NS, UP set record for length of coal haul

A move of low-sulfur Powder River Basin coal by Norfolk Southern and Union Pacific Railway helped a major energy producer reduce sulfur dioxide emissions in an environmentally sensitive area of coastal New Jersey.

Conectiv Energy's B.L. England plant, near Atlantic City, N.J, sits on the shores of Great Egg Harbor Bay near a resort town and a residential area.

"Conectiv wanted to make sure it was reducing emissions in the most cost-effective way at one of the two units at England station while complying with state standards," said Frank DiGregorio, Conectiv's manager fuel supply. "Introducing coal from the Powder River Basin was the answer."

NS and UP coordinated the coal movement from Wyoming to the New Jersey coast - a distance of more than 2,600 miles.

"We believe this is the longest west-to-east coal movement in the United States," Said Doug Evans, NS director utility coal north.

By blending Powder River Basin coal with Pittsburgh Seam coal, which originates on NS' Monongahela Railway south of Pittsburgh, Conectiv was able to reduce emissions in a cost-effective way that ensures reliable plant operation.

Bill Patterson, manger utility coal north, worked closely with UP and Conectiv staff engineer Frank Costanzo to negotiate a new joint-line transportation contract. Patterson also was active in coordinating rail delivery of sufficient quantities of the two coals for blending at the plant.

"We worked with our customer to provide consistent, reliable transportation and a cost-effective solution to meet their goals," Patterson said.

"We were very pleased with the transportation plan NS and UP proposed," DiGregorio said. "We were able to bring the right coal blend together to provide our customers with the power they need."

Winter weather no match for Northern, Western regions

A strong cold front bringing freezing rain, wind, ice and snow to the Midwest and Northeast in late January was no match for Norfolk Southern employees.

Snow amounts varied from 2 to 14 inches across the Midwest and Northeast, but the extremely cold temperatures were the real threat, said Dave Brown, general manager Northern Region. "We have some first-class snow handlers," he said. "As long as it's under 20 inches, we deal with snow fairly well. We were impacted by cold temperatures as much as we were by snow."

In some cases, employees had to travel to problem areas on locomotives, rather than over the icy highways. The engineering department kept switches clear, and the mechanical department inspected cars to keep trains moving.

"Our people did a great job," said Brown. "They stepped up to the challenge, and I think our customers recognized that."

The Midwest received the brunt of the storm. "Our gateways from Chicago to Kansas City and from Kansas City to New Jersey were hit hardest," said Greg Comstock, general manager Western Region.

The NS team persevered and worked to maintain service at the highest level possible. Even with those challenges, NS maintained its flawless performance for United Parcel Service, with no service failures during the winter storm.

"Our people maintained a safe operation under difficult circumstances," said Comstock. "We worked together. Everyone communicated and kept traffic moving."

Fourth-quarter and 2003 results reported

Norfolk Southern reported fourth-quarter net income of $52 million, or $0.13 per diluted share, impacted by two significant charges - a $66 million or $0.17 per share after-tax charge for a voluntary separation program and a $53 million or $0.13 per share after-tax charge to recognize the impaired value of certain telecommunications assets. Excluding the effects of these items, fourth-quarter net income would have been $171 million or $0.43 per share, compared with net income of $129 million or $0.33 per diluted share in the fourth quarter of 2002.

"We are pleased with our fourth-quarter results, which were substantially better than a year ago, demonstrating success at growing our revenue base and improving productivity," said David R. Goode, chairman, president and chief executive officer.

Net income for 2003 was $535 million or $1.37 per share, and included a $114 million or $0.29 per share gain largely due to a required change in accounting for the cost of removing railroad crossties, a $10 million or $0.03 per share gain from discontinued operations resulting from the 1998 sale of a former motor carrier subsidiary, and the two fourth-quarter after-tax charges. Excluding the effect of all four of these items, net income for the year would have been $530 million or $1.35 per share.

Railway operating revenues were the highest of any quarter and year in NS' history. Fourth-quarter revenues were $1.68 billion, up 6 percent compared with the same period a year earlier. For the year, revenues rose to $6.5 billion, 3 percent higher compared with 2002 results.

Fourth-quarter general merchandise revenues improved 5 percent to $956 million compared to the same period of 2002 and set a quarterly record. All of the market groups reported gains, led by metals and construction and agriculture. For the year, general merchandise revenues were $3.7 billion, up

2 percent compared with 2002, and established an annual record.

Intermodal revenues posted records for both the quarter and the year. In the fourth quarter, revenues climbed to $335 million, up 9 percent compared to the same period a year earlier. For the year, intermodal revenues were $1.2 billion, up 5 percent compared to 2002.

Coal revenues increased 7 percent in the fourth quarter to $385 million, benefiting primarily from favorable developments in the coal rate reasonableness proceedings, in which two utilities challenged tariff rates in place since early 2002. For the year, coal revenues rose 4 percent compared to 2002 to $1.5 billion.

Railway operating expenses in the quarter were $1.5 billion, a 12 percent increase compared to fourth quarter 2002, primarily as a result of the $107 million charge for the voluntary separation program. For the year, railroad operating expenses were $5.4 billion, an increase of 6 percent compared to the same period a year earlier, again reflecting the charge for the fourth quarter voluntary separation program.

For the quarter, the railway operating ratio increased to 86.6 percent compared with 81.8 percent in the same period of 2002. For the year, the operating ratio increased to 83.5 percent, compared with 81.5 percent a year earlier. Without the cost of the voluntary separation program, the fourth-quarter ratio would have been 80.3 percent and the ratio for the year would have been 81.9 percent.

NS annual report cites performance improvements

Performance improvements achieved in 2003 are driving business growth and shareholder value, David R. Goode, chairman, president and chief executive officer, said in his letter to stockholders in the 2003 annual report of Norfolk Southern Corporation.

"A lot of progress has been made, with more to come," Goode said. "We clearly are ready to grow now that the economy is improving and demand for our transportation is increasing."

The increased demand "comes at an ideal time, because we have a system second to none and a lean, tested and experienced group of Norfolk Southern people ready to serve our customers.

"This combination of factors has every prospect of enabling our success, as long as we perform at the levels we know we can. I have every confidence the Thoroughbred will continue to respond."

Goode said the rail transportation industry "is showing stability and strength, I believe the best in many years. It has enormous potential to grow and be an even greater piece of the fabric that makes our economy strong."

NS' annual report and Form 10-K are posted on the company's Web site. Created in-house, some 185,000 printed copies are distributed to stockholders, the financial community, news media and libraries. To request a copy, call 800-531-6757, e-mail annualreport@nscorp.com or write to Norfolk Southern Corp., Public Relations Dept., Three Commercial Place, Norfolk, Va. 23510-9217.

Women's network to provide education, support

A new network is forming at Norfolk Southern to provide support and professional growth opportunities for women in the company.

The women's network, or "WiNS," was inspired by a question asked at a conference attended by Kathryn McQuade, senior vice president finance. Those attending were asked what they were doing to support and promote professional growth for women in their companies.

"I knew we were working to support women at NS. I wanted us to do more," McQuade said.

She enlisted the help of two senior managers, Debbie Butler, vice president customer service, and Cindy Earhart, vice president information technology, to sponsor forums in Norfolk, Atlanta and Roanoke to explore the idea of forming a women's network. The response was overwhelmingly positive. A coordinating team has been formed, and plans are in progress for a Web site on NS' NSight intranet and activities in Atlanta, Roanoke and Norfolk.

The network will be open to all nonagreement employees.

"We're very supportive of this initiative," said Tom Mullenix, vice president human resources. "It provides another opportunity to enrich our diversity efforts through informal mentoring and stronger working relationships."

More details will be available on NSight beginning in mid-March.

NS celebrates the contributions of women in March

March is Women's History Month nationally, and Norfolk Southern's Diversity Council is working to highlight the contributions and accomplishments of women in the transportation industry and beyond during the month. "Women making a difference" is the theme for the celebration.

"The role of women in the transportation industry has grown tremendously," said Linda Duncan, manager diversity. "At one time, we would not have seen women operating trains, maintaining track or occupying senior leadership roles in the industry. All that has changed, providing more opportunities for those who are interested and qualified."

A section of the company's Web site is devoted to Women's History Month and activities at various work locations on the NS system. It includes information about the origin and development of Women's History Month, biographies of prominent women, profiles of NS women who are making a difference, a weekly quiz, daily facts about Women's History Month and links to related sites. A commemorative bookmark is available as well.

"It is important to recognize the achievements of women in our company, our industry and the nation," said Peggy Scholzen, labor relations officer and team coordinator for the month- long celebration. "Our goal is to provide information for everyone at NS on how the roles of women have changed within our industry and beyond, and how that has made us a stronger company."

In addition to Duncan and Scholzen, team members are: Dave Brown Jr., locomotive engineer; William Carr, terminal trainmaster; Robin Chapman, manager online communications; David Cobbs, assistant vice president diversity and EEO; Donna Fisher, director chemical marketing; Sonji Henderson, benefits accountant; J.C. Holland, locomotive engineer; Andrea Just, manager internal communications; and Lisa Wilson, business account analyst IT.

Information on the NS Web site will be updated regularly. For more information, go to www.nscorp.com.

NS team recognized for research fund-raising efforts

A team of 30 Norfolk Southern employees and family members raised nearly $4,000 for juvenile diabetes research in the Virginia Beach (Va.) Walk to Cure Diabetes. NS received the bronze corporate award for team fund raising for the annual event sponsored by the Juvenile Diabetes Research Foundation. Robin Pearson, senior labor relations officer, and Brenda Quesenberry, retired marketing coordinator, led the team in its fund-raising efforts.

"We had a good cross-section of people, and we are looking for an even wider representation next year," said Pearson. Some of the departments represented in the walk included law, marketing, labor relations and MODALGISTICS®.

Marketing coordinator Jo Ann Strickland walked with her husband, Paul, specialist medical services, their two children and one of her daughter's friends. "We got involved because I am a juvenile diabetic, and JDRF is an organization we stand behind," she said.

In addition to the bronze corporate award, many of the team members were awarded certificates of appreciation for collecting more than $100 each. Pam Larscheidt, former secretary law, and Pearson also received individual recognition for their fund-raising efforts.

The NS team t-Shirt, sponsored by Don Seale, senior vice president marketing services, and designed by Frank Wright, design manager, public relations, won the Team t-shirt design contest. "This is certainly a worthy cause with respect to preventing diabetes in children," said Seale. "It's something that the business community in Norfolk supported, and we were pleased to be a part of that overall support."

Dr. Ray Prible, director medical services, participated in the walk and knows it benefits NS. "Diabetes affects a number of our employees and their families, and we as a business are impacted by diabetes," he said. "We have a big stake in this area, and I think it is critical that we support efforts to find a cure."

The NS team included:

Norfolk carman runs for a cure

Six months of intensive training was a small price to pay for Jerry Zollars, a Norfolk Southern carman who completed the 2004 Walt Disney World Marathon on Jan. 11 to help fund leukemia research.

Zollars needed $3,000 in pledges to the Leukemia and Lymphoma Society to participate. He did better than that, raising $6,800. Many of Zollars' co-workers assisted him in reaching the pledge amount.

"I want to find a cure, and I'm hoping my efforts help find that cure," said Zollars. "My daughter passed away from leukemia two years ago, and the Leukemia and Lymphoma Society helped my family a lot through that struggle. It was time for me to pay them back."

This year's marathon was Zollars' first, but he hopes it won't be his last. "I would love to run another one," he said. "My wife is concerned because I'm pushing 50. I'll keep trying to talk her into it."

The Leukemia and Lymphoma Society's Team In Training® program helped Zollars, who had no previous running experience, train for the marathon. The six months of training start slowly, but in the last month before the marathon, he ran 75 miles each week.

NS machine operator brings art of storytelling to life

In the hills of eastern Kentucky, a Norfolk Southern roadway machine operator has helped to reintroduce the art of storytelling to his community. Gaylord Cooper and his neighbor, Georgia Purtee, a retired schoolteacher, created the Eastern Kentucky Storytellers Guild of Greenup, Ky., to encourage and perpetuate the oral tradition of storytelling.

Storytelling, says Cooper, draws the audience into a story so that only the listeners, the storyteller and the story can exist for awhile. "The art of storytelling is vital in this day of mass communication, faxes, cell phones and satellite transmissions," he said. "Stories are still the main method by which societies pass down traditions and memories from generation to generation."

Cooper is a former newspaper columnist and writer for The Lexington Herald-Leader and has been a storyteller for 10 years.

Members of the guild, founded in November, sponsor workshops and tell stories at state parks, local schools, churches and community and family gatherings. Officials of Jenny Wiley State Resort at Prestonburg, Ky., have asked the guild to participate in a dinner theater.

"The art of storytelling is making a big resurgence in the country," said Cooper, who is applying for grants to assist in collection of an oral history and traditions of the people of eastern Kentucky. "We hope to bring this custom to other like-minded people who have never seen anything like it before."