NORFOLK SOUTHERN CORP Annual Report, Year Ended Dec 31, 2008

Norfolk Southern Corporation (NSC) reported a strong financial performance in 2008, with net income increasing by 17% to $1.7 billion, driven by a 19% rise in income from railway operations. This was achieved through higher average revenue per unit, including fuel surcharges, which more than offset increased operating expenses and a slight decrease in traffic volume. Operating revenues grew by 13% to $10.7 billion, while operating expenses rose by 11%, leading to an improved operating ratio of 71.1%. The company generated substantial cash flow from operations, exceeding $2.7 billion for the fourth consecutive year, which was used to fund capital expenditures, share repurchases, and dividends. Looking ahead to 2009, NSC anticipates a revenue decline due to the weak economy impacting traffic volume and a reduction in fuel surcharge revenue from lower fuel prices. The company plans to focus on service improvements, maintain its market-based pricing strategy, and reduce volume-related costs. NSC continued its share repurchase program, retiring 19.4 million shares for $1.1 billion in 2008, demonstrating a commitment to returning capital to shareholders.