Cowen and Company Global Transportation & Aerospace/Defense Conference. Wick Moorman Chairman and Chief Executive Officer September 3, 2014

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1 Cowen and Company Global Transportation & Aerospace/Defense Conference Wick Moorman Chairman and Chief Executive Officer September 3,

2 Norfolk Southern Update Second Quarter Summary Third Quarter Update and Business Outlook Service Update Long Term Productivity Opportunities Capital Allocation 2

3 Operating Results Second Quarter 2014 vs ($ millions) Revenue exceeds $3 billion, setting all-time quarterly record. Favorable (Unfavorable) $ % Railway operating revenues $ 3,042 $ 2,802 $ 240 9% Railway operating expenses 2,023 1,966 (57) (3%) Income from railway operations $ 1,019 $ 836 $ % Railway operating ratio % 3

4 Railway Volume Second Quarter 2014 vs (volume in thousands) Total volume up 8% Intermodal up 11% 8% gain in Domestic and 16% increase in International 2,000 2Q 2014 Volume and Year-over-Year Percent Change 1,838 1,983 Merchandise up 7% Strength in Metals & Construction, Chemicals, Agriculture and Automotive offset declines in Paper 1,500 1,000 Intermodal Merchandise +11% +7% Coal up 3% Increases in Utility offset decreases in Export 500 Coal +3% 0 2Q Q

5 Railway Operating Expenses Second Quarter 2014 vs ($ millions) Net increase of $57 / 3%. $35 $17 $12 $4 $11 $2,023 $1, Materials & Other Fuel Depreciation Purchased Svcs & Rents Compensation & Benefits

6 Compensation and Benefits Second Quarter 2014 vs ($ millions) Net decrease of $11 / 2%. Lower post-retirement medical and pension Lower health and welfare benefit costs Higher incentive compensation $726 $715 Increased pay rates Increased overtime

7 Net Income and Diluted Earnings per Share Second Quarter 2014 vs ($ millions except per share) Net Income and Earnings per Share set all-time quarterly records. Net Income Change vs. Prior Period: + 21% Diluted Earnings per Share Change vs. Prior Period: + 23% $465 $562 $1.46 $

8 Norfolk Southern Update 2014 Second Quarter Overview Third Quarter Update and Business Outlook Service Update Long Term Productivity Opportunities Capital Allocation 8

9 Current Railway Volume Third Quarter through Week 35 Total Volume: 1,364,800 units, up 8% Automotive Change in Units 3QTD 2014 vs % 1,259.3 Units (000) 1,364.8 Chemicals MetCon Intermodal Agriculture 15% 12% 10% 7% Paper (1%) 0% Coal

10 Business Outlook COAL Flat demand for utility coal as stockpile replenishment helps offset declines from falling natural gas prices and mild weather Strong competition in the Atlantic metallurgical and thermal markets Reduced domestic met volumes related to plant closures and sourcing shifts 10

11 Business Outlook COAL Flat demand for utility coal as stockpile replenishment helps offset declines from falling natural gas prices and mild weather Strong competition in the Atlantic metallurgical and thermal markets Reduced domestic met volumes related to plant closures and sourcing shifts INTERMODAL Continued opportunities for highway conversion Continued growth in Crescent Corridor services Growth with International shipping partners Continued growth from new facilities Price increase on rail owned domestic container shipments 11

12 Business Outlook COAL Flat demand for utility coal as stockpile replenishment helps offset declines from falling natural gas prices and mild weather Strong competition in the Atlantic metallurgical and thermal markets Reduced domestic met volumes related to plant closures and sourcing shifts INTERMODAL Continued opportunities for highway conversion Continued growth in Crescent Corridor services Growth with International shipping partners Continued growth from new facilities Price increase on rail owned domestic container shipments MERCHANDISE Projected growth in crude oil, increased volume for shalerelated liquid petroleum gases and asphalt Gains in steel, frac sand Continued automotive growth Normalized corn and soybean shipments Improved housing & related construction materials market 12

13 Norfolk Southern Update 2014 Second Quarter Overview Third Quarter Update and Business Outlook Service Update Long Term Productivity Opportunities Capital Allocation 13

14 Composite Service Performance through June 90% Column1 85% 83.3% 83.7% 83.6% 82.4% 80% 75% 73.4% 74.5% 70% 65% 60% 1Q Q Q Q Q Q

15 Miles per Hour Train Speed 1Q11 3QTD14 Better

16 Hours Terminal Dwell 1Q11 3QTD14 Better

17 Norfolk Southern Update 2014 Second Quarter Overview Third Quarter Update and Business Outlook Service Update Long Term Productivity Opportunities Capital Allocation 17

18 Bellevue Yard Expansion Elkhart, IN Conway, PA Bellevue, OH Allentown, PA Enola, PA Chattanooga, TN Sheffield, AL Birmingham, AL Knoxville, TN Linwood, NC Macon, GA 18

19 19 Bellevue Yard Expansion

20 UTCS - Movement Planner All 11 Divisions on Base System 8 of 11 Divisions on Movement Planner with remaining in 2014 Realizing benefits in velocity, productivity, and schedule adherence 20

21 Juniata Locomotive Shop 21 21

22 22 Locomotive Rebuild Programs

23 Norfolk Southern Update 2014 Second Quarter Overview Third Quarter Update and Business Outlook Service Update Long Term Productivity Opportunities Capital Allocation 23

24 Capital Expenditures ($ millions) Robust Capital Plan - $2.2 billion. $2,160 $2,241 $1,971 $2, B Positive Train Control 24

25 Cash From Ops and Capital Expenditures ($ millions) $3,227 $3,065 $3,078 $2,160 $2,241 $1,971 $1,437 $ six months Cash from Operations Capital Expenditures 21 25

26 Annual Dividend Per Share Compound annual growth rate of 20% from 2004 through 2014 $1.22 $1.36 $1.40 $1.66 $1.94 $2.04 $2.22 $0.96 $0.36 $0.48 $ * % +42% +41% +27% +11% +3% +19% +17% +5% +9% *2014 estimate assumes current dividend in December 26

27 Balanced Cash Flow Utilization 2006 through 2013 $13.2 Billion $12.1 Billion* $4.0 Billion $8.1 Billion Capital Expenditures Share Repurchases Dividends * See reconciliation of Total Shareholder Distributions to GAAP posted on our website, 27

28 28 Thank You