Dear Fellow Employee,

An inclusive workplace makes the best use of everyone's talents and fosters a climate of fairness, mutual respect and professionalism. In it, everyone has a chance to succeed and contribute to meeting our strategic goals. As you know, our company is facing big challenges to grow and improve our business in today's environment. The extent to which we create a diverse and inclusive work environment and make it part of our culture will determine our ability to compete and grow in the global business arena.

Recently I addressed the first meeting of Norfolk Southern's new Diversity Council. I charged the council with helping all of us find ways to promote a more inclusive workplace in the shops, in the offices, on the trains and everywhere throughout our company. Our Diversity Council is comprised of 30 employees from around the company, selected from among several hundred who wanted to serve. The fact that so many of you volunteered to give your time and expertise is a sign that we are off to a good start.

What will the council do? Among the areas that it will initially focus are diversity training, communications, and creating the workplace of choice. You will hear more details about this in coming months.

Like safety and customer service, diversity is not the responsibility of one department, one team or one council. It belongs to each of us. These efforts to make sure we fully utilize everyone's talents have my complete support, and in fact I recently appointed a senior management team to ensure that communications remain open and that the appropriate resources are made available for the Diversity Council.

How will we know when our diversity efforts are successful? Simple. When we can say without exception that we value each member of the Thoroughbred team for what he or she contributes, when we always make the best use of the multiple perspectives of our people to improve every facet of our business - then we will know we have succeeded.

I have the utmost confidence in our ability to transform our company in this way, and I look forward to working with you as we do so.

David R. Goode
Chairman, president and chief executive officer

NS reports 2Q/1H results

Norfolk Southern Corporation reported second-quarter net income of $119 million, or $0.31 per diluted share, an increase of 11 percent, compared with net income of $107 million, or $0.28 per diluted share, in the second quarter of 2001.

"Second-quarter results demonstrate our commitment to continued improvement in net income, operating expenses and operating ratio," said David R. Goode, chairman, president and chief executive officer. "We expect to continue to build on that progress.

"We also were pleased with the growth in our intermodal and general merchandise business in the quarter, at the same time that coal was down for the period," Goode said.

For the first six months, net income was $205 million, or $0.53 per diluted share. For the comparable period of 2001, net income was $181 million, or $0.47 per diluted share, and included an after-tax gain of $13 million, or $0.03 per diluted share, related to the 1998 sale of Norfolk Southern's former trucking subsidiary.

Second-quarter railway operating revenues were $1.6 billion, unchanged compared with second quarter 2001. For the first six months of 2002, operating revenues were $3.1 billion, down slightly compared with the same period a year earlier.

Intermodal revenues climbed 7 percent in the second quarter to $295 million and improved 3 percent for the first six months to $565 million, reflecting increased demand for consumer products and traffic growth from the introduction of new services.

Second-quarter general merchandise revenues of $948 million were the highest of any quarter in NS history and improved 3 percent compared to second quarter 2001. For the first six months, general merchandise revenues increased 1 percent to $1.82 billion compared with the year-earlier period. All general merchandise commodity groups reported revenue growth except the paper group. Automotive revenues, strengthened by continued strong domestic production, posted the largest gain, growing by $15 million, or 6 percent, during the quarter, and $29 million, or 6 percent, for the first six months.

Coal revenues declined 11 percent in the second quarter to $350 million compared with second quarter 2001. For the first six months, coal revenues of $709 million were down 10 percent compared with the first half of 2001. Slow-moving utility stockpiles and soft electricity production due to mild weather continued to weaken demand for utility coal.

Railway operating expenses were $1.27 billion for the quarter, down 3 percent compared to second quarter 2001, and $2.53 billion for the first six months, down 4 percent compared to the first half of last year. The decrease in operating expenses in both periods primarily reflects reductions in fuel costs and freight car rental charges.

"During the quarter, we also continued to benefit from our scheduled operating plan as Norfolk Southern achieved lower terminal dwell times and faster train speeds," Goode said.

For the quarter, the railway operating ratio improved 2.5 percentage points to 79.8 percent compared with 82.3 percent in the same period of 2001. This represents the best operating ratio since the Conrail integration in the second quarter of 1999. For the first six months, the operating ratio also improved 2.6 percentage points to 81.9 percent, compared with 84.5 during the same period of 2001.

NS, UP offer expedited intermodal service to Mexico

Norfolk Southern and Union Pacific announced a new service that trims up to three days from current transit times on intermodal shipments from eastern cities to Laredo, Texas, and to Mexico.

The new expedited UP/NS intermodal service offers a variety of transportation options with transit times and rates that are truck-competitive. Service originates on NS in Atlanta; Charlotte, N.C.; Jacksonville and Miami, Fla., and Harrisburg, Pa. NS gives the shipments to Union Pacific at Memphis, Tenn. Union Pacific also offers this service from its Marion, Ark., intermodal facility. Destinations include Laredo, Mexico City and other major markets in Mexico.

30 employees selected for Diversity Council

Thirty employees representative of the company's work force of 29,000 are serving as the first members of Norfolk Southern's Diversity Council.

The council will work to foster a climate of fairness, mutual respect and professionalism for all employees. "This team, which is a demographic cross section of our work force, will serve as a champion of corporate success that recognizes and values the unique perspectives and contributions of all our people," said David Cobbs, assistant vice president diversity and EEO.

Diversity Council members are Pamela Blakeney, assistant manager CYO, Atlanta; Mary Jane Boylan, manager database administration, Atlanta; David A. Brown II, general manager Northern Region, Harrisburg, Pa.; David W. Brown Jr., locomotive engineer, St. Louis; Frank Brown, assistant vice president public relations, Norfolk; William Carr Jr., terminal trainmaster, Atlanta; Tamara Chaney, customer account representative, Atlanta;

Wayne Charles, assistant track supervisor, Toledo, Ohio; Gregg Cody, division engineer, Greenville, S.C.; Mary Deangelis, stenographer/secretary, Conway, Pa.; William Eng, assistant manager service contracts, Roanoke; Donna Fisher, director chemical marketing, Roanoke;

John Garcia, supervisory special agent, Roanoke; Christopher Gilbert, clerk to chief dispatcher, Roanoke; Keith Green, supervisor horsepower hours, Atlanta; Sonji Henderson, CYO clerk, Atlanta; James Holland, locomotive engineer, Macon, Ga.;

Chad Mason, assistant chief dispatcher, Fort Wayne, Ind.; Curtis McElroy, locomotive engineer, Cleveland; Edward Mickens, division manager mechanical operations, Birmingham, Ala.; Jason Pettway, manager of systems, Atlanta; Peggy Scholzen, labor relations officer, Norfolk; Ronald Spradlin, senior claim agent, Fort Wayne, Ind.;

Karin Stamy, general attorney, Norfolk; Haskel Stanback, assistant vice president safety, Roanoke; Edwin Trinkle, general superintendent terminal operations, Atlanta; Clarence Walton, chief waybilling clerk, Atlanta; Joseph Williams, terminal trainmaster, Chicago; Lisa Wilson, business account analyst, Atlanta; and Darnell Wood, assistant superintendent, Linwood, N.C.

Four members of NS' Diversity Council Task Force, which was established in May 2001 to get the diversity initiative started, will continue their support by working with the new council. They are Thomas Brugman, group vice president, Roanoke; Rick Davison, assistant vice president human resources, Norfolk; Cindy Earhart, vice president IT, Atlanta; and Harold Mobley, assistant vice president labor relations, Norfolk.

Members of the senior management team are Ike Prillaman, vice chairman and chief marketing officer; Steve Tobias, vice chairman and chief operating officer; Hank Wolf, vice chairman and chief financial officer; Jim Hixon, senior vice president administration; Kathryn McQuade, senior vice president financial planning and Blair Wimbush, senior general counsel.

NS police officer helps capture fugitive

A New Jersey man never will doubt the dedication of Norfolk Southern police officers after an illegal train ride to Pennsylvania.

The man, Justin Monroe, found himself in a predicament when NS Special Agent Bernard Weaver spotted him hitching a ride on a Norfolk Southern train.

Weaver alerted North Versailles Township police in Pennsylvania and made arrangements to stop the train in order to arrest the trespasser, who was riding in an empty gondola.

With the aid of North Versailles police, Weaver captured Monroe and arrested him for trespassing. When police checked his identity, they discovered he was a fugitive from justice, missing since his escape from a New Jersey prison where he was serving a sentence for firearms violations.

"I was surprised to see that he was a fugitive, but railroad police are always aware of the fact that you don't know who may be riding the rails. Riding the rails is not glamorous and can be very dangerous," Weaver said.

According to North Versailles police, Monroe was surprised by Weaver's thoroughness in responding to the trespass incident.

"Usually, railroad police just write you a citation and send you off. These guys really take this seriously," an officer quoted Monroe as saying after he was in North Versailles custody.

In Weaver's eyes, he was just doing his job.

"As an officer, I have a concern for the safety of all railroaders and the public in general. I am conscientious and just try to do a good job," Weaver said.

NS supports Atlanta Fire Safety and Apparatus Show

For a third consecutive year, Norfolk Southern provided valuable emergency training during the Atlanta Fire Safety and Apparatus Show held July 24-26.

"We had more than 160 firefighters and emergency personnel from as far as Mississippi who benefited from this year's training. The turnout was great and very timely due to the recent passenger train rail accidents around the country," said Mike Stiner, assistant manager hazardous materials.

More than 1,500 people gathered for the event staged behind NS' Atlanta office buildings to celebrate Atlanta's firefighters and their history. Antique fire equipment displays, games and the NS Exhibit Car provided entertainment for every age group.

"This is a great occasion for firefighters to bring their families out and show them what they do," said Stiner, who organized much of the event.

NS, Amtrak and the Atlanta fire department conducted a drill simulating a passenger train accident involving a hazardous waste spill. Stiner said the drill reinforced knowledge gained by fire and emergency personnel during training earlier in the week. "We had a big crowd of onlookers and the drill went extremely well."

At the event's close, the Metro Atlanta Firefighters Association presented Stiner with the first annual Chris Clune "Flames and Trains" Award for his outstanding service to the event. The award honors the late Chris Clune, former deputy regional administrator for the FRA, who was a strong supporter of the event and encouraged the railroad to get involved.

Atlanta IT volunteers help families in need

Atlanta Information Technology employees are taking Norfolk Southern's commitment to service out of the office and into the community. Working with Habitat for Humanity, 115 volunteers are helping to build the dreams of several families in Meriwether County, Ga., one house at a time.

"It's important to give back to our community. Habitat is an excellent organization that helps low-income families afford decent housing," said Dianne Schultheiss, systems programming manager and volunteer group leader.

Habitat for Humanity, founded in 1976, builds and rehabilitates simple, decent houses with the help of the homeowner, volunteers and partner families. Habitat has built more than 100,000 houses around the world, providing more than 500,000 people in more than 2,000 communities with affordable shelter.

The Atlanta volunteers have participated in the program since February 2001, traveling 90 miles to Meriwether County to help build three houses. One was constructed as part of the International Home Builders conference held in Atlanta in February 2002.

As a result of their commitment to community service, the Atlanta IT group was awarded Habitat for Humanity's Outstanding Service Award.

Schultheiss says the experience has been rewarding. "It was a great team building experience. Volunteering really improved the department's morale, and folks got to work with others in IT that they generally do not work with. It was rewarding no matter how you looked at it," she said.

Timmons elected ASLRRA president

The American Short Line Railroad Associa-tion's board of directors voted unanimously on July 25 to elect Richard F. Timmons president. Timmons is a Norfolk Southern resident vice president for public affairs, with responsibility for Pennsylvania and New York. Prior to joining NS in 1998, Timmons had a 32-year career in the United States Army.

He will take over as president of the association on Sept. 3.

NS office manager strikes it big in Senior Open

Some call it a "stroke" of luck -- 73 strokes to be exact. When Jeff Lynch, office manager in the taxation department at Roanoke, filled out a form for a 23rd U.S. Senior Open qualifier, he had no idea he would find himself among the pros. Yet following an amazing 3-over-par game at the Cascade Course in Hot Springs, Va., Lynch found himself in a league of champions at the Open in Owings Mills, Md., for the real thing.

"I couldn't believe it. I tried to qualify last year and didn't make it, but when I realized that it really happened, it was like a dream come true. It's something I always wanted to do," Lynch said.

While he didn't bring home the trophy, he did manage to shoot rounds of 81 and 80 and beat nine other amateurs. He even beat 72-year-old golf legend Arnold Palmer, who posted rounds of 82 and 85.

"I've been playing golf since I was 7 and always wanted to play in the Open. There are not too many sports where you can play with your heroes and the guys you've seen on television," Lynch said.

NS Focus news video debuts

Norfolk Southern launched a new employee video news program, NS Focus, in late August. The program features news about the company's business initiatives and other issues of interest to NS employees. It was produced by the Public Relations Department and the Corporate Media Center and distributed to employees through supervisors. It and future issues of the program will be shown at employee meetings across the system.

"We wanted to bring another news source to NS employees, and this was a good way to do it," said Bob Fort, vice president public relations. "It's our expectation, and the expectation of our leadership team at NS, that the program will create dialogue among employees and generate solid ideas to help NS remain competitivie."