J.P Morgan Aviation, Transportation & Defense Conference March - PowerPoint PPT Presentation

J.P Morgan Aviation, Transportation & Defense Conference March 24, 2011 Wick Moorman Chairman, President & CEO Norfolk Southern Corporation

Norfolk Southern Corporation 2

Agenda  NS Business Outlook  Resource Initiatives  Financial Objectives

Chicago January 31, 2011

Railway Volume First Quarter through Week 11 2011 vs. 2010 1QTD 2011 vs. 2010 Units Abs. % Chg. Agriculture 134,522 (3,673) (3%) Chemicals 81,309 (1,795) (2%) MetCon 124,266 8,262 7% Paper 68,960 1,259 2% Automotive 66,313 5,266 9% Merchandise 475,370 9,319 2% Intermodal 641,750 57,019 10% Coal 345,212 34,149 11% Total 1,462,332 100,487 7% Source: AAR carloadings, which are reported weekly and may not equal NS' reported volumes.

Responding to Growth • Employees • Equipment: – Locomotives and Freight Cars 6

T&E Employment Count Net of Furloughs, Trainees, and Projected Attrition 12,500 12,000 11,500 11,000 10,500 10,000 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11

Resource Initiatives - Locomotives 8

Productivity Scorecard Two Months 2011 vs. 2010 8% Carload Volume 5% Crew Starts 6% Railroad Employees 3% GTMs per Employee 0% GTMs per Gallon 2% GTMs per Train Hour

Railway Volume First Quarter through Week 11 2011 vs. 2010 1QTD 2011 vs. 2010 Units Abs. % Chg. Agriculture 134,522 (3,673) (3%) Chemicals 81,309 (1,795) (2%) MetCon 124,266 8,262 7% Paper 68,960 1,259 2% Automotive 66,313 5,266 9% Merchandise 475,370 9,319 2% Intermodal 641,750 57,019 10% Coal 345,212 34,149 11% Total 1,462,332 100,487 7% Source: AAR carloadings, which are reported weekly and may not equal NS' reported volumes.

Outlook – Business Portfolio General Merchandise Chemicals • Manufacturing recovery • Build out of ethanol network and export grain Agriculture growth • New business, improved auto production and Automotive sales Steel • Recovery in global steel production • Uncertainty in housing, but improving paper Forest Products markets

Outlook – Business Portfolio Intermodal Domestic Intermodal • Truckload conversions International Intermodal • Improving imports/exports Premium • New business opportunity

U.S. Demographics Within our service territory:  74% of the 2009 US population  58% of total energy consumption in U.S.  63% of U.S. manufacturing  One study suggests that at least 30 million truck shipments over 550 miles touch our service territory

Truck Volume in 2007

Projected Truck Volume in 2040

NS Corridor Strategy Mechanicville Ayer Detroit Bethlehem Chicago NY/NJ Greencastle Philadelphia Columbus Cincinnati Lynchburg Pritchard Roanoke Norfolk Charlotte Memphis Corinth Corridor Volume 2010 vs. Increases 2009 Atlanta Birmingham Premier Route 18% Shreveport Meridian PanAm Southern 32% Jacksonville Crescent Corridor 31% New Orleans Meridian 36% Speedway Titusville 146% Titusville

Outlook – Business Portfolio Coal • Falling stockpiles and increased electricity Utility Coal generation Export Coal • Improving exports Domestic Met Coal • Recovery in global steel production

2009-2010 NS Origin Coal Volume Powder River Basin (Tons) 2009-30.1 M 2010-32.8 M Northern Appalachia 2009-41.3 M 2010-45.3 M Illinois 2009-10.8 M 2010-11.1 M Central Appalachia 2009-62.3 M 2010-64.8 M Notes: Excludes coke and iron ore volume.

Lamberts Point Coal Docks

Outlook – Business Portfolio Chemicals • Manufacturing recovery • Build out of ethanol network and export grain Agriculture growth • Truckload conversions Domestic Intermodal International Intermodal & • Improving imports/exports Export Coal Domestic Met Coal & Steel • Recovery in global steel production • Falling stockpiles and increased electricity Utility Coal generation • New business, improved auto production and Automotive sales • Uncertainty in housing, but improving paper Forest Products markets

Financial Objectives • Margin Expansion • Operating Ratio Reductions • Cash Flow Improvement 21

Margin Expansion and Operating Ratio Improvement • Operating Leverage • Productivity • Pricing 22

Margin Expansion and Operating Ratio Improvement • Continued global demand for coal • Price to the market • Intermodal growth 23

Balanced Cash Flow Utilization 2006-2010 $6.8 Billion $6.3 Billion $4.2 Billion $2.1 Billion Dividends Capital Expenditures Share Repurchases

Total Shareholder Distributions Relative to Free Cash Flow* 2006-2010 $6.3 Billion $5.0 Billion • All of NS’ Free Cash Flow Returned to $4.2 Billion Shareholders $2.1 Billion Dividends Share Repurchases Free Cash Flow *See reconciliation to GAAP posted on our website

One line, infinite possibilities 26