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Norfolk Southern Corporation Annual Report for 2001

Norfolk Southern Caps East's Most
Comprehensive Intermodal Network

Norfolk Southern boosted service quality and launched new services in 2001 that position the company for growth.

The John W. Whitaker Intermodal Terminal near Atlanta opened in the summer. The terminal, named after a retired trainmaster and railroad industry civil rights pioneer, allows Norfolk Southern to offer additional services and more reliable transit times. It is a competitive transportation alternative to over-the-road shipping that helps reduce congestion on the nation's highways.

The terminal is named for the late John Wesley Whitaker, who after serving as one of the famed Tuskegee Airmen during World War II became NS predecessor Central of Georgia's first African-American locomotive engineer. He later was named a road foreman of engines on Southern Railway — the railroad's first African-American transportation officer. Whitaker died Feb. 27, 2002.

Situated on 450 acres, the Whitaker terminal is the largest intermodal facility in the East. As a southeast crossroads for movement of containerized freight in all directions, the terminal caps NS' four-year systemwide investment of $380 million in intermodal transportation infrastructure. The Whitaker terminal and NS' Rutherford hub at Harrisburg, Pa., along with major terminals in Chicago, form the backbone of the East's most comprehensive intermodal network.

Customer Service Teams
Sharpen Focus

Pittsburgh
Charlotte
Chicago

A new 70-acre intermodal facility at Maple Heights, Ohio, provides improved and expanded services for northern Ohio businesses moving goods between the Cleveland area and ports on the East Coast.

Exclusive NS service to the new Mason Intermodal Container Transfer Facility operated by the Georgia Ports Authority in Savannah offers direct rail service to the port, efficient transfer of containers between rail and ship, im-proved performance in key lanes and new east-west services.

NS also announced plans for a new intermodal terminal at the former Philadelphia Navy Yard that will be capable of handling 60,000 lifts annually.

Among nonintermodal investments, NS quadrupled the capacity of Enola Yard near Harrisburg, Pa., streamlining routings, enhancing quality of service and solidifying Harrisburg's position as a major freight hub for the Mid-Atlantic. Immediate benefits to customers include improved transit times and equipment utilization.

MODALGISTICS Manages
Customer Supply Chain

MODALGISTICSSM is a new business group created in 2001, pulling together existing services to provide supply chain management services for NS customers in a single package at one price, using a range of modes and information support systems.

MODALGISTICS determines the most cost-effective mix of transportation modes, supply sources and warehousing for a customer's specific distribution needs. The service tests various "what if" scenarios to compare total costs against the customer's baseline costs.

Once an optimum solution is determined, MODALGISTICS helps customers implement it — pulling together the resources of the railroad, Triple Crown Services, trucking companies, rail transfer facilities, lumber reload facilities, metals distribution centers and just-in-time rail auto parts centers. The service enables customers to realize cost savings in transportation, inventory management and capitalization.

MODALGISTICS launched a Web site in October (www.modalgistics.com) to enhance service to customers.

Industrial Development and Real Estate
Post Strong Year

NS assisted with the location of 76 new industries and the expansion of another 33 in 2001. This represents an investment of $2.9 billion by NS customers and is expected to create approximately 5,144 jobs in the 19 states where the plants and expansions are located. Norfolk Southern expects these industrial development efforts to generate more than 95,000 carloads annually.

NS continued to dispose of properties in its extensive real estate holdings. In one of the largest land sales ever in the Washington, D.C., area, NS sold property in its Carlyle development in Alexandria, Va., to LCOR Alexandria, L.L.C. The land will be the site of headquarters for the United States Patent and Trademark Office and will include some 2.5 million square feet of office space and enclosed parking. With this sale, the Carlyle development has established itself as one of the premier mixed residential and commercial areas within the Washington, D.C., metropolitan area.
Southeastern intermodal crossroads: These photos show NS' John W. Whitaker Intermodal Terminal, which opened in 2001 at Austell, Ga., near Atlanta. Below, John Ring, NS yardmaster, monitors operations from the terminal's tower.

Pocahontas Land Celebrates 100 Years

In October, Pocahontas Land Corporation, a natural resources subsidiary of NS, celebrated its centennial anniversary.

In 1901, Norfolk and Western Railway, an NS predecessor company, acquired lands held by Flat Top Coal Land Association and vested them in its subsidiary Pocahontas Coal & Coke, which was renamed Pocahontas Land Corp. in 1939. Since 1901, 1.7 billion tons of coal have been mined from Pocahontas Land properties. Pocahontas Land has coal reserves totaling an additional 1.7 billion tons. It manages more than a million acres, and 70 percent of the current coal production of its lessees is used in electricity generation.

Through sound land management practices and leadership in reclamation efforts, Pocahontas Land has given back to the community, providing educational and recreational enrichment as well as economic opportunity for many. In 2001, the company donated land to the West Virginia Housing Development Fund to provide temporary housing for flood victims.

T-Cubed Develops Infrastructure

In 2001, T-Cubed, the NS telecommunications subsidiary, substantially completed construction of 1,600 miles of fiber-optic infrastructure on its corridors between Chicago and Washington; Chattanooga, Tenn., and Atlanta; and Atlanta and Jacksonville, Fla. It also negotiated and completed several transactions to provide infrastructure to telecommunications services providers.

The telecommunications industry suffered a major slowdown in 2001. However, T-Cubed continues to focus on providing fiber-optic and wireless infrastructure to a variety of telecommunications companies and plans to pursue additional transactions in 2002.

In addition, T-Cubed is exploring ways in which its assets can be used to enhance the current telecommunications infrastructure, along with opportunities to leverage existing assets for commercial purposes.

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