Goldman Sachs Global Industrials Conference
John P. RathboneExecutive Vice President Finance
and Chief Financial Officer
November 14, 2012
1
Norfolk Southern Update
Third Quarter Results
Fourth Quarter Update
Business Outlook
Capital Structure
2
3
Revenue
$2.7 Billion, down (7%)
RPU
$1,509, down (5%)
Volume
1,785,000 units, down (1%)3Q 2011 Mix/Price Fuel Volume 3Q 2012
$2,889
$2,693
$84$72
$40
Components of Revenue Change $ in Millions
Railway Operating RevenueThird Quarter 2012 vs. 2011
4
Utility225.1(15%)
Export57.7(7%)
Met49.2
(17%)
Industrial16.2
(16%)
Utility Continued competition from natural gas and reduced demand for electricity
ExportBaltimore down (15%)Lamberts Point down (6%)
Domestic Met Decelerating steel production and closure of RG Steel
Volume of 348,200 units, down (14%) 3Q 2012 Volume (000’s) & y-o-y Percent Change
Coal MarketThird Quarter 2012 vs. 2011
5
Coal MarketVolumes - Third Quarter 2012 vs. 2011
-30%
-20%
-10%
0%
10%
20%
July August September
YoY Volume % Changes
Export Other Coal
6
MetConLower iron & steel shipments driven by RG steel closure and weaker volumes of aggregates and frac sand
Agriculture Higher shipments of soybeans and feed offset declines in ethanol and wheat
Chemicals Growth in crude oil; currently shipping crude oil to six NS served refineries
Automotive Increased light vehicle production tempered by retooling/model changes
Paper Declines in pulp and waste partially offset by lumber gains
Volume of 569,700 units, down (1%) 3Q 2012 Volume (000’s) & y-o-y Percent Change
Agriculture142.6
--
MetCon165.6(7%)
Chemicals99.0+4%
Paper76.7(5%)
Automotive85.8+7%
Merchandise MarketThird Quarter 2012 vs. 2011
7
Merchandise MarketVolumes - Third Quarter 2012 vs. 2011
-15%
-10%
-5%
0%
5%
10%
15%
July August September
YoY Volume % Change
General Merchandise
8
Domestic Continued highway conversionsTightening truck capacity
International Negative comp partially offset by other gains across International customer base
Triple CrownSoft retail activity and retooling at automotive plants
PremiumIncreased volumes with key accounts
Volume of 867,100 units, up 5% 3Q 2012 Volume (000’s) & y-o-y Percent Change
Domestic434.9+11%
International292.2(1%)
Premium66.8+3%
Triple Crown73.2 (3%)
Intermodal MarketThird Quarter 2012 vs. 2011
9
Intermodal MarketVolumes - Third Quarter 2012 vs. 2011
-5%
0%
5%
10%
15%
July August September
YoY Volume % Change
Intermodal
Operating ResultsThird Quarter 2012 vs. 2011 ($ Millions)
Third Qtr Third Qtr (Unfavorable)2012 2011 $ %
Railway operating revenues $ 2,693 $ 2,889 $ (196) (7%)
Railway operating expenses 1,962 1,951 (11) (1%)
Income from railway operations $ 731 $ 938 $ (207) (22%)
Railway operating ratio 72.9 67.5 (5.4) (8%)
10
Productivity Improvements3rd Quarter – 2012 vs. 2011
Train & Engine Service Overtime Improved 20%
Re-Crews Improved 32%
Equipment Rents (Velocity Driven) Improved 14%
Locomotives In Service Improved 3%
Fuel Consumption Improved 3%
11
Norfolk Southern Update
Third Quarter Results
Fourth Quarter Update
Business Outlook
Capital Structure
12
834,300 units, down (3%)
860.4 834.3
2011 2012
Units (000)
Current Railway VolumeFourth Quarter through Week 45 (Nov 10, 2012)
13
7%
4%
3%
(2%)
(2%)
(7%)
(18%)
Change in Units4QTD12 vs. 2011
Current Railway VolumeFourth Quarter through Week 45 (Nov 10, 2012)
Chemicals
Automotive
Intermodal
Agriculture
Paper
MetCon
Coal
14
7%
4%
3%
(2%)
(2%)
(7%)
(18%)
Change in Units4QTD12 vs. 2011
Current Railway VolumeFourth Quarter through Week 45 (Nov 10, 2012)
Chemicals
Automotive
Intermodal
Agriculture
Paper
MetCon
Coal
15
7%
4%
3%
(2%)
(2%)
(7%)
(18%)
Change in Units4QTD12 vs. 2011
Current Railway VolumeFourth Quarter through Week 45 (Nov 10, 2012)
Chemicals
Automotive
Intermodal
Agriculture
Paper
MetCon
Coal
16
7%
4%
3%
(2%)
(2%)
(7%)
(18%)
Change in Units4QTD12 vs. 2011
Current Railway VolumeFourth Quarter through Week 45 (Nov 10, 2012)
Chemicals
Automotive
Intermodal
Agriculture
Paper
MetCon
Coal
17
7%
4%
3%
(2%)
(2%)
(7%)
(18%)
Change in Units4QTD12 vs. 2011
Current Railway VolumeFourth Quarter through Week 45 (Nov 10, 2012)
Chemicals
Automotive
Intermodal
Agriculture
Paper
MetCon
Coal
18
7%
4%
3%
(2%)
(2%)
(7%)
(18%)
Change in Units4QTD12 vs. 2011
Current Railway VolumeFourth Quarter through Week 45 (Nov 10, 2012)
Chemicals
Automotive
Intermodal
Agriculture
Paper
MetCon
Coal
19
7%
4%
3%
(2%)
(2%)
(7%)
(18%)
Change in Units4QTD12 vs. 2011
Current Railway VolumeFourth Quarter through Week 45 (Nov 10, 2012)
Chemicals
Automotive
Intermodal
Agriculture
Paper
MetCon
Coal
20
Train Speed2012 - YTD through November 2, 2012
21.522.022.523.023.524.024.525.025.5
NS Train Speed (miles per hour) Better
Source: As reported publicly to the AAR
21
Terminal Dwell2012 - YTD through November 2, 2012
16.017.018.019.020.021.022.023.024.025.0
NS Terminal Dwell (hours) Better
Source: As reported publicly to the AAR
22
Composite Service Performance1Q10 – 3Q12
70%
72%
74%
76%
78%
80%
82%
84%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
23
Norfolk Southern Update
Third Quarter Results
Fourth Quarter Update
Business Outlook
Capital Structure
24
25
Business Outlook
Utility coal impacted by competition from
natural gas and reduced demand for electricity
Weaker demand in European and Asian
markets for both met and steam coal
Softer domestic metallurgical market to
support steel production
Coal
26
Business Outlook
Coal Utility coal impacted by competition from natural gas and reduced demand for
electricity Weaker demand in European and Asian markets for both met and steam coal Softer domestic metallurgical market to support steel production
24
26
28
30
32
2011* 2012*
Uni
ts (0
00s)
Rolling Avg - Weeks 36 - 39
(13%)
24
26
28
30
32
2011* 2012*
Uni
ts (0
00s)
Rolling Avg - Weeks 40 - 43
(18%)
* Based on AAR Volumes including Coal, Coke and Metallic Minerals in 2011 and Coal and Coke in 2012.
27
Business Outlook
Project growth in crude oil
Declining demand for sand and other materials for natural gas drilling
Continued automotive growth but tougher comps
Reduced U.S. corn and soybean crop
Merchandise
28
Business Outlook
Continued opportunities for highway conversion
New Intermodal service lanes ahead as new corridor terminals open
Growth with international shipping partners excluding negative Maersk comp
Expansion in premium market segment
Intermodal
Crescent CorridorSets the Stage for up to 34 New Service Lanes in 2013
Meridian
To Mexico
Bethlehem
Greencastle
Birmingham
Memphis
AtlantaCharlotte
Harrisburg
To/From West
New Orleans
Terminal Investments
Meridian
To/From Mexico
29
Norfolk Southern Update
Third Quarter Results
Fourth Quarter Update
Business Outlook
Capital Structure
30
2006 2007 2008 2009 2010 2011 Sep YTD2012
$1,178 $1,341
$1,558 $1,299
$1,470
$2,160
$1,522
Capital Expenditures($ millions)
21
31
2006 2007 2008 2009 2010 2011 Sep YTD2012
$2,206 $2,333
$2,715
$1,860
$2,714
$3,227
$2,476
$1,178 $1,341$1,558
$1,299 $1,470
$2,160
$1,522
Cash from Operations Capital Expenditures
Cash From Ops and Capital Expenditures($ millions)
21
32
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$0.26 $0.30 $0.36$0.48
$0.68
$0.96
$1.22$1.36 $1.40
$1.66
$1.94
Annual Dividend Per Share
Compound annual growth rate of 22% for 2002 through 2012
+15% +20% +33% +42% +41% +27% +11% +3% +19% +17%
33
Balanced Cash Flow Utilization2006 through September 2012
Dividends Share Repurchases Capital Expenditures
$10.5 Billion $10.5 Billion*
$7.3 Billion
$3.2 Billion
* See reconciliation to GAAP of Total Shareholder Distributions posted on our website, www.nscorp.com.
34
Thank You
35