amended and Restated Change in Control Agreements between Norfolk Southern Corporation and the Corporation’s Chairman, President and Chief Executive Officer, and each of the Corporation’s Executive Vice Presidents, to eliminate the excise tax gross-up provision in the Agreements, is incorporated by reference to Exhibit 10.1 to Norfolk Southern Corporation’s Form 8-K filed on January 23, 2013. | |
(ooo)*,** | Form of Change in Control Agreement between Norfolk Southern Corporation and executive officers who did not enter into a change in control agreement before 2016. | |
12** | Statement re: Computation of Ratio of Earnings to Fixed Charges. | |
21** | Subsidiaries of the Registrant. | |
23** | Consent of Independent Registered Public Accounting Firm. | |
31-A** | Rule 13a-14(a)/15d-014(a) CEO Certification. | |
31-B** | Rule 13a-14(a)/15d-014(a) CFO Certification. | |
32** | Section 1350 Certifications. | |
99** | Annual CEO Certification pursuant to NYSE Rule 303A.12(a). |
101** | The following financial information from Norfolk Southern Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015, formatted in Extensible Business Reporting Language (XBRL) includes: (i) the Consolidated Statements of Income of each of the years ended December 31, 2015, 2014, and 2013; (ii) the Consolidated Statements of Comprehensive Income for each of the years ended December 31, 2015, 2014, and 2013; (iii) the Consolidated Balance Sheets at December 31, 2015 and 2014; (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014, and 2013; (v) the Consolidated Statements of Changes in Stockholders’ Equity for each of the three years ended December 31, 2015, 2014, and 2013; and (vi) the Notes to Consolidated Financial Statements. |
* Management contract or compensatory arrangement. | |
** Filed herewith. | |
(B) | Exhibits. |
The Exhibits required by Item 601 of Regulation S-K as listed in Item 15(A)3 are filed herewith or incorporated by reference. | |
(C) | Financial Statement Schedules. |
Financial statement schedules and separate financial statements specified by this Item are included in Item 15(A)2 or are otherwise not required or are not applicable. | |
Exhibits 23, 31, 32, and 99 are included in copies assembled for public dissemination. All exhibits are included in the 2015 Form 10-K posted on our website at www.nscorp.com under “Investors” and “SEC Filings” or you may request copies by writing to: | |
Office of Corporate Secretary Norfolk Southern Corporation Three Commercial Place Norfolk, Virginia 23510-9219 |
/s/James A. Squires | |
By: | James A Squires |
(Chairman, President and Chief Executive Officer) |
Signature | Title |
/s/James A. Squires (James A. Squires) | Chairman, President and Chief Executive Officer and Director (Principal Executive Officer) |
/s/Marta R. Stewart (Marta R. Stewart) | Executive Vice President Finance and Chief Financial Officer (Principal Financial Officer) |
/s/Thomas E. Hurlbut (Thomas E. Hurlbut) | Vice President and Controller (Principal Accounting Officer) |
/s/Thomas D. Bell, Jr. (Thomas D. Bell, Jr.) | Director |
/s/Erskine B. Bowles (Erskine B. Bowles) | Director |
/s/Robert A. Bradway (Robert A. Bradway) | Director |
/s/Wesley G. Bush (Wesley G. Bush) | Director |
/s/Daniel A. Carp (Daniel A. Carp) | Director |
/s/Karen N. Horn (Karen N. Horn) | Director |
/s/Steven F. Leer (Steven F. Leer) | Director |
/s/Michael D. Lockhart (Michael D. Lockhart) | Director |
/s/Amy E. Miles (Amy E. Miles) | Director |
/s/Martin H. Nesbitt (Martin H. Nesbitt) | Director |
/s/John R. Thompson (John R. Thompson) | Director |
Additions charged to: | |||||||||||||||||||
Beginning Balance | Expenses | Other Accounts | Deductions | Ending Balance | |||||||||||||||
Year ended December 31, 2013 | |||||||||||||||||||
Valuation allowance (included net in | |||||||||||||||||||
deferred tax liability) for deferred | |||||||||||||||||||
tax assets | $ | 19 | $ | 13 | $ | — | $ | — | $ | 32 | |||||||||
Casualty and other claims | |||||||||||||||||||
included in other liabilities | 258 | 33 | (1) | — | 77 | (3) | 214 | ||||||||||||
Current portion of casualty and | |||||||||||||||||||
other claims included in | |||||||||||||||||||
accounts payable | 183 | 15 | 101 | (2) | 133 | (4) | 166 | ||||||||||||
Year ended December 31, 2014 | |||||||||||||||||||
Valuation allowance (included net in | |||||||||||||||||||
deferred tax liability) for deferred | |||||||||||||||||||
tax assets | $ | 32 | $ | 1 | $ | — | $ | — | $ | 33 | |||||||||
Casualty and other claims | |||||||||||||||||||
included in other liabilities | 214 | 71 | (1) | — | 86 | (3) | 199 | ||||||||||||
Current portion of casualty and | |||||||||||||||||||
other claims included in | |||||||||||||||||||
accounts payable | 166 | 19 | 132 | (2) | 130 | (4) | 187 | ||||||||||||
Year ended December 31, 2015 | |||||||||||||||||||
Valuation allowance (included net in | |||||||||||||||||||
deferred tax liability) for deferred | |||||||||||||||||||
tax assets | $ | 33 | $ | 2 | $ | — | $ | — | $ | 35 | |||||||||
Casualty and other claims | |||||||||||||||||||
included in other liabilities | 199 | 66 | (1) | — | 74 | (3) | 191 | ||||||||||||
Current portion of casualty and | |||||||||||||||||||
other claims included in | |||||||||||||||||||
accounts payable | 187 | 19 | 119 | (2) | 151 | (4) | 174 |
(1) | Includes adjustments for changes in estimates for prior years’ claims. |
(2) | Includes revenue refunds and overcharges provided through deductions from operating revenues and transfers |
(3) | Payments and reclassifications to/from accounts payable. |
(4) | Payments and reclassifications to/from other liabilities. |
. | Retirement Benefits for Retirees, Beneficiaries and Deferred Vested Participants Under the AW&W Plan 88 |
AC&Y Plan | The Akron, Canton & Youngstown Railroad Company Pension and Insurance Plan. |
AW&W Plan | Algers, Winslow & Western Railway Company Salaried Employees’ Retirement Plan. |
Accrued Benefit | As of any date for any Member the retirement benefit payable at Normal Retirement Age. |
Additional Retirement Benefit | The additional monthly retirement benefit provided under Article VI as set forth in Schedule A or Schedule B of the Plan. |
Agreement Service | Service in a position for which the rates of pay are governed by the provisions of a collective bargaining agreement. |
Agreement Trainee | An Employee in training for a position that is not a Nonagreement Position. |
Average Final Compensation | For a Post-2015 Member, average monthly Compensation paid to a Member during the 60 consecutive months out of the 120 months of Creditable Service ending with the last month in which the Member was employed in a Nonagreement Position (or, if less than 120, of the actual number of months of Creditable Service), which will produce the highest average monthly Compensation. In the case of a Member who has not served for 60 consecutive months during his last 120 (or less) months of Creditable Service, such average shall be computed by aggregating those 60 months which would be consecutive if breaks in service were disregarded. In the case of a Member retired with less than 60 months of Creditable Service, the average monthly Compensation during his total months of Creditable Service shall be used. For a Pre-2016 Member, average monthly Compensation paid to a Member during any five Compensation Years out of the 120 months of Creditable Service ending with the last month in which the Member was employed in a Nonagreement Position (or, if less than 120, of the actual number of months of Creditable Service), which will produce the highest average monthly Compensation. In the case of a Member who has not served five Compensation Years during his last 120 (or less) months of Creditable Service, such average shall be computed by disregarding breaks in service for the purpose of determining Compensation Years. In the case of a Member retired with less than 60 months of Creditable Service, the average monthly Compensation during his total months of Creditable Service shall be used. |
Benefits Investment Committee | Pursuant to Article XII, the Committee that is charged with duties relating to the investment or management of the Plan’s assets. |
Board of Directors | Board of Directors of NSC. |
Board of Managers | Pursuant to Article XI, the Board that acts as trustee and is charged with administering the Plan. |
Bonus | A payment made pursuant to the Norfolk Southern Corporation Annual Bonus Program, Norfolk Southern Corporation Management Incentive Plan, Norfolk Southern Corporation Executive Management Incentive Plan or NS Stock Unit Plan. |
Break in Service | A twelve-month period, measured from the date of employment or anniversaries thereof, in which an Employee is not credited with more than 500 Hours of Service. |
Code | The Internal Revenue Code of 1986, as amended. |
Compensation | Remuneration in the form of salary for nonagreement service paid to an Employee in a Nonagreement Position (increased by the amount of the Member's salary that is not includible in the gross income of the Member because it is contributed by NSC or a Participating Subsidiary pursuant to the Member’s salary reduction agreement and which is not includible in the gross income of the Member under (i) Section 402(e)(3) of the Code, as a Pre-Tax Contribution to the Thrift and Investment Plan of Norfolk Southern Corporation and Participating Subsidiary Companies, (ii) Section 125 of the Code, to provide benefits under the Norfolk Southern Corporation ChoicePlus Benefits Plan, or (iii) Section 132(f)(4) of the Code, to provide benefits under the Pre-Tax Transportation Plan of Norfolk Southern Corporation and Participating Subsidiary Companies), vacation pay paid to a former Employee for service in a Nonagreement Position (including payments for unused vacation made following the Employee’s severance from employment, provided that such payment is made within 2½ months after such severance from employment), Bonus for nonagreement service paid to an Employee in a Nonagreement Position, or differential wage payments as defined in Section 414(u)(12) of the Code (to the extent required by Section 414(u)(12) and the guidance issued thereunder), each as reported to the Internal Revenue Service for Federal income tax purposes. Severance payments, temporary locality payments, or special award payments (such as payments made under recruitment, safety, quality and retention programs) shall not be included within this definition. Annual compensation in excess of the limit provided in Section 401(a)(17)(B) of the Code shall not be included within this definition, except as otherwise permitted by law. For purposes of determining benefit accruals in a Compensation Year beginning on or after January 1, 2002, compensation for any Compensation Year beginning before January 1, 2002 shall be limited to $200,000. |
Compensation Year | Any twelve consecutive month period of monthly Compensation ending on the last day of the same month as the last month in which the Member was employed in a Nonagreement Position. |
Conrail | Consolidated Rail Corporation. |
Conrail Plan | Supplemental Pension Plan of Consolidated Rail Corporation. |
Creditable Service | A Member's creditable service, as defined in Article IV, for purposes of the Plan. |
CW Plan | Retirement Plan of Chesapeake Western Railway. |
Disability Benefit | The monthly disability benefit not to exceed the amount of the Normal Retirement Benefit the Member would receive if the Member separated from service at age 65 (taking into account any additional Creditable Service the Member would have earned if he had continued to work for Norfolk Southern Corporation or a Participating Subsidiary until age 65). |
Disability Benefit Compensation | A Member's basic monthly salary (not to exceed the monthly equivalent of the annual compensation limit prescribed by Section 401(a)(17) of the Code). |
Disability Service | A period during which the Member is receiving benefits under the LTD Plan on account of the Member’s total disability. |
DMU Plan | Des Moines Union Railway Defined Benefit Pension Plan and Trust. |
Eligible Child or Children | A Member’s natural or adopted children (unless such natural or adopted children have been legally adopted by other individuals), who at the date of the Member’s death are unmarried and under the age of 21 or who are totally and permanently disabled. An Eligible Child shall cease to be such as of the earlier of the last day of the month in which the child marries or attains the age of 21, or, if later, the last day of the month in which the child ceases to be totally and permanently disabled. |
Eligible Parent or Parents | A Member’s natural mother or father or, if the Member was legally adopted, the adoptive parents in lieu of the natural parents. |
Employee | A person who is employed as an employee by NSC or a Participating Subsidiary on a full-time basis, or who is employed by NSC or a Participating Subsidiary on a regular part-time basis and is designated as an Employee by NSC or a Participating Subsidiary and, in each instance, who receives compensation directly from NSC or a Participating Subsidiary for services rendered as an employee in the United States. Notwithstanding the previous sentence, the term “Employee” shall not include (i) a person who is covered by a contract or agreement that specifies that such person is not eligible to participate in the Plan; (ii) a person who has terminated from employment with NSC or a Participating Subsidiary, unless designated as an Employee by NSC or a Participating Subsidiary; (iii) a person who is a “Leased Employee” within the meaning of Section 414(n) of the Code or whose basic compensation for services on behalf of NSC or a Participating Subsidiary is not paid directly by NSC or a Participating Subsidiary; or (iv) a person who is classified as a special status employee or an independent contractor. An employee that NSC or a Participating Subsidiary mistakenly but in good faith classifies as other than an Employee shall be deemed to be an Employee as of the date on which NSC or a Participating Subsidiary reclassifies him or her as an Employee. |
Entry Date | January 1st or July 1st coincident with or following the date that an Employee has satisfied the membership requirements of Article III of the Plan. |
Fund | The assets held from time to time under the Plan. |
Highly Compensated Employee | Any Employee who,(i) was at any time during the current year or preceding year a Five Percent Owner; or (ii) during the preceding year (A) received compensation from the Corporation or a Participating Subsidiary in excess of $80,000(as adjusted under Code Section 415(d))and (B) in the case of an Employee of any Participating Subsidiary not treated as a single employer together with the Corporation under Sections 414(b), 414(c), 414(m), 414(n), or 414(o) of the Code. For purposes of this definition, the term “compensation” means compensation within the meaning of Section 415(c)(3). For plan years beginning on or after January 1, 2001, “compensation” shall include elective amounts that are not includible in the gross income of the employee by reason of Section 132(f)(4) of the Code. Highly compensated former employees (as defined in Code Section 414(q)(9)) shall be treated as Highly Compensated Employees for all relevant purposes. For purposes of this definition, Employees who are nonresident aliens and who receive no earned income from the Corporation or a Participating Subsidiary which constitutes income from sources within the United States shall not be treated as Employees. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top paid group, the number of Employees treated as officers and the compensation that is taken into account, shall be made in accordance with Code Section 414(q) and the regulations thereunder. |
Hour of Service | Each hour for which an Employee is paid, or entitled to payment for the performance or nonperformance of duties, or each hour for which back pay, regardless of mitigation of damages, is either awarded or agreed to by the employer. An Hour of Service shall be computed and credited in accordance with DOL Regulation 2530.200b. |
K&IT Plan | Kentucky & Indiana Terminal Railroad Company Retirement Plan. |
Leased Employee | Any person (other than employee of NSC or a Participating Subsidiary) who pursuant to an agreement between the recipient and any other person (“leasing organization”) has performed services for the recipient (or for the recipient and related persons determined in accordance with section 414(n)(6) of the Internal Revenue Code) on a substantially full-time basis for a period of at least one year, and such services are performed under primary direction or control of the recipient. |
LPD Plan | Retirement Plan of Lambert's Point Docks, Incorporated. |
LTD Plan | The Long-Term Disability Plan of Norfolk Southern and Participating Subsidiary Companies or any successor plan. |
Member | A person entitled to participate in the Plan. |
Month of Service | Any calendar month in which an Employee is paid, or entitled to payment, for the performance or nonperformance of duties. A Month of Service shall be treated as the equivalent of 190 Hours of Service in accordance with DOL Regulation 2530.200b-3. |
NF&D Plan | Retirement Plan of Norfolk, Franklin and Danville Railway Company. |
Nonagreement Position | A position for which the rates of pay are not governed by the provisions of a collective bargaining agreement, excluding those employees who perform service on positions as relief yardmasters/supervisors. |
Normal Retirement Age | Age 65. |
Normal Retirement Benefit | The greater of the early retirement benefit under the Plan or the benefit commencing under the Plan at Normal Retirement Date. |
Normal Retirement Date | First day of the month next succeeding the month in which the Member attains Normal Retirement Age. |
NSC | Norfolk Southern Corporation, a Virginia Corporation. |
NW | Norfolk and Western Railway Company, a Virginia Corporation. |
NW Plan | Retirement Plan of Norfolk and Western Railway. |
NW Supplemental Plan | Norfolk and Western Railway Company Plan for Supplemental Pensions. |
Participating Subsidiary | Each subsidiary or affiliated company of NSC which adopts the Plan and is approved for participation in the Plan as provided for in Article XVII. |
Plan | Retirement Plan of Norfolk Southern Corporation and Participating Subsidiary Companies. |
Plan Year | Calendar Year. |
PLC Plan | Pocahontas Land Corporation Plan for Supplemental Pensions. |
Post-retirement Survivor Annuity | A benefit that is payable in monthly installments for the Member’s life, commencing with the calendar month following the month in which the Member retires and ending with the month immediately prior to the month in which the Member dies, and thereafter at least 50% of which is paid in monthly installments to the Member’s Surviving Spouse, commencing in the month of the Member’s death and ending with the month immediately prior to the month of the Surviving Spouse’s death. |
Post-2015 Member | A person who becomes a Member of the Plan after December 31, 2015. |
Pre-2016 Member | A person who becomes a Member of the Plan before January 1, 2016. |
Projected Normal Retirement Benefit | The Member’s projected accrued benefit under the Plan at Normal Retirement Age assuming the Member’s Average Final Compensation at Normal Retirement Age equals his Average Final Compensation as measured on the last day in which the Member was an Employee and taking into account any additional Creditable Service the Member would have earned if he had continued to work at Norfolk Southern Corporation or a Participating Subsidiary until Normal Retirement Age. |
Service Ratio | Effective as of January 1, 2002, a fraction (not exceeding 1) the numerator of which is the Member’s Creditable Service and the denominator of which is the Creditable Service the Member would have if he served until Normal Retirement Age. |
Southern | Formerly, Southern Railway Company, a Virginia Corporation, name changed to Norfolk Southern Railway Company, effective December 31, 1990. |
Southern Plan | Southern Railway System Retirement Plan. |
Surviving Spouse | A deceased Member's lawful surviving spouse who was married to the Member on the date of retirement or date of death before retirement. |
VHC Plan | Virginia Holding Corporation Supplemental Pension Plan. |
Year of Service | Any twelve consecutive month period, as measured from the date of employment or anniversaries thereof, in which an Employee has not less than six Months of Service. |
(ii) | $500 per month. |
(a) | $8.34, but only if the Member had accrued an Hour of Service on or before December 31, 2007; |
(b) | The Member’s Projected Normal Retirement Benefit times the Member’s Service Ratio. Notwithstanding any provision to the contrary, the retirement benefit described in this Section 13(e) shall be reduced in the same manner as described in Section 2 of this Article or in Article IX, as applicable; |
(c) | The Member’s accrued retirement benefit under this Article VI as measured on April 30, 2005; |
(d) | The Member’s Average Final Compensation that is not in excess of $4,167, multiplied by 1.25% times the number of years of his Creditable Service (or fraction thereof) that is not in excess of five years. Notwithstanding any provision to the contrary, the retirement benefit described in this Section 13(d) shall be actuarially reduced, based on mortality for employees as shown in Exhibit A and interest at the rate of 7.5% per year compounded annually if the Member’s benefit commences before Normal Retirement Date; or |
(e) | The Member's Projected Normal Retirement Benefit times the Member's Service Ratio, calculated as if the Member's employment had terminated on December 31, 2009. For purposes of this paragraph, the Service Ratio with respect to benefits accrued between January 1, 2002 and December 31, 2009 shall be equal to a fraction (not exceeding 1) the numerator of which is the Member’s Months of Service and the denominator of which is the number of Months of Service the Member would have if he served until Normal Retirement Age. Notwithstanding any provision to the contrary, the retirement benefit described in this Section 13(e) shall be reduced in the same manner as described in Section 2 of this Article or in Article IX, as applicable. |
(a) | A Member or beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable Code section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, unless the present value of the portion of the benefit that is being paid in a prohibited payment does not exceed the lesser of: |
i. | 50 percent of the present value of the benefit payable in the optional form of benefit that includes the prohibited payment; or |
ii. | 100 percent of the PBGC maximum benefit guarantee amount (as defined in section 1.436-1(d)(3)(iii)(C) of the Treasury Regulations). |
(b) | No amendment to the Plan that has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual or changing the rate at which benefits become nonforfeitable shall take effect in a Plan Year if the adjusted funding target attainment percentage for the Plan Year is: |
i. | Less than 80 percent; or |
ii. | 80 percent or more, but would be less than 80 percent if the benefits attributable to the amendment were taken into account in determining the adjusted funding target attainment percentage. |
(a) | A Member or beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable Code section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment. The limitation set forth in this Section 4(a) does not apply to any payment of a benefit which under Code section 411(a)(11) may be immediately distributed without the consent of the Member. |
(b) | An unpredictable contingent event benefit with respect to an unpredictable contingent event occurring during a Plan Year shall not be paid if the adjusted funding target attainment percentage for the Plan Year is: |
i. | Less than 60 percent; or |
ii. | 60 percent or more, but would be less than 60 percent if the adjusted funding target attainment percentage were redetermined applying an actuarial assumption that the likelihood of occurrence of the unpredictable contingent event during the Plan Year is 100 percent. |
(c) | Benefit accruals under the Plan shall cease as of the applicable Code section 436 measurement date. In addition, if the Plan is required to cease benefits under this Section 4(c), then the Plan is not permitted to be amended in a manner that would increase liabilities of the Plan by reason of an increase in benefits or the establishment of new benefits. |
6. | (a) If a limitation on prohibited payments under Sections 3(a), 4(a) or Section 5 applied to the Plan as of a Code section 436 measurement date, but that limit no longer applies to the Plan as of a later Code section 436 measurement date, then that limitation does not apply to benefits with annuity starting dates that are on or after that later Code section 436 measurement date. |
(b) | If a limitation on benefit accruals under Section 4(c) applied to the Plan as of a Code section 436 measurement date, but that limitation no longer applies to the Plan as of a later Code section 436 measurement date, then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on service on or after that later Code section 436 measurement date, except as otherwise provided under the Plan. The |
(c) | If an unpredictable contingent event benefit with respect to an unpredictable contingent event that occurs during the Plan Year is not permitted to be paid after the occurrence of the event because of the limitation of Section 4(b), but is permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of section 1.436-1(g)(5)(ii)(B) of the Treasury Regulations), then that unpredictable contingent event benefit shall be paid, retroactive to the period that benefit would have been payable under the terms of the Plan (determined without regard to Section 4(b)). If the unpredictable contingent event benefit does not become payable during the Plan Year in accordance with the preceding sentence, then the Plan is treated as if it does not provide for that benefit. |
(d) | If a plan amendment does not take effect as of the effective date of the amendment because of the limitation of Section 3(b) or Section 4(c), but is permitted to take effect later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of section 1.436-1(g)(5)(ii)(C) of the Treasury Regulations), then the plan amendment must automatically take effect as of the first day of the Plan Year or, if later, the original effective date of the amendment. If the plan amendment cannot take effect during the same Plan Year, then it shall be treated as if it were never adopted, unless the plan amendment provides otherwise. |
(a) | equal to, or |
(a) | equal to, |
(b) | 75% of, |
(c) | 50% of, or |
(d) | 1% of |
(a) | a claim or action to recover benefits allegedly due under the provisions of the Plan or by reason of any law, nor |
(b) | a claim or action to enforce rights under the Plan, nor |
(c) | a claim or action to clarify rights to future benefits under the Plan, nor |
(d) | any other claim or action that (i) relates to the Plan and (ii) seeks a remedy, ruling, or judgment of any kind against the Plan, the Plan Administrator, a Plan fiduciary, or a party in interest with respect to the Plan. |
1. | Definitions. For purposes of this Article XXIII, the following definitions shall apply: |
6. | Benefits Payable Out of the Medical Benefits Account. |
Employee Age | Annual Rate of Mortality | Employee Age | Annual Rate of Mortality | Employee Age | Annual Rate of Mortality |
20 | 0.000411 | 50 | 0.004259 | 80 | 0.079994 |
21 | 0.000427 | 51 | 0.004721 | 81 | 0.088980 |
22 | 0.000445 | 52 | 0.005210 | 82 | 0.098503 |
23 | 0.000463 | 53 | 0.005727 | 83 | 0.108513 |
24 | 0.000485 | 54 | 0.006272 | 84 | 0.119079 |
25 | 0.000508 | 55 | 0.006844 | 85 | 0.130175 |
26 | 0.000534 | 56 | 0.007444 | 86 | 0.141882 |
27 | 0.000562 | 57 | 0.008076 | 87 | 0.154275 |
28 | 0.000594 | 58 | 0.008747 | 88 | 0.167531 |
29 | 0.000628 | 59 | 0.009471 | 89 | 0.181694 |
30 | 0.000666 | 60 | 0.010265 | 90 | 0.196968 |
31 | 0.000708 | 61 | 0.011150 | 91 | 0.209014 |
32 | 0.000754 | 62 | 0.012152 | 92 | 0.221755 |
33 | 0.000805 | 63 | 0.013305 | 93 | 0.235306 |
34 | 0.000860 | 64 | 0.014641 | 94 | 0.249791 |
35 | 0.000923 | 65 | 0.016203 | 95 | 0.265356 |
36 | 0.000991 | 66 | 0.018034 | 96 | 0.282155 |
37 | 0.001066 | 67 | 0.019960 | 97 | 0.300359 |
38 | 0.001149 | 68 | 0.021877 | 98 | 0.320159 |
39 | 0.001242 | 69 | 0.023874 | 99 | 0.341754 |
40 | 0.001343 | 70 | 0.026165 | 100 | 0.365359 |
41 | 0.001470 | 71 | 0.029253 | 101 | 0.391194 |
42 | 0.001639 | 72 | 0.032731 | 102 | 0.419496 |
43 | 0.001848 | 73 | 0.036536 | 103 | 0.452379 |
44 | 0.002094 | 74 | 0.040725 | 104 | 0.492096 |
45 | 0.002376 | 75 | 0.045963 | 105 | 0.540899 |
46 | 0.002691 | 76 | 0.050642 | 106 | 0.601038 |
47 | 0.003038 | 77 | 0.056811 | 107 | 0.674766 |
48 | 0.003416 | 78 | 0.063794 | 108 | 0.764335 |
49 | 0.0003824 | 79 | 0.071557 | 109 | 0.871996 |
110 | 1.000000 |
Employee Age | Annual Rate of Mortality | Employee Age | Annual Rate of Mortality | Employee Age | Annual Rate of Mortality |
20 | 0.000275 | 50 | 0.002367 | 80 | 0.063124 |
21 | 0.000290 | 51 | 0.002753 | 81 | 0.070445 |
22 | 0.000306 | 52 | 0.002798 | 82 | 0.078282 |
23 | 0.000323 | 53 | 0.003049 | 83 | 0.086449 |
24 | 0.000342 | 54 | 0.003324 | 84 | 0.095459 |
25 | 0.000362 | 55 | 0.003630 | 85 | 0.105185 |
26 | 0.000383 | 56 | 0.003976 | 86 | 0.115744 |
27 | 0.000406 | 57 | 0.004376 | 87 | 0.126922 |
28 | 0.000430 | 58 | 0.004839 | 88 | 0.139471 |
29 | 0.000457 | 59 | 0.005371 | 89 | 0.152845 |
30 | 0.000487 | 60 | 0.005978 | 90 | 0.167597 |
31 | 0.000518 | 61 | 0.006663 | 91 | 0.180685 |
32 | 0.000553 | 62 | 0.007428 | 92 | 0.194505 |
33 | 0.000591 | 63 | 0.008273 | 93 | 0.209559 |
34 | 0.000632 | 64 | 0.009196 | 94 | 0.226003 |
35 | 0.000677 | 65 | 0.010191 | 95 | 0.244005 |
36 | 0.000725 | 66 | 0.011255 | 96 | 0.263751 |
37 | 0.000780 | 67 | 0.012374 | 97 | 0.285445 |
38 | 0.000839 | 68 | 0.013662 | 98 | 0.309309 |
39 | 0.000903 | 69 | 0.015214 | 99 | 0.335583 |
40 | 0.000975 | 70 | 0.017162 | 100 | 0.364532 |
41 | 0.001056 | 71 | 0.019865 | 101 | 0.396444 |
42 | 0.001147 | 72 | 0.023001 | 102 | 0.431633 |
43 | 0.001251 | 73 | 0.026492 | 103 | 0.470647 |
44 | 0.001366 | 74 | 0.030321 | 104 | 0.515260 |
45 | 0.001494 | 75 | 0.034536 | 105 | 0.567251 |
46 | 0.001638 | 76 | 0.039190 | 106 | 0.628394 |
47 | 0.001795 | 77 | 0.044335 | 107 | 0.700464 |
48 | 0.001968 | 78 | 0.050109 | 108 | 0.785238 |
49 | 0.002158 | 79 | 0.056293 | 109 | 0.884492 |
110 | 1.000000 |
Age | Annual Rate of Mortality | Age | Annual Rate of Mortality | Age | Annual Rate of Mortality | Age | Annual Rate of Mortality |
15 | 0.000143 | 42 | 0.000775 | 69 | 0.014742 | 96 | 0.236930 |
16 | 0.000151 | 43 | 0.000826 | 70 | 0.016160 | 97 | 0.251111 |
17 | 0.000161 | 44 | 0.000885 | 71 | 0.017803 | 98 | 0.265340 |
18 | 0.000167 | 45 | 0.000940 | 72 | 0.019833 | 99 | 0.276338 |
19 | 0.000171 | 46 | 0.000994 | 73 | 0.021968 | 100 | 0.286390 |
20 | 0.000174 | 47 | 0.001054 | 74 | 0.024500 | 101 | 0.301731 |
21 | 0.000179 | 48 | 0.001130 | 75 | 0.027315 | 102 | 0.313092 |
22 | 0.000186 | 49 | 0.001215 | 76 | 0.030348 | 103 | 0.324542 |
23 | 0.000197 | 50 | 0.001323 | 77 | 0.034204 | 104 | 0.335529 |
24 | 0.000208 | 51 | 0.001423 | 78 | 0.038256 | 105 | 0.345501 |
25 | 0.000222 | 52 | 0.001570 | 79 | 0.042806 | 106 | 0.353906 |
26 | 0.000244 | 53 | 0.001764 | 80 | 0.047905 | 107 | 0.361363 |
27 | 0.000253 | 54 | 0.001990 | 81 | 0.053861 | 108 | 0.368721 |
28 | 0.000262 | 55 | 0.002346 | 82 | 0.060545 | 109 | 0.375772 |
29 | 0.000276 | 56 | 0.002818 | 83 | 0.067380 | 110 | 0.382309 |
30 | 0.000301 | 57 | 0.003243 | 84 | 0.075650 | 111 | 0.388123 |
31 | 0.000348 | 58 | 0.003706 | 85 | 0.084660 | 112 | 0.393008 |
32 | 0.000394 | 59 | 0.004206 | 86 | 0.094731 | 113 | 0.396754 |
33 | 0.000438 | 60 | 0.004803 | 87 | 0.106954 | 114 | 0.399154 |
34 | 0.000482 | 61 | 0.005576 | 88 | 0.119811 | 115 | 0.400000 |
35 | 0.000525 | 62 | 0.006405 | 89 | 0.133578 | 116 | 0.400000 |
36 | 0.000566 | 63 | 0.007444 | 90 | 0.148759 | 117 | 0.400000 |
37 | 0.000604 | 64 | 0.008410 | 91 | 0.162589 | 118 | 0.400000 |
38 | 0.000630 | 65 | 0.009508 | 92 | 0.178330 | 119 | 0.400000 |
39 | 0.000657 | 66 | 0.010866 | 93 | 0.193878 | 120 | 1.000000 |
40 | 0.000691 | 67 | 0.012108 | 94 | 0.207982 | ||
41 | 0.000729 | 68 | 0.013316 | 95 | 0.223718 |
Identification Number | Additional Retirement Benefit | ||
1 | $26.88 | ||
2 | 381.72 | ||
3 | 276.40 | ||
4 | 4,555.13 | ||
5 | 315.53 | ||
6 | 328.30 | ||
7 | 964.32 | ||
8 | 58.67 | ||
9 | 83.33 | ||
10 | 1,577.71 | ||
11 | 70.30 | ||
12 | 197.63 | ||
13 | 821.87 | ||
14 | 815.08 | ||
15 | 370.82 | ||
16 | 731.48 | ||
17 | 121.25 | ||
18 | 1,304.57 | ||
19 | 7,731.59 | ||
20 | 40.95 | ||
21 | 482.36 | ||
22 | 68.45 | ||
23 | 116.21 | ||
24 | 83.98 | ||
25 | 499.96 | ||
26 | 44.99 | ||
27 | 200.79 | ||
28 | 783.26 |
Identification Number | Additional Retirement Benefit |
29 | 33.59 |
30 | 67.84 |
31 | 21,388.96 |
32 | 1,371.51 |
33 | 147.65 |
34 | 487.99 |
35 | 127.44 |
36 | 769.73 |
37 | 188.72 |
38 | 1,548.04 |
39 | 1,194.37 |
40 | 158.08 |
41 | 3,411.23 |
42 | 833.34 |
43 | 5,556.86 |
44 | 183.18 |
45 | 671.52 |
46 | 615.62 |
47 | 1,104.12 |
48 | 327.24 |
49 | 41.75 |
50 | 942.45 |
51 | 935.30 |
52 | 387.31 |
53 | 3,322.86 |
54 | 791.16 |
55 | 744.92 |
56 | 182.28 |
57 | 5.95 |
58 | 8.25 |
59 | 1,023.05 |
60 | 1,087.63 |
61 | 5,407.87 |
62 | 69.21 |
63 | 1,155.57 |
64 | 108.99 |
65 | 4,558.49 |
66 | 146.78 |
67 | 504.39 |
68 | 94.28 |
Identification Number | Additional Retirement Benefit |
69 | 84.35 |
70 | 54.44 |
71 | 802.10 |
72 | 219.41 |
73 | 275.25 |
74 | 1,574.82 |
75 | 118.26 |
76 | 424.57 |
77 | 348.56 |
78 | 19.96 |
79 | 608.65 |
80 | 327.15 |
81 | 837.55 |
82 | 184.38 |
83 | 4.09 |
84 | 951.01 |
85 | 488.58 |
86 | 2,518.63 |
87 | 3,292.37 |
88 | 1,335.68 |
89 | 2,240.10 |
90 | 36.38 |
91 | 69.12 |
92 | 494.79 |
93 | 174.17 |
94 | 446.33 |
95 | 146.10 |
96 | 40.11 |
97 | 526.49 |
98 | 833.06 |
99 | 6.08 |
100 | 423.71 |
101 | 307.33 |
102 | 152.40 |
103 | 700.33 |
104 | 204.18 |
105 | 223.78 |
106 | 404.78 |
107 | 93.75 |
Identification Number | Additional Retirement Benefit |
108 | 6.33 |
109 | 675.25 |
110 | 542.69 |
111 | 328.30 |
112 | 274.99 |
113 | 295.00 |
114 | 1,859.62 |
115 | 381.74 |
116 | 301.07 |
117 | 365.04 |
118 | 168.74 |
119 | 603.48 |
120 | 616.62 |
121 | 97.56 |
122 | 356.81 |
123 | 502.83 |
124 | 1,411.62 |
125 | 907.19 |
126 | 571.81 |
127 | 17.65 |
128 | 131.68 |
129 | 45.88 |
130 | 40.14 |
131 | 96.65 |
132 | 2,489.98 |
133 | 1,706.36 |
134 | 59.66 |
135 | 24.14 |
136 | 1,033.44 |
137 | 184.46 |
138 | 414.57 |
139 | 25.72 |
140 | 33.74 |
141 | 132.75 |
142 | 55.67 |
143 | 210.00 |
144 | 124.95 |
145 | 482.39 |
146 | 682.86 |
147 | 184.46 |
Identification Number | Additional Retirement Benefit |
148 | 141.74 |
149 | 150.98 |
150 | 547.65 |
151 | 1,075.72 |
152 | 385.38 |
153 | 2,317.54 |
154 | 345.11 |
155 | 516.83 |
156 | 555.43 |
157 | 18,307.91 |
158 | 1,759.62 |
159 | 94.26 |
160 | 83.45 |
161 | 9.27 |
162 | 910.85 |
163 | 190.44 |
164 | 191.98 |
165 | 543.21 |
166 | 1,486.76 |
167 | 917.88 |
168 | 382.97 |
169 | 41.89 |
170 | 49.51 |
171 | 1,255.99 |
172 | 1,446.97 |
173 | 469.50 |
174 | 1,309.05 |
175 | 2,677.79 |
176 | 1,486.51 |
177 | 112.85 |
178 | 624.48 |
179 | 3,369.39 |
180 | 562.19 |
181 | 971.15 |
182 | 1,130.67 |
Identification Number | Additional Retirement Benefit Before Offset Described in Section 1(e) of Article VI Is Applicable | Additional Retirement Benefit After Offset Described in Section 1(e) of Article VI is Applicable | ||||
1 | $182.08 | $2.61 | ||||
2 | 95.38 | |||||
3 | 175.27 | |||||
4 | 1,352.10 | 726.15 | ||||
5 | 101.82 | |||||
6 | 84.18 | |||||
7 | 216.58 | |||||
8 | 81.42 | |||||
9 | 217.66 | |||||
10 | 388.16 | |||||
11 | 378.31 | |||||
12 | 152.21 |
Identification Number | Reduction in Benefit |
1 | $34.18 |
2 | 25.00 |
3 | 25.00 |
4 | 25.00 |
5 | 25.00 |
6 | 25.00 |
7 | 25.00 |
8 | 25.00 |
9 | 25.00 |
10 | 25.00 |
11 | 25.00 |
Identification Number | AW&W Retirement Benefit |
1 | $ 363.95 life annuity |
2 | 412.08 life annuity payable to surviving spouse |
3 | 713.70 life annuity |
4 | 108.05 life annuity |
5 | 782.39 50% joint & survivor annuity |
6 | 1,936.19 100% joint & survivor annuity |
7 | 927.04 life annuity with 120 payments certain |
8 | 648.38 life annuity with 120 payments certain |
i. | the Participant shall not be entitled to (A) receive the Restricted Stock Unit Shares to which the Participant may have a contingent right to receive in the future, (B) vote the Common Stock represented by the Restricted Stock Units or (C) receive dividends thereon; and |
ii. | the Restricted Stock Units may not be sold, transferred, assigned, pledged, conveyed, hypothecated, used to exercise options or otherwise disposed of. |
(a) | The three-year total return to the Corporation’s stockholders as compared with the total return on the publicly traded stocks of North American Class I railroads (which, as of the Award Date, are Canadian National Railway Company, Canadian Pacific Railway Limited, CSX Corporation, Kansas City Southern and Union Pacific Corporation) and a specified minimum earnout if the three-year total return to the Corporation’s stockholders is greater than the median total return on all stocks comprising the S&P 500 Composite Stock Price Index determined as of the first trading day of <Year of Award>. The three-year total return shall be measured using the closing price per share of stock or equivalent on the New York Stock Exchange (or if unavailable, on another U.S. stock exchange) as determined during the 20 days on which stock is traded ending on and including December 31, <Year Preceding Year of Award Date> and December 31, <3 Years After > or, if a stock is not traded on December 31, <3 Years After >, on the most recent trading day immediately preceding such date. A company will be excluded from the ranking if it ceases to be publicly traded at any time during the three-year period as a result of the company’s being acquired by another company or going private, but included and ranked at the bottom of the group if the company ceases to be publicly traded as a result of becoming subject to a bankruptcy, reorganization or liquidation proceeding. |
(b) | The average of the Corporation’s annual after-tax returns on average invested capital for the three-year Performance Cycle. |
i. | the Participant’s employment is terminated by reason of the Retirement or Disability of the Participant before the expiration of the Performance Cycle, and |
ii. | it is determined that the Participant engaged in any of the following: |
A. | the Participant engaged in an act of fraud, embezzlement or theft in connection with the Participant’s duties or in the course of the Participant’s employment with the Corporation or Subsidiary Company; or |
B. | the Participant disclosed confidential information in violation of a confidentiality agreement with the Corporation or a Subsidiary Company, or otherwise in violation of the law. |
i. | the Participant’s employment is terminated by reason of the Retirement or Disability of the Participant, and |
ii. | it is determined that the Participant engaged in any of the following: |
A. | the Participant engaged in an act of fraud, embezzlement or theft in connection with the Participant’s duties or in the course of the Participant’s employment with the Corporation or Subsidiary Company; or |
B. | the Participant disclosed confidential information in violation of a confidentiality agreement with the Corporation or a Subsidiary Company, or otherwise in violation of the law. |
A. | the Participant’s employment is terminated by reason of the Retirement or Disability of the Participant before the expiration of the Restriction Period, and |
B. | it is determined that the Participant engaged in any of the following: |
1. | the Participant engaged in an act of fraud, embezzlement or theft in connection with the Participant’s duties or in the course of the |
2. | the Participant disclosed confidential information in violation of a confidentiality agreement with the Corporation or a Subsidiary Company, or otherwise in violation of the law. |
(i) | in the event you (a) are Terminated following a Change in Control and (b) accept any benefits provided for in Article III of this Agreement, you will engage in no Competing Employment for the one-year period that begins on your Termination Date; |
(ii) | you waive, forgo and otherwise renounce, on your behalf and that of any individual or organization that does or may claim through you, any and all benefits (including without limitation any prior notice of agreement termination therein provided) to which you may or would be entitled under and by virtue of any other agreement, including amendments and supplements thereto, as in effect on the date hereof between you and the Corporation affording you benefits in the event of your Termination, with the result that all and any such agreements, from and after the date hereof, shall have no force and effect; and |
(iii) | if, prior to a Change in Control, a modification in the nature of your responsibilities with the Corporation (Reassignment) results in a change in the maximum percentage of your salary that may be earned as incentive compensation (Participation Level), upon the effective date of your Reassignment (Reassignment Date), you will become and be eligible to receive only those benefits following a Change in Control as are other individuals at the Participation Level applicable to your new position, the Corporation hereby undertakes to furnish you a new agreement or to furnish an amendment or supplement to this Agreement, to reflect your changed benefits, but its failure or omission |
I. | Effective Date and Term |
(i) | the date, prior to a Change in Control, you cease to be an employee of the Corporation; |
(ii) | the date, prior to a Change in Control, you cease to be eligible to participate in the Corporation's Executive Management Incentive Plan or Management Incentive Plan, or any successor plan[s] or program[s]; and |
(iii) | the date, prior to a Change in Control, that is twenty-four (24) months after you or the Corporation gives notice to the other of the termination of this Agreement, provided, however, that if a Change in Control occurs during the Term hereof, this agreement shall terminate after a period of twenty-four (24) months, beginning on the first day of the month next following the month in which the Change in Control occurs (such period, plus the portion of the month following the Change in Control in which the Change in Control occurs, constituting "the Change in Control Period"). |
III. | Protection Afforded by the Agreement During the Change in Control Period |
(i) | Severance Pay. In lieu of, and in full satisfaction of any and all claims you have or may have thereafter to receive severance pay or benefits under the Norfolk Southern Corporation Severance Pay Plan (or any successor severance pay plan), or to earn any base salary or incentive awards that you had not earned as of your Termination Date, you shall receive a lump-sum payment (Severance Pay) equal to 2.99 times the sum of: |
(a) | an amount equal to your Base Pay (determined in accordance with Item (B)(ii) in Attachment A); and |
(b) | an amount equal to your Incentive Pay (determined in accordance with Item (H) in Attachment A). |
(ii) | Special Proviso for Those Eligible to Retire. If on your Termination Date you are eligible to retire under the provisions of any of the Corporation's retirement plans (excluding any special, temporary early retirement amendment[s]), as in effect either on the day immediately preceding the Change in Control or on your Termination Date, you may elect to retire on your Termination Date by giving the Corporation written notice as provided in this subparagraph (ii). Not later than two (2) business days following, but not including, the date on which Notice of Termination is given (whether by you or by the Corporation), the Corporation shall advise you in writing of your right herein provided to elect to retire. If you wish to exercise that right, you must so advise the Corporation prior to your Termination Date on an election form it provides and in the manner prescribed under Article IX. |
(iii) | Special Provisions for Deferred Compensation. To the extent that any amount payable under this Article III constitutes “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code, the amount shall be subject to the rules set forth below in this subparagraph (iii). |
(b) | Payment Following A Section 409A Change in Control. If the Change in Control is a Section 409A Change in Control, as defined in Item (J) in Attachment A, and your Termination Date occurs within 24 months after the Section 409A Change in Control, your entire benefit shall be paid as provided in this Agreement, including clause (a) and clause (e) of this subparagraph (iii). |
(c) | Payment Following Any Other Change in Control. If the Change in Control is not a Section 409A Change in Control, or if your Termination Date occurs within the Change in Control Period but more than 24 months after the Change in Control, your deferred compensation shall be paid as follows: |
(1) | Your Severance Pay shall be paid as provided in this Agreement, including clause (a) and clause (e) of this subparagraph (iii). |
(2) | Your deferred compensation under the Executives’ Deferred Compensation Plan or any successor plan[s] or program[s] shall be paid at the time and in the form provided under the applicable terms of the plan in which you earned the benefit, without any acceleration or other alteration in the time and form of payment as a result of the Change in Control. |
(d) | Voluntary Termination Following A Section 409A Change in Control. If your employment terminates voluntarily (without good reason) within 24 months following a Section 409A Change in Control, so that your termination is a “separation from service” within the meaning of Section 409A of the Internal Revenue Code but is not a “Termination” within the meaning of Item (L) in Attachment A, then your deferred compensation shall be paid at the time and in the form provided under the applicable terms of the plan in which you earned the benefit. |
(e) | Six-Month Delay for Specified Employees. If, on your Termination Date, you are a “Specified Employee” within the meaning of Item (K) in Attachment A, any portion of your deferred compensation shall be paid no earlier than six months after your Termination Date. During any period in which a payment to which you are otherwise entitled under this Agreement is delayed solely as a result of this clause (e), the payment shall be credited with interest during the period from your Termination Date until the benefit is distributed at 120% of the short term Applicable Federal Rate determined under Section 1274(d) of the Internal Revenue Code that is in effect on your Termination Date. |
(A) | Actual Incentive Pay Percentage means, in any given year, the percentage actually earned, as determined pursuant to the authority of the Board of Directors, of the maximum potential bonus amount potentially payable to participants in the Corporation's Executive Management Incentive Plan and its Management Incentive Plan, or any successor plan[s] or program[s] to either or both (respectively, EMIP and MIP). |
(i) | in determining whether a Termination has occurred, the gross amount of your annual salary in effect on the date of a Change in Control (the gross amount you actually were paid in the pay period coinciding with or immediately preceding the date of the Change in Control, multiplied by the number of pay periods in the year or otherwise determined and expressed as an annual amount). |
(ii) | in calculating the amount of Severance Pay, the larger of (a) or (b), in either case as limited by (c): |
(b) | the amount calculated as provided in Item (B)(i), but substituting "Termination Date" for "date of a Change in Control" wherever the latter term appears; and |
(c) | further provided that, Base Pay used in calculating the amount Severance Pay may not exceed 2.99 times the sum of your annual salary paid during the twelve-month period immediately preceding your Termination Date. |
(C) | Beneficial Owner means any Person who, under Rule 13d-3 (or successor rules or regulations thereto) promulgated under the Securities Exchange Act of 1934, would be deemed beneficially to own Voting Stock. |
(D) | Cause refers to your having engaged in any of the following if the result of the same is materially harmful to the Corporation: |
(iii) | intentional wrongful disclosure of secret processes or of confidential information of the Corporation; or |
(iv) | intentional violation of the Corporation's Code of Conduct/Ethics (or any successor[s]) as in effect immediately prior to a Change in Control. |
(i) | The Corporation consummates a merger or other similar control-type transaction or transactions (however denominated or effectuated) with another corporation or other Person (Combination), and immediately thereafter less than eighty percent (80%) of the combined voting power of the then-outstanding securities of such corporation or Person is held in the aggregate by the holders of securities entitled, immediately prior to such Combination, to vote generally in the election of directors of the Corporation (Voting Stock); |
(ii) | The Corporation consummates any stockholder-approved consolidation or dissolution (however denominated or effectuated) pursuant to a recommendation of the Board; |
(iii) | At any time, Continuing Directors (as herein defined) shall not constitute a majority of the members of the Board ("Continuing Director" means (i) each individual who has been a director of the Corporation for at least twenty-four (24) consecutive months before such time and (ii) each individual who was nominated or elected to be a director of the Corporation by at least two thirds of the Continuing Directors at the time of such nomination or election); |
(iv) | The Corporation sells all or substantially all of its assets to any other corporation or other Person, and less than eighty percent (80%) of the combined voting power of the then-outstanding securities of such corporation or Person immediately after such transaction is held in the aggregate by the holders of Voting Stock immediately prior to such sale; |
(v) | A report is filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), pursuant to the Securities Exchange Act of 1934, as amended (Exchange Act), disclosing that any Person has become the Beneficial Owner of twenty (20) or more percent of the voting power of Voting Stock; or |
(vi) | The Board determines by a majority vote that, because of the occurrence, or the threat or imminence of the occurrence, of another event or situation with import or effects similar to the foregoing, those who have accepted an agreement of this type are entitled to its protections. |
(F) | Competing Employment means the provision of services of any type, kind or nature and in any capacity (whether as a director, partner, officer, employee, independent contractor, consultant or otherwise), whether or not for compensation or other remuneration of any type, kind or nature (current or deferred and whether or not paid or payable to you, or at your direction), to any organization or person |
(iv) | one of whose customers or clients which accounted for 5% or more of the organization's or person's gross revenues in the immediately preceding fiscal year or is likely to account for 5% or more of such gross revenues in the current or next succeeding fiscal year is: |
(G) | Incentive Opportunity means the percentage of your salary or other fixed compensation that, in accordance with all applicable provisions of the EMIP and MIP – including, without limitation, earnings and return targets - in effect immediately prior to the Change in Control, could be earned as incentive pay. |
(H) | Incentive Pay means the product of (i) and (ii), as limited by (iii), where: |
(i) | is 100% of the larger of your Incentive Opportunity |
Example: | On your Termination Date, your Incentive Opportunity is 30% of your base salary; immediately prior to the date of the Change in Control, your Incentive Opportunity was 45% of your base salary. |
(I) | Person means any "person" as that term is used in the Exchange Act or any rules and regulations promulgated thereunder, including any "affiliate" or "associate" of any person, as those terms are used in the Exchange Act or any rules and regulations promulgated thereunder. |
(J) | Section 409A Change in Control means any event that qualifies as a "Change in Control" (as defined in Item (H), above), and that also constitutes a "change in ownership," "change in effective control," or "change in the ownership of a substantial portion of the Corporation’s assets" with respect to you, as defined in regulations or other guidance under Section 409A of the Internal Revenue Code. |
(K) | Specified Employee means an officer of the Corporation or of any company controlled by or under common control with the Corporation within the meaning of Section 414(b) or (c) of the Internal Revenue Code (including the Corporation, an “NSC Company”) with annual compensation greater than $130,000 indexed), a five percent (5%) owner of an NSC Company, or a one percent (1%) owner of an NSC Company with annual compensation greater than $150,000 (not indexed), determined in each case in accordance with Section 409A of the Internal Revenue Code. If all NSC Companies have (in the aggregate) more than 50 officers whose annual compensation exceeds $130,000 (indexed), only the 50 officers with the greatest annual compensation shall be considered “Specified Employees.” For purposes of this definition, “annual compensation” shall be determined on the basis of Internal Revenue Service Form W-2, Wage and Tax Statement, excluding foreign compensation. |
(L) | Termination means your “separation from service” within the meaning of Section 409A of the Internal Revenue Code and the regulations thereunder in the circumstances described in (i) or (ii) below. |
(i) | If a condition listed in any one or more of (a) through (h), below, occurs without your prior written consent during the Change in Control Period and results in a material negative change in your relationship with the Corporation, your “separation from service” within the meaning of Section 409A of the Internal Revenue Code, excluding a separation from service on account of disability or death, within two years after the initial existence of the condition: |
(a) | You are not elected or reelected to the office of the Corporation you held immediately prior to the Change in Control, or - if you were serving as a director of the Corporation immediately prior to the Change in Control - you are removed as a director; |
(b) | Your Base Pay is, or when annualized will be, materially less than the amount determined in accordance with (B)(i) herein; |
(c) | Your Incentive Opportunity is materially less than that provided for under Item (G) herein; |
(d) | The Corporation, except to meet the requirements of applicable federal or state law, (i) terminates, or (ii) materially reduces the value or scope of your rights to any benefits to which you are entitled, and which (before the reduction or termination) have substantial value; |
(e) | You determine in good faith that following a Change in Control, you have been rendered substantially unable to carry out or have suffered a substantial reduction in any of the substantial authorities, powers, functions, responsibilities or duties attached to the position you held immediately prior to the Change in Control; |
(f) | The liquidation, dissolution, merger, consolidation or reorganization of the Corporation or the transfer of all or a significant portion of its business and/or assets, unless the successor or successors (by liquidation, merger, consolidation, reorganization or otherwise) to which all or a significant portion of its business and/or assets have been transferred (directly or by operation of law) shall have assumed all the duties and obligations of the Corporation under this Agreement either by operation of law or pursuant to the provisions under the Agreement caption "Binding on Successors"; |
(g) | The Corporation requires you to relocate your principal location of work outside a circle having (i) as its center your principal location of work immediately prior to the Change in Control and (ii) a radius of fifty (50) miles, or requires you to travel away from your office in the course of discharging your responsibilities or duties hereunder significantly more (in terms either of consecutive days or of aggregate days in any calendar year) than was required of you immediately prior to the Change in Control; or |
(h) | Without limiting the generality or the effect of the foregoing, any material breach of this Agreement by the Corporation or any successor thereto. |
(ii) | The termination of your employment by the Corporation, during the twenty-four months next succeeding a Change in Control, for any reason except: |
(a) | Your death; |
(b) | Your Total Disability, as defined in the Long Term Disability Plan of Norfolk Southern Corporation and Participating Subsidiary Companies (or any plan that is successor or in addition thereto), as then in effect, and you begin to receive disability benefits pursuant to that plan; |
(c) | Your retirement pursuant to any Board-approved policy or plan, on the terms in effect immediately prior to the Change in Control, providing for mandatory retirement of certain personnel; or |
(d) | Cause. |
(M) | Termination Date means the date on which your Termination becomes effective, as specified in the Notice of Termination (hereinafter defined) or as otherwise occurring. |
(ii) | set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination under the provision(s) so indicated; and |
(a) | if the Termination is for Cause, shall be a date not less than thirty (30) days from the date the Notice of Termination is given; and |
(b) | if the Termination is not for Cause, shall be a date not less than fifteen (15) nor more than sixty (60) days after such Notice of Termination is given. |
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||
EARNINGS | |||||||||||||||
Income from continuing operations before income | |||||||||||||||
taxes as reported | $ | 2,442 | $ | 3,134 | $ | 2,965 | $ | 2,758 | $ | 2,918 | |||||
Add (subtract): | |||||||||||||||
Total interest expenses (as detailed below) | 584 | 592 | 576 | 546 | 504 | ||||||||||
Amortization of capitalized interest | 12 | 11 | 12 | 10 | 9 | ||||||||||
Income of partially owned entities(1) | (50 | ) | (46 | ) | (51 | ) | (45 | ) | (39 | ) | |||||
Total earnings | $ | 2,988 | $ | 3,691 | $ | 3,502 | $ | 3,269 | $ | 3,392 | |||||
FIXED CHARGES | |||||||||||||||
Interest expense on debt | $ | 545 | $ | 545 | $ | 525 | $ | 495 | $ | 455 | |||||
Interest expense on unrecognized tax benefit | (3 | ) | 1 | 1 | (1 | ) | (9 | ) | |||||||
Other interest expense | 7 | 11 | 11 | 10 | 12 | ||||||||||
Calculated interest portion of rent expense(2) | 35 | 35 | 39 | 42 | 46 | ||||||||||
Total interest expenses | 584 | 592 | 576 | 546 | 504 | ||||||||||
Capitalized interest | 21 | 19 | 18 | 20 | 19 | ||||||||||
Total fixed charges | $ | 605 | $ | 611 | $ | 594 | $ | 566 | $ | 523 | |||||
RATIO OF EARNINGS TO FIXED CHARGES | 4.94 | 6.04 | 5.90 | 5.78 | 6.49 |
STATE OR COUNTRY OF INCORPORATION | |||
Atlantic Investment Company | Delaware | ||
General American Insurance Company | Vermont | ||
General Security Insurance Company, Ltd. | Bermuda | ||
Norfolk Southern Properties, Inc. | Virginia | ||
Norfolk Southern Railway Company | Virginia | ||
NS Fiber Optics, Inc. | Virginia | ||
PDC Timber LLC | Delaware | ||
Pennsylvania Investment Company, Inc. | Delaware | ||
PLC Timber LLC | Delaware | ||
Pocahontas Development Corporation | Kentucky | ||
Pocahontas Land Corporation | Virginia | ||
T-Cubed of North America, LLC | Delaware | ||
Thoroughbred Technology and Telecommunications, LLC | Virginia |
Norfolk Southern Railway Company Subsidiaries | |||
Airforce Pipeline, Inc. | North Carolina | ||
Alabama Great Southern LLC | Virginia | ||
Alabama Great Southern Railroad Company, The | Alabama | ||
BRF Investment, LLC | Virginia | ||
Camp Lejeune Railroad Company | North Carolina | ||
Carolina and Northwestern Railway Company | Delaware | ||
Central of Georgia LLC | Virginia | ||
Central of Georgia Railroad Company | Georgia | ||
Chesapeake Western Railway | Virginia | ||
Chicago Land Management, LLC | Virginia | ||
Cincinnati, New Orleans and Texas Pacific Railway Company, The | Ohio | ||
Citico Realty Company | Virginia | ||
CNOTP LLC | Ohio | ||
Georgia Southern and Florida Railway Company | Georgia | ||
GSFR LLC | Georgia | ||
High Point, Randleman, Asheboro and Southern Railroad Company | North Carolina | ||
HPRASR LLC | North Carolina | ||
Interstate Railroad Company | Virginia | ||
Lamberts Point Barge Company, Inc. | Virginia | ||
Mobile and Birmingham Railroad Company | Alabama | ||
Norfolk and Portsmouth Belt Line Railroad Company | Virginia | ||
Norfolk Southern International, Inc. | Virginia | ||
Norfolk Southern - Mexico, LLC | Virginia | ||
NorfolkSouthernMexicana, S. de R.L. de C.V. | Mexico | ||
North Carolina Midland Railroad Company, The | North Carolina | ||
NS Spectrum Corporation | Virginia | ||
PLS Investment, LLC | Virginia |
STATE OR COUNTRY OF INCORPORATION | |||
Norfolk Southern Railway Company Subsidiaries (continued) | |||
Rail Investment Company | Delaware | ||
Reading Company, LLC [Delaware] | Delaware | ||
Reading Company, LLC [Virginia] | Virginia | ||
RIC LLC | Delaware | ||
South Western Rail Road Company, The | Georgia | ||
Southern Rail Terminals, Inc. | Georgia | ||
Southern Rail Terminals of North Carolina, Inc. | North Carolina | ||
Southern Region Materials Supply, Inc. | Georgia | ||
State University Railroad Company | North Carolina | ||
S-VA Corporation | Virginia | ||
TCS Leasing, Inc. | Oklahoma | ||
TCV, Inc. | Delaware | ||
Tennessee, Alabama & Georgia Railway Company | Delaware | ||
Tennessee Railway Company | Tennessee | ||
Thoroughbred Direct Intermodal Services, Inc. | Pennsylvania | ||
Thoroughbred Emissions Research, LLC | Virginia | ||
Thoroughbred Funding, Inc. | Virginia | ||
Transworks Company | Indiana | ||
Transworks Inc. | Virginia | ||
Transworks of Indiana, Inc. | Indiana | ||
Triple Crown Services Company | -- | ||
Virginia and Southwestern Railway Company | Virginia | ||
Wheelersburg Terminal LLC | Virginia | ||
Yadkin Railroad Company | North Carolina | ||
Yadkin Railroad Investment LLC | North Carolina |
Norfolk Southern Properties, Inc. Subsidiaries | |||
Alexandria-Southern Properties, Inc. | Virginia | ||
Arrowood-Southern Company | North Carolina | ||
Charlotte-Southern Hotel Corporation | North Carolina | ||
Lambert’s Point Docks, Incorporated | Virginia | ||
Nickel Plate Improvement Company, Inc., The | Indiana | ||
NS-Charlotte Tower Corporation | North Carolina | ||
NS Transportation Brokerage Corporation | Virginia | ||
Sandusky Dock Corporation | Virginia | ||
Southern Region Industrial Realty, Inc. | Georgia | ||
SRIR Timber LLC | Delaware | ||
Virginia Holding Corporation | Virginia | ||
Westlake Land Management, Inc. | Florida |
1. | I have reviewed this Annual Report on Form 10-K of Norfolk Southern Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ James A. Squires | |
James A. Squires | |
Chairman, President, and Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of Norfolk Southern Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Marta R. Stewart | |
Marta R. Stewart | |
Executive Vice President Finance and Chief Financial Officer |
Signed: | /s/ James A. Squires |
James A. Squires | |
Chairman, President, and Chief Executive Officer | |
Norfolk Southern Corporation |
Signed: | /s/ Marta R. Stewart |
Marta R. Stewart | |
Executive Vice President Finance and Chief Financial Officer | |
Norfolk Southern Corporation |
NYSE REGULATION |
Domestic Company Section 303A Annual CEO Certification |
[x] | Without qualification | |||
or | ||||
[ ] | With qualification |
By: | /s/ James A. Squires | |
Print Name: | James A. Squires | |
Title: | President and Chief Executive Officer | |
Date: | June 10, 2015 |
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