Norfolk Southern Railway Co/VA – ‘8-K’ for 6/23/97 – EX-99

As of:  Monday, 6/30/97   ·   For:  6/23/97   ·   Accession #:  92275-97-11   ·   File #:  1-00743

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Nsr 8-K                                                4     14K 
 2: EX-10       Transaction Agt.                                     112±   405K 
 3: EX-99       Press Release                                          7±    27K 

EX-99   —   Press Release

EX-99
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CONTACTS:     Thomas E. Hoppin      Robert Fort                               
CSX Corporation       Norfolk Southern Corporation
804-782-1450          757-629-2710                

FOR IMMEDIATE RELEASE                                                         

CSX AND NORFOLK SOUTHERN FILE APPLICATION                 
FOR HISTORIC RESTRUCTURING OF EASTERN RAIL SYSTEM                 
Carriers Seek STB Approval for Division of Conrail System                   

WASHINGTON  -  June 23, 1997  -  CSX Corporation (NYSE: CSX)          
and Norfolk Southern Corporation (NYSE: NSC) today asked the                    
Surface Transportation Board to approve their acquisition of                    
Conrail Inc.  The proposed transaction would reshape the eastern                
rail system and restore competition to the largest market in the                
Northeast for the first time in more than two decades.                          

The two carriers filed an eight-volume application detailing          
nearly $1 billion in public benefits from the transaction, which                
will usher in a new era of rail service and rail-truck                          
competition.  The 15,000-page application lists dozens of service               
and infrastructure improvements that will deliver more reliable                 
and efficient service to thousands of customers.                                

In presenting the case for the most far-reaching railroad             
restructuring in history, the companies said they will spend a                  
combined $1.2 billion for capital improvements.  The money will                 
be spent over three years for such things as track improvements,                
added capacity, new or expanded freight terminals, clearance                    
projects, new automobile distribution centers.                                  

The two carriers announced April 8 that they had reached an           
agreement to acquire Conrail and operate its routes and assets in               
a $10 billion transaction, with Norfolk Southern getting 58                     
percent and CSX 42 percent.  Today's filing starts the clock on                 
the 350-day schedule the Surface Transportation Board (STB) has                 
set to consider the application.                                                

In the application, the companies said their plan will                
create balanced competition in the East, extend their reach into                
large new markets and replace Conrail's monopoly with                           
head-to-head rail competition.  The companies said the                          
transaction will stimulate economic growth in the Northeast by                  
improving transportation options for industries throughout the                  
region.                                                                         

The restructuring will result in two well-matched rail                
systems with both providing single-line service.  CSX will                      
operate more than 23,000 route miles in 23 states and Norfolk                   
Southern more than 21,000 miles in 22 states.                                   

"For the first time since the 1960s, we will have two                 
balanced Class I railroads competing throughout the eastern                     
United States," John W. Snow, chairman, president and chief                     
executive officer of CSX, said in a statement submitted to the                  
Board.  "This new era of competition will be between two vigorous               
companies that have a proud record of seeking maximum efficiency                
and good rates for customers."                                                  

David R. Goode, chairman, president and chief executive               
officer of Norfolk Southern, said, "The transaction is by far the               
most pro-competitive railroad restructuring in history.  It will                
create two new Northeast/Southeast rail systems that will do                    
their utmost to best each other in the marketplace every day.                   
This will bring about a blossoming of rail competition the likes                
of which the Northeast has not experienced in decades."                         

In support of their application, Norfolk Southern and CSX             
submitted to the STB more than 2,300 letters from shippers,                     
public officials and other railroads, the strongest show of                     
support ever for a railroad transaction.                                        

"The elimination of the Conrail monopoly alone is a                   
substantial public benefit," the two railroads said in their                    
application, noting that many customers will benefit from more                  
efficient routings and extended single-line service that will                   
eliminate delays and the costs of transferring shipments from one               
rail carrier to another.                                                        

In addition, the projected diversion of traffic from                  
congested highways to rail will deliver significant benefits to                 
the public.  The two carriers estimated that within three years                 
the transaction annually will save 120 million gallons of diesel                
fuel, eliminate more than a million truck trips, reduce truck                   
traffic on the nation's highways by more than 780 million miles,                
and save about $94 million in highway maintenance costs.                        

Detailing the planned capital investments, CSX estimated it           
will spend more than $488 million for projects that include $83                 
million for Conrail route improvements, $151 million in corridor                
upgrades, nearly $76 million for expansion or improvement of                    
intermodal and automobile facilities, more than $77 million for                 
merchandise terminals, and the remainder in mechanical facilities               
and other projects.                                                             

Norfolk Southern said it will spend about $729 million on             
major capital improvements and equipment purchases.  The projects               
include about $220 million for expansion or improvements in                     
intermodal facilities, $130 million for corridor upgrades, about                
$70 million to improve existing Conrail routes, $30 million for                 
new automobile facilities, about $100 million to improve                        
mechanical facilities, $26 million for track connections and $98                
million for new equipment.                                                      

Other highlights of the joint application:                            
.    A huge increase in single-line service, providing                
shippers with shorter transit times and more reliable       
service.  For shipments of automobiles, chemicals,          
agricultural commodities and other merchandise, a           
projected 233,000 additional shipments will move on a       
single carrier with no intermediate transfer.               
.    A 15,000-shipment increase in single-line service for            
coal.                                                       
.    The return of competitive rail service to the New                
York/New Jersey metropolitan area, the largest consumer     
market in the country, for the first time in more than      
two decades.                                                

The transaction will affect employment through the creation,          
transfer and elimination of certain positions over three years.                 
CSX and Norfolk Southern project that over that period they                     
jointly will eliminate about 3 percent of the nearly 73,000                     
positions at the three railroads.  CSX and Norfolk Southern said                
they expect the restructuring in the long run will boost rail                   
transportation and create new jobs in the industry.                             

CSX Corporation, headquartered in Richmond, Va., is an                
international transportation company offering a variety of rail,                
container-shipping, intermodal, trucking, barge and contract                    
logistics management services.  The company's 18,500 route-mile                 
rail system links 20 states in the East and Midwest.                            

Norfolk Southern is a Virginia-based holding company with             
headquarters in Norfolk, Va.  It owns a major freight railroad,                 
Norfolk Southern Railway Company, which operates about 14,300                   
miles of road in 20 states, primarily in the Southeast and                      
Midwest, and the Province of Ontario, Canada.  The corporation                  
also owns North American Van Lines, Inc., and Pocahontas Land                   
Corporation, a natural resources company.                                       

###                 

Additional information about the transaction can be found on the                
World Wide Web sites of CSX (http://www.csx.com) and Norfolk                    
Southern (http://www.nscorp.com).                                               

EX-99
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Backgrounder:           

THE NORFOLK SOUTHERN            
OPERATING PLAN            

Norfolk Southern's operation and integration of                 
Conrail lines with the existing NS system will                  
restore and enhance rail competition and will                 
improve rail efficiency throughout the East.                  

The transaction, by far the most pro-competitive railroad                       
restructuring in history, will create two expanded rail systems                 
in the eastern United States, offering rail competition not seen                
in the Northeast for decades.                                                   

The restructured rail systems will build upon the two carrier                   
competition between Norfolk Southern and CSX Transportation that                
has thrived in the Southeast for two decades.  The increase in                  
transportation efficiency also will be two-fold, because Norfolk                
Southern and CSXT each will try to outperform the other in the                  
marketplace with safer, faster, and more reliable rail                          
transportation services.                                                        

The Operating Plan filed with the federal Surface Transportation                
Board explains operation of the New Norfolk Southern's expanded                 
21,400-mile system in 22 states and the Province of Ontario,                    
Canada, and details service efficiencies and cost savings.                      

Norfolk Southern will invest more than $700 million in                          
construction and improvement projects to allow seamless movement                
of freight between Conrail routes operated by NS and the current                
NS system and better connections with other railroads, such as                  
Union Pacific and Illinois Central.                                             

This integration of routes is the key to delivering more                        
competition coupled with more and better single system service.                 
Under the Operating Plan the number of rail shipments that will                 
move by one railroad rather than two will greatly increase.  This               
improved efficiency is particularly important for service                       
sensitive intermodal and automotive customers.                                  

Rail users throughout the country will benefit because most rail                
freight crosses regional boundaries.  In the East and Midwest,                  
shippers will be able to expand their market reach, while                       
customers will be able to choose from more suppliers.  In                       
addition, the restructuring will eliminate more than one million                
truck trips from eastern and midwestern highways each year --                   
diverting 589,000 truckloads annually to Norfolk Southern alone.                
Highway traffic congestion, fuel consumption, accidents, and                    
pollution will be reduced, and highway maintenance costs will                   
decline.                                                                        

For coal producers, the Operating Plan shows that the New Norfolk               
Southern System will provide direct access to many more                         
customers.  Coal volume moving between current NS lines and                     
NS-operated Conrail lines will grow from 4 million tons in 1996                 
to an estimated 12 million tons in several years and even greater               
amounts in the future.                                                          

For intermodal customers, single line routings will significantly               
improve speed and reliability on lines linking current Norfolk                  
Southern markets in the Southeast and Midwest with current                      
Conrail northeastern markets.  For example, new service will be                 
added along Norfolk Southern's new Shenandoah Route, which                      
connects New York, Philadelphia, and Pittsburgh to Norfolk                      
Southern points in the Southeast and to the West via New Orleans.               
Transit times between the Southeast and Northeast will be reduced               
through more efficient routings, and additional corridors will be               
cleared to allow doublestack container service.                                 

For automobile manufacturers, the New Norfolk Southern System                   
will speed delivery of new vehicles to dealers over new single                  
system routes.  More than 19,000 carloads of new vehicles and                   
more than 21,000 carloads of parts will gain single line routing                
under the Operating Plan.  The New Norfolk Southern System                      
network is designed to move 90 percent of available vehicle                     
traffic in dedicated trains, reducing transit time and damage.                  

For chemicals customers, most of which provide their own                        
railcars, the New Norfolk Southern System service network will                  
improve equipment utilization by eliminating costly delays in                   
transferring shipments  between Norfolk Southern and Conrail.                   
Assuming a 24-hour service improvement for only the 18,000                      
carloads of chemicals traffic interchanged between NS and Conrail               
in 1996, these customers could save an estimated $360,000 in                    
annual equipment costs.                                                         

The New Norfolk Southern System will add or improve three service               
routes to link the Northeast and the Midwest:                                   

- The Penn Route will be the shortest rail route between northern               
New Jersey and Chicago.  More than $300 million will be invested                
during the first three years of operation of the New Norfolk                    
Southern System for substantial clearance and capacity                          
improvements for traffic growth, particularly for intermodal and                
automotive traffic.  New auto terminals will be built in the                    
Philadelphia and Baltimore areas, and intermodal terminals will                 
be built, expanded, or improved in northern New Jersey, the                     
Philadelphia area, Pittsburgh, Harrisburg (Rutherford), and                     
Allentown, Pennsylvania, and Baltimore.                                         

- The Southern Tier Route will integrate Conrail's Southern Tier                
Line across New York State with Norfolk Southern's existing                     
Buffalo-Cleveland line.  This new route will be an important New                
Norfolk Southern System doublestack route into the New York                     
metropolitan area market and will provide access to connecting                  
carriers serving New England.  Norfolk Southern will invest                     
approximately $35 million during the first three years of                       
operation, making the route more efficient.  These improvements                 
will be much needed, because the Operating Plan projects that the               
New Norfolk Southern System will run eight through trains per day               
on this route, in addition to CP/St. Lawrence & Hudson and New                  
York, Susquehanna & Western operations that now use and will                    
continue to use the Southern Tier Line under existing trackage                  
and haulage rights.                                                             

- The Southwest Gateway Route will connect Norfolk Southern's                   
Kansas City line with Conrail lines at Vermilion, Ohio, and                     
Butler, Indiana, for connection with the Penn Route.  This new                  
route will bypass the congested Chicago and St. Louis gateways.                 
Norfolk Southern will invest more than $55 million in the route                 
during the first three years of operation for capacity                          
improvements and new connections.  Connections at Sidney,                       
Illinois, with Union Pacific and at Tolono, Illinois, with                      
Illinois Central will offer competitive service for heavy                       
petrochemical and other flows between the Northeast and                         
southwestern and Gulf Coast states.                                             

Four major New Norfolk Southern System routes will spur improved                
service between the Northeast and Southeast:                                    

- The Piedmont Route will connect these regions using two                       
corridors north of Manassas, Virginia.  One leg via Allentown and               
Harrisburg, Pennsylvania, and Hagerstown, Maryland, will carry                  
freight between the Southeast and the Philadelphia area; it also                
will be the clearance route for doublestack and multilevel                      
(vehicle) traffic.  The second route will use Amtrak's Northeast                
Corridor via Baltimore, Wilmington, Delaware, and Philadelphia                  
for southeastern traffic and for Triple Crown RoadRailer                        
service.  New RoadRailer  terminals will be built along this                    
route in Philadelphia, Baltimore, and Charlotte, North Carolina.                

- The Shenandoah Route will handle northeastern traffic via                     
Harrisburg, Pennsylvania, Roanoke, Virginia, and Knoxville and                  
Chattanooga, Tennessee, to Atlanta and via the New Orleans and                  
Memphis gateways to the West.  More than $33 million will be                    
invested in this route for sidings as well as doublestack                       
clearances between Front Royal and Roanoke, Virginia.  This route               
parallels Interstate 81, and the New Norfolk Southern System                    
expects to draw significant general merchandise and intermodal                  
freight from trucks to rail service on this route.  Coal between                
Central Appalachian coal fields and the Northeast also will move                
via this route.                                                                 

- The Mid-South Route will extend from Chicago, Detroit,                        
Cleveland, and Pittsburgh to the Southeast via Cincinnati.  Most                
of this route already is cleared to handle domestic doublestack                 
traffic, and planned capital investments will provide the                       
remaining clearances, add track capacity, and expand intermodal                 
terminals at Cincinnati and Columbus, Ohio.  This route will be                 
particularly beneficial to automotive customers expected to move                
heavy volumes of time-sensitive traffic.                                        

- The Bridge Route will connect the Southeast with Upstate New                  
York, Canada, and New England through Harrisburg.  Much of this                 
route will consist of Norfolk Southern haulage over CP/St.                      
Lawrence & Hudson from Sunbury, Pennsylvania, to Albany, New                    
York, via Binghamton, New York.  CP and Norfolk Southern will                   
invest more than $11 million in the Sunbury line to enable it to                
handle domestic doublestacks and heavy freight.  Paper, clay and                
intermodal traffic will be the principal commodities handled.                   
Three markets -- Detroit, northern New Jersey, and the southern                 
New Jersey/- Philadelphia area -- will be within new "Shared                    
Assets Areas."  Rail customers within these Shared Assets Areas                 
will have direct two-carrier competition through access to both                 
the New Norfolk Southern System and CSXT.  In other areas,                      
special arrangements will ensure competitive rail service.  For                 
example, Norfolk Southern will operate former Monongahela Railway               
lines serving the coal mining region south of Pittsburgh, one of                
Conrail's largest markets, and CSXT will have direct access to                  
all customers.  In Indianapolis and six other markets in Indiana,               
Ohio, and Illinois, NS and CSXT will exchange trackage and other                
rights to preserve competition. When the New Norfolk Southern                   
System Operating Plan is fully implemented, the estimated public                
benefit is almost $500 million.  These public benefits consist of               
the following approximate amounts:  $255 in operating savings,                  
$90 million in shipper logistics costs reductions, $80 million in               
rate-related competitive effects, and $45 million in reduced                    
highway costs as a result of truck to rail diversion of traffic.                

Dates Referenced Herein   and   Documents Incorporated by Reference

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Filed on:		6/30/97							10-Q
For Period End:		6/23/97		1
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