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Annual Meeting of Stockholders

May 12, 2011

Williamsburg, Va. - May 12, 2011

Wick Moorman
Chairman, President and CEO

Before I begin my remarks, I invite you to view a brief video presentation highlighting your company's achievements and initiatives over the past year.

Thank you. The video does a great job of capturing the optimistic outlook that we all have for Norfolk Southern as we look ahead. Our optimism is based on the gathering momentum of a recovering economy and our excellent performance of 2010, continuing on through the first quarter of 2011.

Just to look back for a moment at 2010, it was a very strong year. As I said in the annual report to shareholders, my crystal ball, which is not that good at the best of times, certainly wasn’t sharp enough to predict that 2010 would be our second-best year ever for earnings.

Our overall 2010 volumes were up 14 percent, with growth occurring across most all of our commodities. Coal volume was up 10 percent, triggered by increased demand for domestic and global steel, and by power plants restocking across our network.

Intermodal volume increased 16 percent in 2010, driven by economic recovery and highway conversions.

General merchandise volume was up 14 percent in 2010. Record agricultural shipments led the charge, along with higher volumes of steel and metal products.

Higher demand for our services in 2010, coupled with improved revenue per unit, resulted in revenue growth of 19 percent compared with 2009. Coal and merchandise revenues were up 20 percent, and intermodal was up 17 percent.

As you know, we also had our challenges last year. We had to manage through some service issues as traffic growth exceeded our expectations in some areas, and it was a challenge to get resources in place to handle the growth. We responded by reinstituting a strong recruitment and training program for train and engine service employees, which I’ll have more to say about momentarily.

In spite of some pressures on the expense side, mainly connected with an increased number of trains to handle business growth, and more severe weather than usual, we exercised strong cost control and still posted our second-best operating ratio since the Conrail transaction – 71.9 percent, 5 percent better than in 2009.

Looking ahead, we remain committed to providing the best customer service in the railroad industry. In line with that commitment, our investments in corridor initiatives in 2010 and continuing into this year support the volume growth we have seen as well as the growth we expect. These initiatives give us increased rail capacity and also provide safety and environmental benefits for the public. They are also important indicators of our commitment to sustainable business practices that create green jobs.

We opened the Heartland Corridor in 2010. Already this year, we have broken ground for a new terminal in Tennessee, with another planned next month in Alabama. Both are part of the Crescent Corridor project, supported by a $105 million TIGER grant from the U.S. Department of Transportation. Additional Crescent Corridor terminals are planned in North Carolina and Pennsylvania.

Norfolk Southern is the leader in developing public-private partnerships that improve the nation’s transportation infrastructure. From that leadership perspective, we will continue making progress on other important projects, such as the Mid-America Corridor and the CREATE project in Chicago.

More recently, we saw in the first quarter of this year a carry-forward of the positive momentum of 2010, which gives us increased confidence in our future business prospects.

As I think that all of you know, Norfolk Southern had an excellent first quarter, delivering all-time first-quarter highs in revenues, income from railway operations, and earnings per share. We achieved these results even though we were challenged by sharply higher fuel prices and an unfavorable arbitration ruling that decreased earnings per share by 10 cents.

Our record operating results and strong free cash flow enabled us to continue our focused efforts on investing in our company while at the same time returning cash to our shareholders. We were able to increase our dividend 11 percent during the quarter.

We also achieved these results in the face of unusually disruptive severe weather in January and February which created a number of service challenges. I should also say that more recently we all saw the terrible devastation in Mississippi, Alabama, Tennessee, and Virginia, and we are all mindful that many people and communities, including some of our employees, in our service territory suffered adverse effects as a result of those storms. Our company is supporting relief efforts in all four states hardest hit. I encourage everyone to pull together to help recover and rebuild.

On a brighter note, our service performance improved substantially late in the quarter and on into April as we worked through the weather issues. Our improved service and handling of increased traffic volumes were largely the result of the targeted hiring I mentioned earlier.

We have been aggressively hiring and training conductors since the beginning of 2010. We now are seeing the benefits of these resources across our network in terms of improved velocity, increased efficiency, and improving service performance. By the end of the year, we expect our train-and-engine-service work force will approach the levels we had in early 2008. This will help us manage present and future projected traffic growth on our network.

Before I close, I want to pay tribute to our employees for their continued focus on safety – our number one priority. Their safety performance was nothing short of remarkable in 2010. They demonstrated continuous improvement quarter to quarter, and in the fourth quarter and for the year posted injury ratios we never before have attained.

I am particularly proud of the way our new employees have integrated into the Norfolk Southern culture. Although 30 percent of our agreement work force has been with the company fewer than five years, they have continued to help generate positive momentum in our safety process.

As testimony to the safety dedication of all our employees, we recently received formal notice that Norfolk Southern will receive its 22nd consecutive Harriman Gold Medal for employee safety for the year 2010. The award will be presented next week in Washington. It is recognition yet again of the determination of our people to ensuring that we conduct our business safely – not only for all of us at Norfolk Southern, but for our families, our customers, and for the communities we serve.

I’ll close by saying that I and your management team feel confident that the economic recovery is well under way and that barring some unanticipated event, it will continue well on into 2012. There is always a risk of legislative or regulatory action which could be damaging to our company and the industry, and we continue to watch events in Washington very closely. But at the end of the day, the vast majority of public officials and our customers believe that a strong and healthy rail industry is vital to all of our interests, and I remain optimistic that we will continue to be allowed to earn an adequate return and invest in our future.

Just as the opening video evoked the infinite possibilities of our one line, we at Norfolk Southern feel good about the results we are producing and confident of our future ability to produce superior service for our customers and superior returns for our shareholders.


Forward-Looking Statements
The material on this site does or may contain “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995 and other applicable law. These statements may be identified by the use of words like “believe,” “expect,” “anticipate” and “project.” Forward-looking statements reflect management’s good-faith evaluation of information currently available. However, such statements are dependent on, and, therefore can be influenced by, a number of external variables over which management has little or no control, including: domestic and international economic conditions; interest rates; the business environment in industries that produce and consume rail freight; competition and consolidation within the transportation industry; fluctuation in prices or availability of key materials, in particular diesel fuel; labor difficulties, including strikes and work stoppages; legislative and regulatory developments; results of synthetic fuel-related investments, as affected by production levels and the price of crude oil; results of litigation; changes in securities and capital markets; disruptions to our technology infrastructure, including our computer systems; and natural events such as severe weather, hurricanes and floods. For more discussion about the risks facing our company, see Part I, Item 1A “Risk Factors” in our annual report on Form 10-K and any updates contained in any subsequent Forms 10-Q. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in such forward-looking statements. We undertake no obligation to update or revise forward-looking statements.