UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549
                         -----------------------

                              FORM 10-K405

(X)	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
	EXCHANGE ACT OF 1934
	For the fiscal year ended Dec. 31, 2001
OR

( )	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
	SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                 to
                                     ---------------    ---------------
                                       Commission file number 1-8339

                      NORFOLK SOUTHERN CORPORATION
-----------------------------------------------------------------------
         (Exact name of registrant as specified in its charter)

                   Virginia                               52-1188014
------------------------------------------------	------------------
	(State or other jurisdiction of                  (I.R.S. Employer
	 incorporation or organization)                 Identification No.)

           Three Commercial Place,
             Norfolk, Virginia                            23510-2191
------------------------------------------------	------------------
	(Address of principal executive offices)	          (Zip Code)

Registrant's telephone number, including area code	  (757) 629-2680
                                                       ------------------

Securities registered pursuant to Section 12(b) of the Act:

						Name of each exchange
      Title of each Class		 on which registered
	-------------------	     ---------------------
Norfolk Southern Corporation
Common Stock (Par Value $1.00)	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  NONE

	Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 12 months (or for such shorter 
period that the registrant was required to file such reports) and 
(2) has been subject to such filing requirements for the past 90 days.  
Yes (X)  No ( )

	Indicate by check mark if disclosure of delinquent filers pursuant 
to Item 405 of Regulation S-K is not contained herein and will not be 
contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this 
Form 10-K405 or any amendment to this Form 10-K405. (X)

	The aggregate market value of the voting stock held by 
nonaffiliates as of January 31, 2002:  $8,716,403,555.

	The number of shares outstanding of each of the registrant's classes 
of common stock, as of January 31, 2002:  386,536,743 (excluding 
21,169,125 shares held by registrant's consolidated subsidiaries).

                                    2


DOCUMENTS INCORPORATED BY REFERENCE:

	Portions of the Registrant's definitive proxy statement to be 
filed electronically pursuant to Regulation 14A not later than 120 days 
after the end of the fiscal year, are incorporated by reference in 

Part III.



                                    3

                            TABLE OF CONTENTS
                            -----------------

            NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)		Page
												----

Part I.	1.	Business								  4

		2.	Properties								  4

		3.	Legal Proceedings							 19

		4.	Submission of Matters to a Vote of Security Holders	 19

			Executive Officers of the Registrant			 19

Part II.	5.	Market for Registrant's Common Stock and
			 Related Stockholder Matters				 	 22

		6.	Selected Financial Data						 23

		7.	Management's Discussion and Analysis of
			 Financial Condition and Results of Operations		 25

		7A.	Quantitative and Qualitative Disclosures
			 About Market Risk						 48

		8.	Financial Statements and Supplementary Data		 50

		9.	Changes in and Disagreements with Accountants on
			 Accounting and Financial Disclosure			 83

Part III.  10.	Directors and Executive Officers of the Registrant	 84

	     11.	Executive Compensation						 84

	     12.	Security Ownership of Certain Beneficial Owners
			 and Management							 84

	     13.	Certain Relationships and Related Transactions		 84

Part IV.   14.	Exhibits, Financial Statement Schedule and
			 Reports on Form 8-K						 85

			Index to Consolidated Financial Statement Schedule	 85

Power of Attorney										 91

Signatures											 91

Exhibit Index										 95

                                     4


                                   PART I
                                   ------

              NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)


Item 1.	Business.
------	--------

	and


Item 2.	Properties.
------	----------

	GENERAL - Norfolk Southern Corporation (Norfolk Southern) was 
incorporated on July 23, 1980, under the laws of the Commonwealth of 
Virginia.  On June l, 1982, Norfolk Southern acquired control of two major 
operating railroads, Norfolk and Western Railway Company (NW) and Southern 
Railway Company (Southern) in accordance with an Agreement of Merger and 
Reorganization dated as of July 31, 1980, and with the approval of the 
transaction by the Interstate Commerce Commission (ICC) (now the Surface 
Transportation Board [STB]).

	Effective Dec. 31, 1990, Norfolk Southern transferred all the common 
stock of NW to Southern, and Southern's name was changed to Norfolk 
Southern Railway Company (Norfolk Southern Railway).  Effective Sept. 1, 
1998, NW was merged with and into Norfolk Southern Railway.  As of Dec. 31, 
2001, all the common stock of Norfolk Southern Railway and 22.5 percent of 
its voting preferred stock (resulting in 95.2 percent voting control) was 
owned directly by Norfolk Southern.

	Through a jointly owned entity, Norfolk Southern and CSX Corporation 
(CSX) own the stock of Conrail Inc., which owns the major freight railroad 
in the Northeast.  Norfolk Southern has a 58% economic and 50% voting 
interest in the jointly owned entity.  See also the discussion concerning 
operation of a portion of Conrail's rail assets, below.

	On March 28, 1998, Norfolk Southern closed the sale of its motor 
carrier company, North American Van Lines, Inc. (NAVL) (see "Discontinued 
Operations" on Page 38 and Note 17 on Page 79).  NAVL's results are 
presented as "Discontinued operations" in the accompanying financial 
information.

	Unless indicated otherwise, Norfolk Southern and its subsidiaries 
are referred to collectively as NS.

	OPERATION OF A PORTION OF THE CONRAIL RAIL ASSETS - On June 1, 1999, 
Norfolk Southern and CSX, through their respective railroad subsidiaries, 
began operating separate portions of Conrail's rail routes and assets.  
Substantially all such assets are owned by two wholly owned subsidiaries 
of Consolidated Rail Corporation (CRC); one of those subsidiaries, 
Pennsylvania Lines LLC (PRR), has entered into

                                      5

various operating and leasing arrangements, more particularly described in 
Note 2 on Page 58, with Norfolk Southern Railway.  Certain rail assets 
(Shared Assets Areas) still are owned by CRC, which operates them for joint 
and exclusive use by Norfolk Southern Railway and the rail subsidiary of CSX.

	Operation of the PRR routes and assets increased the size of the 
system over which Norfolk Southern Railway provides service by nearly 50% 
and afforded access to the New York metropolitan area, to much of the 
Northeast and to most of the major East Coast ports north of Norfolk, 
Virginia.  Also, the leasing arrangements with PRR augmented Norfolk 
Southern Railway's locomotive, freight car and intermodal fleet.

	RAILROAD OPERATIONS - As of Dec. 31, 2001, NS' railroads operated 
approximately 21,500 miles of road in the states of Alabama, Delaware, 
Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, 
Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, 
Ohio, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia, 
and in the Province of Ontario, Canada.  Of this total, about 12,000 miles 
are owned with the balance operated under lease or trackage rights; most 
of this total is main line track.  In addition, its railroads operate 
almost 17,000 miles of passing, industrial, yard and side tracks.

	In addition to the lines leased from Conrail previously discussed, 
NS' railroads have major leased lines between Cincinnati, Ohio, and 
Chattanooga, Tennessee, and operate over trackage owned by North Carolina 
Railway Company (NCRR).

	The Cincinnati-Chattanooga lease, covering about 335 miles, expires 
in 2026, and is subject to an option to extend the lease for an additional 
25 years, at terms to be agreed upon.

	Operations over the approximately 330 miles of tracks of NCRR, 
previously under a 100-year lease which expired on Dec. 31, 1994, are 
now under a trackage rights agreement.  The term of the agreement is 
15 years with NS' railroads having the right to renew for two additional 
15-year periods.

	NS' railroads carry raw materials, intermediate products and finished 
goods primarily in the Southeast, East and Midwest, and to and from the rest 
of the United States and parts of Canada.  They also transport overseas 
freight through several Atlantic and Gulf Coast ports.  Atlantic ports 
served by NS include:  Norfolk, Virginia; Morehead City, North Carolina; 
Charleston, South Carolina; Savannah and Brunswick, Georgia; 
Jacksonville, Florida; Baltimore, Maryland; Philadelphia, Pennsylvania/
Camden, New Jersey; Wilmington, Delaware;

                                     6

and the Ports of New York/New Jersey.  Gulf Coast ports served include 
Mobile, Alabama, and New Orleans, Louisiana.

	The lines of NS' railroads reach most of the larger industrial and 
trading centers of the Southeast, Northeast, Mid-Atlantic region and Midwest.  
Chicago, Norfolk, Detroit, Atlanta, Metropolitan New York City, Jacksonville, 
Kansas City (Missouri), Baltimore, Buffalo, Charleston, Cleveland, Columbus, 
Philadelphia, Pittsburgh, Toledo, Greensboro, Charlotte and Savannah are 
among the leading centers originating and terminating freight traffic on 
the system.  In addition, haulage arrangements with connecting carriers 
allow NS' railroads to provide single-line service to and from additional 
markets, including haulage provided by Florida East Coast Railway Company 
to serve south Florida, including the port cities of Miami, West Palm 
Beach and Fort Lauderdale; and The Kansas City Southern Railway Company 
to provide transcontinental intermodal service via a connection with the 
Burlington Northern and Santa Fe Railway Company.  Service is provided to 
New England, including the Port of Boston, via haulage and interline 
arrangements with Canadian Pacific Railway Company and Guilford 
Transportation Industries.  The system's lines also reach many individual 
industries, electric generating facilities, mines (in western Virginia, 
eastern Kentucky, southern and northern West Virginia and western 
Pennsylvania), distribution centers, transload facilities and other 
businesses located in smaller communities in its service area.  The 
traffic corridors carrying the heaviest volumes of freight include those 
from the New York City area to Chicago (via Allentown and Pittsburgh); 
Chicago to Jacksonville (via Cincinnati, Chattanooga and Atlanta); 
Appalachian coal fields of Virginia, West Virginia and Kentucky, to 
Norfolk and Sandusky, Ohio; Buffalo to Chicago and Kansas City; and 
Memphis to Chattanooga.  Chicago, Memphis, Sidney/Salem, New Orleans, 
Kansas City, Buffalo, St. Louis and Meridian are major gateways for 
interterritorial system traffic. 

	TRIPLE CROWN OPERATIONS - Until April 1993, NS' intermodal 
subsidiary, Triple Crown Services, Inc. (TCS), offered intermodal service 
using RoadRailer (Registered Trademark hereinafter abbreviated RT) 
equipment and domestic containers.  RoadRailer(RT) units are enclosed 
vans that can be pulled over highways in tractor-trailer configuration 
and over the rails by locomotives.  On April 1, 1993, the business, 
name and operations of TCS were transferred to Triple Crown Services 
Company (TCSC), a partnership in which subsidiaries of NS and Conrail 
are equal partners.  RoadRailer(RT) equipment owned or leased by TCS 
(which was renamed TCS Leasing, Inc.) is operated by TCSC.  From April 1, 
1993, to June 1, 1999, the revenues of TCSC were not consolidated with the 
results of NS; however, effective June 1, 1999, NS gained control of TCSC 
and, therefore, now includes TCSC's results in its consolidated financial 
statements.  TCSC offers door-to-door intermodal service using RoadRailer(RT) 
equipment in major traffic corridors, including those between the Midwest 
and the Northeast, the Midwest and the Southeast and the Midwest and 
Texas/Mexico.

                                       7


<TABLE>
	RAILWAY OPERATING REVENUES - NS' total railway operating revenues 
were $6.2 billion in 2001.  Revenue, shipments and revenue yield by 
principal railway operating revenue sources for the past five years are 
set forth in the following table.


<CAPTION>
                                                  Year Ended December 31,
Principal Sources of             --------------------------------------------------------
Railway Operating
Revenues					2001		2000		1999		1998		1997
--------------------			----		----		----		----		----
(Revenues in millions, shipments in thousands, revenue yield in dollars per shipment)

<S>						<C>		<C>		<C>		<C>		<C>
COAL
  Revenues					$ 1,521	$ 1,435	$ 1,322	$ 1,252	$ 1,301
   % of total revenues			     25%	     23%	     25%	     29%	     31%
  Shipments					  1,695	  1,687	  1,519	  1,310	  1,324
   % of total shipments			     26%	     25%	     25%	     27%	     28%
  Revenue Yield				$   897	$   850	$   870	$   955	$   983

AUTOMOTIVE
  Revenues					$   885	$   921	$   746	$   577	$   492
   % of total revenues			     14%	     15%	     14%	     13%	     11%
  Shipments					    622	    692	    611	    487	    361
   % of total shipments				9%	     10%	     10%	     10%	      7%
  Revenue Yield				$ 1,423	$ 1,331	$ 1,220	$ 1,186	$ 1,364

CHEMICALS
  Revenues					$   752	$   756	$   641	$   492	$   504
   % of total revenues			     12%	     13%	     12%	     12%	     12%
  Shipments					    432	    453	    394	    315	    316
   % of total shipments	 			6%		6%		7%		7%		7%
  Revenue Yield				$ 1,742	$ 1,668	$ 1,627	$ 1,559	$ 1,595

METALS/CONSTRUCTION
  Revenues					$   674	$   689	$   567	$   375	$   369
   % of total revenues			     11%	     11%	     11%	      9%	      9%
  Shipments					    703	    757	    587	    372	    374
   % of total shipments			     11%	     11%	     10%	      8%		8%
  Revenue Yield				$   959	$   911	$   965	$ 1,008	$   987

PAPER/CLAY/FOREST
  Revenues					$   612	$   630	$   578	$   535	$   539
   % of total revenues			     10%	     10%	     11%	     13%	     13%
  Shipments					    450	    491	    465	    445	    457
   % of total shipments				7%		7%		8%		9%	     10%
  Revenue Yield				$ 1,357	$ 1,285	$ 1,243	$ 1,202	$ 1,178

AGR./CONSUMER PRODUCTS/GOVT.
  Revenues					$   603	$   609	$   539	$   468	$   476
   % of total revenues			     10%	     10%	     11%	     11%	     11%
  Shipments					    509	    525	    489	    441	    455
   % of total shipments				8%		8%		8%		9%		9%
  Revenue Yield				$ 1,185	$ 1,160	$ 1,103	$ 1,063	$ 1,046

                                          8


                                                  Year Ended December 31,
Principal Sources of	         --------------------------------------------------------
Railway Operating
Revenues					2001		2000		1999		1998		1997
--------------------			----		----		----		----		----
(Revenues in millions, shipments in thousands, revenue yield in dollars per shipment)

INTERMODAL
(Trailers, Containers
 and RoadRailers)
  Revenues					$ 1,123	$ 1,119	$   849	$   555	$   568
   % of total revenues			     18%	     18%	     16%	     13%	     13%
  Shipments					  2,214	  2,242	  1,896	  1,443	  1,472
   % of total shipments			     33%	     33%	     32%	     30%	     31%
  Revenue Yield				$   507	$   499	$   448	$   385	$   386

Total Railway Operating
 Revenues					$ 6,170	$ 6,159	$ 5,242	$ 4,254	$ 4,249
Total Railway Shipments			  6,625	  6,847	  5,961	  4,813	  4,759
Railway Revenue Yield			$   931	$   900	$   879	$   884	$   893
</TABLE>



	COAL TRAFFIC - Coal, coke and iron ore -- most of which is bituminous 
coal -- is NS' railroads' largest commodity group as measured by revenues.  
The railroads originated 155 million tons of coal, coke and iron ore in 2001 
and handled a total of 178 million tons.  Revenues from coal, coke and iron 
ore accounted for about 25 percent of NS' total railway operating revenues 
in 2001.


                                         9


	The following table shows total coal, coke and iron ore tonnage 
originated on line, received from connections and handled for the past 
five years:


<TABLE>
							Tons of Coal, Coke and Iron Ore (Millions)
							-----------------------------------------

<CAPTION>
						2001		2000		1999		1998		1997
						----		----		----		----		----

	<S>					<C>		<C>		<C>		<C>		<C>
	Originated				 155		 156		 138		 119		 119
	Received				  23		  19		  20		  15		  15
						----		----		----		----		----
	Handled				 178		 175		 158		 134		 134
						====		====		====		====		====
</TABLE>



<TABLE>
	Of the 155 million tons of coal, coke and iron ore originated at 
ports or on lines operated by NS' railroads in 2001, the approximate 
breakdown by origin state was as follows:

<CAPTION>
	Origin State	Millions of Tons
	------------	----------------
	<S>				 <C>
	West Virginia		  49
	Virginia			  32
	Pennsylvania		  26
	Kentucky			  24
	Ohio				   8
	Indiana			   7
	Alabama		  	   4
	Illinois			   4
	Other				   1
					 ---
					 155
					 ===
</TABLE>


	Of the 178 million tons handled, NS moved approximately 14 million 
tons for export, primarily through NS' pier facilities at Norfolk 
(Lamberts Point), Virginia; 20 million tons to domestic and Canadian 
steel industries; 133 million tons of steam coal to electric utilities; 
and 11 million tons to other industrial and miscellaneous users.

                                         10

	Total coal handled through all system ports in 2001 was 37 million 
tons.  Of this total, 14 million tons (including coastwise traffic) moved 
through Lamberts Point, 3 million tons moved through the Baltimore Terminal, 
10 million tons moved to various docks on the Ohio River, and 10 million 
tons moved to various Lake Erie ports.  Other than coal for export, 
virtually all coal handled by NS' railroads was terminated in states 
situated east of the Mississippi River.

	The quantities of NS export coal handled through Lamberts Point for 
the past five years were as follows:


<TABLE>
				Export Coal through Lamberts Point
					(Millions of tons)
				----------------------------------

<CAPTION>
		2001		2000		1999		1998		1997
		----		----		----		----		----
<S>		<C>		<C>		<C>		<C>		<C>
		12		16		17		24		28
</TABLE>


	See the discussion of coal traffic, by type of coal, in Part II, 

Item 7, "Management's Discussion and Analysis."

	MERCHANDISE TRAFFIC - The merchandise traffic group consists of 
intermodal and general merchandise, which is comprised of five major 
commodity groupings:  automotive; chemicals; paper, clay and forest 
products; metals and construction; and agriculture, consumer products and 
government.  Total merchandise revenues in 2001 were $4.6 billion, a 
2 percent decrease, compared with 2000.  Merchandise carloads and 
intermodal units handled in 2001 were 4.93 million, compared with 
5.16 million handled in 2000, a decrease of 4 percent.  Revenues and 
carloads in all general merchandise groups declined, a result of the 
weak economy.  Intermodal revenues were up $4 million, despite a 1 percent 
decline in traffic volume.

	In 2001, 156 million tons of merchandise freight, or approximately 
68 percent of total merchandise tonnage handled by NS, originated online.  
The balance of merchandise traffic was received from connecting carriers, 
usually at interterritorial gateways.  The principal interchange points 
for NS-received traffic included Chicago, Memphis, New Orleans, 
Cincinnati, Kansas City, Detroit, Hagerstown, St. Louis/East St. Louis 
and Louisville.


                                       11


	See the discussion of general merchandise rail traffic by commodity 
group and intermodal rail traffic in Part II, Item 7, "Management's 
Discussion and Analysis."


<TABLE>
	RAIL OPERATING STATISTICS - The following table sets forth certain 
statistics relating to NS' railroads' operations for the past five years, 
including operations in the Northern Region that commenced June 1, 1999:

<CAPTION>
									  Year Ended December 31,
								--------------------------------------
							2001		2000		1999		1998		1997
							----		----		----		----		----

<S>						     <C>	     <C>	      <C>	     <C>	     <C>
Revenue ton miles (billions)			   182	   197	    167	   135 	   137
Freight train miles
 traveled (millions)		              70.0        74.4         61.5       53.0        49.7
Revenue per ton mile                     $0.0339     $0.0312      $0.0315    $0.0316     $0.0310
Revenue tons per train                     2,604       2,653        2,710      2,539	 2,755
Revenue ton miles
 per man-hour worked                       3,023       2,888        2,577      2,659       2,930
Percentage ratio of
 railway operating
 expenses to railway
 operating revenues                         83.7%       89.7%        86.3%      75.3%       71.5%
</TABLE>


	FREIGHT RATES - In 2001, NS' railroads continued their reliance on 
private contracts and exempt price quotes as their predominant pricing 
mechanisms.  Thus, a major portion of NS' railroads' freight business is 
not currently economically regulated by the government.  In general, 
market forces have been substituted for government regulation and now are 
the primary determinant of rail service prices.

	In 2001, NS' railroads were found by the STB not to be "revenue 
adequate" based on results for the year 2000.  A railroad is "revenue 
adequate" under the applicable law when its return on net investment 
exceeds the rail industry's composite cost of capital.

	PASSENGER OPERATIONS - Regularly scheduled passenger trains are 
operated by Amtrak on NS' lines between Alexandria and New Orleans, and 
between Greensboro and Selma, North Carolina.  Commuter trains are 
operated on the NS line between Manassas and Alexandria under 
contract with two transportation commissions of the Commonwealth of 
Virginia.  NS also leases the Chicago to Manhattan, Illinois, line to 
the Commuter Rail Division of the Regional Transportation Authority of 
Northeast Illinois.  Since June 1, 1999, Norfolk Southern Railway has 
operated former Conrail lines on which Amtrak conducts regularly

                                     12

scheduled passenger operations between Chicago, Illinois, and Detroit, 
Michigan, and between Chicago and Harrisburg, Pennsylvania.

	Also since June 1, 1999, through its operation of PRR's routes, 
Norfolk Southern Railway has been providing freight service over former 
Conrail lines with significant ongoing Amtrak and commuter passenger 
operations, and is conducting freight operations over some trackage 
owned by Amtrak or by New Jersey Transit, the Southeastern 
Pennsylvania Transportation Authority, Metro-North Commuter Railway 
Company and Maryland DOT.  Finally, passenger operations are 
conducted either by Amtrak or by the commuter agencies over trackage 
owned by Pennsylvania Lines LLC, or by Conrail in the Shared 
Assets Areas.

	NONCARRIER OPERATIONS - NS' noncarrier subsidiaries engage 
principally in telecommunications; the acquisition, leasing and 
management of coal, oil, gas and minerals; the development of commercial 
real estate; and the leasing or sale of rail property and equipment.  
In 2001, no such noncarrier subsidiary or industry segment grouping of 
noncarrier subsidiaries met the requirements for a reportable business 
segment set forth in Statement of Financial Accounting Standards No. 131.


                                      13

	RAILWAY PROPERTY:


<TABLE>
	EQUIPMENT - As of Dec. 31, 2001, NS owned or leased the following 
units of equipment:

<CAPTION>
						Number of Units
				     ----------------------------	  Capacity
			          Owned*	   Leased**	   Total	of Equipment
				    -----	   ------	   -----	------------

<S>				    <C>	   <C>	   <C>	<C>
Type of Equipment
-----------------
Locomotives:								(Horsepower)
  Multiple purpose	    2,260	   1,048	   3,308	 11,031,600
  Switching	                  106	     113	     219	    319,800
  Auxiliary units	             59	      18	      77	          0
	                     ------	  ------	 -------	 ----------
    Total locomotives	    2,425	   1,179	   3,604	 11,351,400
	                     ======	  ======	 =======	 ==========

Freight Cars:                       	                        (Tons)
  Hopper      	         19,868	   4,987	  24,855	  2,613,619
  Box	                     17,629	   4,666	  22,295	  1,735,275
  Covered Hopper	         10,439	   3,035	  13,474	  1,468,158
  Gondola	               27,998	  10,362	  38,360	  4,107,632
  Flat	                3,711	   1,495	   5,206	    379,822
  Caboose	                  174	      77	     251	          0
  Other	                3,392	       0	   3,392	    173,580
                           ------	  ------	 -------	 ----------
    Total freight cars	   83,211	  24,622	 107,833	 10,478,086
                           ======	  ======	 =======	 ==========

Other:
  Work equipment	          4,971	   1,642	   6,613
  Vehicles	                3,391	   1,306	   4,697
  Highway trailers
   and containers	            403	   8,053	   8,456
  RoadRailers(RT)	          5,577	       0	   5,577
  Miscellaneous	          1,441	   9,698	  11,139
                           ------	  ------	 -------
    Total other	         15,783	  20,699	  36,482
                           ======	  ======	 =======
</TABLE>


	*  Includes equipment leased to outside parties and equipment subject 
         to equipment trusts, conditional sale agreements and capitalized 
         leases.

	** Includes 982 locomotives, 17,640 freight cars and 2,957 units 
         of other equipment leased from PRR.

                                     14



<TABLE>
	The following table indicates the number and year built for locomotives 
and freight cars owned at Dec. 31, 2001:

<CAPTION>
                                                Year Built
                    ----------------------------------------------------------------
                                                       1991-  1985-  1984 &
                    2001   2000   1999   1998   1997   1996   1990   Before   Total
                    ----   ----   ----   ----   ----   ----   ----   ------   -----

<S>	              <C>	   <C>    <C>    <C>    <C>    <C>    <C>    <C>      <C>
Locomotives:
  Number of	
   units            110	    60    147    119    120    407    381    1,081    2,425
  Percent of
   fleet	          4%     2%     6%     5%     5%    17%    16%      45%     100%

Freight cars:
  Number of
   units	         --	   106    503  1,567  1,076  6,344  5,132   68,483   83,211
  Percent of
   fleet  	         --	    --%     1%     2%     1%     8%     6%      82%     100%
</TABLE>


	As of Dec. 31, 2001, the average age of the locomotive fleet was 
15.7 years.  During 2001, 126 locomotives, the average age of which was 
22.4 years, were retired.  The average age of the freight car fleet at 
Dec. 31, 2001, was 25.4 years.  During 2001, 4,407 freight cars were 
retired. Since 1988, about 29,000 coal cars have been rebodied.  As a 
result, the remaining serviceability of the freight car fleet is greater 
than may be inferred from the high percentage of freight cars built in 
earlier years.


<TABLE>

                                        Annual Average Bad Order Ratio
                                     -----------------------------------
<CAPTION>
                                     2001    2000    1999    1998   1997
                                     ----    ----    ----    ----   ----
<S>	                               <C>     <C>     <C>     <C>    <C>
Freight Cars 
  (excluding cabooses): 
	NS Rail                        6.9%	   5.7%    3.7%    4.1%   4.6%

Locomotives: 
	NS Rail                        5.8%	   5.5%    5.3%    4.3%   5.0%
</TABLE>



                                     15

	Ongoing freight car and locomotive maintenance programs are intended 
to ensure the highest standards of safety, reliability, customer satisfaction 
and equipment marketability.  In past years, the freight car bad order ratio 
reflected the storage of certain types of cars that were not in high demand.  
The ratio had declined more recently as a result of a disposition program 
for underutilized, unserviceable and overage revenue cars.  The ratio rose 
in 2000 and 2001 as a result of decreased maintenance activity.  The 
locomotive bad order ratio also includes units out of service for routine 
maintenance and modifications.  The increase in the locomotive bad order 
ratio in 1999 was primarily due to the maintenance requirements of units 
being rented to meet short-term needs and to weather-related failures.  
The ratio remained high in 2000 as maintenance activities were curtailed 
in response to a slowing economy.  The higher ratio in 2001 reflected units 
out of service related to the resumption of maintenance and modification 
activities.

	TRACKAGE - All NS trackage is standard gauge, and the rail in 
approximately 97 percent of the main line trackage (including first, second, 
third and branch main tracks, all excluding trackage rights) ranges from 
100 to 155 pounds per yard.  Of the approximately 31,300 miles of track 
maintained as of Dec. 31, 2001, about 21,200 were laid with welded rail.


<TABLE>
	The density of traffic on running tracks (including passing tracks 
but excluding trackage rights) during 2001 was as follows:

<CAPTION>
              Gross tons of
              freight carried
              per track mile        Track miles of        Percent
              (Millions)            running tracks        of total
              ---------------	      --------------	    --------

<S>	        <C>	                     <C>	             <C>
              0-4                       6,044                 27
              5-19                      7,769                 35
              20 and over               8,629                 38
		                           ------	             ---
                                       22,442                100
                                       ======	             ===
</TABLE>


	


                                       16


<TABLE>
	The following table summarizes certain information about NS' track 
roadway additions and replacements during the past five years:

<CAPTION>
                                       2001      2000      1999      1998      1997
                                       ----      ----      ----      ----      ----

     <s>                               <c>       <c>       <c>       <c>       <c>
     Track miles of rail installed       254       390       403       429       451
     Miles of track surfaced           3,836     3,687     5,087     4,715     4,703
     New crossties installed
      (millions)                         1.5       1.5       2.3       2.0       2.2
</TABLE>


	MICROWAVE SYSTEM - The NS microwave system, consisting of 7,282 radio 
route miles, 442 active stations and 4 passive repeater stations, provides 
communications between most operating locations.  The microwave system is used 
primarily for voice communications, VHF radio control circuits, data and 
facsimile transmissions, traffic control operations and AEI data transmissions.

	TRAFFIC CONTROL - Of a total of 21,500 route miles operated by NS, 
excluding trackage rights over foreign lines, 11,486 miles are signalized 
including 8,521 miles of centralized traffic control (CTC) and 2,965 miles 
of automatic block signals.  Of the 8,521 miles of CTC, 1,870 miles are 
controlled by data radio originating at 147 base station radio sites.

	COMPUTERS - Data processing facilities connect the yards, terminals, 
transportation offices, rolling stock repair points, sales offices and other 
key system locations to the central computer complex in Atlanta, Georgia.  
Operating and traffic data are compiled and stored to provide customers with 
information on their shipments throughout the system.  Data processing 
facilities are capable of providing current information on the location of 
every train and each car on line, as well as related waybill and other train 
and car movement data.  Additionally, these facilities afford substantial 
capacity for, and are utilized to assist management in the performance of, 
a wide variety of functions and services, including payroll, car and revenue 
accounting, billing, material management activities and controls, and 
special studies.

	OTHER - The railroads have extensive facilities for support of 
operations, including freight depots, car construction shops, maintenance 
shops, office buildings, and signals and communications facilities.

	ENCUMBRANCES - Certain railroad equipment is subject to the prior 
lien of equipment financing obligations amounting to approximately 
$895 million as of Dec. 31, 2001, and $816 million at Dec. 31, 2000.

                                        17


	CAPITAL EXPENDITURES - Capital expenditures for road, equipment and 
other property for the past five years were as follows (including 
capitalized leases):


<TABLE>
                                    Capital Expenditures
                         -------------------------------------------
<CAPTION>
                      2001       2000       1999       1998       1997
                      ----       ----       ----       ----       ----
                                  (In millions of dollars)

     <S>              <C>        <C>        <C>        <C>        <C>
     Road             $   505    $   557    $   559    $   612    $   599
     Equipment            233        146        349        442        306
     Other property         8         28          4          6         24
                       ------	    ------     ------     ------     ------
       Total          $   746    $   731    $   912    $ 1,060    $   929
                       ======     ======     ======     ======     ======
</TABLE>


	Capital spending and maintenance programs are and have been designed 
to assure the ability to provide safe, efficient and reliable transportation 
services.  For 2002, NS has budgeted $705 million of capital spending.  See 
the discussion following "Cash used for investing activities," on Page 40 
in Part II, Item 7, "Management's Discussion and Analysis."

	ENVIRONMENTAL MATTERS - Compliance with federal, state and local laws 
and regulations relating to the protection of the environment is a principal 
NS goal.  To date, such compliance has not affected materially NS' capital 
additions, earnings, liquidity or competitive position.  See the discussion 
of "Environmental Matters" on Page 45 in Part II, Item 7, "Management's 
Discussion and Analysis," and in Note 18 to the Consolidated Financial 
Statements on Page 79.

	EMPLOYEES - NS employed an average of 30,894 employees in 2001, 
compared with an average of 33,738 in 2000.  The decrease reflects the 
effects of the early retirement and work-force reduction programs in 2000.  
The approximate average cost per employee during 2001 was $52,000 in 
wages and $21,000 in employee benefits.  

	Approximately 85 percent of NS' railroad employees are covered by 
collective bargaining agreements with 15 different labor unions.  See the 
discussion of "Labor Agreements" on Page 43 in Part II, Item 7, 
"Management's Discussion and Analysis."

                                       18


	GOVERNMENT REGULATION - In addition to environmental, safety, 
securities and other regulations generally applicable to all businesses, 
NS' railroads are subject to regulation by the STB, which succeeded the 
ICC on Jan. 1, 1996.  The STB has jurisdiction over some rates, routes, 
conditions of service and the extension or abandonment of rail lines.  
The STB also has jurisdiction over the consolidation, merger or acquisition 
of control of and by rail common carriers.  The Department of Transportation 
regulates certain track and mechanical equipment standards.

	The relaxation of economic regulation of railroads, begun over two 
decades ago by the ICC under the Staggers Rail Act of 1980, has continued 
under the STB.  Significant exemptions are TOFC/COFC (i.e., "piggyback") 
business, rail boxcar traffic, lumber, manufactured steel, automobiles and 
certain bulk commodities such as sand, gravel, pulpwood and wood chips for 
paper manufacturing.  Transportation contracts on regulated shipments 
effectively remove those shipments from regulation as well.  About 
75 percent of NS' freight revenues come from either exempt traffic or 
traffic moving under transportation contracts.

	Efforts may be made in 2002 to re-subject the rail industry to 
unwarranted federal economic regulation.  The Staggers Rail Act of 1980, 
which substantially reduced such regulation, encouraged and enabled rail 
carriers to innovate and to compete for business, thereby contributing to 
the economic health of the nation and to the revitalization of the 
industry.  Accordingly, NS will oppose efforts to reimpose unwarranted 
economic regulation. 

	COMPETITION - There is continuing strong competition among rail, 
water and highway carriers.  Price is usually only one factor of 
importance as shippers and receivers choose a transport mode and specific 
hauling company.  Inventory carrying costs, service reliability, ease of 
handling and the desire to avoid loss and damage during transit are also 
important considerations, especially for higher-valued finished goods, 
machinery and consumer products.  Even for raw materials, semi-finished 
goods and work-in-process, users are increasingly sensitive to transport 
arrangements which minimize problems at successive production stages.

	NS' primary rail competitor is the CSX system; both operate 
throughout much of the same territory.  Other railroads also operate in 
parts of the territory.  NS also competes with motor carriers, water 
carriers and with shippers who have the additional option of handling 
their own goods in private carriage.

	Certain cooperative strategies between railroads and between 
railroads and motor carriers enable carriers to compete more 
effectively in specific markets.

                                     19



I
tem 3.	Legal Proceedings.
------	-----------------

	None.


Item 4.	Submission of Matters to a Vote of Security Holders. 
------	---------------------------------------------------

	There were no matters submitted to a vote of security holders during 
the fourth quarter of 2001.


Executive Officers of the Registrant.
------------------------------------

	Norfolk Southern's executive officers generally are elected and 
designated annually by the Board of Directors at its first meeting held 
after the annual meeting of stockholders, and they hold office until 
their successors are elected.  Executive officers also may be elected 
and designated throughout the year as the Board of Directors considers 
appropriate.  There are no family relationships among the officers, nor 
any arrangement or understanding between any officer and any other person 
pursuant to which the officer was selected.  The following table sets 
forth certain information, as of February 1, 2002, relating to the 
executive officers.

                                        Business Experience During Past
Name, Age, Present Position             Five Years
---------------------------             -------------------------------

David R. Goode, 61,                     Present position since September
  Chairman, President and                 1992.
  Chief Executive Officer

L. I. Prillaman, 58,                    Present position since August 1998;
  Vice Chairman and                       prior thereto was Executive Vice
  Chief Marketing Officer                 President-Marketing

Stephen C. Tobias, 57,                  Present position since August 1998;
  Vice Chairman and                       prior thereto was Executive Vice
  Chief Operating Officer                 President-Operations.

Henry C. Wolf, 59,                      Present position since August 1998;
  Vice Chairman and                       prior thereto was Executive Vice
  Chief Financial Officer                 President-Finance. 

John F. Corcoran, 61,                   Present position since August 1997;
  Senior Vice President-                  prior thereto was Vice President-
  Public Affairs                          Public Affairs.

                                      20


                                        Business Experience During Past
Name, Age, Present Position             Five Years
---------------------------             --------------------------------

John W. Fox, Jr., 54,                   Present position since April 1, 2001.
  Senior Vice President-                  Served as Senior Vice President -
  Coal Services                           Coal Marketing from December 1999 
                                          to April 1, 2001, and prior thereto 
                                          was Vice President - Coal Marketing.

James A. Hixon, 48,                     Present position since February 1, 
  Senior Vice President-                  2001.  Served as Senior Vice
  Administration                          President-Employee Relations from 
                                          November 1999 to February 1, 2001, 
                                          and prior thereto was Vice 
                                          President-Taxation.

Henry D. Light, 61,                     Present position since January 22,
  Senior Vice President-Law               2002.  Served as Vice President-
                                          Law from April 2000 to January 22,
                                          2002, and prior thereto was General
                                          Counsel-Operations.

James W. McClellan, 62,                 Present position since August 1998;
  Senior Vice President-                  prior thereto was Vice President-
  Planning                                Strategic Planning. 

Kathryn B. McQuade, 45,                 Present position since April 2000.
  Senior Vice President-                  Served as Vice President-Financial
  Financial Planning                      Planning from August 1998 to 
                                          April 2000, and prior thereto was 
                                          Vice President-Internal Audit.

Charles W. Moorman, 50,                   Present position since October 1999;
  President-Thoroughbred                    prior thereto was Vice President-
  Technology and                            Information Technology.
  Telecommunications, Inc.

John P. Rathbone, 50,                     Present position since April 2000;
  Senior Vice President                     prior thereto was Vice President
  and Controller                            and Controller.

Stephen P. Renken, 58,                    Present position since February 1,
  Senior Vice President-                    2001.  Served as Vice President-
  Chief Information Officer                 Information Technology from
                                            September 1999 to February 1, 2001,
                                            Assistant Vice President-Program
                                            Management from December 1997 to
                                            September 1999, and prior thereto
                                            was a consultant to NS.

                                      21


                                          Business Experience During Past
Name, Age, Present Position               Five Years
---------------------------               -------------------------------

John M. Samuels, 58,                      Present position since April 2000;
  Senior Vice President-                    Served as Vice President-Operations
  Operations Planning and                   Planning and Budget from January
  Support                                   1998 to April 2000; and prior
                                            thereto was Vice President-
                                            Operating Assets of Conrail.

Donald W. Seale, 49,                      Present position since December 1999;
  Senior Vice President-                    prior thereto was Vice President-
  Merchandise Marketing                     Merchandise Marketing.


                                     22



PART II
-------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)


Item 5.     Market for Registrant's Common Stock and Related
------      ------------------------------------------------
            Stockholder Matters.
            -------------------

                   NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                       STOCK PRICE AND DIVIDEND INFORMATION
                                   (Unaudited)


<TABLE>
	The Common Stock of Norfolk Southern Corporation, owned by 53,042 
stockholders of record as of Dec. 31, 2001, is traded on the New York Stock 
Exchange with the symbol NSC.  The following table shows the high and low 
sales prices and dividends per share, by quarter, for 2001 and 2000 (prices 
quoted in fractions have been rounded to the nearest cent).

<CAPTION>
                                              Quarter
                          ----------------------------------------------
2001                      1st           2nd            3rd           4th
----                      ---           ---            ---           ---
<S>                    <C>           <C>            <C>           <C>
Market price
   High                $  18.90      $  24.11       $  22.60      $  19.88
   Low                    13.63         15.80          13.41         15.19
Dividends per share    $   0.06      $   0.06       $   0.06      $   0.06


2000                      1st           2nd            3rd           4th
----                      ---           ---            ---           ---
Market price
   High                $  22.75      $  19.69       $  19.75      $  15.63
   Low                    12.69         14.19          14.13         11.94
Dividends per share    $   0.20      $   0.20       $   0.20      $   0.20
</TABLE>



                                     23



Item 6.	Selected Financial Data.
------	-----------------------


<TABLE>
                 NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                         FIVE-YEAR FINANCIAL REVIEW
                                1997 - 2001
                                  Page One

<CAPTION>
                                    2001        2000(1)     1999(2)     1998        1997
                                    ----        ----        ----        ----        ----
                                          ($ in millions, except per share amounts) 

<S>                                 <C>         <C>         <C>         <C>         <C>
RESULTS OF OPERATIONS
Railway operating revenues          $ 6,170     $ 6,159     $ 5,242     $ 4,254     $ 4,249
Railway operating expenses            5,163       5,526       4,524       3,202       3,036
                                     ------      ------      ------      ------      ------
  Income from
   railway operations                 1,007         633         718       1,052       1,213

Other income - net                       99         168         164         309         170
Interest expense on debt                553         551         531         516         385
                                     ------      ------      ------      ------      ------
  Income from continuing
   operations before
   income taxes                         553         250         351         845         998

Provision for income taxes              191          78         112         215         299
                                     ------      ------      ------      ------      ------
  Income from continuing
   operations                           362         172         239         630         699

Discontinued operations (3)              13          --          --         104          22
                                     ------      ------      ------      ------      ------
    Net income                      $   375     $   172     $   239     $   734     $   721
                                     ======      ======      ======      ======      ======

PER SHARE DATA
Net income - basic                  $  0.97     $  0.45     $  0.63     $  1.94     $  1.91
Net income - diluted                $  0.97     $  0.45     $  0.63     $  1.93     $  1.90
Dividends                           $  0.24     $  0.80     $  0.80     $  0.80     $  0.80
Stockholders' equity
 at year end                        $ 15.78     $ 15.16     $ 15.50     $ 15.61     $ 14.44
</TABLE>



                                      24


Item 6.	Selected Financial Data. (continued)
------	-----------------------


<TABLE>
                 NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                           FIVE-YEAR FINANCIAL REVIEW
                                  1997 - 2001
                                    Page Two

<CAPTION>
                                    2001        2000(1)     1999(2)     1998       1997
                                    ----        ----        ----        ----       ----
                                          ($ in millions, except per share amounts)

<S>                                 <C>         <C>         <C>         <C>        <C>
FINANCIAL POSITION 
Total assets                        $ 19,418    $ 18,976    $ 19,250    $ 18,180   $ 17,350
Total long-term debt, 
 including current
 maturities                         $  7,632    $  7,636    $  8,059    $  7,624   $  7,459
Stockholders' equity                $  6,090    $  5,824    $  5,932    $  5,921   $  5,445

OTHER

Capital expenditures                $    746    $    731    $    912    $  1,060   $    929

Average number of shares
 outstanding (thousands)             385,158     383,358     380,606     378,749    376,593

Number of stockholders
  at year end                         53,042      53,194      51,123      51,727     50,938

Average number of employees:
  Rail                                30,510      33,344      30,897      24,185     23,323
  Nonrail (3)                            384         394         269         115      2,494
                                     -------     -------     -------     -------    -------

    Total                             30,894      33,738      31,166      24,300     25,817
                                     =======     =======     =======     =======    =======
</TABLE>


NOTES

(1)	2000 operating expenses include $165 million in work-force reduction 
      costs for early retirement and separation programs.  These costs reduced 
      net income by $101 million, or 26 cents per diluted share.
(2)	On June 1, 1999, NS began operating a substantial portion of Conrail's 
      properties. As a result, both its railroad route miles and the number 
      of its railroad employees increased by approximately 50% on that date.
(3)	In 1998, NS sold all the common stock of its motor carrier subsidiary, 
      North American Van Lines, Inc. (NAVL), for $207 million and recorded 
      a $90 million pretax ($105 million, or 28 cents per diluted share, 
      after-tax) gain. Accordingly, NAVL's results of operations, financial 
      position and cash flows are presented as "Discontinued operations."  
      Results in 2001 include an additional after-tax gain of $13 million, 
      or 3 cents per diluted share, that resulted from the expiration of 
      certain indemnities contained in the sales agreement.

                                       25



Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations.
            -----------------------------------

                  NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                   Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


The following discussion and analysis should be read in conjunction with 
the Consolidated Financial Statements and Notes beginning on Page 51 
and the Five-Year Financial Review beginning on Page 23.

SUMMARIZED RESULTS OF OPERATIONS

2001 Compared with 2000
-----------------------
	Net income in 2001 was $375 million, up 118%. Results in 2001 
included a $13 million gain related to the 1998 sale of NS' former motor 
carrier subsidiary (see Note 17 on Page 79). Income from continuing 
operations, which excludes that gain, was $362 million, up 110%.  Results 
in 2000 included $165 million of costs related to actions taken to reduce 
the size of the work force, which reduced income from continuing operations 
by $101 million, or 26 cents per diluted share. Excluding these costs, 
income from continuing operations increased $89 million, or 33%, in 2001. 
The improvement resulted from higher income from railway operations, which 
was up $209 million, or 26%, that more than offset lower nonoperating 
income, which was down $69 million (see Note 3 on Page 61).
	Diluted earnings per share were 97 cents, up 116%. Diluted earnings 
per share from continuing operations were 94 cents, up 109%. Excluding 
the work-force reduction costs in 2000, diluted earnings per share from 
continuing operations were up 32%.

2000 Compared with 1999
-----------------------
	Results for 2000 reflected the first full year of operations over 
Conrail's lines. On June 1, 1999 (the Closing Date), NS' railroad 
subsidiary (Norfolk Southern Railway Company [NSR]) began operating a 
substantial portion of Conrail's properties (substantially all of which 
comprise NSR's Northern Region) under various agreements with Pennsylvania 
Lines LLC (PRR), a wholly owned subsidiary of Consolidated Rail Corporation 
(CRC) (see Note 2 on Page 58). As a result, both the railroad route miles 
operated by NSR and the number of its railroad employees increased by 
approximately 50% on that date. Results for 1999 reflect five months 
(January through May) of operating the former Norfolk Southern railroad 
system and seven months (June through December) of operating the present 
system, which includes the Northern Region.
	Results in 1999 were adversely affected by difficulties encountered 
in the assimilation of the Northern Region into NSR's existing system that 
resulted in system congestion, an increase in cars on line, increased 
terminal dwell time and reduced system velocity. These service issues 
and actions taken to address them increased operating expenses, primarily 
labor costs and equipment costs, including car hire and locomotive rentals. 
Moreover, revenues were lower than expected as some customers diverted 
traffic to other modes of transportation.

                                       26


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

	Net income in 2000 was $172 million, down 28%. Excluding the 
$101 million after-tax cost of the work-force reductions, net income 
would have been $273 million, up 14%. The increase resulted from gains 
from the sale of nonoperating properties (see Note 3 on Page 61) and 
higher income from railway operations, compared with a weak 1999.
	Diluted earnings per share were 45 cents, down 29%. Excluding the 
effects of the work-force reduction costs, diluted earnings per share 
were up 13%.

DETAILED RESULTS OF OPERATIONS

Railway Operating Revenues
--------------------------
	Railway operating revenues were $6.2 billion in both 2001 and 2000, 
and were $5.2 billion in 1999. Revenues in 1999 include results of 
operations in the Northern Region for seven months. The following table 
presents a three-year comparison of revenues by market group.


<TABLE>
                   RAILWAY OPERATIING REVENUES BY MARKET GROUP

<CAPTION>
($ in millions)                                 2001        2000        1999
--------------                                  ----        ----        ----
<S>                                           <C>         <C>         <C>
Coal                                          $ 1,521     $ 1,435     $ 1,322
General merchandise:
  Automotive                                      885         921         746
  Chemicals                                       752         756         641
  Metals/construction                             674         689         567
  Paper/clay/forest                               612         630         578
  Agriculture/consumer products/government        603         609         539
                                               ------      ------      ------
General merchandise                             3,526       3,605       3,071
Intermodal                                      1,123       1,119         849
                                               ------      ------      ------
    Total                                     $ 6,170     $ 6,159     $ 5,242
                                               ======      ======      ======
</TABLE>


	In 2001, revenues fell for all the general merchandise market groups.  
However, a 6% increase in coal revenues offset the effects of the lower 
general merchandise revenues.  As shown in the following table, higher 
revenue yields offset the effects of lower traffic volume.


<TABLE>
                  RAILWAY OPERATING REVENUE VARIANCE ANALYSIS
                            Increases (Decreases)

<CAPTION>
($ in millions)                     2001 vs. 2000           2000 vs. 1999
--------------                      -------------           -------------
<S>                                    <C>                      <C>
Volume                                 $ (200)                  $  779	
Revenue per unit/mix                      211                      138	
                                        -----                    -----
  Total                                $   11                   $  917
                                        =====                    =====

</TABLE>


                                      27


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -------------------------------------------------

	Revenue per unit increased in all market groups, principally due to 
rate increases, use of higher-capacity equipment and favorable changes in 
the mix of traffic.
	In 2000, revenues increased for all market groups, reflecting a full 
year of handling Northern Region traffic. Revenues improved for the last 
seven months, a comparison that fully includes the Northern Region in both 
years, reflecting recovery of most of the diverted traffic and new business. 
However, weakness in the economy resulted in lower revenues very late in the 
year. Revenue per unit improved in most market groups, principally due to the 
effects of Northern Region traffic and increased rates. About half of the 
revenue per unit increase for the intermodal market group was attributable to 
the effects of the consolidation of Triple Crown Services Company (TCS) 
revenues (see discussion of intermodal revenues below).

	COAL tonnage increased 2% in 2001 and revenues increased 6%. Revenue per 
unit increased 6%, a result of rate increases, including lower volume-related 
refunds on export coal shipments, gains in tonnage per car and favorable 
changes to the mix of traffic (less shorter-haul business). Coal, coke and 
iron ore revenues represented 25% of total railway operating revenues in 2001, 
and 83% of NS' coal shipments originated on lines it operated.
	In 2000, coal tonnage increased 11%, and revenues increased 9%, 
reflecting a full year of Northern Region traffic. Revenue per unit declined, 
a result of a higher proportion of traffic with a shorter length of haul, 
principally attributable to a full year of Northern Region operations.

                    TOTAL COAL, COKE AND IRON ORE TONNAGE

(In millions of tons)                      2001       2000        1999
--------------------                       ----       ----        ----
Utility                                     133        119         108
Export                                       14         20          18	
Domestic metallurgical                       20         25          22	
Other                                        11         11          10
                                            ---        ---         ---
    Total                                   178        175         158
                                            ===        ===         ===

	Utility coal traffic increased 11% in 2001, reflecting higher demand 
for coal-fired electricity and the effects of very high natural gas prices 
early in the year. High demand for electricity, a volatile market for 
natural gas and production problems at a number of large mines in the East 
late in 2000 combined to increase the demand for coal early in 2001 with a 
resulting increase in coal prices. Utility coal traffic volume also 
benefited from the shifting of coal that traditionally would have been 
bound for export to the domestic market.
	In 2000, utility coal traffic increased 11%, reflecting a full year 
of Northern Region operations. The effects of expanded operations were 
somewhat offset by coal production problems at several NS-served mines, 
unanticipated outages at some NS-served utility plants, large stockpiles 
at the beginning of the year and mild summer weather in portions of NS' 
service territory.
	The near-term outlook for utility coal remains positive. U.S. 
demand for electricity continues to grow rapidly, and coal-fired 
generation remains the cheapest marginal source of electricity. Several 
underutilized coal-fired power plants are making the transition


                                      28


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

from peak-only generation to full-time generation. In addition, although 
natural gas prices have returned to more normal levels, the volatility of 
natural gas prices may improve the long-term competitive position of 
coal-fired generation.
	Phase II of Title IV of the Clean Air Act Amendments of 1990, which 
imposes more stringent limits on sulfur dioxide emissions, took effect on 
Jan. 1, 2000. Many of the mines served by NS produce coals that satisfy 
Phase II requirements. In addition, substantial banks of sulfur dioxide 
allowances held by many NS-served utilities should continue to provide a 
market for other NS-served mines for many years. However, several federal 
environmental regulatory initiatives continued to be pursued during 2001, 
including "new source review" for older coal-fired plants. Many of the 
rules that have been promulgated to date are in litigation. If the rules 
survive litigation and are implemented, they could increase the cost 
of coal-fired generation and potentially adversely affect the value of 
the sulfur dioxide allowance bank.
	The Bush Administration rejected in 2001 the Kyoto Protocol and 
withdrew U.S. participation in that process. If implemented, the proposed 
Kyoto limits on greenhouse gases could have put additional cost pressures 
on coal-fired generation. The U.S. withdrawal from the Kyoto process has 
renewed interest in building coal-fired generation plants. 
	The 1999 decision by a federal district court judge in West Virginia 
holding that some common mountaintop mining practices in the coal industry 
are illegal was overturned in April 2001 by the U.S. Fourth Circuit 
Court of Appeals. In January 2002, the U.S. Supreme Court refused to 
hear an appeal of the case.

	Export coal tonnage declined 30% in 2001. The rapid rise of domestic 
utility coal prices early in the year enticed many foreign-market 
suppliers to place much of their 2001 production in the domestic utility 
markets. In addition, production difficulties at several large NS-served 
mines and flooding in West Virginia in July significantly reduced the 
supply of low volatile coal. The combination of these factors resulted 
in most of the decline in shipments of export coal. Steam coal exported 
through Baltimore declined 32%, and export metallurgical coals through 
Norfolk declined by 30%. Demand for steam coal to export strengthened 
in the last half of 2001; however, the strong U.S. demand limited NS' 
participation in this market. Demand for coking coal to export continued 
to soften, as steel production moved from traditional NS markets in 
Europe to Asia, which in recent years has been supplied by Australian 
or Canadian coals.
	In 2000, export coal tonnage increased 8%, a result of a full year 
of access to Baltimore through the Northern Region, mitigated by lower 
tonnage through Norfolk. Several additional factors also adversely 
affected export coal traffic volume. Delayed settlements between buyers 
and sellers in the spring postponed shipments of some export tonnage. 
Foreign buyers ultimately intended to purchase additional U.S. 
metallurgical coal, but production capacity available for export had 
been diminished by two years of dramatically lower prices. Toward the 
end of 2000, production difficulties at several large NS-served mines 
significantly reduced tonnage available for export. Limited supplies 
overall prevented other coal producers from providing substitute coal.
	Export coal tonnage is expected to continue to be limited by supply 
and subject to the fluctuations of the world market. While the 
consolidation of Australian producers should help stabilize that supply 
channel, new Australian production could displace U.S.

                                       29


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

volumes to Europe absent any increase in demand. Moreover, Chinese 
participation in Pacific Rim markets could displace Australian coals there 
and force that tonnage to Europe.

	Domestic metallurgical coal, coke and iron ore traffic decreased 18% 
in 2001, due to a decline in the market for domestic steel. The softening 
economy and an increase in steel imports drastically cut blast furnace 
production, sharply reducing the demand for coking coal, iron ore and coke. 
The increase in imported steel also resulted in lower prices that put 
pressure on the U.S. steel industry and led to plant closures and 
bankruptcies that included some NS customers.
	In 2000, domestic metallurgical coal, coke and iron ore traffic 
increased 17%, due to a full year of Northern Region operations. In 
addition, increased production in the first half of the year and gains 
in NS market share contributed to the higher traffic. However, the 
softening economy and increased steel imports diminished blast furnace 
production rates, sharply reducing demand for raw materials.
	Domestic metallurgical coal, coke and iron ore traffic is expected 
to continue to suffer from the decline in demand for domestically produced 
steel. However, the United States has applied a tariff on imported coke, 
which has reduced its entry to the U.S. market. Moreover, the U.S. 
International Trade Commission has recommended that President Bush take 
similar action on imported steel. But long-term demand is expected to 
continue to decline, due to advanced technologies that allow production of 
steel using less coke.

	Other coal traffic, principally steam coal shipped to manufacturing 
plants, increased 6% in 2001 and 4% in 2000. The gain in 2001 resulted from 
new and increased business from industrial customers. The increase in 2000 
reflected a full year of handling Northern Region traffic; however, this 
was mitigated by the loss of some traffic to competitors.


<TABLE>
                                  COAL
            (Shown as a graph in the Annual Report to Stockholders)
                                (millions)

<CAPTION>
                  2001              2000              1999
                  ----              ----              ----
<S>             <C>                <C>               <C>
                $1,521             $1,435            $1,322
</TABLE>


	Revenues increased $86 million, or 6%, in 2001, primarily due 
      to increased utility coal traffic volume and higher revenue 
      per unit.  This group includes utility coal, export coal, 
      domestic metallurgical coal and industrial coal, coke and 
      iron ore. 

	GENERAL MERCHANDISE traffic volume (carloads) decreased 7% in 2001, 
and revenues decreased 2%, principally due to the effects of the weak 
economy. In 2000, traffic volume increased 15%, and revenues increased 17%, 
reflecting a full year of operating the Northern Region.


                                      30


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

	Automotive traffic volume decreased 10%, and revenues declined 4% in 
2001, principally due to a 10% drop in vehicle production. Revenue per unit 
increased 7%, principally due to rate increases, efficiencies gained from the 
redesign of the mixing center network and use of higher capacity equipment.
	In 2000, automotive traffic volume increased 13%, and revenues increased 
23%, reflecting a full year of Northern Region operations, record vehicle 
production and the recapture of business diverted because of service issues 
after the Closing Date. The carload increase was less than the revenue 
increase principally due to the effects of a redesign of the mixing center 
network. This redesign improves vehicle velocity through the network and 
includes changes in traffic flows that resulted in a decline in carloads, 
with no corresponding decrease in revenues.
	Ford Motor Company, NS' largest customer, has announced potential 
reductions in vehicle production which could affect NS volumes. However, 
automotive revenues in 2002 are expected to be comparable to those of 2001, 
as light vehicle production is predicted to be flat.


<TABLE>
                                 AUTOMOTIVE
           (Shown as a graph in the Annual Report to Stockholders)
                                 (millions)

<CAPTION>
                  2001              2000              1999
                  ----              ----              ----
<S>             <C>               <C>               <C>
                $  885            $  921            $  746
</TABLE>


	Revenues decreased $36 million, or 4%, in 2001, due to a 10% drop 
      in traffic volume.  Revenue per unit increased, principally due 
      to rate increases and improved efficiency.  This group includes 
      finished vehicles for BMW, DaimlerChrysler, Ford Motor Company, 
      General Motors, Honda, Isuzu, Jaguar, Land Rover, Mazda, 
      Mercedes-Benz, Mitsubishi, Nissan, Saab, Subaru, Suzuki, Toyota 
      and Volkswagen, and auto parts for Ford Motor Company, General 
      Motors, Mercedes-Benz and Toyota. 

	Chemicals traffic volume decreased 5%, and revenues decreased 1% in 
2001. The weak economy depressed shipments of petroleum, plastics, 
industrial and miscellaneous chemicals. These declines were partially 
offset by new business through NS' Thoroughbred Bulk Transfer (TBT) 
facilities that handle chemicals and bulk commodities for customers not 
located on NS-served lines. Revenue per unit increased due to higher rates 
and a favorable change in the mix of traffic (more longer-haul moves).
	In 2000, chemicals traffic volume increased 15%, and revenues 
increased 18%, due to a full year of Northern Region operations and the 
return of traffic that had been diverted because of service issues after 
the Closing Date. Shipments of miscellaneous chemicals, chlorine, caustic 
soda and plastics continued to rebound, but sulfur carloads were down due 
to weak fertilizer markets. Chemicals shipments continued to increase 
through NS' TBT facilities.
	Chemicals revenues are expected to continue to be adversely affected 
until the economy recovers. However, NS expects to benefit from new business 
and improved yields.


                                     31


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------


<TABLE>
                                  CHEMICALS
             (Shown as a graph in the Annual Report to Stockholders)
                                  (millions)

<CAPTION>
                 2001               2000               1999
                 ----               ----               ----
<S>             <C>                <C>                <C>
                $ 752              $ 756              $ 641
</TABLE>


		Revenues decreased $4 million, or 1%, in 2001, due to lower 
		traffic volumes that resulted from the weak economy.  This 
		group includes sulfur and related chemicals, petroleum 
		products, chlorine and bleaching compounds, plastics, 
		rubber, industrial chemicals, chemical wastes and 
		municipal wastes.

	Metals and construction traffic volume decreased 7%, and revenues 
declined 2% in 2001, reflecting weakness in the steel and construction 
industries. The steel industry recession, which began in 2000, has 
resulted in excess capacity and the closing of numerous steel mills. 
Revenue per unit increased due to higher rates and favorable changes in 
the mix of traffic.
	In 2000, metals and construction traffic volume increased 29%, and 
revenues increased 22%, reflecting a full year of operations over the 
expanded system. Revenue per unit declined, largely due to a change in the 
mix of traffic. Metals traffic benefited from increased shipments of sheet 
steel, imported slab steel and ferrous scrap; however, this was tempered 
by a significant slowdown in the steel industry in the last half of the 
year. Construction traffic benefited from continued strength in housing 
starts and highway construction.
	Metals and construction revenues are expected to suffer from the 
effects of a continued softness in the steel market. However, increased 
highway construction in NS' service area is expected to mitigate the 
drop in metals demand.


<TABLE>
                            METALS AND CONSTRUCTION
            (Shown as a graph in the Annual Report to Stockholders)
                                   (millions)

<CAPTION>
                   2001             2000               1999
                   ----             ----               ----
<S>               <C>              <C>                <C>
                  $ 674            $ 689              $ 567
</TABLE>


		Revenues decreased $15 million, or 2%, in 2001, principally 
		due to weakness in the steel industry.  Revenue per unit 
		increased due to higher rates and favorable changes in the 
		mix of traffic.  This group includes steel, aluminum products, 
		machinery, scrap metals, cement, aggregates, bricks and minerals.

	Paper, clay and forest products traffic volume declined 8%, and 
revenues decreased 3%, in 2001, primarily due to a weakened paper market. 
Paper shipments were adversely affected by reduced production at many 
NS-served paper mills, a result of sluggish newspaper advertising and soft 
demand for paper. Lumber traffic began the year weak,

                                      32


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

improved in late summer, but softened late in the year due to short-term 
weakness in housing starts. Revenue per unit increased principally due to 
higher rates.
	In 2000, paper, clay and forest products traffic volume increased 5%, 
and revenues increased 9%, principally due to the effects of a full year 
of Northern Region operations. Consolidation in the paper industry and a 
weakening paper market in the second half of the year contributed to lower 
carloads during the summer months and into the fall. Weak demand for paper 
production inputs, such as scrap paper and wood pulp, was tempered by 
stronger demand for newsprint and printing paper.
	Paper, clay and forest products revenues are expected to continue to 
be adversely affected by weak demand in 2002, due to continued consolidations 
and little anticipated capacity expansion through 2003. NS is pursuing new 
business using MODALGISTICS(SM), its supply-chain focused business unit 
formed in February 2001.


<TABLE>
                       PAPER, CLAY AND FOREST PRODUCTS
             (Shown as a graph in the Annual Report to Stockholders)
                                 (millions)

<CAPTION>
                  2001               2000               1999
                  ----               ----               ----
<S>              <C>                <C>                <C>
                 $ 612              $ 630              $ 578
</TABLE>


		Revenues decreased $18 million, or 3%, in 2001, primarily 
		due to a weakened paper market.  Revenue per unit benefited 
		from higher rates.  This group includes lumber and wood 
		products, pulpboard and paper products, woodfibers, woodpulp, 
		scrap paper and clay.  NS serves 66 paper mills, 105 paper 
		distribution centers and more than 100 lumber reload centers.

	Agriculture, consumer products and government traffic volume decreased 
3%, and revenues declined 1% in 2001, primarily due to reduced shipments of 
fertilizer. This decline was due to soft farm demand, record high natural 
gas prices early in the year (which curtailed production of certain 
fertilizers) and increased imports. This was mitigated by traffic volume 
increases for grain, flour, wheat and canned goods. The revenue per unit 
increase was primarily due to favorable changes in the mix of traffic.
	In 2000, agriculture, consumer products and government traffic volume 
increased 7%, and revenues increased 13%, due to the effects of a full year 
of Northern Region traffic and modest growth in the Southeast markets. Rate 
increases and more longer-haul (higher revenue-per-unit) traffic also 
contributed to the revenue increase. Grain traffic benefited from new 
shuttle-train service that improved service to new and expanded Southeast 
feed mills. In addition, traffic increased for Midwest grain and sweeteners 
and consumer goods from the West.
	Agriculture, consumer products and government revenues in 2002 are 
expected to be comparable to those of 2001. Continued weakness in the 
fertilizer market is expected to offset gains in the Southeast feed 
markets and new business.


                                     33


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

                     AGRICULTURE, CONSUMER PRODUCTS AND GOVERNMENT
                (Shown as a graph in the Annual Report to Stockholders)
                                      (millions)

                  2001                    2000                    1999
                  ----                    ----                    ----
                 $ 603                   $ 609                   $ 539

		Revenues decreased $6 million, or 1%, in 2001, principally 
		due to soft farm demand, depressed fertilizer production 
		and increased imports.  This group includes soybeans, wheat, 
		corn, fertilizers, animal and poultry feed, food oils, flour, 
		beverages, canned goods, sweeteners, consumer products and 
		items for the military.

	INTERMODAL traffic volume decreased 1%, but revenues increased slightly 
in 2001. Domestic traffic volume was up in the first half of the year, but 
demand increasingly weakened as the year progressed, which eroded NS' base 
of traffic. New business supported by the opening of three new terminals and 
other initiatives mitigated the effects of the weakened economy. International 
traffic, which accounts for about half of intermodal volume, grew slightly as 
U.S. imports slowed with the economy. TCS traffic volume increased 1% despite 
economic conditions, as it continued to benefit from reliable, trucklike 
service. Intermodal revenue per unit dropped later in the year, reflecting the 
expiration of fuel surcharges that were implemented late in 2000 and the 
introduction of new shorter-haul business.
	In 2000, intermodal traffic volume increased 18%, and revenues 
increased 32%, primarily due to a full year of Northern Region traffic and 
the consolidation of TCS revenues (see Note 2 on Page 58). About half of the 
improvement in revenue per unit resulted from the effects of consolidating 
TCS. Prior to June 1, 1999, NS revenues included only the amounts for rail 
services it performed under contract to TCS, but NS volume included most 
TCS units. Also contributing to the revenue-per-unit improvement were rate 
increases throughout the year on domestic business and the implementation 
of fuel surcharges later in the year. In addition, increased demand, new 
business and improved service contributed to the gains, as major customers, 
including UPS, JB Hunt, Hub Group and Maersk, increased volumes. Despite 
weak demand in the first quarter and the loss in December 1999 of a major 
customer, NS had regained its market share by the second quarter. Domestic 
and premium business volumes benefited from service improvements and 
expansion initiatives. International traffic, which accounts for about 
half of intermodal volume, grew 5%, notwithstanding the loss of business 
from a major customer. TCS traffic increased 3%, as it recovered from 
service shortcomings after the Closing Date.
	Intermodal revenues are expected to benefit from continued 
improvements in service and the terminal capacity added in 2001. 


                                       34


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------


<TABLE>
                                     INTERMODAL
               (Shown as a graph in the Annual Report to Stockholders)
                                     (millions)

<CAPTION>
                 2001                     2000                    1999
                 ----                     ----                    ----
<S>            <C>                      <C>                      <C>
               $ 1,123                  $ 1,119                  $ 849
</TABLE>


		Revenues increased $4 million in 2001, despite a 1% drop 
		in traffic volume.  This group handles trailers, domestic 
		and international containers, TCS equipment and equipment 
		for intermodal marketing companies, international steamship 
		lines, truckers and other shippers.

Railway Operating Expenses
--------------------------
	Railway operating expenses decreased 7% in 2001, but increased 22% 
in 2000. Expenses in 2000 included $165 million of costs related to 
actions taken to reduce the size of the work force. Excluding these costs, 
railway operating expenses decreased 4% in 2001, while carloads dropped 3%; 
and increased 19% in 2000 on carloads that were 15% higher. The higher 
expense increase in 2000 reflected a full year of Northern Region 
operations and sharply higher diesel fuel prices.
	The railway operating ratio, which measures the percentage of 
railway operating revenues consumed by railway operating expenses, was 
83.7% in 2001, compared with 87.0% in 2000 (excluding the work-force 
reduction costs, which increased the ratio 2.7 percentage points) and 
86.3% in 1999. 
	The decline in the 2001 ratio reflected the increase in revenue 
per unit as well as reduced expenses that resulted from gains in efficiency. 
The increase in the 2000 ratio reflected the effects of a full year of 
Northern Region operations and the sharp increase in diesel fuel prices, 
which more than offset the absence of the significant costs incurred in 
1999 related to the service issues after the Closing Date. In addition, 
the ratio was adversely affected by a change in traffic mix (more 
resource-intensive traffic, such as automotive and intermodal) and the 
new traffic in the Northern Region, coupled with the decrease in export 
coal traffic.

                                       35


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

	The following table shows the changes in railway operating expenses 
summarized by major classifications.

                          RAILWAY OPERATING EXPENSES
                            Increases (Decreases)

($ in millions)                             2001 vs. 2000          2000 vs. 1999
--------------                              -------------          -------------
Compensation and benefits *                   $ (220)                 $  379
Materials, services and rents                     (1)                    171
Conrail rents and services                       (57)                    167
Depreciation                                      11                      28
Diesel fuel                                      (66)                    223
Casualties and other claims                        1                       4
Other                                            (31)                     30
                                               -----                   -----
  Total                                       $ (363)                 $1,002
                                               =====                   =====

*  Includes $165 million of work-force reduction costs in 2000.

	Compensation and benefits represented 39% of total railway operating 
expenses and decreased 10% in 2001, but increased 20% in 2000. Both 
comparisons reflect the $165 million of work-force reduction costs in 2000. 
Excluding those costs, compensation and benefits decreased 3% in 2001, but 
increased 12% in 2000.
	The 3% decline in 2001 reflected savings attributable to the reduced 
size of the work force. These savings were somewhat offset by higher wages 
and benefit costs for union employees, higher incentive compensation and 
reduced pension income.
	The 12% increase in 2000 was largely attributable to the effects of 
a full year of expanded operations and higher wages and benefit costs for 
union employees. These increases were mitigated by higher pension income and 
the absence of the $49 million incurred in 1999 for the Special Work 
Incentive Program (SWIP) for union employees in the third quarter of 1999. 
Pension income was higher in 2000 largely due to the transfer of assets 
from the Conrail pension plan after the Closing Date. NS has substantial 
unrecognized gains related to its overfunded pension plan; amortization 
of these gains will continue to be included in "Compensation and 
benefits" expenses (see Note 11 on Page 68).
	The Railroad Retirement and Survivors' Improvement Act, which took 
effect on Jan. 1, 2002, provides for a phased reduction of the employers' 
portions of Tier II Railroad Retirement payroll taxes. The phase-in calls 
for a reduction from 16.1% in 2001 to 15.6% in 2002, 14.2% in 2003 and 
13.1% in 2004. In addition, the supplemental annuity tax was eliminated. 
These changes are expected to result in a $21 million reduction to payroll 
tax expenses in 2002. The new law allows for investment of Tier II assets 
in a diversified portfolio through the newly established National Railroad 
Retirement Investment Trust. The law also provides a mechanism for 
automatic adjustment of Tier II payroll taxes should the trust assets 
fall below a four-year reserve or exceed a six-year reserve.


                                        36


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

	Materials, services and rents includes items used for the maintenance 
of the railroad's lines, structures and equipment; the costs of services 
purchased from outside contractors, including the net costs of operating 
joint (or leased) facilities with other railroads; and the net cost of 
equipment rentals. This category of expenses decreased slightly in 2001, 
but increased 13% in 2000.
	In 2001, the effects of lower equipment rents were largely offset 
by higher costs for purchased services, including expenses for software, 
consulting and legal fees. The increase in 2000 was mostly attributable 
to the effects of a full year of Northern Region operations and the 
consolidation of TCS and was mitigated by the absence of significant costs 
incurred in 1999 related to the service issues encountered after the 
Closing Date.
	Equipment rents, which includes the cost to NS of using equipment 
(mostly freight cars) owned by other railroads or private owners, less the 
rent paid to NS for the use of its equipment, decreased 11% in 2001, but 
increased 22% in 2000. The decline in 2001 was principally due to shorter 
car cycle times that resulted in fewer car days on line and fewer freight 
car and locomotive leases. The 2000 increase was principally due to the 
effects of a full year of expanded operations but was mitigated by a 
favorable comparison for the last seven months, as expenses in 1999 were 
high due to the service issues encountered after the Closing Date.
	Locomotive and equipment repair costs increased in 2001, principally 
due to renewed maintenance activity. This trend is expected to continue in 
2002, driven by higher expenses for freight car repairs. In 2000, 
maintenance costs increased, reflecting a full year of Northern Region 
operations; however, the increase was tempered by reduced maintenance 
activities, a result of cost control efforts.

	Conrail rents and services, a new category of expense beginning in 
1999, arose from the expansion of operations on the Closing Date and 
amounted to $421 million in 2001, $478 million in 2000 and $311 million 
in 1999. This item includes amounts due to PRR and CRC for use of their 
operating properties and equipment and CRC's operation of the Shared Assets 
Areas. Also included is NS' equity in Conrail's net earnings since the 
Closing Date, plus the additional amortization related to the difference 
between NS' investment in Conrail and its underlying equity (see Note 2 
on Page 58). The decline in 2001 reflected higher Conrail earnings and 
lower expenses in the Shared Assets Areas (see "Conrail's Results of 
Operations, Financial Condition and Liquidity," below). Expenses in 2000 
included a full year of operations over Conrail's lines, compared with 
seven months in 1999.

	Depreciation expense was up 2% in 2001 and 6% in 2000. Increases in 
both years were due to property additions, reflecting substantial levels of 
capital spending (see Note 1, "Properties," on Page 57 for NS' depreciation 
policy). A periodic review of depreciation rates is being finalized, and 
rates are expected to be somewhat lower.

                                      37


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

	Diesel fuel expenses decreased 14% in 2001, but increased 87% in 2000. 
The decline in 2001 was the result of an 8% drop in consumption and a 7% 
decline in the average price per gallon. Expenses in 2001 include $8 million 
related to the hedging program initiated in the second quarter (see "Market 
Risks and Hedging Activities," below and Note 16 on Page 77). The increase 
in 2000 expenses resulted from a 61% rise in the average price per gallon and 
higher consumption that reflected a full year of Northern Region operations.

	Casualties and other claims expenses (including the estimates of costs 
related to personal injury, property damage and environmental matters) 
increased slightly in 2001 and 3% in 2000. 
	The largest component of casualties and other claims expense is 
personal injury costs. In 2001, cases involving occupational injuries 
comprised about 31% of the total employee injury cases settled and 15% of 
the total settlement payments made. Injuries of this type are not generally 
caused by a specific accident or event, but, rather, result from a claimed 
exposure over time. Many such claims are being asserted by former or 
retired employees, some of whom have not been actively employed in the 
rail industry for decades. NS continues to work actively to eliminate all 
employee injuries and to reduce the associated costs.
	The rail industry remains uniquely susceptible to litigation 
involving job-related accidental injury and occupational claims because 
of an outmoded law, the Federal Employers' Liability Act (FELA), 
originally passed in 1908 and applicable only to railroads. This law, 
which covers employee claims for job-related injuries, promotes an 
adversarial claims environment and produces results that are 
unpredictable and inconsistent. The railroads have been unsuccessful 
so far in efforts to persuade Congress to replace FELA with a no-fault 
workers' compensation system.
	NS maintains substantial amounts of commercial insurance for 
potential third-party liability and property damage claims. It also 
retains reasonable levels of risk through self-insurance.

	Other expenses decreased 13% in 2001, but increased 14% in 2000. 
The decline in 2001 was principally due to lower bad debt costs, reduced 
franchise and property taxes, and lower travel and employee-relocation 
expenses. The increase in 2000 reflected a full year of Northern Region 
operations and higher bad debt expense.

Other Income - Net
------------------
	Other income - net was $99 million in 2001, $168 million in 2000 
and $115 million in 1999 (see Note 3 on Page 61). The reduction in 2001 
resulted from the absence of $101 million of gains that occurred in 2000 
related to the sale of certain timber rights and gas and oil royalty and 
working interests. This was somewhat offset by lower interest accruals 
on federal income tax liabilities and a $13 million gain from a 
nonrecurring settlement. Results in 2001 also included an $18 million 
gain from a large property sale that closed in December. The increase in 
2000 reflected the $101 million of gains, mitigated by the commencement 
of a program under which accounts receivable are sold on a revolving 
basis (see Note 5 on Page 63).

                                    38


Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------

Income Taxes
------------
	Income tax expense in 2001 was $191 million for an effective rate of 
35%, compared with effective rates of 31% in 2000 and 32% in 1999.  
Excluding the equity in Conrail's after-tax earnings, the effective rates 
were 38% in 2001 and 34% in both 2000 and 1999.
	The effective rate in 2001 was higher than that of 2000 and 1999, 
primarily due to dispositions of tax benefits related to coal-seam gas 
properties. The effective rates in all three years benefited from favorable 
adjustments upon filing the prior year tax returns and favorable adjustments 
to state tax liabilities. In addition, both 2000 and 1999 benefited from 
investments in coal-seam gas properties. 
	In January 1995, the United States Tax Court issued a preliminary 
decision that disallowed some of the tax benefits a subsidiary of NS 
purchased from a third party pursuant to a safe harbor lease agreement in 
1981. In January 2001, NS received payment from the third party in 
accordance with indemnification provisions of the lease agreement.

Discontinued Operations
-----------------------
	Income from discontinued operations consisted of a $13 million 
after-tax gain related to the sale of NS' motor carrier subsidiary (see 
Note 17 on Page 79).


FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

	Cash provided by operating activities, NS' principal source of 
liquidity, was $654 million in 2001, compared with $1.3 billion in 2000 
and $533 million in 1999. Results in 2000 reflect the commencement of a 
program under which accounts receivable are sold on a revolving basis 
(see Note 5 on Page 63). Excluding the infusion of cash from this program, 
operating cash flow declined $300 million in 2001. The decrease primarily 
resulted from an $88 million reduction in the amount of accounts receivable 
sold, higher tax payments including amounts applicable to prior years, an 
increase in telecommunication receivables, bonus payments in 2001 (no such 
payments in 2000) and the timing of payrolls.  A significant portion of 
payments made to PRR (which are included in "Conrail Rents and Services" 
and, therefore, are a use of cash in "Cash provided by operating 
activities") are borrowed back from a PRR subsidiary and, therefore, are 
a source of cash in "Proceeds from borrowings."  In 2001, NS' net cash flow 
from these borrowings amounted to $250 million.  The improvement in cash 
provided by operating activities in 2000 resulted primarily from favorable 
changes in working capital, including an improvement in collection of 
accounts receivable, a lengthening of accounts payable and the lack of 
bonus payments.
 	The large changes in "Accounts receivable" and "Current liabilities 
other than debt" in the 1999 cash flow statement primarily resulted from 
the commencement of operations in the Northern Region.  In addition, 
collection of accounts receivable had slowed.
	NS' working capital deficit was $1.3 billion at Dec. 31, 2001, 
compared with $1.0 billion at Dec. 31, 2000. The increase resulted 
principally from a higher amount of debt due within one year.  Debt due 
in 2002 is expected to be paid using cash generated from operations 
(including sales of accounts receivable), cash on hand and proceeds 
from borrowings.  Part of the working capital deficit at Dec. 31, 2001, 
arises from a $373 million balance in "Notes and accounts payable to 
Conrail" that is not expected to be repaid in 2002.

                                      39

Item 7.     Management's Discussion and Analysis of Financial
------      -------------------------------------------------
            Condition and Results of Operations. (continued)
            -----------------------------------------------


	NS currently has the capability to increase the amount of accounts 
receivable being sold under the revolving sale program to meet its more 
immediate working capital needs. During 2001, the amount of receivables 
NS could sell under this program ranged from $345 million to $468 million, 
and the amount of receivables NS sold ranged from $300 million to 
$402 million. Moreover, NS has the capability to issue up to $1 billion 
of commercial paper (see Note 8 on Page 65); however, any reduction in 
its credit rating could limit NS' ability to access the commercial paper 
markets (see also the discussion of financing activities, below).
	NS expects to generate sufficient cash flow from operations to meet 
its ongoing obligations.  This expectation is based on a view that the 
economy will remain flat for the first half of 2002 and resume growth in 
the third and fourth quarters.
	NS' contractual obligations related to its long-term debt 
(including capital leases), operating leases and agreements with CRC 
are as follows:


<TABLE>
<CAPTION>
								2003-		2005- 	2007 and
($ in millions)		Total		2002		2004		2006		Subsequent
--------------          -----       ----        ----        ----        ----------
<S>                   <C>          <C>         <C>         <C>            <C>
Long-term debt and
  capital leases      $ 7,632	     $  605	     $  705	     $  706	        $ 5,616
Operating leases          890         113         172         117             488
Agreements with CRC       775          27          62          68             618
                       ------       -----       -----       -----          ------
    Total             $ 9,297      $  745      $  939      $  891         $ 6,722
                       ======       =====       =====       =====          ======
</TABLE>


	NS also has contractual obligations to PRR as disclosed in Note 2 on 
Page 58.  However, NS has the ability to borrow back funds from PRR to the 
extent they are not needed to fund contractual obligations at Conrail.  As 
an indirect owner of Conrail, NS may need to make capital contributions, 
loans or advances to Conrail to fund its contractual obligations.  The 
following table presents 58% of Conrail's contractual obligations for 
long-term debt (including capital leases) and operating leases.


<TABLE>
<CAPTION>
                                                2003-	      2005-	      2007 and
($ in millions)         Total      2002         2004        2006        Subsequent
--------------          -----      ----         ----        ----        ----------
<S>                   <C>         <C>          <C>         <C>            <C>
Long-term debt and
  capital leases      $   705     $   35       $   62      $   48         $  560
Operating leases          369         36           61          64            208
                       ------      -----        -----       -----          -----
    Total             $ 1,074     $   71       $  123      $  112         $  768
                       ======      =====        =====       =====          =====
</TABLE>


	NS also has two transactions not included in the balance sheets or 
in the previous table of its contractual obligations consisting of an 
accounts receivable sale program (see Note 5 on Page 63) and an 
operating lease covering 140 locomotives (see Note 9 on Page 67).

                                       40


Item 7.	Management's Discussion and Analysis of Financial
------	-------------------------------------------------
		Condition and Results of Operations. (continued)
		-----------------------------------------------


	Under the accounts receivable sale program, NS sells without recourse 
undivided ownership interests in a pool of accounts receivable to two 
unrelated buyers.  NS has no ownership interest in the buyers.  The buyers 
issued debt to fund their initial purchase, and NS used the proceeds it 
received from the initial purchase primarily to pay down its outstanding 
debt.  NS has no obligation related to the buyers' debt, and there is no 
existing obligation to repurchase sold receivables.  Upon termination of 
the program, the buyers would cease purchasing new receivables and 
collections related to the sold receivables would be retained by the buyers.
	The operating lease covering the 140 locomotives is renewable annually 
at NS' option and expires in 2008.  The lessor is not related to NS and its 
owner has a substantive residual equity capital investment at risk in the 
entity.  The lessor owns the locomotives and issued debt to finance their 
purchase.  NS has no obligation related to the debt.  NS has the option to 
purchase the locomotives, but also can return them to the lessor.  The 
return provisions of the lease are not so onerous as to preclude this 
option.  If NS does not purchase the locomotives at the end of the maximum 
lease term, it is liable for any shortfall in the then fair value of the 
locomotives and a specified residual value.  NS does not expect to be 
required to make any payments under this provision.

	Cash used for investing activities increased slightly in 2001, but 
decreased slightly in 2000. Property additions were up 2% in 2001, 
following a large decline in 2000 that reflected the absence of 
significant locomotive purchases, as fleet additions were accomplished 
by operating lease. Investing activities in 1999 included approximately 
$140 million more of borrowings against the net cash surrender value of 
corporate-owned life insurance than in 2000. Property additions account 
for most of the recurring spending in this category.
	The following tables show capital spending and track and equipment 
statistics for the past five years.


<TABLE>
                           CAPITAL EXPENDITURES

<CAPTION>
($ in millions)         2001      2000      1999      1998      1997
--------------          ----      ----      ----      ----      ----
<S>                    <C>       <C>       <C>       <C>       <C>
Road                   $ 505     $ 557     $ 559     $  612    $ 599	
Equipment                233       146       349        442      306	
Other property             8        28         4          6       24
                        ----      ----      ----      -----     ----
    Total              $ 746     $ 731     $ 912     $1,060    $ 929
                        ====      ====      ====      =====     ====
</TABLE>


	Capital expenditures increased 2% in 2001, but decreased 20% 
in 2000. Outlays in 2001 included amounts for locomotive purchases that 
were somewhat offset by lower expenditures for freight car purchases 
and roadway projects. The decline in 2000 reflected lower capital 
expenditures for locomotives as a result of the operating lease. In 
both years, spending for road included fiber-optic infrastructure that 
is expected to be completed in 2002 (see "Telecommunications 
Subsidiary," below).

                                      41


Item 7.	Management's Discussion and Analysis of Financial
------	-------------------------------------------------
		Condition and Results of Operations. (continued)
		-----------------------------------------------



<TABLE>
                TRACK STRUCTURE STATISTICS (CAPITAL AND MAINTENANCE)

<CAPTION>
                                      2001     2000     1999     1998     1997
                                      ----     ----     ----     ----     ----
<S>                                  <C>      <C>      <C>      <C>      <C>
Track miles of rail installed          254      390      403      429      451
Miles of track surfaced              3,836    3,687    5,087    4,715    4,703
New crossties installed (millions)     1.5      1.5      2.3      2.0      2.2
</TABLE>




<TABLE>
                      AVERAGE AGE OF OWNED RAILWAY EQUIPMENT

<CAPTION>
(Years)                               2001     2000     1999     1998     1997
------                                ----     ----     ----     ----     ----
<S>                                   <C>      <C>      <C>      <C>      <C>
Freight cars                          25.4     24.6     23.8     23.6     23.0
Locomotives                           15.7     16.1     15.4     15.4     15.3
Retired locomotives                   22.4     24.5     22.7     20.6     23.3
</TABLE>


	The table above excludes equipment leased from PRR (see Note 2 on 
Page 58), which comprises 16% of the freight car fleet and 27% of the 
locomotive fleet.
	The higher average age of owned locomotives in 2000 reflects the fact 
that locomotives leased in 2000 are not included in the statistic. The 1998 
decrease in the average age of retired locomotives resulted from a 
disproportionate share of early retirements as well as retention of older 
units in anticipation of the Closing Date.
	Through its coal car rebody program, which was suspended in 2000, 
NS converted about 29,000 hopper cars into high-capacity steel gondolas 
or hoppers. As a result, the remaining service life of the freight-car 
fleet is greater than may be inferred from the increasing average age 
shown in the table above.
	For 2002, NS has budgeted $705 million for capital expenditures. 
The anticipated spending includes $482 million for roadway projects, of 
which $366 million is for track and bridge program work. Also included 
are projects for marketing and industrial development initiatives and 
continuing investments in intermodal infrastructure. Equipment spending 
of $173 million includes the purchase of 50 locomotives and upgrades to 
existing units, and projects related to computers and information 
technology, including additional security and backup systems.  NS 
issued in February 2002 debt secured by the locomotives.

	Cash provided by financing activities in 2001 was $151 million, and 
reflects the effects of the reduction to the dividend in January 2001. 
Financing activities included loan transactions with a PRR subsidiary that 
resulted in net borrowings of $250 million in 2001 and net repayments of 
$72 million in 2000 (see Note 2 on Page 58). Excluding these borrowings, 
debt was reduced $20 million in 2001 and $422 million in 2000. The 
substantial net reduction of debt in 2000 was accomplished in part with 
the proceeds from the sale of accounts receivable. NS' debt-to-total 
capitalization ratio (excluding notes payable to Conrail) at year end 
was 55.6% in 2001 and 56.7% in 2000.
	NS currently has in place a new $1 billion, five-year credit 
facility, which replaced the facility that would have expired in May 2002. 
The new agreement provides for borrowings at prevailing rates and 
includes financial covenants similar to the old

                                    42


Item 7.	Management's Discussion and Analysis of Financial
------	-------------------------------------------------
		Condition and Results of Operations. (continued)
		-----------------------------------------------

facility (see Note 8 on Page 65).  In addition, NS has issued only $250 
million of debt under its $1 billion shelf registration that became 
effective in April 2001.

CONRAIL'S RESULTS OF OPERATIONS, FINANCIAL CONDITION AND LIQUIDITY

	Through May 31, 1999, Conrail's results of operations include freight 
line-haul revenues and related expenses. After the Closing Date, June 1, 1999, 
its results reflect its new structure and operations (see Note 2 on Page 58). 
Currently, Conrail's major sources of operating revenues are operating fees 
and rents from NSR and CSXT. The composition of Conrail's operating expenses 
also changed.
	Conrail's net income was $174 million in 2001, compared with 
$170 million in 2000 and $26 million in 1999 (see Note 2 on Page 58). Results 
in 1999 included $180 million of expenses ($121 million after taxes), 
principally to increase certain components of its casualty liability based 
on an actuarial valuation, to adjust certain litigation and environmental 
liabilities related to settlements and completion of site reviews and a 
credit adjustment related to the assumption of a lease obligation by CSX. 
Excluding the effects of these items, net income would have been 
$147 million in 1999.
	The improvement in 2001 reflected lower casualties and other claims 
expenses, a favorable adjustment to state income tax reserves and 
environmental and insurance settlements in Conrail's favor. These positive 
items were offset in part by the absence of significant gains from the sale 
of property. The 2000 increase reflected a $37 million after-tax gain from 
a property sale and the absence of significant transition-related expenses.
	Conrail's operating revenues were $903 million in 2001, $985 million 
in 2000 and $2.2 billion in 1999.  The decline in 2001 resulted from lower 
revenues at Conrail's Indiana Harbor Belt subsidiary, the expiration of 
certain equipment leases and lower operating fees, largely because of 
reduced operating costs in the Shared Assets Areas. The decline in 2000 
was attributable to the change in operations.
	Conrail's operating expenses were $639 million in 2001, 
$749 million in 2000 and $2.0 billion in 1999. The decline in 2001 was 
primarily due to lower expenses for materials, services and rents; 
casualties and other claims; and compensation and benefits. The decrease 
in 2000 was principally due to the change in operations and the absence 
of the $180 million of expenses discussed above and $60 million of 
transition-related expenses (principally technology integration costs 
and employee stay bonuses).
	Conrail's cash provided by operations increased $140 million, 
or 39%, in 2001, but decreased $34 million, or 9%, in 2000. The 2001 
increase was principally due to a $50 million cash payment for 
transferring to a third party certain rights to license, manage and 
market signboard advertising on Conrail's property for 25 years and 
proceeds from a favorable insurance settlement. The 2000 reduction 
reflected the change in operations and payment of one-time items owed 
to NSR and CSXT. Cash generated from operations is Conrail's principal 
source of liquidity and is primarily used for debt repayments and capital 
expenditures. Debt repayments totaled $61 million in 2001 and $318 million 
in 2000. Capital expenditures totaled $47 million in 2001 and $220 million 
in 2000.
	Conrail had working capital of $438 million at Dec. 31, 2001, 
compared with $85 million at Dec. 31, 2000, including $687 million and 
$323 million, respectively, of amounts receivable from NS and CSX. Conrail 
is not an SEC registrant and, therefore,

                                      43


Item 7.	Management's Discussion and Analysis of Financial
------	-------------------------------------------------
		Condition and Results of Operations. (continued)
		-----------------------------------------------

presently cannot issue any publicly traded securities. Conrail is expected 
to have sufficient cash flow to meet its ongoing obligations.
	NS' equity in earnings of Conrail, net of amortization, was 
$44 million in 2001, $21 million in 2000 and $17 million in 1999. NS' 
other comprehensive loss for 2001, as shown in the Consolidated Statement 
of Changes in Stockholders' Equity on Page 55, included $41 million for 
its portion of Conrail's other comprehensive loss (see Note 13 on Page 74).

OTHER MATTERS

Telecommunications Subsidiary
-----------------------------
	NS' subsidiary, Thoroughbred Technology and Telecommunications, Inc. 
(T-Cubed), is codeveloping fiber optic infrastructure with members of the 
telecommunications industry. This industry has recently experienced a 
severe downturn. During the second quarter, one of T-Cubed's codevelopers 
filed for protection under Chapter 11 of the U.S. Bankruptcy Code and 
foreign laws. This codeveloper owes T-Cubed amounts for work performed on 
joint projects; however, based on known facts and circumstances, management 
believes that such  amounts ultimately will be realized. T-Cubed is engaged 
in contract litigation with a second codeveloper concerning the latter's 
obligation to purchase fiber optic infrastructure installed by T-Cubed 
between Cleveland, Ohio, and northern Virginia. Management expects to 
prevail in this litigation. The ability to collect a judgment against 
the codeveloper, Williams Communications, LLC, may be limited due to 
its declining financial condition; however, the shortfall, if any, 
cannot now be determined.
	As a result of changes in the values of telecommunications assets, 
T-Cubed is monitoring its carrying amount of these assets, as required 
by SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets 
and Long-Lived Assets to Be Disposed Of." To date, based on the known 
facts and circumstances, management believes that its ultimate investment 
in these assets will be recovered and, accordingly, no impairment has been 
recognized (see Note 6 on Page 63).

Labor Arbitration
-----------------
	Several hundred claims have been filed on behalf of NSR employees 
furloughed after June 1, 1999, for various periods of time, alleging that 
the furloughs were a result of the Conrail transaction and seeking 
"New York Dock" income protection benefits. One labor organization has 
initiated arbitration on behalf of approximately 100 of these claimants. 
Management believes, based on known facts and circumstances, including 
the availability of legal defenses, that the amount of liability for 
these claims should not have a material adverse effect on NS' financial 
position, results of operations or liquidity. Depending on the outcome of 
the arbitration, other claims may be filed or progressed to arbitration. 
Should all such claimants prevail, there could be a significant effect 
on results of operations in a particular quarter.

Labor Agreements
----------------
	Approximately 85 percent of NS' railroad employees are covered by 
collective bargaining agreements with 15 different labor unions. These 
agreements remain in effect until changed pursuant to the Railway Labor Act. 
Moratorium provisions in these agreements

                                      44


Item 7.	Management's Discussion and Analysis of Financial
------	-------------------------------------------------
		Condition and Results of Operations. (continued)
		-----------------------------------------------

permitted NS and the unions to propose such changes in late 1999; 
negotiations at the national level commenced shortly thereafter. The 
outcome of these negotiations is uncertain. However, agreements have been 
reached with the Brotherhood of Maintenance of Way Employes, which 
represents about 4,400 NS employees, and with the Brotherhood of Locomotive 
Engineers, which represents about 5,000 NS employees. In addition, a 
tentative national agreement (subject to ratification) has been reached with 
the United Transportation Union, which represents about 7,000 NS employees. 
The tentative national agreement reached with the International Brotherhood 
of Electrical Workers, which represents about 1,000 NS employees, was 
not ratified.

Market Risks and Hedging Activities
-----------------------------------
	NS uses derivative financial instruments to reduce the risk of 
volatility in its diesel fuel costs and to manage its overall exposure to 
fluctuations in interest rates.
	In 2001, NS began a program to hedge a portion of its diesel fuel 
consumption. The intent of the program is to assist in the management of 
NS' aggregate risk exposure to fuel price fluctuations, which can 
significantly affect NS' operating margins and profitability, through the 
use of one or more types of derivative instruments.
	Diesel fuel costs represented 8% of NS' operating expenses for 2001. 
The program provides that NS will not enter into any fuel hedges with a 
duration of more than 36 months, and that no more than 80% of NS' average 
monthly fuel consumption will be hedged for each month within any 
36-month period.
	As of Dec. 31, 2001, through swap transactions and advance 
purchases, NS has hedged approximately 40% of expected 2002 diesel fuel 
requirements. The effect of the hedges is to yield an average cost of 
70 cents per hedged gallon, including federal taxes and transportation.
	A 10% decrease in diesel fuel prices would increase NS' liability 
related to the swaps by approximately $15 million.
	NS manages its overall exposure to fluctuations in interest rates 
by issuing both fixed- and floating-rate debt instruments and by entering 
into interest-rate hedging transactions to achieve an appropriate mix 
within its debt portfolio.
	Of NS' total debt outstanding (see Note 8 on Page 65), all is 
fixed-rate debt, except for most capital leases, $250 million of notes 
due in 2003 and $174 million of equipment obligations. As a result, NS' 
debt subject to interest rate exposure totaled $675 million at Dec. 31, 
2001.  A 1% increase in interest rates would increase NS' total annual 
interest expense related to all its variable debt by approximately 
$7 million. Management considers it unlikely that interest rate 
fluctuations applicable to these instruments will result in a material 
adverse effect on NS' financial position, results of operations 
or liquidity.
	The capital leases, which carry an average fixed rate of 7.1%, 
were effectively converted to variable rate obligations using interest 
rate swap agreements. On Dec. 31, 2001, the average pay rate under these 
agreements was 2.8%, and the average receive rate was 7.1%. During 2001, 
the effect of the swaps was to reduce interest expense by $3 million. 
A portion of the lease obligations is payable in Japanese yen. NS 
eliminated the associated exchange rate risk at the inception of each 
lease with a yen deposit sufficient to fund the yen-denominated 
obligation. Most of these deposits are held by foreign banks, primarily 
Japanese. As a result, NS is exposed to financial market risk relative 
to Japan.

                                      45


Item 7.	Management's Discussion and Analysis of Financial
------	-------------------------------------------------
		Condition and Results of Operations. (continued)
		-----------------------------------------------

Counterparties to the interest rate swaps and Japanese banks holding yen 
deposits are major financial institutions believed by management to 
be creditworthy.

Environmental Matters
---------------------
	NS is subject to various jurisdictions' environmental laws and 
regulations. It is NS' policy to record a liability where such liability 
or loss is probable and its amount can be estimated reasonably. Claims, 
if any, against third parties for recovery of cleanup costs incurred by NS 
are reflected as receivables (when collection is probable) in the balance 
sheet and are not netted against the associated NS liability. Environmental 
engineers regularly participate in ongoing evaluations of all identified 
sites and in determining any necessary adjustments to initial liability 
estimates. NS also has established an Environmental Policy Council, composed 
of senior managers, to oversee and interpret its environmental policy.
	Operating expenses for environmental matters totaled approximately 
$10 million in 2001, $11 million in 2000 and $12 million in 1999, and 
capital expenditures totaled approximately $10 million in each of 2001 and 
2000 and $8 million in 1999. Capital expenditures in 2002 are expected to be 
comparable to those in 2001.
	NS' balance sheets included liabilities for environmental exposures in 
the amount of $33 million at Dec. 31, 2001, and $36 million at Dec. 31, 2000 
(of which $8 million was accounted for as a current liability in each year). 
At Dec. 31, 2001, the liability represented NS' estimate of the probable 
cleanup and remediation costs based on available information at 126 
identified locations. On that date, 10 sites accounted for $17 million of 
the liability, and no individual site was considered to be material. NS 
anticipates that much of this liability will be paid out over five years; 
however, some costs will be paid out over a longer period.
	At some of the 126 locations, certain NS subsidiaries, usually in 
conjunction with a number of other parties, have been identified as 
potentially responsible parties by the Environmental Protection Agency 
(EPA) or similar state authorities under the Comprehensive Environmental 
Response, Compensation and Liability Act of 1980, or comparable state 
statutes, which often impose joint and several liability for cleanup costs.
	With respect to known environmental sites (whether identified by NS 
or by the EPA or comparable state authorities), estimates of NS' ultimate 
potential financial exposure for a given site or in the aggregate for all 
such sites are unavoidably imprecise because of the widely varying costs 
of currently available cleanup techniques, the likely development of new 
cleanup technologies, the difficulty of determining in advance the nature 
and full extent of contamination and each potential participant's share of 
any estimated loss (and that participant's ability to bear it), and 
evolving statutory and regulatory standards governing liability.
	The risk of incurring environmental liability -- for acts and 
omissions, past, present and future -- is inherent in the railroad 
business. Some of the commodities in NS' traffic mix, particularly 
those classified as hazardous materials, can pose special risks that NS 
and its subsidiaries work diligently to minimize. In addition, several NS 
subsidiaries own, or have owned, land used as operating property, or which 
is leased or may have been leased and operated by others, or held for sale.
	Because environmental problems that are latent or undisclosed may exist 
on these properties, there can be no assurance that NS will not incur 
environmental liabilities or costs with respect to one or more of them, 
the amount and materiality of which cannot be

                                       46


Item 7.	Management's Discussion and Analysis of Financial
------	-------------------------------------------------
		Condition and Results of Operations. (continued)
		-----------------------------------------------

estimated reliably at this time. Moreover, lawsuits and claims involving 
these and other unidentified environmental sites and matters are likely to 
arise from time to time. The resulting liabilities could have a significant 
effect on financial condition, results of operations or liquidity in a 
particular year or quarter.
	However, based on an assessment of known facts and circumstances, 
management believes that it is unlikely that any known matters, either 
individually or in the aggregate, will have a material adverse effect on 
NS' financial position, results of operations or liquidity.

New Accounting Pronouncement
----------------------------
	In October 2001, the Financial Accounting Standards Board issued 
Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived 
Assets." Statement No. 144 supersedes Statement No. 121, "Accounting for the 
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed 
Of," but it retains many of the fundamental provisions of that Statement. 
Statement No. 144 also broadens the presentation of discontinued operations 
to include more disposal transactions. NS' adoption of Statement No. 144, 
effective Jan. 1, 2002, did not have a material effect on its 
financial statements.

Inflation
---------
	Generally accepted accounting principles require the use of historical 
cost in preparing financial statements. This approach disregards the effects 
of inflation on the replacement cost of property. NS, a capital-intensive 
company, has most of its capital invested in such assets. The replacement 
cost of these assets, as well as the related depreciation expense, would be 
substantially greater than the amounts reported on the basis of 
historical cost.

Trends
------
	Federal Economic Regulation -- Efforts may be made in 2002 to reimpose 
unwarranted federal economic regulation on the rail industry. The Staggers 
Rail Act of 1980, which substantially reduced such regulation, encouraged and 
enabled rail carriers to innovate and to compete for business. NS and other 
rail carriers will oppose any efforts to reimpose unwarranted 
economic regulation.

	Utility Deregulation -- Deregulation of the electrical utility industry 
is expected to increase competition among electric power generators; 
deregulation over time would permit wholesalers and possibly retailers of 
electric power to sell or purchase increasing quantities of power to or from 
distant parties. The effects of deregulation on NS and on its customers cannot 
be predicted with certainty; however, NS serves a number of efficient power 
producers and is working diligently to ensure that its customers remain 
competitive in this evolving environment.

	Carbon-Based Fuel -- There is growing concern in some quarters that 
emissions resulting from burning carbon-based fuel, including coal, are 
contributing to global warming and causing other environmental changes. To 
the extent that these concerns evolve into a consensus among policy-makers, 
the impact could be either a reduction in the demand


                                    47


Item 7.	Management's Discussion and Analysis of Financial
------	-------------------------------------------------
		Condition and Results of Operations. (continued)
		-----------------------------------------------

for coal or imposition of more stringent regulations on emissions, which 
might result in making coal a less economical source of power generation 
or make permitting of coal-fired facilities even more difficult. The 
revenues and net income of NSR and other railroads that move large 
quantities of coal could be affected adversely. 

Forward-Looking Statements
--------------------------
	This Management's Discussion and Analysis of Financial Condition 
and Results of Operations contains forward-looking statements that may 
be identified by the use of words like "believe," "expect," "anticipate" 
and "project." Forward-looking statements reflect management's good-faith 
evaluation of information currently available. However, such statements 
are dependent on and, therefore, can be influenced by, a number of 
external variables over which management has little or no control, 
including: domestic and international economic conditions; the business 
environment in industries that produce and consume rail freight; 
competition and consolidation within the transportation industry; 
fluctuation in prices of key materials, in particular diesel fuel; 
labor difficulties, including strikes and work stoppages; legislative 
and regulatory developments; changes in securities and capital markets; 
and natural events such as severe weather, floods and earthquakes. Forward-
looking statements are not, and should not be relied upon as, a guaranty 
of future performance or results. Nor will they necessarily prove to be 
accurate indications of the times at or by which any such performance or 
results will be achieved. As a result, actual outcomes and results may 
differ materially from those expressed in forward-looking statements.
The Company undertakes no obligation to update or revise forward-looking
statements.
                                        48



Item 7A.	Quantitative and Qualitative Disclosures about Market Risk.
-------	----------------------------------------------------------

	The information required by this item is included in Part II, Item 7, 
"Management's Discussion and Analysis of Financial Condition and Results 
of Operations" on Page 44 under the heading "Market Risks and 
Hedging Activities."

                                        49


Item 8.	Financial Statements and Supplementary Data.
------	-------------------------------------------


<TABLE>
                     NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                               QUARTERLY FINANCIAL DATA
                                     (Unaudited)

<CAPTION>
                                                      Three Months Ended
                                       -----------------------------------------------
                                       March 31      June 30     Sept. 30      Dec. 31
                                       --------      -------     --------      -------
                                      (In millions of dollars, except per share amounts)

	2001
	----
<S>						   <C>           <C>         <C>           <C>
Railway operating revenues	         $  1,540      $  1,592    $  1,508      $  1,530
Income from railway operations              205	          282         245           275
Net income                                   74*          107          79           115
Earnings per share -
  Basic and diluted                    $   0.19*     $   0.28    $   0.20      $   0.30


	2000 
	----
Railway operating revenues             $  1,508	     $  1,592    $  1,535      $  1,524
Income from railway operations               28           278         211           116
Net income (loss)                           (48)          116          99             5
Earnings (loss) per share -	
  Basic and diluted                    $  (0.12)     $   0.30    $   0.26      $   0.01

* Includes a $13 million, or 3 cents per share, after-tax gain related to 
the 1998 sale of NS' motor carrier subsidiary (see Note 17 on Page 79).
</TABLE>



                                     50

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

      Index to Financial Statements:                              Page
      -----------------------------                               ----

            Consolidated Statements of Income
             Years ended December 31, 2001, 2000 and 1999          51

            Consolidated Balance Sheets
             As of December 31, 2001 and 2000                      52

            Consolidated Statements of Cash Flows
             Years ended December 31, 2001, 2000 and 1999          53

            Consolidated Statements of Changes in
             Stockholders' Equity
             Years ended December 31, 2001, 2000 and 1999          55

            Notes to Consolidated Financial Statements             56

            Independent Auditors' Report                           82


     The Index to Consolidated Financial Statement Schedule 
     appears in Item 14 on Page 85.

                                    51

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
                NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Income

<CAPTION>
                                                 Years ended December 31,
                                              2001         2000         1999
                                              ----         ----         ----
                                       ($ in millions, except earnings per share)

<S>                                         <C>          <C>          <C>
RAILWAY OPERATING REVENUES                  $   6,170    $   6,159    $   5,242

RAILWAY OPERATING EXPENSES
   Compensation and benefits (Note 11)          2,014        2,234        1,855
   Materials, services and rents                1,444        1,445        1,274
   Conrail rents and services (Note 2)            421          478          311
   Depreciation                                   514          503          475
   Diesel fuel                                    412          478          255
   Casualties and other claims                    143          142          138
   Other                                          215          246          216
                                             --------     --------     --------
      Total railway operating expenses          5,163        5,526        4,524
                                             --------     --------     --------

         Income from railway operations         1,007          633          718

Equity in earnings of Conrail (Note 2)             --           --           49
Other income - net (Note 3)                        99          168          115
Interest expense on debt (Note 6)                (553)        (551)        (531)
                                             --------     --------     --------
         Income from continuing 
            operations before income taxes        553          250          351

Provision for income taxes (Note 4)               191           78          112
                                             --------     --------     --------
         Income from continuing operations        362          172          239

Discontinued operations - gain on sale of 
  motor carrier, net of taxes (Note 17)            13           --           --
                                             --------     --------     --------
            NET INCOME                      $     375    $     172    $     239
                                             ========     ========     ========

EARNINGS PER SHARE (Note 14)
         Income from continuing operations -
            Basic and diluted               $    0.94    $    0.45    $    0.63

         Net income - Basic and diluted     $    0.97    $    0.45    $    0.63
</TABLE>


See accompanying Notes to Consolidated Financial Statements.

                                    52

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
                NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                        Consolidated Balance Sheets
<CAPTION>
                                                     As of December 31,
                                                    2001           2000
                                                    ----           ----
                                                      ($ in millions)

<S>                                                <C>             <C>
ASSETS
Current assets:
   Cash and cash equivalents                       $   204         $    --
   Short-term investments                               --               2
   Accounts receivable, net (Note 5)                   475             411
   Due from Conrail (Note 2)                             8              31
   Materials and supplies                               90              91
   Deferred income taxes (Note 4)                      162             182
   Other current assets                                108             132
                                                    ------          ------
      Total current assets                           1,047             849

Investment in Conrail (Note 2)                       6,161           6,154
Properties less accumulated depreciation (Note 6)   11,208          11,105
Other assets                                         1,002             868
                                                    ------          ------
      TOTAL ASSETS                                 $19,418         $18,976
                                                    ======          ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable (Note 7)                       $   848         $   925
   Income and other taxes                              312             251
   Notes and accounts payable to Conrail (Note 2)      373             155

   Other current liabilities (Note 7)                  248             259
   Current maturities of long-term debt (Note 8)       605             297
                                                    ------          ------
      Total current liabilities                      2,386           1,887

Long-term debt (Note 8)                              7,027           7,339
Other liabilities (Note 10)                          1,089           1,131
Minority interests                                      45              50
Deferred income taxes (Note 4)                       2,781           2,745
                                                    ------          ------
      TOTAL LIABILITIES                             13,328          13,152
                                                    ------          ------

Stockholders' equity:
   Common stock $1.00 per share par value,
     1,350,000,000 shares authorized; issued
     407,000,871 and 405,421,447 shares, 
     respectively                                      407             405
   Additional paid-in capital                          423             392
   Accumulated other comprehensive loss (Note 13)      (55)             (6)
   Retained income                                   5,335           5,053
   Less treasury stock at cost, 21,169,125 and
     21,363,974 shares, respectively                   (20)            (20)
                                                    ------          ------
      TOTAL STOCKHOLDERS' EQUITY                     6,090           5,824
                                                    ------          ------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $19,418         $18,976
                                                    ======          ======
</TABLE>


See accompanying Notes to Consolidated Financial Statements.


                                      53

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
                  NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                     Consolidated Statements of Cash Flows
<CAPTION>
                                                 Years ended December 31,
                                               2001        2000       1999
                                               ----        ----       ----
                                                     ($ in millions)
<S>                                           <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                 $   375     $   172    $   239
   Reconciliation of net income to
    net cash provided by operating
    activities:
      Depreciation                                527         517        489
      Deferred income taxes                        44           2         85
      Equity in earnings of Conrail               (44)        (21)       (17)
      Gains and losses on properties 
       and investments                            (59)       (160)       (62)
      Income from discontinued operations         (13)         --         --
      Changes in assets and liabilities
       affecting operations:
        Accounts receivable (Note 5)              (74)        446       (322)
        Materials and supplies                      1           9        (40)
        Other current assets and due 
         from Conrail                              46          60        (50)
        Current liabilities other than debt       (27)        220        259
        Other - net (Note 11)                    (122)         97        (48)
                                               ------      ------     ------
         Net cash provided by 
          operating activities                    654       1,342        533

CASH FLOWS FROM INVESTING ACTIVITIES
   Property additions                            (746)       (731)      (912)
   Property sales and other transactions          156         137        104
   Investments, including short-term              (99)        (77)      (126)
   Investment sales and other transactions         88          90        343
                                               ------      ------     ------
         Net cash used for 
          investing activities                   (601)       (581)      (591)

CASH FLOWS FROM FINANCING ACTIVITIES
   Dividends                                      (93)       (306)      (304)
   Common stock issued - net                       14           2         14
   Proceeds from borrowings                     1,995       1,055      1,110
   Debt repayments                             (1,765)     (1,549)      (730)
                                               ------      ------     ------
        Net cash provided by (used for)
         financing activities                     151        (798)        90

        Net increase (decrease) in cash
         and cash equivalents                     204         (37)        32

CASH AND CASH EQUIVALENTS
   At beginning of year                            --          37          5
                                               ------      ------     ------
   At end of year                             $   204     $    --    $    37
                                               ======      ======     ======
</TABLE>



(continued)

                                     54

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
                NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
              Consolidated Statements of Cash Flows (continued)

<CAPTION>
                                                     Years ended December 31,
                                                   2001        2000       1999
                                                   ----        ----       ----
                                                          ($ in millions)


<S>                                               <C>         <C>        <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   Cash paid during the year for:
      Interest (net of amounts capitalized)       $   550     $   543    $   520
      Income taxes                                $    74     $     5    $    16
</TABLE>



See accompanying Notes to Consolidated Financial Statements.


                                     55

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
                    NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Changes in Stockholders' Equity
<CAPTION>

                                                    Accumu-
                                                    lated
                                         Addi-      Other
                                         tional     Compre-
                              Common     Paid-In    hensive    Retained    Treasury
                              Stock      Capital    Loss       Income      Stock      Total
                              -----      -------    ----       ------      -----      -----
                                       ($ in millions, except per share amounts)

<S>                          <C>        <C>        <C>        <C>         <C>        <C>
BALANCE DECEMBER 31, 1998    $   401    $   296    $   (8)    $ 5,252     $   (20)   $ 5,921
Comprehensive income - 1999
   Net income                                                     239                    239
   Other comprehensive
    loss (Note 13)                                     (3)                                (3)
                                                                                      ------
      Total comprehensive
       income                                                                            236
Dividends on Common Stock,
 $0.80 per share                                                 (304)                  (304)
Other	(Notes 11 and 12)            3         76                                           79
                              ------     ------    ------      ------      ------     ------

BALANCE DECEMBER 31, 1999        404        372       (11)      5,187         (20)     5,932
Comprehensive income - 2000
   Net income                                                     172                    172
   Other comprehensive
    income (Note 13)                                    5                                  5
                                                                                      ------
      Total comprehensive
       income                                                                            177
Dividends on Common Stock,
 $0.80 per share                                                 (306)                  (306)
Other (Notes 11 and 12)            1         20                                           21
                              ------     ------    ------      ------      ------     ------

BALANCE DECEMBER 31, 2000    $   405    $   392   $    (6)    $ 5,053     $   (20)   $ 5,824
Comprehensive income - 2001
   Net income                                                     375                    375
   Other comprehensive
    loss (Note 13)                                    (49)                               (49)
                                                                                      ------
      Total comprehensive
       income                                                                            326
Dividends on Common Stock,
 $0.24 per share                                                  (93)                   (93)
Other	(Notes 11 and 12)            2         31                                           33
                              ------     ------    ------      ------      ------     ------

BALANCE DECEMBER 31, 2001    $   407    $   423   $   (55)    $ 5,335     $   (20)   $ 6,090
                              ======     ======    ======      ======      ======     ======
</TABLE>


See accompanying Notes to Consolidated Financial Statements.

                                      56


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

                  NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


The following Notes are an integral part of the Consolidated 
Financial Statements.

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Description of Business
-----------------------
     Norfolk Southern Corporation is a Virginia-based holding company 
engaged principally in the transportation of freight by rail, operating 
approximately 21,500 route miles primarily in the East and Midwest. 
These financial statements include Norfolk Southern Corporation 
(Norfolk Southern) and its majority-owned and controlled subsidiaries 
(collectively, NS) on a consolidated basis. Norfolk Southern's major 
subsidiary is Norfolk Southern Railway Company (NSR). All significant 
intercompany balances and transactions have been eliminated 
in consolidation.
     The railroad transports raw materials, intermediate products and 
finished goods classified in the following market groups (percent of 
total railway operating revenues): coal (25%); automotive (14%); 
chemicals (12%); metals/construction (11%); paper/clay/forest 
products (10%); agriculture/consumer products/government (10%); and 
intermodal (18%). Ultimate points of origination or destination for 
some of the freight (particularly coal bound for export and intermodal 
containers) are outside the United States. Approximately 85% of NS' 
railroad employees are covered by collective bargaining agreements 
with 15 different labor unions.
     Through a jointly owned entity, Norfolk Southern and CSX Corporation 
own the stock of Conrail Inc., which owns the major Northeast freight 
railroad. Norfolk Southern has a 58% economic and 50% voting interest in 
the jointly owned entity (see Note 2).

Use of Estimates
----------------
     The preparation of financial statements in accordance with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities, the 
disclosure of contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period. Management reviews its estimates, including those related 
to the recoverability and useful lives of assets, as well as liabilities for 
litigation, environmental remediation, casualty claims, income taxes, 
pensions and postretirement benefits. Changes in facts and circumstances 
may result in revised estimates.

Cash Equivalents
----------------
     "Cash equivalents" are highly liquid investments purchased three 
months or less from maturity.

Investments
-----------
     Marketable equity and debt securities are reported at amortized cost 
or fair value, depending upon their classification as securities "held-to-
maturity," "trading" or "available-for-sale." Unrealized gains and losses 
for investments designated as "available-for-sale," net of taxes, are 
recognized in "Accumulated other comprehensive loss."

                                        57


I
tem 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     Investments, where NS has the ability to exercise significant influence 
over but does not control the entity, are accounted for using the equity 
method in accordance with APB Opinion No. 18, "The Equity Method of 
Accounting for Investments in Common Stock."

Materials and Supplies
----------------------
     "Materials and supplies," consisting mainly of fuel oil and items for 
maintenance of property and equipment, are stated at the lower of average 
cost or market. The cost of materials and supplies expected to be used in 
capital additions or improvements is included in "Properties."

Properties
----------
     "Properties" are stated principally at cost and are depreciated using 
group depreciation. Rail is depreciated primarily on the basis of use 
measured by gross ton-miles. Other properties are depreciated generally 
using the straight-line method over the lesser of estimated service or 
lease lives. NS capitalizes interest on major capital projects during the 
period of their construction. Expenditures, including those on leased 
assets, that extend an asset's useful life or increase its utility are 
capitalized. Maintenance expense is recognized when repairs are performed. 
When properties other than land and nonrail assets are sold or retired in 
the ordinary course of business, the cost of the assets, net of sale 
proceeds or salvage, is charged to accumulated depreciation rather than 
recognized through income. Gains and losses on disposal of land and nonrail 
assets are included in "Other income - net" (see Note 3).
     NS reviews the carrying amount of properties whenever events or 
changes in circumstances indicate that such carrying amount may not be 
recoverable based on future undiscounted cash flows or estimated net 
realizable value. Assets that are deemed impaired as a result of such 
review are recorded at the lower of carrying amount or fair value.

Revenue Recognition
-------------------
     Revenue is recognized proportionally as a shipment moves from origin 
to destination. Refunds due in accordance with transportation contracts are 
recorded as a reduction to revenues during the life of the contract, based 
on management's best estimate of projected liability.

Derivatives
-----------
     NS does not engage in the trading of derivatives. NS uses derivative 
financial instruments to reduce the risk of volatility in its diesel fuel 
costs and in the management of its mix of fixed and floating-rate debt. 
Management has determined that these derivative instruments qualify as 
either fair-value or cash-flow hedges, having values that highly correlate 
with the underlying hedged exposures and have designated such instruments 
as hedging transactions. Credit risk related to the derivative financial 
instruments is considered to be minimal and is managed by requiring high 
credit standards for counterparties and periodic settlements.

Required Accounting Changes
---------------------------
     Effective Jan. 1, 2001, NS adopted Statement of Financial Accounting 
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and 
Hedging Activities," and SFAS No. 138, "Accounting for Certain Derivative 
Instruments and Certain Hedging Activities " (see Note 16).

                                     58


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

Reclassifications
-----------------
     Certain amounts in the consolidated financial statements and notes 
thereto have been reclassified to conform to the 2001 presentation.


2.	INVESTMENT IN CONRAIL AND OPERATIONS OVER ITS LINES

Overview
--------
     Norfolk Southern and CSX Corporation (CSX) jointly own Conrail Inc. 
(Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC), 
the major freight railroad in the Northeast. From May 23, 1997, the date 
Norfolk Southern and CSX completed their acquisition of Conrail stock, 
until June 1, 1999, Conrail's operations continued substantially unchanged 
while Norfolk Southern and CSX awaited regulatory approvals and prepared 
for the integration of the respective Conrail routes and assets to be 
leased to their railroad subsidiaries, NSR and CSX Transportation, Inc. 
(CSXT). From time to time, Norfolk Southern and CSX, as the indirect owners 
of Conrail, may need to make capital contributions, loans or advances 
to Conrail.

Commencement of Operations
--------------------------
     On June 1, 1999 (the Closing Date), NSR and CSXT began operating as 
parts of their respective rail systems the separate Conrail routes and assets 
leased to them pursuant to operating and lease agreements.
     The Operating Agreement between NSR and Pennsylvania Lines LLC (PRR), 
a wholly owned subsidiary of CRC, governs substantially all nonequipment 
assets to be operated by NSR and has an initial 25-year term, renewable at 
the option of NSR for two five-year terms. Payments under the Operating 
Agreement are subject to adjustment every six years to reflect changes in 
values. NSR also has leased or subleased for varying terms from PRR a 
number of equipment assets. Costs necessary to operate and maintain the 
PRR assets, including leasehold improvements, are borne by NSR. CSXT has 
entered into comparable arrangements, for the operation and use of certain 
other CRC routes and assets, with another wholly owned CRC subsidiary.
     NSR and CSXT also have entered into agreements with CRC governing other 
properties that continue to be owned and operated by CRC (the Shared Assets 
Areas). NSR and CSXT pay CRC a fee for joint and exclusive access to the 
Shared Assets Areas.  In addition, NSR and CSXT pay, based on usage, the 
costs incurred by CRC to operate the Shared Assets Areas.
     Future minimum lease payments due to PRR under the Operating Agreement 
and lease agreements and to CRC under the Shared Assets Areas (SAA) 
agreements are as follows:


<TABLE>
<CAPTION>
                                             PRR Oper.       PRR Lease       SAA
   ($ in millions)                             Agmt.           Agmts.       Agmts.
   --------------                            ---------       ---------     --------
    <S>                                      <C>             <C>           <C>
    2002                                     $     196       $     131     $     27
    2003                                           217             109           30
    2004                                           238              93           32
    2005                                           246              72           34
    2006                                           246              57           34
    2007 and subsequent years                    4,530             171          618	
                                             ---------       ---------     --------
       Total                                 $   5,673       $     633     $    775
                                             =========       =========     ========
</TABLE>


                                       59


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     Operating lease expense related to the agreements, which is included 
in "Conrail rents and services," amounted to $467 million in 2001, 
$502 million in 2000 and $273 million in 1999.
     On the Closing Date, both NS' railroad route miles and its railroad 
employees increased approximately 50 percent. NSR and CSXT now provide 
substantially all rail freight services on Conrail's route system, perform 
most services incident to customer freight contracts and employ the 
majority of Conrail's former work force. As a result, NSR receives all 
freight revenues and incurs all expenses on the PRR lines.

Investment in Conrail
---------------------
     NS is applying the equity method of accounting to its investment in 
Conrail in accordance with APB Opinion No. 18, "The Equity Method of 
Accounting for Investments in Common Stock."
     NS is amortizing the excess of the purchase price over Conrail's net 
equity using the principles of purchase accounting, based primarily on the 
estimated remaining useful lives of Conrail's property and equipment, 
including the related deferred tax effect of the differences in tax and 
accounting bases for certain assets. At Dec. 31, 2001, the difference 
between NS' investment in Conrail and its share of Conrail's underlying net 
equity was $3.8 billion.
     NS' consolidated balance sheet at Dec. 31, 2001, includes $80 million 
of liabilities related to the Conrail transaction, principally for 
contractual obligations to Conrail employees imposed by the Surface 
Transportation Board when it approved the transaction. Through Dec. 31, 
2001, NS had paid $109 million of such costs.
     Effective June 1, 1999, NS' consolidated financial statements include 
the consolidated financial position and results of Triple Crown Services 
Company (TCS), a partnership in which subsidiaries of NS and PRR 
are partners.

Related-Party Transactions
--------------------------
     Until the Closing Date, NSR and CRC had transactions with each other in 
the customary course of handling interline traffic. As of Dec. 31, 2001, 
substantially all of the amounts receivable or payable related to these 
transactions had been satisfied. 
     NS provides certain general and administrative support functions to 
Conrail, the fees for which are billed in accordance with several service-
provider arrangements and totaled $6 million in 2001, $7 million in 2000 
and $10 million in 1999.
     "Conrail rents and services," a new line on the income statements 
beginning June 1, 1999, includes: (1) expenses for amounts due to PRR and 
CRC for use by NSR of operating properties and equipment, operation of the 
Shared Assets Areas and continued operation of certain facilities during 
a transition period; and (2) NS' equity in the earnings of Conrail, 
net of amortization.
     "Notes and accounts payable to Conrail" includes $301 million at 
Dec. 31, 2001, and $51 million at Dec. 31, 2000, of interest-bearing loans 
made to NS by a PRR subsidiary that are payable on demand. The interest 
rate for these loans is variable and was 2.45% at Dec. 31, 2001. Also 
included is $72 million at Dec. 31, 2001, and $104 million at Dec. 31, 
2000, due to PRR and CRC related to expenses included in "Conrail rents 
and services," as discussed above. 


                                      60

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

Summary Financial Information - Conrail
----------------------------------------
     The following summary financial information should be read in 
conjunction with Conrail's audited financial statements, included as 
Exhibit 99 to this Annual Report on Form 10-K.
     Through May 31, 1999, Conrail's results of operations include freight 
line-haul revenues and related expenses. After the Closing Date, June 1, 
1999, its results reflect its new structure and operations. Currently, 
Conrail's major sources of operating revenues are from NSR and CSXT. The 
composition of Conrail's operating expenses also has changed.



<TABLE>
Summarized Consolidated Statements of Income - Conrail
------------------------------------------------------
<CAPTION>
($ in millions)                      2001             2000            1999
---------------                      ----             ----            ----
<S>                                <C>              <C>             <C>
Operating revenues                 $   903          $   985         $  2,174
Operating expenses                     639              749            2,046
                                    ------           ------          -------
   Operating income                    264              236              128
Other - net                             (6)              31              (83)
                                    ------           ------          -------
   Income before income taxes          258              267               45
Provision for income taxes              84               97               19
                                    ------           ------          -------
   Net income                      $   174          $   170         $     26
                                    ======           ======          =======
</TABLE>


Note: Conrail's results for 2000 included gains from the sale of property 
that had been written up to fair market value in the allocation of NS' 
investment in Conrail. Accordingly, the gains related to that fair-value 
write-up, totaling $17 million after taxes, were excluded in determining 
NS' equity in Conrail's net income. Conrail's results in 1999 included 
after-tax expenses of $121 million, principally: (1) to increase certain 
components of its casualty reserves based on an actuarial valuation, 
(2) to adjust certain litigation and environmental reserves related to 
settlements and completion of site reviews and (3) to adjust a credit 
related to the assumption of a lease obligation by CSX. These 1999 items 
were considered in the allocation of NS' investment in Conrail to the 
fair values of Conrail's assets and liabilities and, accordingly, were 
excluded in determining NS' equity in Conrail's net income.


<TABLE>
Summarized Consolidated Balance Sheets - Conrail
-------------------------------------------------
<CAPTION>
                                                            December 31,
($ in millions)                                          2001         2000
---------------                                          ----         ----
<S>                                                     <C>          <C>
Assets:
   Current assets                                       $   846      $   520
   Noncurrent assets                                      7,236        7,540
                                                         ------       ------
      Total assets                                      $ 8,082      $ 8,060
                                                         ======       ======
Liabilities and stockholders' equity:
   Current liabilities                                  $   408      $   435
   Noncurrent liabilities                                 3,569        3,643
   Stockholders' equity                                   4,105        3,982
                                                         ------       ------
      Total liabilities and stockholders' equity        $ 8,082      $ 8,060
                                                         ======       ======
</TABLE>


Note: Current assets include demand notes and receivables from NS and CSX 
totaling $687 million at Dec. 31, 2001, and $323 million at Dec. 31, 2000.  
Current liabilities include amounts payable to NS and CSX totaling 
$12 million at Dec. 31, 2001, and $31 million at Dec. 31, 2000.


                                     61


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
3.    OTHER INCOME - NET

<CAPTION>
      ($ in millions)                                    2001       2000       1999
      --------------                                     ----       ----       ----
      <S>                                              <C>         <C>        <C>
      Income from natural resources:
         Royalties from coal                           $    52     $   55     $    59
         Gains from sale of timber, oil
          and gas rights and interests                       -        101           -
         Nonoperating depletion
          and depreciation                                 (13)       (13)        (14)
                                                        ------      -----      ------
            Subtotal                                        39        143          45
      Gains from sale of properties
       and investments                                      59         59          62
      Rental income                                         40         40          34
      Interest income                                       15         11           8
      Other interest expense                                 1        (39)        (30)
      Sale of accounts receivable
       (Note 5)                                            (17)       (23)          -
      Taxes on nonoperating property                       (11)        (9)         (7)
      Corporate-owned life insurance - net                   6          -          (3)
      Equity in undistributed earnings
       of partnerships                                      (8)         3           1
      Charitable contributions                              (4)        (4)          -
      Other - net                                          (21)       (13)          5
                                                        ------      -----      ------
         Total                                         $    99     $  168     $   115
                                                        ======      =====      ======
</TABLE>


     "Other current assets" in the Consolidated Balance Sheets includes 
prepaid interest on corporate-owned life insurance borrowings of 
$45 million at Dec. 31, 2001, and $43 million at Dec. 31, 2000.


<TABLE>
4.	INCOME TAXES

<CAPTION>
Provision for Income Taxes
--------------------------
($ in millions)                                2001        2000        1999
---------------                                ----        ----        ----
<S>                                           <C>         <C>         <C>
Current: 
   Federal                                    $   125     $    65     $    18
   State                                           22          11           9
                                               ------      ------      ------
      Total current taxes                         147          76          27

Deferred:
   Federal                                         35           1          78
   State                                            9           1           7
                                               ------      ------      ------
      Total deferred taxes                         44           2          85
                                               ------      ------      ------
      Provision for income taxes              $   191     $    78     $   112
                                               ======      ======      ======
</TABLE>



                                     62


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

Reconciliation of Statutory Rate to Effective Rate
--------------------------------------------------
     Total income taxes as reflected in the Consolidated Statements of 
Income differ from the amounts computed by applying the statutory federal 
corporate tax rate as follows:


<TABLE>
<CAPTION>
                                                   2001            2000           1999
     ($ in millions)                          Amount    %     Amount    %    Amount    %
     ---------------                          ------   --     ------   --    ------   --
     <S>                                     <C>       <C>   <C>       <C>  <C>       <C>      
     Federal income tax
      at statutory rate                      $   194   35    $    87   35   $   123   35
     State income taxes,
      net of federal tax
      benefit                                     20    4          8    3        10    3
     Equity in earnings
      of Conrail                                 (16)  (3)        (7)  (3)       (6)  (2)
     Corporate-owned
      life insurance                              (3)   -         (2)  (1)        1    -
     Other - net                                  (4)  (1)        (8)  (3)      (16)  (4)
                                              ------   --     ------   --    ------   --
     Provision for income taxes              $   191   35    $    78   31   $   112   32
                                              ======   ==     ======   ==    ======   ==
</TABLE>



Deferred Tax Assets and Liabilities
-----------------------------------
     Certain items are reported in different periods for financial reporting 
and income tax purposes. Deferred tax assets and liabilities are recorded in 
recognition of these differences.
     The tax effects of temporary differences that give rise to significant 
portions of the deferred tax assets and deferred tax liabilities are 
as follows:


<TABLE>
<CAPTION>
                                                            December 31,
($ in millions)                                          2001          2000
---------------                                          ----          ----
<S>                                                    <C>           <C>
Deferred tax assets:
   Reserves, including casualty and other claims       $   158       $   158
   Employee benefits                                        75           104
   Retiree health and death benefit obligation             137           139
   Taxes, including state and property                     221           200
   Other                                                    22            28
                                                         -----         -----
      Total gross deferred tax assets                      613           629
   Less valuation allowance                                (18)          (12)
                                                         -----         -----
      Net deferred tax assets                              595           617
                                                         -----         -----
Deferred tax liabilities:
   Property                                             (3,126)       (3,117)
   Other                                                   (88)          (63)
                                                         -----         -----
      Total gross deferred tax liabilities              (3,214)       (3,180)
                                                         -----         -----
      Net deferred tax liability                        (2,619)       (2,563)
      Net current deferred tax assets                      162           182
                                                         -----         -----
      Net long-term deferred tax liability             $(2,781)      $(2,745)
                                                         =====         =====
</TABLE>

                                      63


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     Except for amounts for which a valuation allowance has been provided, 
management believes the other deferred tax assets will be realized. The 
total valuation allowance increased $6 million in 2001, $3 million in 2000 
and $6 million in 1999.

Internal Revenue Service (IRS) Reviews
--------------------------------------
     Consolidated federal income tax returns have been examined and 
Revenue Agent Reports have been received for all years up to and including 
1996. The consolidated federal income tax returns for 1997, 1998 and 1999 
are being audited by the IRS. Management believes that adequate provision 
has been made for any additional taxes and interest thereon that might 
arise as a result of IRS examinations.

5.   ACCOUNTS RECEIVABLE

     Beginning in May 2000, a bankruptcy-remote special purpose 
subsidiary of NS sold without recourse undivided ownership interests in a 
pool of accounts receivable totaling approximately $700 million. Upon 
commencement of this program, NS received cash proceeds of $460 million. 
The buyers have a priority collection interest in the entire pool of 
receivables and, as a result, NS has retained credit risk to the extent 
the pool exceeds the amount sold. NS services and collects the receivables 
on behalf of the buyers; however, no servicing asset or liability has been 
recognized because the benefits of servicing are estimated to be just 
adequate to compensate NS for its responsibilities. Payments collected 
from sold receivables can be reinvested in new accounts receivable on 
behalf of the buyers. Should NS' credit rating drop below investment grade, 
the buyers have the right to discontinue this reinvestment.
     At Dec. 31, 2001 and 2000, $300 million and $388 million, 
respectively, had been sold under this arrangement and, therefore, are not 
included in "Accounts receivable, net," on the consolidated balance sheet. 
The fees associated with the sale, which are based on the buyers' 
financing costs, are included in "Other income - net" (see Note 3). NS' 
retained interest, which is included in "Accounts receivable, net," is 
recorded at fair value using estimates of dilution based on NS' historical 
experience. These estimates are adjusted regularly based on NS' actual 
experience with the pool, including defaults and credit deterioration. NS 
has historically experienced very low levels of default. If historical 
dilution percentages were to increase one percentage point, the value of 
NS' retained interest would be reduced by approximately $7 million.
     NS' allowance for doubtful accounts was $5 million at Dec. 31, 2001, 
and $7 million at Dec. 31, 2000.

6.	PROPERTIES


<TABLE>
<CAPTION>
                                                      December 31,         Depreciation
($ in millions)                                    2001          2000      Rate for 2001
---------------                                    ----          ----      -------------
<S>                                              <C>           <C>              <C>
Railway property:
   Road                                          $ 10,452      $ 10,078         3.0%
   Equipment                                        5,559         5,588         4.1%
Other property                                        632           653         3.2%
                                                  -------       -------
                                                   16,643        16,319
Less: Accumulated depreciation                      5,435         5,214
                                                  -------       -------	
Net properties                                   $ 11,208      $ 11,105
                                                  =======       =======
</TABLE>


                                     64


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     Included in properties are approximately $110 million in 
telecommunications assets consisting of fiber optic conduit. Because of the 
significant economic downturn in the telecommunications industry during the 
year, NS evaluated the recoverability of these assets at Dec. 31, 2001. 
Based on known facts and circumstances, management believes that its 
ultimate investment in these assets, which is expected to total 
approximately $130 million upon completion of the network, will 
be recovered.
     Equipment includes $474 million at Dec. 31, 2001 and 2000, of 
assets recorded pursuant to capital leases. Other property includes the 
costs of obtaining rights to natural resources of $341 million at 
Dec. 31, 2001 and 2000.

Capitalized Interest
--------------------
     Total interest cost incurred on debt in 2001, 2000 and 1999 was 
$570 million, $569 million and $546 million, respectively, of which 
$17 million, $18 million and $15 million was capitalized.


                                     65


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

7.	CURRENT LIABILITIES


<TABLE>
<CAPTION>
                                                            December 31,
($ in millions)                                          2001          2000
---------------                                          ----          ----
<S>                                                    <C>          <C>
Accounts payable:
   Accounts and wages payable                          $    385     $    427
   Casualty and other claims                                192          223
   Equipment rents payable - net                            130          134
   Vacation liability                                       118          117
   Other                                                     23           24
                                                        -------      -------
      Total                                            $    848     $    925
                                                        =======      =======
Other current liabilities:
   Interest payable						 $    118     $    131
   Accrued Conrail-related costs (Note 2)                    35           47
   Liabilities for forwarded traffic                         35           40
   Retiree health and death 
    benefit obligation (Note 11)                             24           24
   Derivative instruments                                    17            -
   Other                                                     19           17
                                                        -------      -------
      Total                                            $    248     $    259
                                                        =======      =======
</TABLE>


8. LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                             December 31,
($ in millions)                                           2001          2000
---------------                                           ----          ----
<S>                                                      <C>           <C>
Notes at average rates and maturities as follows:
   6.69%, maturing 2002 to 2006                          $  1,500      $  1,450
   7.20%, maturing 2007 to 2011                             1,750         1,450
   8.10%, maturing 2017 to 2021                               800           800
   7.54%, maturing 2027 to 2031                             1,500           800
   7.05%, maturing 2037                                       750           750
   7.90%, maturing 2097                                       350           350
Commercial paper                                                -         1,132
Equipment obligations at an average rate of 5.9%,
   maturing to 2014                                           579           473
Capitalized leases at an average rate of 2.8%,
   maturing to 2015                                           316           343
Other debt at an average rate of 6.6%,
   maturing to 2019                                           119           119
Discounts and premiums, net                                   (32)          (31)
                                                          -------       -------
      Total long-term debt                               $  7,632      $  7,636
      Current maturities                                     (605)         (297)
                                                          -------       -------
      Long-term debt less current maturities             $  7,027      $  7,339
                                                          =======       =======

Long-term debt maturities subsequent to 2002
   are as follows:
      2003                                               $    357
      2004                                                    348
      2005                                                    401
      2006                                                    305
      2007 and subsequent years                             5,616
                                                          -------
      Total                                              $  7,027
                                                          =======
</TABLE>


                                    66


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     Each holder of a 2037 note may require NS to redeem all or part of the 
note at face value, plus accrued and unpaid interest, on May 1, 2004.
     The railroad equipment obligations and the capitalized leases are 
secured by liens on the underlying equipment.
     Certain lease obligations require the maintenance of yen-denominated 
deposits, which are pledged to the lessor to satisfy yen-denominated lease 
payments. These deposits are included in "Other assets" on the balance 
sheet and totaled $78 million at Dec. 31, 2001, and $90 million at 
Dec. 31, 2000.

Shelf Registration
------------------
     NS filed on Form S-3 a shelf registration statement with the Securities 
and Exchange Commission covering the issuance of up to $1 billion of 
securities. As of Dec. 31, 2001, NS had issued $250 million of debt under 
this shelf registration.

Commercial Paper and Credit Agreement
-------------------------------------
     NS has the ability to issue commercial paper backed by a $1 billion 
credit agreement that expires in 2006. At Dec. 31, 2001, NS had no commercial 
paper outstanding. At Dec. 31, 2000, $1,132 million of commercial paper was 
outstanding and was classified as long-term because NS had the ability, 
through a previous credit agreement, to convert this obligation into 
longer-term debt. Any borrowings under the credit agreement are contingent 
on the continuing effectiveness of the representations and warranties made 
at the inception of the agreement.

Debt Covenants
--------------
     NS is subject to various financial covenants with respect to its debt 
and under its credit agreement, including a minimum net worth requirement, a 
maximum leverage ratio restriction and certain restrictions on issuance of 
further debt. At Dec. 31, 2001, NS was in compliance with all debt covenants.


                                       67


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

9.   LEASE COMMITMENTS

     NS is committed under long-term lease agreements, which expire on 
various dates through 2067, for equipment, lines of road and other property. 
The following amounts do not include payments to PRR under the Operating 
Agreement and lease agreements or to CRC under the SAA agreements (see 
Note 2). Future minimum lease payments and operating lease expense, other 
than to PRR and CRC, are as follows:


<TABLE>
<CAPTION>
                                                       Operating     Capital
($ in millions)                                        Leases        Leases
---------------                                        ---------     -------
<S>                                                     <C>          <C>
2002                                                    $    113     $     47
2003                                                          97           49
2004                                                          75           48
2005                                                          65           51
2006                                                          52           57
2007 and subsequent years                                    488          123
                                                         -------      -------
      Total                                             $    890     $    375
                                                         =======	

Less imputed interest on capital leases
  at an average rate of 7.1%                                               59
                                                                      -------

Present value of minimum lease payments
  included in debt                                                   $    316
                                                                      =======
</TABLE>



<TABLE>
Operating Lease Expense
-----------------------

<CAPTION>
($ in millions)                                       2001        2000         1999
---------------                                       ----        ----         ----
<S>                                                 <C>         <C>          <C>
Minimum rents                                       $    149    $    167     $    118
Contingent rents                                          55          61           61
                                                     -------     -------      -------
   Total                                            $    204    $    228     $    179
                                                     =======     =======      =======
</TABLE>



     During 2000, NS entered into an operating lease for 140 locomotives, 
which is renewable annually at NS' option, has a maximum term of eight 
years and includes purchase options. Because the fixed, noncancellable 
term of the lease is one year, future minimum lease payments in the table 
above do not include amounts related to this lease.  However, operating 
lease expense for 2001 in the table above does include $18 million related 
to this lease.  If NS does not purchase the locomotives at the end of the 
maximum lease term, it is liable for any shortfall in the then fair value 
of the locomotives and a specified residual value.  NS does not expect to 
be required to make any payments under this provision.

                                       68


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
10. OTHER LIABILITIES

<CAPTION>
                                                              December 31,
($ in millions)                                          2001              2000
---------------                                          ----              ----
<S>                                                   <C>               <C>
Retiree health and death 
  benefit obligation (Note 11)                        $     291         $     291
Casualty and other claims                                   265               262
Deferred compensation                                       147               148
Net pension obligations (Note 11)                            79                83
Accrued Conrail-related costs (Note 2)                       46                72
Other                                                       261               275
                                                       --------          --------
   Total                                              $   1,089         $   1,131
                                                       ========          ========
</TABLE>



11.  PENSIONS AND OTHER POSTRETIREMENT BENEFITS

     Norfolk Southern and certain subsidiaries have both funded and 
unfunded defined benefit pension plans covering principally salaried 
employees. Norfolk Southern and certain subsidiaries also provide 
specified health care and death benefits to eligible retired employees 
and their dependents. Under the present plans, which may be amended or 
terminated at NS' option, a defined percentage of health care expenses 
is covered, reduced by any deductibles, copayments, Medicare payments and, 
in some cases, coverage provided under other group insurance policies.

Early Retirement Programs in 2000
---------------------------------
     During 2000, NS offered two voluntary early retirement programs to 
its salaried employees. The principal incentives offered in these programs 
were enhanced pension benefits, the cost for most of which will be paid 
from NS' overfunded pension plan. A February program was accepted by 919 
of 1,180 eligible employees, and a December program was accepted by 370 of 
846 eligible employees. The total cost of these programs, which is included 
in "Compensation and benefits," was $133 million. The resulting noncash 
reduction to NS' pension plan asset is included in "Other - net" in the 
Consolidated Statement of Cash Flows.

                                       69


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
<CAPTION>
                                              Pension Benefits             Other Benefits
($ in millions)                             2001            2000         2001          2000
---------------                             ----            ----         ----          ----
<S>                                        <C>             <C>          <C>           <C>
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligation at
  beginning of year                        $  1,312        $  1,058     $    445      $    340
Cost of early retirement benefits                 -             119            -            14
Service cost                                     15              18           14            15
Interest cost                                    94              79           33            27
Amendment                                         6              21            -             -
Legislative changes                             (19)              -            -             -
Actuarial (gains) losses                         36             120           21            79
Benefits paid                                  (120)           (103)         (34)          (30)
                                            -------         -------      -------       -------
      Benefit obligation at end of year       1,324           1,312          479           445
                                            -------         -------      -------       -------
CHANGE IN PLAN ASSETS
Fair value of plan assets
  at beginning of year                        1,999           2,072          126           152
Actual return on plan assets                    (74)             30           (8)           (5)
Employer contribution                             7               8           34             9
401(h) account transfer                         (14)             (8)           -             -
Benefits paid                                  (120)           (103)         (34)          (30)
                                            -------         -------      -------       -------
      Fair value of plan
       assets at end of year                  1,798           1,999          118           126
                                            -------         -------      -------       -------
      Funded status                             474             687         (361)         (319)

Unrecognized initial net asset                    -              (3)           -             -
Unrecognized (gain) loss                       (142)           (478)          46             4
Unrecognized prior
 service cost (benefit)                          30              47            -             -
                                            -------         -------      -------       -------
      Net amount recognized                $    362        $    253     $   (315)     $   (315)
                                            =======         =======      =======       =======

Amounts recognized in the
  Consolidated Balance
  Sheets consist of:
      Prepaid benefit cost                 $    426        $    315     $      -      $      -
      Accrued benefit liability                 (79)            (83)        (315)         (315)
      Accumulated other
        comprehensive income                     15              21            -             -
                                            -------         -------      -------       -------
      Net amount recognized                $    362        $    253     $   (315)     $   (315)
                                            =======         =======      =======       =======
</TABLE>


     Of the pension plans included above, the unfunded pension plans were 
the only plans with an accumulated benefit obligation in excess of plan 
assets. These plans' accumulated benefit obligations were $79 million at 
Dec. 31, 2001, and $83 million at Dec. 31, 2000. These plans' projected 
benefit obligations were $89 million at Dec. 31, 2001 and 2000. Because of 
the nature of such plans, there are no plan assets.
     NS received Section 401(h) account transfers, from pension assets, of 
$14 million in 2001 and $8 million in 2000 as reimbursement for medical 
payments for retirees.

                                     70


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     Legislative changes primarily resulting from the December 2001 amendment 
to the Railroad Retirement Act ("The Act") increased benefits payable to 
certain retirees covered by The Act.  Since employees' pension benefits 
paid by NS are offset by a portion of benefits paid under The Act, the 
amendment served to reduce NS' obligation by approximately $19 million at 
Dec. 31, 2001.
     During 2001, NS amended its qualified and nonqualified pension plans to 
enhance benefits to certain NS employees.  The amendments increased the 
pension benefit obligation by $6 million at Dec. 31, 2001.
     During 2000, NS amended its qualified pension plan to allow for the 
payment of qualifying disability benefits.  The amendment increased the 
pension benefit obligation by $21 million at Dec. 31, 2000.
     Pension and other postretirement benefit costs are determined based 
on actuarial valuations that reflect appropriate assumptions as of the 
measurement date, ordinarily the beginning of each year. The funded status 
of the plans is determined using appropriate assumptions as of each year end. 
During 1999, NS received assets from the Conrail pension plan and assumed 
certain related liabilities. As a result, the measurement dates for 
determining pension costs were Jan. 1, 1999, and Aug. 31, 1999; the costs 
reflect discount rates of 6.75% and 7.75%, respectively, and other 
assumptions appropriate at those dates. A summary of the major 
assumptions follows:


<TABLE>
<CAPTION>
                                                2001        2000        1999
                                                ----        ----        ----
<S>                                             <C>         <C>         <C>
Funded status:
  Discount rate                                 7.25%       7.50%       7.75%
  Future salary increases                       5%          5%          5%
Pension cost:
  Discount rate                                 7.50%       7.75%       6.75%
  Return on assets in plans                     10%         10%         10%
  Future salary increases                       5%          5%          5%
</TABLE>



<TABLE>
Pension and Other Postretirement Benefit Costs Components
---------------------------------------------------------

<CAPTION>
($ in millions)                                 2001        2000        1999
---------------                                 ----        ----        ----
<S>                                             <C>         <C>         <C>
PENSION BENEFITS
Service cost                                    $    15     $    18     $    17
Interest cost                                        94          79          73
Cost of early retirement programs                     -         119           -
Expected return on plan assets                     (202)       (192)       (152)
Amortization of prior service cost                    4           4           4
Amortization of initial net asset                    (3)         (7)         (7)
Recognized net actuarial (gain) loss                (24)        (38)        (22)
                                                 ------      ------      ------
   Net cost (benefit)                           $  (116)    $   (17)    $   (87)
                                                 ======      ======      ======

OTHER POSTRETIREMENT BENEFITS
Service cost                                    $    14     $    15     $    11
Interest cost                                        33          27          23
Cost of early retirement programs                     -          14           -
Expected return on plan assets                      (13)        (14)        (12)
Amortization of prior service cost                    -           -         (12)
Recognized net actuarial (gain) loss                  -          (4)         (2)
                                                 ------      ------      ------
   Net cost                                     $    34     $    38     $     8
                                                 ======      ======      ======
</TABLE>


                                       71


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     For measurement purposes, increases in the per capita cost of covered 
health care benefits were assumed to be 7.0% for 2002 and 6.0% for 2003. 
It is assumed the rate will decrease gradually to an ultimate rate of 5.0% 
for 2004 and remain at that level thereafter.
     Assumed health care cost trend rates have a significant effect on the 
amounts reported in the financial statements. To illustrate, a one-
percentage-point change in the assumed health care cost trend would have 
the following effects:


<TABLE>
<CAPTION>
                                                   One percentage point
($ in millions)                                  Increase        Decrease
--------------------                             --------        --------
<S>                                               <C>             <C>
Increase (decrease) in:
  Total service and interest cost components      $   5           $  (4)
  Postretirement benefit obligation               $  42           $ (36)
</TABLE>


     Under collective bargaining agreements, NS and certain subsidiaries 
participate in a multi-employer benefit plan, which provides certain 
postretirement health care and life insurance benefits to eligible union 
employees. Premiums under this plan are expensed as incurred and amounted 
to $10 million in 2001, $7 million in 2000 and $5 million in 1999.

401(k) Plans
------------
     Norfolk Southern and certain subsidiaries provide 401(k) savings plans 
for employees. Under the plans, NS matches a portion of employee 
contributions, subject to applicable limitations. Since 1999, NS has issued 
shares of Common Stock to fund its contributions. NS' expenses under these 
plans were $11 million in 2001 and $12 million in both 2000 and 1999.
     In November 1999, NS issued and contributed to eligible participants' 
accounts approximately 2 million shares of Norfolk Southern Common Stock 
in connection with a temporary special work incentive program available 
to its unionized employees during much of the third quarter of 1999. The 
cost of the program, which was charged to compensation and benefits 
expenses, was $49 million.


12.  STOCK-BASED COMPENSATION

     Under the stockholder-approved Long-Term Incentive Plan (LTIP), a 
committee of nonemployee directors of the Board may grant stock options, 
stock appreciation rights (SARs), restricted stock and performance share 
units (PSUs), up to a maximum 88,025,000 shares of Norfolk Southern Common 
Stock (Common Stock). Under the Board-approved Thoroughbred Stock Option 
Plan (TSOP), the committee may grant stock options up to a maximum of 
6,000,000 shares of Common Stock. Options may be granted for a term not to 
exceed 10 years, but may not be exercised prior to the first anniversary 
of the date of grant. Options are exercisable at the fair market value of 
Common Stock on the date of grant.
     The LTIP also permits the payment -- on a current or a deferred basis 
and in cash or in stock -- of dividend equivalents on shares of Common 
Stock covered by options or PSUs in an amount commensurate with dividends 
paid on Common Stock. Tax absorption payments also are authorized in 
amounts estimated to equal the federal and state income taxes applicable 
to shares of Common Stock issued subject to a share retention agreement.

                                      72

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

Accounting Method
-----------------
     NS applies APB Opinion 25 and related interpretations in accounting 
for awards made under the plans. Accordingly, grants of PSUs, restricted 
stock, dividend equivalents, tax absorption payments and SARs result in 
charges to net income, while grants of stock options have no effect on 
net income. Related compensation costs were $20 million in 2001, $5 million 
in 2000 and $2 million in 1999. NS recognized additional paid-in capital of 
$1 million in 2001, none in 2000 and $4 million in 1999 related to the tax 
benefit generated by stock option exercises.
     Had such compensation costs been determined in accordance with SFAS 123, 
net income would have been $358 million in 2001, $149 million in 2000 and 
$210 million in 1999; and basic and diluted earnings per share would have 
been $0.93 in 2001, $0.39 in 2000 and $0.55 in 1999. These pro forma amounts 
include compensation costs as calculated using the Black-Scholes option-
pricing model, with average expected option lives of five years for 2001 
and 2000 grants and four years for 1999 grants; average risk-free interest 
rates of 5.1% in 2001, 6.8% in 2000 and 5.2% in 1999; average stock-price 
volatilities of 39% in 2001, 33% in 2000 and 21% in 1999; and dividend 
yields of 2% in 2001 and 3% in 2000 and 1999. These assumptions produce 
per-share grant-date fair values of $5.48 in 2001, $5.22 in 2000 and 
$5.12 in 1999.


<TABLE>
<CAPTION>
Stock Option Activity
---------------------
                                                            Weighted Average
                                    Option Shares            Exercise Price
                                    -------------		----------------
<S>                                  <C>                        <C>
Balance 12/31/98                     13,059,048                 $  25.48
Granted                               9,150,400                    30.09
Exercised                              (859,085)                   17.10
Canceled                               (234,000)                   29.84
                                     ----------
Balance 12/31/99                     21,116,363                    27.77
Granted                               7,705,800                    16.94
Exercised                              (273,813)                   13.95
Canceled                               (427,400)                   26.84
                                     ----------
Balance 12/31/00                     28,120,950                    24.96
Granted                               6,985,000                    15.48
Exercised                            (1,079,902)                   16.58
Canceled                               (612,525)                   26.51
                                     ----------
Balance 12/31/01                     33,413,523                 $  23.21
                                     ==========
</TABLE>


     Of the total options outstanding at Dec. 31, 2001, 26 million were 
vested and have a weighted-average exercise price of $25.25.


                                      73

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------


<TABLE>
<CAPTION>
Stock Options Outstanding
-------------------------

    Exercise Price                          Number         Weighted Average
------------------------------------      Outstanding          Remaining
Range               Weighted Average      at 12/31/01      Contractual Life
-----               ----------------      -----------      ----------------
<S>                     <C>               <C>                  <C>
$15.48 to $16.94        $16.22            14,143,232           8.6 years
 18.81 to  21.08         20.56             2,691,350           1.8 years
 24.31 to  27.69         26.83             7,821,600           5.7 years
 29.46 to  33.25         32.10             8,757,341           6.3 years
----------------        ------            ----------       -----------------
$15.48 to $33.25        $23.21            33,413,523           6.8 years
                                          ==========
</TABLE>


Performance Share Units
-----------------------
     PSUs provide for awards based on achievement of certain predetermined 
corporate performance goals at the end of a three-year cycle. PSU grants and 
average grant-date fair market values were 817,500 and $15.48 in 2001; 
937,500 and $16.94 in 2000; and 850,000 and $27.72 in 1999, respectively. 
PSUs may be paid in the form of shares of Common Stock, cash or any 
combination thereof. Shares earned and issued may be subject to share 
retention agreements and held by NS for up to five years.

Shares Available and Issued
---------------------------
     Shares of stock available for future grants and issued in connection 
with all features of the LTIP and TSOP are as follows:


<TABLE>
<CAPTION>
                                       2001              2000              1999
                                       ----              ----              ----
<S>                                 <C>                <C>              <C>
Available for future 
 grants 12/31:
      LTIP                          30,816,365         2,554,584        10,512,997
      TSOP                           2,535,000         2,488,700         2,349,600

Shares of Common Stock 
issued:
      LTIP                           1,146,346           395,626         1,086,288
      TSOP                                   -                 -                 -
</TABLE>



                                        74


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

13.	STOCKHOLDERS' EQUITY

Accumulated Other Comprehensive Loss
------------------------------------
     "Accumulated other comprehensive loss" reported in the Consolidated 
Statements of Changes in Stockholders' Equity consisted of the following:



<TABLE>
<CAPTION>
                                              Balance          Net                             Balance
                                           at Beginning       Gain        Reclassification     at End
($ in millions)                               of Year        (Loss)          Adjustments       of Year
 -------------                                -------         ----           -----------       -------
 December 31, 2001
 -----------------
 <S>                                          <C>            <C>              <C>              <C>
 Unrealized gains on securities               $     7        $    (1)         $     -          $    6
 Cash flow hedges                                   -            (16)               5             (11)
 Minimum pension liability                        (13)           (37)               -             (50)
                                               ------         ------           ------           -----
 Accumulated other comprehensive loss         $    (6)       $   (54)         $     5          $  (55)
                                               ======         ======           ======           =====

 December 31, 2000
 -----------------
 Unrealized gains on securities               $     2        $     5          $     -          $    7
 Minimum pension liability                        (13)             -                -             (13)
                                               ------         ------           ------           -----
 Accumulated other comprehensive loss         $   (11)       $     5          $     -          $   (6)
                                               ======         ======           ======           =====
</TABLE>



                                      75


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     "Other comprehensive income (loss)" reported in the Consolidated 
Statements of Changes in Stockholders' Equity consisted of the following:



<TABLE>
<CAPTION>
                                          Pretax          Tax (Expense)        Net-of-Tax
($ in millions)                           Amount             Benefit             Amount
 -------------                            ------             -------             ------
<S>                                       <C>                <C>                 <C>
Year ended 12/31/01
-------------------
Net gain (loss) arising during the year:
   Cash flow hedges                       $  (27)            $    11             $   (16)
   Less reclassification adjustments           8                  (3)                  5
                                           -----              ------              ------
      Subtotal                               (19)                  8                 (11)

Unrealized gains (losses) on securities       (1)                  -                  (1)
Minimum pension liability                    (35)                 (2)                (37)
                                           -----              ------              ------
Other comprehensive income (loss)         $  (55)            $     6             $   (49)
                                           =====              ======              ======

Year ended 12/31/00
-------------------
Net gain (loss) arising during the year:
   Unrealized gains (losses) 
    on securities                         $    7             $    (2)            $     5
                                           -----              ------              ------
Other comprehensive income (loss)         $    7             $    (2)            $     5
                                           =====              ======              ======

Year ended 12/31/99
-------------------
Net gain (loss) arising during the year:
   Unrealized gains (losses) 
    on securities                         $   (6)            $     1             $    (5)
   Minimum pension liability                   2                   -                   2
                                           -----              ------              ------
Other comprehensive income (loss)         $   (4)            $     1             $    (3)
                                           =====              ======              ======
</TABLE>



     In 2001, Conrail recorded a $70 million loss in other comprehensive 
income related to an increase in its minimum pension liability.  NS' 
"Other comprehensive loss" for 2001 and its "Accumulated other 
comprehensive loss" at Dec. 31, 2001, include $41 million arising from 
this Conrail adjustment.

Undistributed Earnings of Equity Investees
------------------------------------------
     "Retained income" includes undistributed earnings of equity investees, 
principally attributable to NS' equity in the earnings of Conrail, of 
$355 million at Dec. 31, 2001; $351 million at Dec. 31, 2000; and 
$330 million at Dec. 31, 1999.


                                       76

Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

14.  EARNINGS PER SHARE

     The following table sets forth the calculation of basic and diluted 
earnings per share:


<TABLE>
<CAPTION>
($ in millions except per share,
 shares in millions)                                       2001        2000        1999
--------------------------------                           ----        ----        ----
<S>                                                     <C>         <C>         <C>
Basic earnings per share:
  Income available to common
    stockholders for basic and
    diluted computations                                $   375     $   172     $   239
                                                         ------      ------      ------
  Weighted-average shares outstanding                       385         383         381
                                                         ------      ------      ------
Basic earnings per share                                $  0.97     $  0.45     $  0.63
                                                         ------      ------      ------

Diluted earnings per share:
  Weighted-average shares
    outstanding per above                                   385         383         381
  Dilutive effect of outstanding 
    options, PSUs and SARs (as
    determined by the application
    of the treasury stock method)                             1           -           1
                                                         ------      ------      ------
  Adjusted weighted-average
    shares outstanding                                      386         383         382
                                                         ------      ------      ------
Diluted earnings per share                              $  0.97     $  0.45     $  0.63
                                                         ======      ======      ======
</TABLE>


     These calculations exclude options the exercise price of which 
exceeded the average market price of Common Stock as follows: in 2001, 
20 million in the fourth quarter, 19 million in each of the third and 
second quarters, and 28 million in the first quarter; in 2000, 
28 million in the fourth, third and first quarters, and 20 million 
in the second quarter; and in 1999, 17 million in the fourth quarter, 
9 million in the third quarter, 7 million in the second quarter and 
5 million in the first quarter.
     There are no adjustments to "Net income" or "Income from 
continuing operations" for the diluted earnings per share computations.


15.  FAIR VALUES OF FINANCIAL INSTRUMENTS

     The fair values of "Cash and cash equivalents," "Short-term 
investments," "Accounts receivable" and "Accounts payable" approximate 
carrying values because of the short maturity of these financial 
instruments. The fair value of corporate-owned life insurance 
approximates carrying value. The carrying amounts and estimated fair 
values for the remaining financial instruments, excluding derivatives 
(see Note 16) and investments accounted for under the equity method 
in accordance with APB Opinion No. 18, consisted of the following 
at Dec. 31:


<TABLE>
<CAPTION>
                                                 2001                    2000
                                                 ----                    ----
                                          Carrying    Fair        Carrying    Fair
($ in millions)                            Amount     Value        Amount     Value
---------------                           --------    -----       --------    -----
<S>                                        <C>        <C>          <C>        <C>
Investments                                $    44    $    51      $    49    $    56
Notes receivable                                93         98           93         93
Long-term debt                              (7,632)    (8,067)      (7,636)    (7,809)
</TABLE>



                                          77


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     Quoted market prices were used to determine the fair value of 
marketable securities; underlying net assets were used to estimate the fair 
value of other investments. The fair values of notes receivable are based 
on future discounted cash flows.  The fair values of debt were estimated 
based on quoted market prices or discounted cash flows using current interest 
rates for debt with similar terms, company rating and remaining maturity.
     Carrying amounts of marketable securities reflect unrealized holding 
gains of $10 million on Dec. 31, 2001, and $11 million on Dec. 31, 2000. 
Sales of "available-for-sale" securities were immaterial for years ended 
Dec. 31, 2001 and 2000.


16. DERIVATIVE FINANCIAL INSTRUMENTS

     On Jan. 1, 2001, NS adopted Statement of Financial Accounting Standards 
No. 133, "Accounting for Derivative Instruments and Hedging Activities" 
(SFAS 133), as amended by Statement of Financial Accounting Standards 
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging 
Activities" (SFAS 138).  The Statements establish accounting and reporting 
standards for derivative instruments and hedging activities, requiring that 
all derivatives be recognized in the financial statements as either assets 
or liabilities and that they be measured at fair value. Changes in fair 
value are recorded as adjustments to the assets or liabilities being hedged 
in "Other comprehensive income," or in current earnings, depending on 
whether the derivative is designated and qualifies for hedge accounting, 
the type of hedge transaction represented and the effectiveness of the 
hedge.  The adoption of SFAS 133 and SFAS 138 resulted in the recognition 
of a $5 million asset and a $5 million increase in long-term debt as of 
Jan. 1, 2001.
     NS uses derivative financial instruments to reduce the risk of 
volatility in its diesel fuel costs and to manage its overall exposure to 
fluctuations in interest rates.  NS does not engage in the trading of 
derivatives. Management has determined that its derivative financial 
instruments qualify as either fair-value or cash-flow hedges, having 
values that highly correlate with the underlying hedged exposures, and 
has designated such instruments as hedging transactions.  Credit risk 
related to the derivative financial  instruments is considered to be 
minimal and is managed by requiring high credit standards for 
counterparties and periodic settlements.

Diesel Fuel Hedging
-------------------
     In the second quarter of 2001, NS began a program to hedge a portion 
of its diesel fuel consumption. The intent of the program is to assist in 
the management of NS' aggregate risk exposure to fuel price fluctuations, 
which can significantly affect NS' operating margins and profitability. 
In order to minimize this risk, NS instituted a continuous hedging strategy 
for a portion of its estimated future fuel needs by entering into a series 
of forward purchases and swaps in order to lock in the purchase prices of 
some of its diesel fuel. Hedges are placed each month by competitive bid 
among selected counterparties. The goal of this hedging strategy is to 
average fuel costs over an extended period of time while minimizing the 
incremental cost of hedging.
     The program provides that NS will not enter into any fuel hedges 
with a duration of more than 36 months, and that no more than 80 percent 
of NS' average monthly fuel consumption will be hedged for each month 
within any 36-month period. Diesel fuel costs represented 8%, 9% and 6% 
of NS' operating expenses for the years ended Dec. 31, 2001, 2000 and 
1999, respectively. 

                                       78


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

     NS entered into two types of diesel fuel derivative transactions in 
2001. Management has designated these derivative instruments as cash-flow 
hedges of the exposure to variability in expected future cash flows 
attributable to fluctuations in diesel fuel prices. In 2001, NS purchased 
eight monthly call options at a strike price of 84 cents per gallon of 
Nymex No. 2 heating oil. The cost of the monthly options, which expired 
serially through Dec. 31, 2001, was amortized as a component of diesel 
fuel expense. Because the price of diesel fuel did not reach the strike 
price at any time during the period the options were outstanding, NS did 
not record any benefit related to these transactions. During 2001, NS entered 
into 222 fuel swaps for approximately 370 million gallons at an average price 
of approximately 68 cents per gallon of Nymex No. 2 heating oil. As of 
Dec. 31, 2001, outstanding swaps covered approximately 32 percent and 
21 percent of estimated fuel purchases for the years 2002 and 
2003, respectively.
     NS' fuel hedging activity resulted in a net increase in 2001 diesel 
fuel expense of $8 million. Ineffectiveness related to the use of diesel 
fuel hedges in 2001 was less than $1 million.

Interest Rate Hedging
---------------------
     NS manages its overall exposure to fluctuations in interest rates by 
issuing both fixed and floating-rate debt instruments, and by entering into 
interest rate hedging transactions. NS had $251 million, or 3.5%, and 
$280 million, or 4.3%, of its fixed rate debt portfolio hedged at 
Dec. 31, 2001 and Dec. 31, 2000, respectively, using interest rate swaps 
that qualify for and are designated as fair-value hedge transactions. 
These swaps have been effective in hedging the changes in fair value of the 
related debt arising from changes in interest rates and, accordingly, 
there has been no impact on earnings resulting from ineffectiveness 
associated with these derivative transactions.

Fair Values
-----------
     The fair values of NS' diesel fuel derivative instruments at Dec. 31, 
2001, were determined based upon current fair market values as quoted by 
third party dealers. Fair values of interest rate swaps were determined 
based upon the present value of expected future cash flows discounted at 
the appropriate implied spot rate from the spot rate yield curve. Fair 
value adjustments are noncash transactions and, accordingly, are excluded 
from the Consolidated Statement of Cash Flows. At Dec. 31, 2001, 
"Accumulated other comprehensive loss," a component of "Stockholders' 
equity," includes $15 million (pretax) relating to the decrease in the 
fair value of the derivative fuel hedging transactions that will terminate 
within the next 12 months.
     The asset and liability positions of NS' outstanding derivative 
financial instruments were as follows:


<TABLE>
<CAPTION>
                                                              December 31,
($ in millions)                                            2001          2000
---------------                                            ----          ----
<S>                                                       <C>           <C>
Interest rate hedges: 
  Gross fair market asset position                        $   12        $    5
  Gross fair market (liability) position                       -             -
Fuel hedges:
  Gross fair market asset position                             -             -
  Gross fair market (liability) position                     (19)            -
                                                           -----         -----	
      Total net asset (liability) position                $   (7)       $    5
                                                           =====         =====
</TABLE>



                                      79


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

17.  DISCONTINUED OPERATIONS - MOTOR CARRIER

     On March 28, 1998, NS sold all the common stock of North American 
Van Lines, Inc. (NAVL), its motor carrier subsidiary. Results in 2001 
include an additional after-tax gain of $13 million, or 3 cents per share, 
that resulted from the expiration of certain indemnities contained in the 
sales agreement.


18.	COMMITMENTS AND CONTINGENCIES

Lawsuits
--------
     Norfolk Southern and certain subsidiaries are defendants in numerous 
lawsuits and other claims relating principally to railroad operations. When 
management concludes that it is probable that a liability has been incurred 
and the amount of the liability can be reasonably estimated, it is accrued 
through a charge to expenses. An accrual is not made when management's best 
estimate, based on known facts and circumstances, is that it is unlikely 
that a loss has been incurred. 
     Presently, there are two cases involving labor issues and contractual 
obligations of a fiber optic codeveloper where the aggregated range of loss 
could be from nothing to $75 million. Management believes that NS will 
prevail in these cases. The ability to collect a judgment against the 
codeveloper, Williams Communications, LLC, may be limited due to its 
declining financial condition; however, the shortfall, if any, cannot 
now be determined. Unfavorable outcomes on these cases could result in 
accruals that could be significant to results of operations in a 
particular year or quarter.

Casualty Claims
---------------
     NS is generally self-insured for casualty claims. Claims in excess of 
self-insurance levels are insured up to excess coverage limits. The casualty 
claims liability is determined actuarially, based upon claims filed and an 
estimate of claims incurred but not yet reported. While the ultimate amount 
of claims incurred is dependent on future developments, in management's 
opinion, the recorded liability is adequate to cover the future payments 
of claims. However, it is possible that the recorded liability may not be 
adequate to cover the future payment of claims. Adjustments to the recorded 
liability will be reflected in operating expenses in the periods in which 
such adjustments are known.

Environmental Matters
---------------------
     NS is subject to various jurisdictions' environmental laws and 
regulations. It is NS' policy to record a liability where such liability or 
loss is probable and its amount can be estimated reasonably. Claims, if 
any, against third parties for recovery of cleanup costs incurred by NS 
are reflected as receivables in the balance sheet and are not netted 
against the associated NS liability. Environmental engineers regularly 
participate in ongoing evaluations of all identified sites and in 
determining any necessary adjustments to initial liability estimates. 
NS also has established an Environmental Policy Council, composed of 
senior managers, to oversee and interpret its environmental policy.

                                      80


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

      NS' balance sheets included liabilities for environmental exposures in 
the amount of $33 million at Dec. 31, 2001, and $36 million at Dec. 31, 2000 
(of which $8 million was accounted for as a current liability in each year). 
At Dec. 31, 2001, the liability represented NS' estimate of the probable 
cleanup and remediation costs based on available information at 126 
identified locations. On that date, 10 sites accounted for $17 million of 
the liability, and no individual site was considered to be material. NS 
anticipates that much of this liability will be paid out over five years; 
however, some costs will be paid out over a longer period.
     At some of the 126 locations, certain NS subsidiaries, usually in 
conjunction with a number of other parties, have been identified as 
potentially responsible parties by the Environmental Protection Agency 
(EPA) or similar state authorities under the Comprehensive Environmental 
Response, Compensation and Liability Act of 1980, or comparable state 
statutes, which often impose joint and several liability for cleanup costs.
     With respect to known environmental sites (whether identified by NS 
or by the EPA or comparable state authorities), estimates of NS' ultimate 
potential financial exposure for a given site or in the aggregate for all 
such sites are necessarily imprecise because of the widely varying costs of 
currently available cleanup techniques, the likely development of new 
cleanup technologies, the difficulty of determining in advance the nature 
and full extent of contamination and each potential participant's share of 
any estimated loss (and that participant's ability to bear it), and evolving 
statutory and regulatory standards governing liability.
     The risk of incurring environmental liability - for acts and omissions, 
past, present and future - is inherent in the railroad business.  Some of 
the commodities in NS' traffic mix, particularly those classified as 
hazardous materials, can pose special risks that NS and its subsidiaries 
work diligently to minimize.  In addition, several NS subsidiaries own, or 
have owned, land used as operating property, or which is leased or may 
have been leased and operated by others, or held for sale.  Because 
environmental problems may exist on these properties that are latent or 
undisclosed, there can be no assurance that NS will not incur 
environmentally related liabilities or costs with respect to one or more 
of them, the amount and materiality of which cannot be estimated reliably 
at this time.  Moreover, lawsuits and claims involving these and other 
now-unidentified environmental sites and matters are likely to arise from 
time to time.  The resulting liabilities could have a significant effect 
on financial condition, results of operations or liquidity in a particular 
year or quarter.
     However, based on its assessment of the facts and circumstances now 
known, management believes that it has recorded the probable costs for 
dealing with those environmental matters of which the Corporation is aware.  
Further, management believes that it is unlikely that any identified 
matters, either individually or in the aggregate, will have a material 
adverse effect on NS' financial position, results of operations or 
liquidity.

Purchase Commitments
--------------------
     NSR had outstanding purchase commitments of approximately $150 million 
in connection with its 2002 capital program.  NS has forward fuel purchase 
commitments in the first quarter of 2002 covering 38 million gallons of 
fuel at an average cost of 62 cents per gallon, which includes federal taxes.


                                       81


Item 8.	Financial Statements and Supplementary Data. (continued)
------	-------------------------------------------

Change-In-Control Arrangements
------------------------------
     Norfolk Southern has compensation agreements with officers and certain 
key employees that become operative only upon a change in control of the 
Corporation, as defined in those agreements. The agreements provide 
generally for payments based on compensation at the time of a covered 
individual's involuntary or other specified termination and for certain 
other benefits.

Debt Guarantees
---------------
     As of Dec. 31, 2001, certain Norfolk Southern subsidiaries are 
contingently liable as guarantors with respect to $8 million of 
indebtedness of related entities.

                                      82



INDEPENDENT AUDITORS' REPORT


The Stockholders and Board of Directors
Norfolk Southern Corporation:

     We have audited the consolidated financial statements of Norfolk 
Southern Corporation and subsidiaries as listed in the index in Item 8. 
In connection with our audits of the consolidated financial statements, 
we have also audited the consolidated financial statement schedule listed 
in Item 14(a)2. These consolidated financial statements and this consolidated 
financial statement schedule are the responsibility of the Company's 
management. Our responsibility is to express an opinion on these consolidated 
financial statements and this consolidated financial statement schedule 
based on our audits.

     We conducted our audits in accordance with auditing standards generally 
accepted in the United States of America. Those standards require that we 
plan and perform the audit to obtain reasonable assurance about whether the 
financial statements are free of material misstatement. An audit includes 
examining, on a test basis, evidence supporting the amounts and disclosures 
in the financial statements. An audit also includes assessing the accounting 
principles used and significant estimates made by management, as well as 
evaluating the overall financial statement presentation. We believe that our 
audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of Norfolk 
Southern Corporation and subsidiaries as of December 31, 2001 and 2000, and 
the results of their operations and their cash flows for each of the years 
in the three-year period ended December 31, 2001, in conformity with 
accounting principles generally accepted in the United States of America. 
Also in our opinion, the related consolidated financial statement schedule, 
when considered in relation to the basic consolidated financial statements 
taken as a whole, presents fairly, in all material respects, the information 
set forth therein.




/s/ KPMG LLP
Norfolk, Virginia
January 21, 2002





                                       83



I
tem 9.    Changes in and Disagreements with Accountants on Accounting
------     -----------------------------------------------------------
           and Financial Disclosure.
           ------------------------

     None.








                                       84



PART III
--------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)


Item 10.    Directors and Executive Officers of the Registrant.
-------     --------------------------------------------------


Item 11.    Executive Compensation.
-------     ----------------------


Item 12.    Security Ownership of Certain Beneficial Owners and
-------     ---------------------------------------------------
            Management.
            ----------

       and


Item 13.    Certain Relationships and Related Transactions.
-------     ----------------------------------------------

     In accordance with General Instruction G(3), the information called for 
by Part III is incorporated herein by reference from Norfolk Southern's 
definitive Proxy Statement, for the Norfolk Southern Annual Meeting of 
Stockholders to be held on May 9, 2002, which definitive Proxy Statement 
will be filed electronically with the Commission pursuant to Regulation 14A.  
The information regarding executive officers called for by Item 401 of 
Regulation S-K is included in Part I hereof beginning on Page 19 under 
"Executive Officers of the Registrant."


                                        85



PART IV
-------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)


Item 14.    Exhibits, Financial Statement Schedule and
-------     ------------------------------------------
            Reports on Form 8-K.
            -------------------

(A)   The following documents are filed as part of this report:

      1.    Index to Consolidated Financial Statements:              Page
            ------------------------------------------               ----

            Consolidated Statements of Income
              Years ended December 31, 2001, 2000, and 1999            51

            Consolidated Balance Sheets
              As of December 31, 2001 and 2000                         52

            Consolidated Statements of Cash Flows
              Years ended December 31, 2001, 2000, and 1999            53

            Consolidated Statements of Changes in 
              Stockholders' Equity
              Years ended December 31, 2001, 2000, and 1999            55

            Notes to Consolidated Financial Statements                 56

            Independent Auditors' Report                               82

      2.    Financial Statement Schedule:

      The following consolidated financial statement schedule 
should be read in connection with the consolidated 
financial statements:

            Index to Consolidated Financial Statement Schedule       Page
            --------------------------------------------------       ----

            Schedule II - Valuation and Qualifying Accounts            93

            Schedules other than the one listed above are omitted 
either because they are not required or are inapplicable, or because 
the information is included in the consolidated financial statements 
or related notes.


                                      86

Item 14.    Exhibits, Financial Statement Schedule and
-------     ------------------------------------------
            Reports on Form 8-K. (continued)
            -------------------

     3.     Exhibits

Exhibit
Number	Description
-------	-----------------------------------------------------------

3           Articles of Incorporation and Bylaws -

3(i)        The Restated Articles of Incorporation of Norfolk Southern 
            Corporation are incorporated by reference to Exhibit 3(i) 
            to Norfolk Southern Corporation's 10-K filed on March 5, 2001.

3(ii)       The Bylaws of Norfolk Southern Corporation, as amended 
            January 22, 2002, are filed herewith.

4           Instruments Defining the Rights of Security Holders, 
            Including Indentures - 

            (a)     Indenture, dated as of January 15, 1991, from Norfolk 
                    Southern Corporation to First Trust of New York, 
                    National Association, as Trustee, related to the 
                    issuance of notes in the principal amount of $750 million, 
                    incorporated by reference to Exhibit 4.1 to Norfolk 
                    Southern Corporation's Registration Statement on Form S-3 
                    (No. 33-38595).

            (b)     First Supplemental Indenture, dated May 19, 1997, 
                    between Norfolk Southern Corporation and First Trust of 
                    New York, National Association, as Trustee, related to 
                    the issuance of notes in the principal amount of 
                    $4.3 billion, is incorporated herein by reference to 
                    Exhibit 1.1(d) to Norfolk Southern Corporation's Form 8-K 
                    filed on May 21, 1997.

            (c)     Second Supplemental Indenture, dated April 26, 1999, 
                    between Norfolk Southern Corporation and U.S. Bank Trust 
                    National Association, as Trustee,  related to the 
                    issuance of notes in the principal amount of $400 million, 
                    is incorporated herein by reference to Exhibit 1.1(c) 
                    to Norfolk Southern Corporation's Form 8-K filed on 
                    April 30, 1999.

            (d)     Third Supplemental Indenture, dated May 23, 2000, 
                    between Norfolk Southern Corporation and U.S. Bank Trust 
                    National Association, as Trustee,  related to the issuance 
                    of notes in the principal amount of $600 million, is 
                    incorporated herein by reference to Exhibit 4.1 to 
                    Norfolk Southern Corporation's Form 8-K filed on 
                    May 25, 2000.

            (e)     Fourth Supplemental Indenture, dated as of February 6, 
                    2001, between Norfolk Southern Corporation and U.S. Bank 
                    Trust National Association, as Trustee, related to the 
                    issuance of notes in the principal amount of $1 billion, 
                    is incorporated herein by reference to Exhibit 4.1 to 
                    Norfolk Southern Corporation's Form 8-K filed on 
                    February 7, 2001.

            (f)     Fifth Supplemental Indenture, dated as of July 5, 2001, 
                    between Norfolk Southern Corporation and U.S. Bank Trust 
                    National Association, as Trustee, related to the issuance 
                    of notes in the principal amount of $250 million, is 
                    incorporated herein by reference to Exhibit 4.1 to 
                    Norfolk Southern Corporation's Form 8-K filed on 
                    July 5, 2001.

            (g)     Rights Agreement, dated as of September 26, 2000, between 
                    Norfolk Southern Corporation and The Bank of New York, 
                    with exhibits thereto, is incorporated herein by reference 
                    to Exhibit 4 to Norfolk Southern Corporation's Form 8-K 
                    filed on September 26, 2000.


                                         87

Item 14.    Exhibits, Financial Statement Schedule and
-------     ------------------------------------------
            Reports on Form 8-K. (continued)
            -------------------

     3.     Exhibits (continued)

Exhibit
Number	Description
-------	------------------------------------------------------------

In accordance with Item 601(b)(4)(iii) of Regulation S-K, copies of other 
instruments of Norfolk Southern Corporation and its subsidiaries with 
respect to the rights of holders of long-term debt are not filed herewith, 
or incorporated by reference, but will be furnished to the Commission 
upon request.

10          Material Contracts -

           (a)     The Transaction Agreement, dated as of June 10, 1997, 
                   by and among CSX, CSX Transportation, Inc., Registrant, 
                   Norfolk Southern Railway Company, Conrail Inc., 
                   Consolidated Rail Corporation and CRR Holdings LLC, 
                   with certain schedules thereto, is incorporated herein 
                   by reference from Exhibit 10 to Norfolk Southern 
                   Corporation's Form 8-K filed on June 30, 1997.

           (b)     Amendment No. 1, dated as of August 22, 1998, to the 
                   Transaction Agreement, dated as of June 10, 1997, by 
                   and among CSX Corporation, CSX Transportation, Inc., 
                   Norfolk Southern Corporation, Norfolk Southern Railway 
                   Company, Conrail Inc., Consolidated Rail Corporation 
                   and CRR Holdings LLC is incorporated herein by reference 
                   from Exhibit 10.1 to Norfolk Southern Corporation's 
                   Form 10-Q filed on August 11, 1999.

           (c)     Amendment No. 2, dated as of June 1, 1999, to the 
                   Transaction Agreement, dated June 10, 1997, by and 
                   among CSX Corporation, CSX Transportation, Inc., Norfolk 
                   Southern Corporation, Norfolk Southern Railway Company, 
                   Conrail Inc., Consolidated Rail Corporation and CRR 
                   Holdings LLC is incorporated herein by reference from 
                   Exhibit 10.2 to Norfolk Southern Corporation's Form 
                   10-Q filed on August 11, 1999.

           (d)     Operating Agreement, dated as of June 1, 1999, by and 
                   between Pennsylvania Lines LLC and Norfolk Southern Railway 
                   Company is incorporated herein by reference from Exhibit 
                   10.3 to Norfolk Southern Corporation's Form 10-Q filed on 
                   August 11, 1999.

           (e)     Amendment No. 1, dated as of September 29, 2001, to 
                   Operating Agreement, dated as of June 1, 1999, by and 
                   between Pennsylvania Lines LLC and Norfolk Southern 
                   Railway Company, is filed herewith.

           (f)     Shared Assets Area Operating Agreement for North Jersey, 
                   dated as of June 1, 1999, by and among Consolidated 
                   Rail Corporation, CSX Transportation, Inc. and Norfolk 
                   Southern Railway Company, with exhibit thereto, is 
                   incorporated herein by reference from Exhibit 10.4 to 
                   Norfolk Southern Corporation's Form 10-Q filed on 
                   August 11, 1999.

           (g)     Shared Assets Area Operating Agreement for South 
                   Jersey/Philadelphia, dated as of June 1, 1999, by and 
                   among Consolidated Rail Corporation, CSX Transportation, 
                   Inc. and Norfolk Southern Railway Company, with exhibit 
                   thereto, is incorporated herein by reference from 
                   Exhibit 10.5 to Norfolk Southern Corporation's Form 
                   10-Q filed on August 11, 1999.

           (h)     Shared Assets Area Operating Agreement for Detroit, dated 
                   as of June 1, 1999, by and among Consolidated Rail 
                   Corporation, CSX Transportation, Inc. and Norfolk Southern 
                   Railway Company, with exhibit thereto, is incorporated 
                   herein by reference from Exhibit 10.6 to Norfolk Southern 
                   Corporation's Form 10-Q filed on August 11, 1999.

                                          88

Item 14.    Exhibits, Financial Statement Schedule and
-------     ------------------------------------------
            Reports on Form 8-K. (continued)
            -------------------


       3.   Exhibits (continued)

Exhibit
Number	Description
-------	------------------------------------------------------------

      10    Material Contracts (continued) -

            (i)     Amendment No. 1, dated as of June 1, 2000, to the Shared 
                    Assets Areas Operating Agreement for North Jersey, South 
                    Jersey/Philadelphia and Detroit, dated as of June 1, 
                    1999, by and among Consolidated Rail Corporation, 
                    CSX Transportation, Inc. and Norfolk Southern Railway 
                    Company, with exhibit thereto, is incorporated herein by 
                    reference to Exhibit 10(h) to Norfolk Southern 
                    Corporation's 10-K filed on March 5, 2001.

            (j)     Amendment No. 2, dated as January 1, 2001, to the Shared 
                    Assets Area Operating Agreements for North Jersey, South 
                    Jersey/Philadelphia and Detroit, dated as of June 1, 
                    1999, by and among Consolidated Rail Corporation, 
                    CSX Transportation, Inc. and Norfolk Southern Railway 
                    Company, with exhibit thereto, is filed herewith.

            (k)     Monongahela Usage Agreement, dated as of June 1, 1999, 
                    by and among CSX Transportation, Inc., Norfolk Southern 
                    Railway Company, Pennsylvania Lines LLC and New York 
                    Central Lines LLC, with exhibit thereto, is incorporated 
                    herein by reference from Exhibit 10.7 to Norfolk Southern 
                    Corporation's Form 10-Q filed on August 11, 1999.

            (l)     The Agreement, entered into as of July 27, 1999, between 
                    North Carolina Railroad Company and Norfolk Southern 
                    Railway Company, is incorporated herein by reference 
                    from Exhibit 10(i) to Norfolk Southern Corporation's 
                    Form 10-K filed on March 6, 2000.

            (m)     The Supplementary Agreement, entered into as of January 1, 
                    1987, between the Trustees of the Cincinnati Southern 
                    Railway and The Cincinnati, New Orleans and Texas Pacific 
                    Railway Company (the latter a wholly owned subsidiary of 
                    Norfolk Southern Railway Company) - extending and 
                    amending a Lease, dated as of October 11, 1881 - is 
                    incorporated by reference to Exhibit 10(k) to Norfolk 
                    Southern Corporation's Form 10-K filed on March 5, 2001.

            (n)     The Norfolk Southern Corporation Executive Management 
                    Incentive Plan, effective January 25, 2000, is incorporated 
                    by reference herein from Exhibit 10(l) to Norfolk Southern 
                    Corporation's Form 10-K filed on March 6, 2000.

            (o)     The Norfolk Southern Corporation Long-Term Incentive Plan, 
                    as amended effective January 23, 2001, is incorporated 
                    herein by reference to Exhibit 10(m) to Norfolk Southern 
                    Corporation's Form 10-K filed on March 5, 2001.

            (p)     The Norfolk Southern Corporation Officers' Deferred 
                    Compensation Plan, as amended effective September 26, 
                    2000, is incorporated herein by reference to Exhibit 
                    10(n) to Norfolk Southern Corporation's Form 10-K 
                    filed on March 5, 2001.

            (q)     The Norfolk Southern Corporation Executives' Deferred 
                    Compensation Plan, as amended effective January 20, 2001, 
                    is incorporated herein by reference to Exhibit 10(o) to 
                    Norfolk Southern Corporation's Form 10-K filed on 
                    March 5, 2001.

                                          89

Item 14.    Exhibits, Financial Statement Schedule and
-------     ------------------------------------------
            Reports on Form 8-K. (continued)
            -------------------


	3.    Exhibits (continued)

Exhibit
Number      Description
-------     ------------------------------------------------------------

	10    Material Contracts (continued) -

            (r)     The Directors' Deferred Fee Plan of Norfolk Southern 
                    Corporation, as amended effective January 23, 2001, 
                    is incorporated herein by reference to Exhibit 10(p) 
                    to Norfolk Southern Corporation's Form 10-K filed on 
                    March 5, 2001.

            (s)     The Norfolk Southern Corporation Directors' Restricted 
                    Stock Plan, effective January 1, 1994, as restated 
                    November 24, 1998, is incorporated herein by reference 
                    from Exhibit 10(h) to Norfolk Southern Corporation's 
                    Form 10-K filed on March 24, 1999.

            (t)     Form of Severance Agreement, dated as of June 1, 1996, 
                    between Norfolk Southern Corporation and certain 
                    executive officers (including those defined as "named 
                    executive officers" and identified in the Corporation's 
                    Proxy Statement for the 1997 through 2001 Annual 
                    Meetings of Stockholders) is filed herewith.

            (u)     Norfolk Southern Corporation Supplemental (formerly, 
                    Excess) Benefit Plan, effective as of August 22, 1999, 
                    is incorporated herein by reference from Exhibit 
                    10(r) to Norfolk Southern Corporation's Form 10-K 
                    filed on March 6, 2000.

            (v)     The Norfolk Southern Corporation Directors' Charitable 
                    Award Program, effective February 1, 1996, is filed 
                    herewith.

            (w)     The Norfolk Southern Corporation Outside Directors' 
                    Deferred Stock Unit Program, as amended on 
                    September 23, 1997, is incorporated herein by 
                    reference from Exhibit 10(m) to Norfolk Southern 
                    Corporation's Form 10-K filed on March 25, 1998.

            (x)     Agreement, dated as of October 1, 2001, providing 
                    enhanced pension benefits to three officers in exchange 
                    for their continued employment with Norfolk Southern 
                    Corporation for two years, is incorporated herein by 
                    reference to Exhibit 10(w) to Norfolk Southern 
                    Corporation's Form 10-Q filed on November 9, 2001.  
                    The agreement was entered into with L. Ike Prillaman, 
                    Vice Chairman and Chief Marketing Officer; 
                    Stephen C. Tobias, Vice Chairman and Chief Operating 
                    Officer; and Henry C. Wolf, Vice Chairman and 
                    Chief Financial Officer.

                                           90

Item 14.    Exhibits, Financial Statement Schedule and
-------     ------------------------------------------
            Reports on Form 8-K. (continued)
            -------------------

      3.    Exhibits (continued)

Exhibit
Number      Description
-------     ------------------------------------------------------------

      12    Statement re:  Computation of Ratio of Earnings to Fixed Charges.

      21    Subsidiaries of the Registrant.

      23    Consents of Experts and Counsel -

            (a)    Consent of KPMG LLP.
            (b)    Consent of KPMG LLP and Ernst & Young LLP.

      99    Conrail Inc. 2001 Annual Report to Stockholders.

(B)   Reports on Form 8-K.

      None

(C)   Exhibits. 

      The Exhibits required by Item 601 of Regulation S-K as listed in 
      Item 14(a)3 are filed herewith or incorporated herein by reference.

(D)   Financial Statement Schedules. 

      Financial statement schedules and separate financial statements 
      specified by this Item are included in Item 14(a)2 or are otherwise 
      not required or are not applicable. 



                                       91  


POWER OF ATTORNEY
-----------------

     Each person whose signature appears below under "SIGNATURES" hereby 
authorizes Henry C. Wolf and Henry D. Light, or either of them, to execute 
in the name of each such person, and to file, any amendment to this report 
and hereby appoints Henry C. Wolf and Henry D. Light, or either of them, 
as attorneys-in-fact to sign on his or her behalf, individually and in each 
capacity stated below, and to file, any and all amendments to this report.



SIGNATURES
----------

     Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, Norfolk Southern Corporation has duly caused this 
report to be signed on its behalf by the undersigned, thereunto duly 
authorized, on this 21st day of February, 2002.


     NORFOLK SOUTHERN CORPORATION


     By     /s/ David R. Goode
       ----------------------------------
           (David R. Goode, Chairman,
            President and Chief
            Executive Officer) 


     Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below on this 21st day of February, 2002, by 
the following persons on behalf of Norfolk Southern Corporation and in the 
capacities indicated.

Signature                                 Title
---------                                 -----



/s/ David R. Goode
------------------------------            Chairman, President and Chief
(David R. Goode)                           Executive Officer and Director
                                           (Principal Executive Officer) 


/s/ Henry C. Wolf 
------------------------------            Vice Chairman and
(Henry C. Wolf)                            Chief Financial Officer
                                           (Principal Financial Officer) 

                                      92


Signature                                 Title
---------                                 -----


/s/ John P. Rathbone
------------------------------            Senior Vice President and
(John P. Rathbone)                         Controller
                                           (Principal Accounting Officer) 

/s/ Gerald L. Baliles
------------------------------            Director
(Gerald L. Baliles) 


/s/ Carroll A. Campbell, Jr.
------------------------------            Director
(Carroll A. Campbell, Jr.) 


/s/ Gene R. Carter
------------------------------            Director
(Gene R. Carter)


/s/ Alston D. Correll
------------------------------            Director
(Alston D. Correll)


/s/ Landon Hilliard
------------------------------            Director
(Landon Hilliard) 


/s/ Steven F. Leer
------------------------------            Director
(Steven F. Leer) 


/s/ Jane Margaret O'Brien
------------------------------            Director
(Jane Margaret O'Brien) 


/s/ Harold W. Pote
------------------------------            Director
(Harold W. Pote)


/s/ J. Paul Reason
------------------------------            Director
(J. Paul Reason)

                                       93


<TABLE>
                                                                        Schedule II
                                                                        Page 1 of 2


                              Norfolk Southern Corporation and Subsidiaries
                              ---------------------------------------------
                                     Valuation and Qualifying Accounts
                              Years Ended December 31, 1999, 2000 and 2001
                                         (In millions of dollars)

<CAPTION>
                                                               Additions charged to
                                                               --------------------
                                       Beginning                    Other                     Ending
                                        Balance       Expenses     Accounts    Deductions     Balance 
                                       ---------      --------     --------    ----------     -------

<S>                                     <C>            <C>           <C>        <C>            <C>
Year ended December 31, 1999
----------------------------
Valuation allowance (included
 net in deferred tax liability)
 for deferred tax	assets                $    3         $    6       $    --     $    --        $    9
Casualty and other claims
 included in other liabilities          $  271         $  114       $     9 (1) $   119 (2)    $  275
Current portion of casualty
 and other claims included
 in accounts payable                    $  144         $   19       $   191 (1) $   173 (3)    $  181


Year ended December 31, 2000
----------------------------
Valuation allowance (included
 net in deferred tax liability)
 for deferred tax assets                $    9         $    3       $    --     $    --        $   12
Casualty and other claims 
 included in other liabilities          $  275         $  117       $     8 (1) $   138 (2)    $  262
Current portion of casualty
 and other claims included
 in accounts payable                    $  181         $   19       $   221 (1) $   198 (3)    $  223


(1)   Includes revenue refunds and overcharges provided through deductions 
      from operating revenues and transfers from other accounts.

(2)   Payments and reclassifications to/from accounts payable.

(3)   Payments and reclassifications to/from other liabilities.
</TABLE>



		(continued)

                                         94


<TABLE>
                                                                      Schedule II
                                                                      Page 2 of 2


<CAPTION>
                              Norfolk Southern Corporation and Subsidiaries
                              ---------------------------------------------
                                    Valuation and Qualifying Accounts
                          Years Ended December 31, 1999, 2000 and 2001 (continued)
                                        (In millions of dollars)

                                                               Additions charged to
                                                               --------------------
                                       Beginning                    Other                     Ending
                                        Balance       Expenses     Accounts    Deductions     Balance 
                                       ---------      --------     --------    ----------     -------

Year ended December 31, 2001
----------------------------
<S>                                      <C>           <C>          <C>          <C>           <C>
Valuation allowance (included
 net in deferred tax liability)
 for deferred tax	assets                 $    12       $    6       $   --       $    --       $   18
Casualty and other claims
 included in other liabilities           $   262       $  110       $   20 (1)   $   127 (2)   $  265
Current portion of casualty
 and other claims included
 in accounts payable                     $   223       $   22       $  142 (1)   $   195 (3)   $  192
</TABLE>



(1)   Includes revenue refunds and overcharges provided through deductions 
      from operating revenues and transfers from other accounts.

(2)   Payments and reclassifications to/from accounts payable.

(3)   Payments and reclassifications to/from other liabilities.


                                         95


EXHIBIT INDEX
-------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES (NS)

Electronic
Submission
Exhibit
Number      Description                                                 Page
---------   -------------------------------------------------------     ----

3(ii)	      The Bylaws of Norfolk Southern Corporation, as amended 
            January 22, 2002.                                            96

10(e)       Amendment No. 1, dated as of September 29, 2001, to 
            Operating Agreement, dated as of June 1, 1999, by and 
            between Pennsylvania Lines LLC and Norfolk Southern 
            Railway Company.                                            109

10(j)       Amendment No. 2, dated as January 1, 2001, to the 
            Shared Assets Area Operating Agreements for North Jersey, 
            South Jersey/Philadelphia and Detroit, dated as of 
            June 1, 1999, by and among Consolidated Rail Corporation, 
            CSX Transportation, Inc. and Norfolk Southern Railway 
            Company, with exhibit thereto.                              111

10(t)       Form of Severance Agreement, dated as of June 1, 1996, 
            between Norfolk Southern Corporation and certain 
            executive officers (including those defined as "named 
            executive officers" and identified in the Corporation's 
            Proxy Statement for the 1997 through 2001 Annual 
            Meetings of Stockholders).                                  123

10(v)       The Norfolk Southern Corporation Directors' Charitable 
            Award Program, effective February 1, 1996.                  136


12          Statement re:  Computation of Ratio of Earnings to 
            Fixed Charges.                                              140

21          Subsidiaries of Norfolk Southern Corporation.               141

23          Consent of Experts and Counsel -
            (a)     Consent of KPMG LLP.                                143
            (b)     Consent of KPMG LLP and Ernst & Young LLP.          144

99          Conrail Inc. 2001 Annual Report to Stockholders.            145

     Exhibits 3(ii), 10(e), 10(j), 10(t) and 10(v) are not included in 
copies assembled for public dissemination. If you have a need for this type 
of information, we will be pleased to send it to you.

                                     Write to:
                          Office of Corporate Secretary
                          Norfolk Southern Corporation
                             Three Commercial Place
                          Norfolk, Virginia 23510-9219




                                      96












                                 B Y L A W S


                                     OF


                        NORFOLK SOUTHERN CORPORATION


                                 AS AMENDED


                             January 22, 2002

                                       97


                                     BYLAWS

                                       OF

                          NORFOLK SOUTHERN CORPORATION


ARTICLE I

Stockholders' Meetings

     SECTION 1.  Annual Meeting.  The annual meeting of the stockholders of 
the corporation shall be held on such date in March, April, May or June as 
the board of directors may designate.  If the date of the annual meeting shall 
be a legal holiday, the meeting shall be held on the next succeeding day not a 
legal holiday.
     SECTION 2.  Special Meetings.  Special meetings of the stockholders shall 
be held whenever called by the chief executive officer or by a majority of 
the directors.
     SECTION 3.  Time and Place.  All meetings of the stockholders shall be 
held at the time and place stated in the notice of meeting.
     SECTION 4.  Quorum.  The holders of a majority of the outstanding shares 
of capital stock entitled to vote, represented in person or by proxy, shall 
constitute a quorum at any meeting of the stockholders.  If less than a quorum 
is present at an annual or special meeting, then a majority in interest of the 
stockholders present in person or by proxy may from time to time adjourn the 
meeting to a fixed time and place, no further notice of any adjourned meeting 
being required.  Each stockholder
 shall be entitled to one vote in person or 
by proxy for each share entitled to vote then outstanding in his name on the 
books of the corporation.

                                       98

     SECTION 5.  Record Date.  The board of directors may fix in advance a 
date as the record date for a determination of stockholders for any purpose, 
such date to be not more than seventy days before the meeting or action 
requiring a determination of stockholders.
     SECTION 6.  Conduct of Meetings.  The chief executive officer, or any 
officer or director he may designate, shall preside over all meetings of the 
stockholders.  The secretary of the corporation, or an assistant secretary, 
shall act as secretary of all the meetings, if present.  If the secretary or 
an assistant secretary is not present, the chairman of the meeting shall 
appoint a secretary.
     The board of directors, prior to the annual meeting of the stockholders 
each year, shall appoint one or more inspectors of election to act at such 
annual meeting and at all other meetings of stockholders held during the 
ensuing year.  In the event of the failure of the board to make such 
appointment or if any inspector of election shall for any reason fail to 
attend and to act at such meeting, an inspector or inspectors of election, 
as the case may be, may be appointed by the chairman of the meeting.  The 
inspectors of election shall determine the qualification of voters, the 
validity of proxies and the results of ballots.
     SECTION 7.  Proposals by Stockholders.  No business may be transacted 
at an annual or special meeting of stockholders other than business that is 
either (a) specified in the notice of meeting (or any supplement thereto) 
given by or at the direction of the board of directors, (b) otherwise 
properly brought before the meeting by or at the direction of the board of 
directors or (c) otherwise properly brought before the meeting by a 
stockholder (i) who is a stockholder on

                                       99
the date of the giving of the notice provided for in this Section 7 and on 
the record date for the determination of stockholders entitled to vote at 
such meeting and (ii) who gives to the corporation notice in writing of the 
proposal, provided that such written notice is received at the principal 
executive office of the corporation, addressed to the Corporate Secretary, 
(A) in the case of an annual meeting, not less than ninety (90) nor more 
than one hundred sixty (160) calendar days prior to the anniversary date of 
the immediately preceding annual meeting and, (B) in the case of a special 
meeting, not later than the tenth calendar day next following the date on 
which notice of the holding of the special meeting is mailed to stockholders 
or public disclosure of the date of the special meeting was made, whichever 
first occurs.  The written notice given to the corporation shall include 
(i) the specific language on which stockholders will be asked to vote, 
(ii) the name and address of such stockholder, (iii) the class or series and 
number of shares of the capital stock of the corporation which are owned 
beneficially and/or of record by such stockholder, (iv) a representation as 
to the existence and nature of any agreement or understanding between the 
proposing stockholder and any other person or persons (including their 
identities) in connection with bringing the proposal, and (v) a 
representation as to any material interest of the proposing stockholder 
(and the other person or persons) in the subject matter of the proposal.  
The requirements of this Section 7 are in addition to any other 
applicable requirements.

                                      100

ARTICLE II

Board of Directors

     SECTION 1.  Election, Number and Term.  The board of directors shall be 
chosen at the annual meeting of the stockholders.  The number of directors 
shall be ten, and the directors shall be classified and shall hold office for 
terms as provided in the articles of incorporation.  This number may be 
increased or decreased at any time by amendment of these bylaws, but shall 
always be a number of not less than three.  Directors need not be 
stockholders.  Directors shall hold office until their successors are elected.
     SECTION 2.  Quorum.  A majority of the number of directors fixed by these 
bylaws shall constitute a quorum.  If less than a quorum is present at a 
meeting, then a majority of those present may adjourn the meeting to a fixed 
time and place, no further notice of any adjourned meeting being required.
     SECTION 3.  Vacancies.  Any vacancy arising among the directors, 
including a vacancy resulting from an increase by not more than thirty percent 
in the number of directors last elected by the stockholders, may be filled by 
a majority vote of the remaining directors though less than a quorum unless 
sooner filled by the stockholders.
     SECTION 4.  Meetings.  Meetings of the board of directors shall be held at 
times fixed by resolution of the board or upon the call of the chief executive 
officer or of one-third of the members of the board.  Notice of any meeting 
not held at a time fixed by a resolution of the board shall be given to each 
director at least two days before the meeting at his residence or business 
address or by delivering such notice to him or by telephoning or telegraphing 
it to

                                      101

him at least one day before the meeting.  Any such notice shall contain the 
time and place of the meeting.  Meetings may be held without notice if all the 
directors are present or those not present waive notice before or after the 
meeting.  The chief executive officer, or any director he may designate, shall 
preside over all meetings.
     SECTION 5.  Committees.  The board of directors may by resolution 
designate an executive committee and one or more other committees, each of 
which shall consist of two or more directors.  Any such committee, to the 
extent provided in the resolution of the board of directors and except as 
otherwise provided by law, shall have and may exercise the powers and 
authority of the board of directors in the management of the business and 
affairs of the corporation.
     SECTION 6.  Nominations of Directors.  Except as otherwise provided in 
the Articles of Incorporation, only persons who are nominated in accordance 
with the following procedures shall be eligible for election as directors.  
Nominations of persons for election to the board of directors may be made at 
any annual meeting of the stockholders (a) by or at the direction of the 
board of directors or (b) by any stockholder (i) who is a stockholder on the 
date of the giving of the notice provided for in this Section 6 and on the 
record date for the determination of stockholders entitled to vote at such 
meeting and (ii) who gives to the corporation notice in writing of the 
nomination, provided that such written notice is received at the principal 
executive office of the corporation, addressed to the Corporate Secretary, 
not less than ninety (90) nor more than one hundred sixty (160) calendar 
days prior to the anniversary date of the immediately preceding annual 
meeting.  The written notice given to the

                                       102

corporation shall include all the information about the nominee that would 
be required by applicable rules and regulations of the Securities and Exchange 
Commission to be included for nominees listed in the proxy statement for such 
meeting and shall include (i) the name and address of such stockholder and 
(ii) the class or series and number of shares of the capital stock of the 
corporation which are owned beneficially and/or of record by such stockholder.
Such notice must be accompanied by a written consent of each proposed nominee 
to being named as a nominee and to serve as a director if elected.

ARTICLE III

Officers

     SECTION 1.  Election, Number and Term.  The board of directors, promptly 
after its election in each year, may elect a chairman of the board and shall 
elect a president (one of whom shall be designated chief executive officer), a 
secretary and a treasurer, and may elect one or more vice chairmen and vice 
presidents and may appoint such other officers as it may deem proper.  Any 
officer may hold more than one office except that the same person shall not 
be president and secretary.  Each officer shall hold office until his successor 
is elected or until his death or until he resigns or is removed in the manner 
hereinafter provided.
     SECTION 2.  Removal.  Any officer may be removed at any time by the vote 
of the board of directors and any officer or agent appointed otherwise than by 
the board of directors may be removed by any officer having authority to 
appoint that officer or agent.
     SECTION 3.  Vacancies.  Vacancies among the officers elected by the board 
of directors shall be filled by the directors.

                                       103

     SECTION 4.  The Chief Executive Officer.  The chief executive officer, 
subject to the control of the board of directors, shall in general supervise 
and control all of the business and affairs of the corporation.  All officers 
and agents, other than officers or agents elected or appointed by the board 
of directors, shall be appointed by the chief executive officer or by the 
heads of departments, subject to the approval of the chief executive officer.  
Unless otherwise specifically provided in these bylaws or by direction of the 
board of directors, the chief executive officer or, at his direction, any 
officer, employee or agent of the corporation designated by him, may sign and 
execute all representations, securities, conveyances of real and personal 
property, leases, licenses, releases, contracts and other obligations and 
instruments in the name of the corporation.
     SECTION 5.  The Vice Chairmen and Vice Presidents.  The vice chairmen 
and the vice presidents shall perform such duties as from time to time may 
be assigned to them by the chief executive officer or by the board of 
directors.  In the absence of the chief executive officer, or in the event 
of his death, inability or refusal to act, the officer designated by the 
chief executive officer or the board of directors shall perform the duties 
of the chief executive officer, and, when so acting, shall have all the 
powers of and be subject to all the restrictions upon the chief executive 
officer.  Any vice chairman or vice president may sign, with the secretary 
or an assistant secretary, certificates for shares of the corporation.

                                       104

     SECTION 6.  The Secretary.  The secretary shall:

    (a)     keep the minutes of the meetings of the stockholders and the board 
of directors in one or more books provided for that purpose; 
    (b)     see that all notices are duly given in accordance with the 
provisions of these bylaws or as required by law; 
    (c)     be custodian of the corporate records and of the seal of the 
corporation and see that the seal of the corporation is affixed to all 
documents the execution of which on behalf of the corporation under its seal 
is duly authorized;
    (d)     keep a register of the post office address of each stockholder 
which shall be furnished to the secretary by such stockholders; 
    (e)     sign with the chairman of the board, a vice chairman, the 
president, or a vice president, certificates for shares of the corporation, 
the issuance of which shall have been authorized by resolution of the 
board of directors; 
    (f)     have general charge of the stock transfer books of the 
corporation; and 
    (g)     in general perform all duties incident to the office of secretary 
and such other duties as from time to time may be assigned to him by the 
chief executive officer or by the board of directors.

     SECTION 7.  The Treasurer.  If required by the board of directors, the 
treasurer shall give a bond for the faithful discharge of his duties in such 
sum and with such surety or sureties as the board of directors shall determine.
He shall:  

    (a)      have charge and custody of and be responsible for all funds and 
securities of the corporation; receive and give receipts for moneys due and 
payable to the corporation from any source whatsoever, and deposit all such 
moneys in the name of the corporation in such banks, trust companies or other 
depositaries as shall be selected in accordance with the provisions of 
Article IV of these bylaws; 
    (b)      when duly authorized, disperse all moneys belonging

                                      105

or coming to the corporation; and 
    (c)      in general perform all the duties incident to the office of 
treasurer and such other duties as from time to time may be assigned to him 
by the chief executive officer or by the board of directors.

     SECTION 8.  Assistant Secretaries and Assistant Treasurers.  The assistant 
secretaries, when authorized by the board of directors, may sign with the 
chairman of the board, a vice chairman, the president or a vice president 
certificates for shares of the corporation the issuance of which shall have 
been authorized by a resolution of the board of directors.  The assistant 
treasurers shall respectively, if required by the board of directors, give 
bonds for the faithful discharge of their duties in such sums and with such 
sureties as the board of directors shall determine.  The assistant secretaries 
and assistant treasurers, in general, shall perform such duties as shall be 
assigned to them by the secretary or the treasurer, respectively, or by the 
chief executive officer or the board of directors.

     SECTION 9.  Salaries.  The salaries of the officers elected by the 
board of directors shall be fixed by the board of directors.  The salaries of 
all other officers shall be fixed by the chief executive officer or by the 
heads of departments, subject to the approval of the chief executive officer.

                                       106

ARTICLE IV

Checks and Deposits

     SECTION 1.  Checks and Drafts.  All checks, drafts or other orders for the 
payment of money, notes or other evidences of indebtedness issued in the name 
of the corporation, shall be signed by such officer or officers, agent or 
agents of the corporation and in such manner as shall from time to time be 
determined by resolution of the board of directors.

     SECTION 2.  Deposits.  All funds of the corporation not otherwise employed 
shall be deposited from time to time to the credit of the corporation in such 
banks, trust companies or other depositories as may be selected in a manner 
authorized by the board of directors.

ARTICLE V

Certificate of Stock

     Each stockholder shall be entitled to a certificate or certificates of 
stock in such form as may be approved by the board of directors signed by the 
chairman of the board, a vice chairman, the president or a vice president and 
by the secretary or an assistant secretary or the treasurer or any 
assistant treasurer.
     All transfers of stock of the corporation shall be made upon its books 
by surrender of the certificate for the shares transferred accompanied by an 
assignment in writing by the holder and may be accomplished either by the 
holder in person or by a duly authorized attorney in fact.
     In case of the loss, mutilation or destruction of a certificate of stock, 
a duplicate certificate may be issued upon such terms not in conflict with law 
as the board of directors may prescribe.

                                      107

     The board of directors may also appoint one or more transfer agents and 
registrars and may require stock certificates to be countersigned by a transfer 
agent or registered by a registrar or may require stock certificates to be both 
countersigned by a transfer agent and registered by a registrar.  If 
certificates of capital stock of the corporation are signed by a transfer agent 
or by a registrar (other than the corporation itself or one of its employees), 
the signature thereon of the officers of the corporation and the seal of the 
corporation thereon may be facsimiles, engraved or printed.  In case any 
officer or officers who shall have signed, or whose facsimile signature or 
signatures shall have been used on, any such certificate or certificates shall 
cease to be such officer or officers of the corporation, whether because of 
death, resignation or otherwise, such certificate or certificates may 
nevertheless be issued and delivered as though the person or persons who 
signed such certificate or certificates or whose facsimile signature or 
signatures shall have been used thereon had not ceased to be such officer 
or officers of the corporation.

ARTICLE VI

Seal

     The seal of the corporation shall be a flat-faced circular die, of which 
there may be any number of counterparts, with the word "SEAL" and the name of 
the corporation and the state and year of incorporation engraved thereon.

                                       108

ARTICLE VII

Fiscal Year

     The fiscal year of the corporation shall begin on the first day of 
January and end on the thirty-first day of December in each year.

ARTICLE VIII

Voting of Stock Held

     Unless otherwise ordered by the board of directors, the chief executive 
officer, or his designee, shall have full power and authority in behalf of the 
corporation to attend and to act and to vote at any meetings of stockholders 
of any corporation in which the corporation may hold stock, and at any such 
meeting shall possess and may exercise any and all the rights and powers 
incident to the ownership of such stock, which, as the owner thereof, the 
corporation might have possessed and exercised if present, and may sign 
proxies on behalf of the corporation with respect to any such meeting or 
sign consents on behalf of the corporation with respect to corporate actions 
permitted without a meeting of stockholders.  The board of directors, by 
resolution, from time to time, may confer like powers upon any other person 
or persons.

ARTICLE IX

Amendments

     These bylaws may be altered, amended or repealed and new bylaws may be 
adopted by the board of directors at any regular or special meeting of the 
board of directors.


                                      109

                              AMENDMENT NO. 1 TO
                           PRR OPERATING AGREEMENT

     This AMENDMENT NO. 1 TO THE PRR OPERATING AGREEMENT (this "Amendment") 
dated as of September 29, 2001 is by and between PENNSYLVANIA LINES LLC, a 
Delaware limited liability company, as Owner, and NORFOLK SOUTHERN RAILWAY 
COMPANY, a Virginia corporation, as Operator.

     WHEREAS, Owner and Operator have entered into that certain Operating 
Agreement dated June 1, 1999 (the "Agreement");

     WHEREAS, Owner and Operator have determined to amend the Agreement 
as set forth herein;

     NOW, THEREFORE, the parties hereby amend the Agreement as follows:

     Section 6.3 of the Agreement is amended to read as follows:

     SECTION 6.3  Confirmation of Settlement Account.  Within six (6) 
months of the crediting of an amount to the Settlement Account, the 
Appraisal Procedure shall be used to confirm that credits to the Settlement 
Account were based on the fair market value of the relevant Allocated 
Assets consistent with the terms of this Agreement.  The Settlement Account 
shall be adjusted consistent with the outcome of the Appraisal Procedure 
and the payments made pursuant to Section 6.2 hereof shall reflect any 
such adjustments.
	
	[The remainder of this page has been intentionally left blank.]


                                      110

     IN WITNESS
 WHEREOF, the parties hereto have caused this Amendment to be 
duly executed as of the date and year first above written.


                    PENNSYLVANIA LINES LLC,
                    as OWNER

			
                    By:	______________________________________
					
                    Name:	________________________________

                    Title:	________________________________



                    NORFOLK SOUTHERN RAILWAY COMPANY,
                    as OPERATOR


                    By:	______________________________________

                    Name:     ________________________________

                    Title:    ________________________________


	                           111




                           AMENDMENT NO. 2

                     DATED AS OF JANUARY 1, 2001

                               OF THE

                         SHARED ASSETS AREA

                         OPERATING AGREEMENT

                                 FOR

                             NORTH JERSEY


                       Dated as of June 1, 1999

                             By and Among

                     CONSOLIDATED RAIL CORPORATION,

                     CSX TRANSPORTATION, INC. and

                   NORFOLK SOUTHERN RAILWAY COMPANY


                                 112

                            AMENDMENT NO. 2
                                OF THE
                          SHARED ASSETS AREA
                          OPERATING AGREEMENT
                                 FOR
                             NORTH JERSEY


     This AMENDMENT NO. 2 dated as of January 1, 2001 
("Amendment No. 2") OF THE SHARED ASSETS AREA OPERATING 
AGREEMENT for North Jersey ("Agreement") dated as of 
June 1, 1999, is by and among Consolidated Rail 
Corporation ("CRC"), CSX Transportation, Inc. ("CSXT") 
and Norfolk Southern Railway Company ("NSR").

                        W I T N E S S E T H:

     WHEREAS, the parties have previously entered into 
the Agreement;

     WHEREAS, the parties now desire to amend the Agreement 
with respect to the funding of capital improvements in the 
Shared Assets Areas ("SAAs") as more fully set forth below:

     WHEREAS, it is the intent of the parties that, except 
as expressly amended hereby, the Agreement shall remain 
unamended and in full force and effect;

     NOW, THEREFORE, the parties hereby amend the Agreement 
as follows:

     SECTION 1.  Definitions.  Capitalized terms used in 
this Amendment and not defined herein shall have the meanings 
assigned to such terms in the Agreement.

     SECTION
 2.  Amendments of the Agreement.  The Agreement 
is hereby amended pursuant to and in compliance with 
Section 17 as follows:

(a) The text of Section 6(b) is hereby deleted in its 
entirety and the following substituted therefor:

"(b) CRC Board Approved Projects.  Either of two options for 
initial funding and reimbursement by the Operators may be 
determined by the CRC Board at the time it approves a 
particular project.  In the event the CRC Board does not 
specify the method of initial funding and reimbursement in 
the resolution authorizing the project, then Option One 
described below shall be the method of such funding 
and reimbursement.

                                113

(i)  Option One:  Each Operator shall be responsible 
for an equal share of the initial budgeted funding of each 
capital improvement project which has been approved by the 
CRC Board and is included in an approved Capital Expenditure 
Budget, except as provided in Section 6(c).  A final 
accounting shall be made to adjust the initial budgeted 
funding to the actual project cost as specified in the 
Accounting Plan.

(ii) Option Two:  CRC shall provide the funding for the 
proposed capital improvement project, except as provided in 
Section 6(c).

     The options for the method of reimbursement are set forth 
in Section 9(e)(ii)."

(b) The text of Section 9(e)(ii) is hereby deleted in 
its entirety and the following substituted therefor:

     "(ii)   With respect to Budgeted Capital Expenditures 
approved by the CRC Board:

(A) If Option One, as described in Section 6(b), is 
used for the initial funding of the particular capital 
improvement project, then one-twelfth (1/12) of fifty percent 
(50%) of the annual amount of the Budgeted Capital 
Expenditures for the particular capital improvement project; 
or

(B) If Option Two is used for the initial funding of 
the particular capital improvement project, then one hundred 
and two percent (102%) of fifty percent (50%) of the monthly 
book depreciation for the particular capital 
improvement project."


     SECTION 3.  Effectiveness.  This Amendment No. 2 shall 
become effective as of January 1, 2001 (the "Amendment Date").

     SECTION 4.  Integration; Confirmation.  On and after the Amendment 
No. 2 Date, each reference in the Agreement to "this Agreement," herein, 
"hereunder" or words of similar import, and each reference in any Note or 
other document delivered in connection with the Agreement shall be deemed 
to be a reference to the Agreement as amended by this Amendment No. 2, 
and the Agreement as so amended shall be read as a single integrated 
document.  Except as specifically amended by this Amendment No. 2, all 
other terms and provisions of the Agreement shall continue in full force 
and effect and unchanged and are hereby confirmed in all respects.

     SECTION 5.  Confirmation of Agreement.  In all respects 
not inconsistent with the terms and provisions of this Amendment 
No. 2, the Agreement is hereby ratified, adopted, approved and confirmed.

     SECTION 6.  Counterparts.  This Amendment No. 2 may be 
signed in any number of counterparts, each of which shall be 
an original, with the same effect as if the signatures thereto 
and hereto were upon the same instrument.

                                     114

     IN WITNESS WHEREOF, the parties hereto have caused this 
Amendment No. 2 to be duly executed as of the day and year first 
above written.


                         CSX TRANSPORTATION, INC.


                         By:  
                         Name:
                         Title:


                         NORFOLK SOUTHERN RAILWAY COMPANY


                         By:
                         Name:
                         Title:


                         CONSOLIDATED  RAIL CORPORATION


                         By:
                         Name:
                         Title:


                                    115



                           AMENDMENT NO. 2

                     DATED AS OF JANUARY 1, 2001

                               OF THE

                         SHARED ASSETS AREA

                         OPERATING AGREEMENT

                                FOR

                      SOUTH JERSEY/PHILADELPHIA


                       Dated as of June 1, 1999

                            By and Among

                    CONSOLIDATED RAIL CORPORATION,

                    CSX TRANSPORTATION, INC. and

                   NORFOLK SOUTHERN RAILWAY COMPANY


                                  116

                            AMENDMENT NO. 2
                                 OF THE
                           SHARED ASSETS AREA
                           OPERATING AGREEMENT
                                  FOR
                        SOUTH JERSEY/PHILADELPHIA


     This AMENDMENT NO. 2 dated as of January 1, 2001 
("Amendment No. 2") OF THE SHARED ASSETS AREA OPERATING 
AGREEMENT for South Jersey/Philadelphia ("Agreement") dated 
as of June 1, 1999, is by and among Consolidated Rail 
Corporation ("CRC"), CSX Transportation, Inc. ("CSXT") and 
Norfolk Southern Railway Company ("NSR").

                          W I T N E S S E T H:

     WHEREAS, the parties have previously entered into the 
Agreement;

     WHEREAS, the parties now desire to amend the Agreement 
with respect to the funding of capital improvements in the 
Shared Assets Areas ("SAAs") as more fully set forth below:

     WHEREAS, it is the intent of the parties that, except as 
expressly amended hereby, the Agreement shall remain unamended 
and in full force and effect;

     NOW, THEREFORE, the parties hereby amend the Agreement as follows:

     SECTION 1.  Definitions.  Capitalized terms used in this Amendment 
and not defined herein shall have the meanings assigned to such terms 
in the Agreement.

     SECTION 2.  Amendments of the Agreement.  The Agreement is 
hereby amended pursuant to and in compliance with Section 17 as follows:

     (a)     The text of Section 6(b) is hereby deleted in its entirety and 
the following substituted therefor:

     "(b)    CRC Board Approved Projects.  Either of two options 
for initial funding and reimbursement by the Operators may be
determined by the CRC Board at the time it approves a particular
project.  In the event the CRC Board does not specify the method 
of initial funding and reimbursement in the resolution authorizing 
the project, then Option One described below shall be the method 
of such funding and reimbursement.

(i) Option One:  Each Operator shall be responsible for 
an equal share of the initial budgeted funding of each capital improvement

                                        117

project which has been approved by the CRC Board and is included in an 
approved Capital Expenditure Budget, except as provided in Section 6(c).  
A final accounting shall be made to adjust the initial budgeted funding 
to the actual project cost as specified in the Accounting Plan.

(ii) Option Two:  CRC shall provide the funding for the 
proposed capital improvement project, except as provided in 
Section 6(c).

     The options for the method of reimbursement are set forth 
in Section 9(e)(ii)."

(b) The text of Section 9(e)(ii) is hereby deleted in 
its entirety and the following substituted therefor:

   "(ii)    With respect to Budgeted Capital Expenditures 
approved by the CRC Board:

(A) If Option One, as described in Section 6(b), 
is used for the initial funding of the particular capital 
improvement project, then one-twelfth (1/12) of fifty percent 
(50%) of the annual amount of the Budgeted Capital Expenditures 
for the particular capital improvement project; or

(B) If Option Two is used for the initial funding 
of the particular capital improvement project, then one hundred 
and two percent (102%) of fifty percent (50%) of the monthly book 
depreciation for the particular capital improvement project."

     SECTION 3.  Effectiveness.  This Amendment No. 2 shall 
become effective as of January 1, 2001 (the "Amendment Date").

     SECTION 4.  Integration; Confirmation.  On and after the Amendment 
No. 2 Date, each reference in the Agreement to "this Agreement," herein, 
"hereunder" or words of similar import, and each reference in any Note 
or other document delivered in connection with the Agreement shall be 
deemed to be a reference to the Agreement as amended by this Amendment 
No. 2, and the Agreement as so amended shall be read as a single 
integrated document.  Except as specifically amended by this Amendment 
No. 2, all other terms and provisions of the Agreement shall 
continue in full force and effect and unchanged and are hereby confirmed 
in all respects.

     SECTION 5.  Confirmation of Agreement.  In all respects not inconsistent 
with the terms and provisions of this Amendment No. 2, the Agreement is 
hereby ratified, adopted, approved and confirmed.

     SECTION 6.  Counterparts.  This Amendment No. 2 may be 
signed in any number of counterparts, each of which shall be an original, 
with the same effect as if the signatures thereto and hereto were upon 
the same instrument.

                                118

     IN WITNESS WHEREOF, the parties hereto have caused this 
Amendment No. 2 to be duly executed as of the day and year first 
above written.


                         CSX TRANSPORTATION, INC.


                         By:  
                         Name:
                         Title:


                         NORFOLK SOUTHERN RAILWAY COMPANY


                         By:
                         Name:
                         Title:


                         CONSOLIDATED  RAIL CORPORATION


                         By:
                         Name:
                         Title:


                                119


                           AMENDMENT NO. 2

                     DATED AS OF JANUARY 1, 2001

                               OF THE

                         SHARED ASSETS AREA

                        OPERATING AGREEMENT

                                FOR

                              DETROIT

                      Dated as of June 1, 1999

                            By and Among

                   CONSOLIDATED RAIL CORPORATION,

                   CSX TRANSPORTATION, INC. and

                 NORFOLK SOUTHERN RAILWAY COMPANY



                                 120


                           AMENDMENT NO. 2
                               OF THE
                         SHARED ASSETS AREA
                         OPERATING AGREEMENT
                                 FOR
                               DETROIT


     This AMENDMENT NO. 2 dated as of January 1, 2001 ("Amendment No. 2") 
OF THE SHARED ASSETS AREA OPERATING AGREEMENT for Detroit ("Agreement") 
dated as of June 1, 1999, is by and among Consolidated Rail Corporation 
("CRC"), CSX Transportation, Inc. ("CSXT") and Norfolk Southern Railway 
Company ("NSR").

                          W I T N E S S E T H:

     WHEREAS, the parties have previously entered into the 
Agreement;

     WHEREAS, the parties now desire to amend the Agreement 
with respect to the funding of capital improvements in the 
Shared Assets Areas ("SAAs") as more fully set forth below:

     WHEREAS, it is the intent of the parties that, except as expressly 
amended hereby, the Agreement shall remain unamended 
and in full force and effect;

     NOW, THEREFORE, the parties hereby amend the Agreement 
as follows:

     SECTION 1.  Definitions.  Capitalized terms used in this Amendment 
and not defined herein shall have the meanings 
assigned to such terms in the Agreement.

     SECTION 2.  Amendments of the Agreement.  The Agreement 
is hereby amended pursuant to and in compliance with 
Section 17 as follows:

(a) The text of Section 6(b) is hereby deleted in its 
entirety and the following substituted therefor:

   "(b)    CRC Board Approved Projects.  Either of two options 
for initial funding and reimbursement by the Operators may be
determined by the CRC Board at the time it approves a 
particular project.  In the event the CRC Board does not specify 
the method of initial funding and reimbursement in the resolution
authorizing the project, then Option One described below shall 
be the method of such funding and reimbursement.

(i) Option One:  Each Operator shall be responsible for 
an equal share of the initial budgeted funding of each capital improvement 
project which has been approved by the CRC Board and 
is included in an approved Capital Expenditure Budget, except as provided

                                     121
 
in Section 6(c).  A final accounting shall be made to 
adjust the initial budgeted funding to the actual project cost 
as specified in the Accounting Plan.

(ii) Option Two:  CRC shall provide the funding for the 
proposed capital improvement project, except as provided in 
Section 6(c).

     The options for the method of reimbursement are set forth 
in Section 9(e)(ii)."

    (b)    The text of Section 9(e)(ii) is hereby deleted in its entirety 
and the following substituted therefor:

  "(ii)    With respect to Budgeted Capital Expenditures approved 
by the CRC Board:

(A) If Option One, as described in Section 6(b), is 
used for the initial funding of the particular capital 
improvement project, then one-twelfth (1/12) of fifty percent 
(50%) of the annual amount of the Budgeted Capital Expenditures 
for the particular capital improvement project; or

(B) If Option Two is used for the initial funding of 
the particular capital improvement project, then one hundred and 
two percent (102%) of fifty percent (50%) of the monthly book depreciation 
for the particular capital improvement project."


     SECTION 3.  Effectiveness.  This Amendment No. 2 shall 
become effective as of January 1, 2001 (the "Amendment Date").

     SECTION 4.  Integration; Confirmation.  On and after the Amendment No. 2 
Date, each reference in the Agreement to "this Agreement," herein, "hereunder" 
or words of similar import, and each reference in any Note or other document 
delivered in connection with the Agreement shall be deemed to be a reference 
to the Agreement as amended by this Amendment No. 2, and the Agreement as so 
amended shall be read as a single integrated document.  Except as specifically 
amended by this Amendment No. 2, all other terms and provisions of the 
Agreement shall continue in full force and effect and unchanged and are 
hereby confirmed in all respects.

     SECTION 5.  Confirmation of Agreement.  In all respects not inconsistent 
with the terms and provisions of this Amendment No. 2, the Agreement is hereby 
ratified, adopted, approved and confirmed.

     SECTION 6.  Counterparts.  This Amendment No. 2 may be signed in any 
number of counterparts, each of which shall be an original, with the same 
effect as if the signatures thereto and hereto were upon the same instrument.

                               122

     IN WITNESS WHEREOF, the parties hereto have caused this 
Amendment No. 2 to be duly executed as of the day and year 
first above written.


                         CSX TRANSPORTATION, INC.


                         By:  
                         Name:
                         Title:


                         NORFOLK SOUTHERN RAILWAY COMPANY


                         By:
                         Name:
                         Title:


                         CONSOLIDATED RAIL CORPORATION


                         By:
                         Name:
                         Title:


                                      123


                                   AGREEMENT     {Officers}	


     This agreement, dated as of June 1, 1996 (Agreement), between Norfolk 
Southern Corporation (Corporation) and _____________ (1) memorializes your 
entitlement to certain rights and benefits hereinafter detailed that mature 
upon, and only upon, your Termination (this and other terms not defined in 
the text are defined in Attachment A hereto) following a Change in Control 
and your commitment not to engage in Competing Employment for certain 
periods; (2) absent such Termination, is not intended to affect, and shall 
not be construed as affecting, the compensation and benefits you are entitled 
to receive; and (3) is not under any circumstances a contract or guarantee 
of employment with the Corporation.  Moreover, upon the happening of such 
conditions, your rights under any and all employee retirement income or 
welfare benefit policies, plans, programs or arrangements of the Corporation 
in which you participate shall be governed by the terms thereof and, except 
as herein expressly provided, shall not be enlarged hereunder or otherwise 
affected hereby.

     The Agreement's terms and protections reflect the Corporation's beliefs 
that, in the event of a potential Change in Control, (1) the best interests 
of its stockholders
 require management focus and continuity; and (2) such 
focus and continuity will be enhanced by providing economic protection to 
officers and other key employees whose employment is most likely to be 
affected adversely by such a change.  At the recommendation of its 
Compensation and Nominating Committee (Committee), which is composed 
entirely of non-employee directors, the Board of Directors of the 
Corporation (Board) has directed the Corporation to offer this Agreement 
to you.

     As consideration for the Corporation's offer of this Agreement, and by 
your acceptance of it, you hereby covenant and agree as follows:

(i) for the three-year period that begins on the date of this 
Agreement, you will engage in no Competing Employment (provided, however, that 
if (a) prior to a Change in Control your employment with the Corporation is 
terminated for Cause or because of your inadequate performance of assigned 
duties or for other similar reasons - each as determined by the 
Corporation's chief legal officer serving at the time - or (b) your 
Termination Date is within such three-year period, the restriction imposed 
by this subparagraph (i) shall cease to apply as of your Termination Date), 
and your undertaking in this respect may be enforced by appropriate court 
orders and decrees, including without limitation those calling for 
injunctions and specific performance; 

(ii) in the event you (a) are Terminated following a Change in Control 
and (b) accept any benefits provided for in Article III or Article IV of this 
Agreement, you will engage in no Competing Employment for the one-year period 
that begins on your Termination Date;

(iii) you waive, forego and otherwise renounce, on your behalf and that 
of any individual or organization that does or may claim through you, any 
and all benefits (including without limitation any prior notice of agreement 
termination therein provided) to which you may or would be entitled under and

                                      124

by virtue of any other agreement, including amendments and supplements 
thereto, as in effect on the date hereof between you and the Corporation 
affording you benefits in the event of your Termination, with the result 
that all and any such agreements, from and after the date hereof, shall 
have no force and effect; and

(iv) if, prior to a Change in Control, a modification in the nature 
of your responsibilities with the Corporation (Reassignment) results in a 
change in the maximum percen-tage of your salary that may be earned as 
incentive compensation (Participation Level), upon the effective date of 
your Reassignment (Reassignment Date), you will become and be eligible to 
receive only those benefits following a Change in Control as are other 
individuals at the Participation Level applicable to your new position, 
provided, however, that the three-year period provided for in subparagraph 
(i) above shall not be extended because of your Reassignment; the 
Corporation hereby undertakes to furnish you a new agreement or to furnish 
an amendment or supplement to this Agreement, to reflect your changed 
benefits, but its failure or omission to do so shall not affect the 
benefits to which, under this subparagraph (iv), you are entitled upon and 
after such Reassignment Date.


I.   Effective Date and Term

     The Agreement is effective and its term (Term) begins on the date 
hereof; its Term ends (provided, however, that the three-year prohibition 
on engaging in Competing Employment that begins on the date of this 
Agreement, including the exceptions, set out in subparagraph (i) of the 
third paragraph of the preamble shall continue to apply) on the earliest of: 

(i) the date, prior to a Change in Control, you cease to be an employee 
of the Corporation; 

(ii) the date, prior to a Change in Control, you cease to be eligible 
to participate in the Corporation's Executive Management Incentive Plan or 
Management Incentive Plan, or any successor plan[s] or program[s]; and

(iii) the date, prior to a Change in Control, that is twenty-four (24) 
months after you or the Corporation gives notice to the other of the 
termination of this Agreement, provided, however, that if a Change in 
Control occurs during the Term hereof, this Agreement shall terminate after 
a period of twenty-four (24) months, beginning on the first day of the 
month next following the month in which the Change in Control occurs (such 
period - plus the portion of the month, following the Change in Control, 
in which the Change in Control occurs - the Change in Control Period).

                                       125

II.  Binding on Successors

     The Corporation shall require any successor (whether direct or indirect, 
by purchase, merger, consolidation, reorganization, share exchange or 
otherwise) to all or substantially all of the business and/or assets of the 
Corporation (Successor; and such result, Succession) by agreement, in form 
and substance satisfactory to the Corporation's chief legal officer or his 
designee(s), serving immediately prior to the Change in Control, expressly 
to assume and agree to perform this Agreement in the same manner and to the 
same extent the Corporation would have been required to perform it had no 
such Succession occurred.  This Agreement shall be binding upon and inure to 
the benefit of the Corporation and any Successor (and, from and after any 
such Succession, that Successor shall be deemed the "Corporation" for 
purposes of this Agreement), but otherwise the Corporation shall not assign 
or transfer any of its rights, or delegate any of its duties or 
obligations, hereunder.

III. Protection Afforded by the Agreement During the Change in Control Period

     Except as limited by subparagraph (ix) concerning retirement, in the 
event of your Termination during the Change in Control Period, the Corporation 
shall (1) pay you within ten (10) business days after your Termination Date 
the amounts indicated in subparagraphs (i), (ii), (iii), (iv) and (vii); (2) 
continue to provide the Additional Benefits detailed in subparagraph (v); (3) 
timely pay, afford or deliver the other amounts, credits or instruments called 
for in subparagraphs (vi) and (viii); and (4) pay and provide the Tax 
Assistance Payments and other benefits defined and called for herein:

(i)  Severance Pay.  In lieu of, and in full satisfaction of any and all 
claims you have or may have thereafter to receive cash compensation or awards 
under or otherwise to participate in or under any feature of any compensation 
policy, plan, program or arrangement of the Corporation, you shall receive a 
lump-sum payment (Severance Pay) equal to three (3) times the sum of:

(a) an amount equal to your Base Pay (determined in accordance with 
Item (D)(ii) in Attachment A); and 

(b) an amount equal to your Incentive Pay (determined in accordance with 
Item (L) in Attachment A).


(ii)  Long-Term Compensation 

(a) Performance Share Unit Equivalent.  In lieu of your having any 
entitlement (which entitlement, upon your receipt of the benefit herein 
provided, hereby is waived in full) to receive unearned Performance Share 
Units (as that term is defined in the Norfolk Southern Corporation Long-Term 
Incentive Plan, or successor plan[s] or program[s])that you have been awarded 
and as to which a performance cycle has not been completed on your 
Termination Date, you shall receive for each incomplete cycle a cash payment

                                      126

equal to the Performance Share Unit Equivalent (determined in accordance with 
Item N in Attachment A).

(b) Option Equivalent.  Except in the case of persons at the time 
subject to Section 16 of the Securities Exchange Act of 1934 (Officers), for 
each option granted to you by the Corporation which on your Termination Date 
is exercisable but remains unexercised (and by its terms, no longer can be 
exercised), you shall receive a cash payment equal to the Option Equivalent 
(determined in accordance with Item M in Attachment A).  To protect and assure 
to the full extent practicable the intended value of options exercisable at 
the time by Officers, effective on the date Notice of Termination (for reasons 
other than Cause) is given, any requirement contained in any agreement(s) 
between such Officer and the Corporation that such Officer exercise an option 
only during a specified period (other than any provision concerning the date 
on which the option first is or becomes exercisable) hereby is waived.

(c) Accelerated Dividend Equivalent.  As to each option, performance 
share unit or other instrument you hold on the date Notice of Termination 
(for reasons other than Cause) is given as to which the right to receive 
dividend equivalents then exists, you shall receive an amount equal to the 
Accelerated Dividend Equivalent (determined in accordance with Item A in 
Attachment A), provided, however, that the Corporation's obligation to make 
the payment herein provided for shall mature on your Termination Date.  

    (iii)  Deferred Compensation Equivalent. In lieu of your having any 
entitlement to receive payments under the terms of the Officers' Deferred 
Compensation Plan (or any successor plan[s] or program[s]), which entitlement, 
upon your receipt of the benefit herein provided, hereby is waived in full, 
you shall receive an amount equal to the Deferred Compensation Equivalent 
(determined in accordance with Item J in Attachment A).

(iv) Vacation Equivalent.  In lieu of your having any entitlement to 
receive payments or other compensation for vacation to which you would have 
been or might have become entitled in and following the year that includes 
your Termination Date, which entitlement, upon your receipt of the benefit 
herein provided, hereby is waived in full, you shall receive an amount equal 
to the Vacation Equivalent (determined in accordance with Item T in 
Attachment A).

(v) Additional Benefits.  For the thirty-six (36) months next 
following your Termination Date, the Corporation shall arrange to provide 
you with Additional Benefits substantially similar to those you were entitled 
to receive immediately prior to your Termination Date (and if and to the 
extent that such benefits shall not or cannot be paid or provided under any 
policy, plan, program or arrangements of the Corporation for whatever reason, 
the Corporation shall itself pay or provide for the payment of such Additional 
Benefits to you, your dependents and your beneficiaries).  Without otherwise 
limiting the purposes or effects of the provisions under the caption "No

                                       127

Mitigation Obligation," infra, Additional Benefits to which you are entitled 
pursuant to the first sentence of this subparagraph (v) shall be reduced to 
the extent you actually receive comparable Additional Benefits from another 
employer during such period following your Termination Date, and you shall 
report to the Corporation any such benefits actually received.

(vi) Post-Retirement Life Insurance Benefit.  If on your Termination 
Date you are not eligible - or, if eligible, you have elected not to - 
retire pursuant to subparagraph (ix) of this Article III, in lieu of your 
entitlement at retirement to receive benefits of any kind under the 
Corporation's Executive Life Insurance Plan, which entitlement, upon your 
receipt of the benefit herein provided, hereby is waived in full, you shall 
receive, as soon as practicable after your Termination Date, a fully paid 
policy in the face amount and determined in accordance with Item P in 
Attachment A, and the Corporation shall pay to or on your behalf the cash 
benefit, also determined in accordance with Item P in Attachment A.

           If on your Termination Date you are eligible, and elect, to 
retire pursuant to subparagraph (ix) of this Article III, you shall receive 
the policy and cash benefit determined in accordance with Item P of 
Attachment A, provided, however, that such policy and the related cash 
payment shall not be distributed or made until such policy would have been 
distributed under the terms of the Executive Life Insurance Plan or its 
successor(s), as in effect on the day immediately preceding the date of the 
Change in Control.

(vii) Prorata Incentive Pay.  In lieu of your having any entitlement 
(which entitlement, upon your receipt of the benefit herein provided, hereby 
is waived in full) to receive payments or other compensation under the terms 
of the Executive Management Incentive Plan or the Management Incentive Plan 
(or successor plan[s] or program[s]) in respect of your employment during 
the year that includes your Termination Date, you shall receive an amount 
equal to Prorata Incentive Pay (determined in accordance with Item Q in 
Attachment A).

   (viii)  (a)   Creditable Service for Retirement.  For purposes of 
determining your creditable service under the Corporation's various retirement 
plans, including without limitation any agreement(s) with you providing 
retirement income, you shall receive additional creditable service, based on 
your age on your Termination Date, as follows:

                 (1)   Age 50 - 54:   as if you had been employed until you 
                                      were 60;
                 (2)   Age 55 - 59:   as if you had been employed until you 
                                      were 62; and
                 (3)   All others:    three (3) additional years,

provided, however, that such creditable service shall not be greater than the 
number that is equal to the number of months (calculated in accordance with 
the terms of the applicable plan) between (i) your Termination Date and 
(ii) the date on which you would attain the mandatory retirement age in 
effect at the time of the Change in Control.  Your rights under such 
programs and plans shall be governed by the terms thereof and, except as

                                      128

herein expressly provided, shall not be enlarged hereunder or otherwise 
affected hereby.

     (b)     Final Average Compensation for Retirement.  For purposes of 
determining your final average compensation under the Corporation's various 
plans (including without limitation any agreement(s) with you) providing 
retirement income, the amount of Severance Pay provided for in subparagraph 
(i) of this Article III shall be included, and the payments made pursuant to 
subparagraph (i) shall be deemed to have been made over the number of annual 
periods equal to the multiple used to determine the gross amount of your 
Severance Pay, provided, however, that your final average compensation shall 
not include amounts paid or payable pursuant to subparagraph (iv) (to the 
extent they are an Additional Vacation Equivalent) and subparagraph (vii) of 
this Article III.

    (ix)    Special Proviso for Those Eligible to Retire.  If on your 
Termination Date you are eligible to retire under the provisions of any of 
the Corporation's retirement plans (excluding any special, temporary early 
retirement amendment[s]), as in effect either on the day immediately 
preceding the Change in Control or on your Termination Date, you may elect 
to retire on your Termination Date by giving the Corporation written notice 
as provided in this subparagraph (ix).  Not later than two (2) business days 
following, but not including, the date on which Notice of Termination is 
given (whether by you or by the Corporation), the Corporation shall advise 
you in writing of your right herein provided to elect to retire.  If you wish 
to exercise that right, you must so advise the Cor-poration prior to your 
Termination Date on an election form it provides and in the manner 
prescribed under Article X.

          If and only if you make this election, your retirement will be 
deemed to have occurred simultaneously with your Termination Date (provided, 
however, that the "effective date" of such retirement for purposes of such 
retirement plans shall be as provided under such plans), and, instead of your 
having the rights provided in this Article III, your rights shall be governed 
by the retiree (or any specific change in control) provisions of the 
respective, applicable plans (as to each, on the terms most favorable to you 
under such plan [excluding any special, temporary early retirement 
amendment(s)]) as in effect either immediately preceding the Change in 
Control or on your Termination Date), provided, however, that if you make 
the election herein afforded, you shall still receive the payments called 
for in subparagraphs (i) and (ii)(a), (ii)(c) and (iii), and the benefits 
described in subparagraph (viii). 

           There shall be no right of setoff or counterclaim in respect of 
any claim, debt or obligation against any payment to, or benefit for, you 
provided for in this Agreement, except as expressly provided in 
subsection (v).

           Without limiting your rights to arbitration, at law or in equity, 
if the Corporation fails on a timely basis to make any payment required to be 
made pursuant to provisions under this Article III, the Corporation shall pay 
interest on the amount thereof at an annualized rate of interest equal to

                                    129

three percent (3%) above the then-applicable Prime Rate ("Prime Rate" means 
the rate of interest publicly announced by Morgan Guaranty Trust Company of 
New York in New York City from time to time as its prime rate).


IV.  Certain Tax Payments by the Corporation
	 
     Notwithstanding anything in the Agreement to the contrary, in the event 
of (a) your Termination during the Change in Control Period and (b) the 
determination (as hereinafter provided) that any required payment by the 
Corporation to or for your benefit, whether paid or payable pursuant to the 
terms of the Agreement or otherwise pursuant to or by reason of any other 
agreement, policy, plan, program or arrangement, including without 
limitation any stock option, stock appreciation right, or similar right, or 
the lapse or termination of any restriction on the vesting or exercisability 
of any of the foregoing including without limitation acceleration of the 
termination of Share Retention Agreements under the Corporation's Long-Term 
Incentive Plan (individually and collectively, Payment), would be subject to 
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, 
as amended (Code) or any successor provision thereto by reason of the 
Payment's being considered "contingent on a change in ownership or control" 
of the Corporation within the meaning of Section 280G of the Code (or any 
successor provision thereto), or any interest or penalties with respect to 
such excise tax (collectively, Excise Tax), then you shall be entitled to 
receive an additional payment or payments (individually or collectively, Tax 
Assistance Payment), which shall include an amount such that, after you 
pay (1) all taxes (including any interest or penalties imposed with respect 
to such taxes) and (2) any Excise Tax imposed upon the Tax Assistance Payment, 
you retain so much of the Tax Assistance Payment as is equal to the Excise Tax 
imposed on the Payment.

          Subject to the provisions hereinafter concerning your providing 
notice of a claim by the Internal Revenue Service, all determinations required 
to be made under these provisions, including whether an Excise Tax is payable 
by you, the amount of such Excise Tax and whether the Corporation is required 
to pay you a Tax Assistance Payment and the amount of such Tax Assistance 
Payment, if any, shall be made by a nationally recognized accounting firm you, 
in your sole discretion, select (Accounting Firm).  You shall direct the 
Accounting Firm to submit its determination and detailed supporting 
calculations to both you and the Corporation within thirty (30) days after 
the Termination Date, if applicable, and any such other time or times as you 
or the Corporation may request.  If the Accounting Firm determines that any 
Excise Tax is payable by you, the Corporation shall pay the required Tax 
Assistance Payment to you within ten (10) business days after the Corporation 
receives such determination and calculations with respect to any Payment 
to you.

          Any federal tax returns you file shall be prepared and filed on a 
basis consistent with the determination of the Accounting Firm with respect 
to the Excise Tax payable by you.  If the Accounting Firm determines that you 
are required to pay no Excise Tax, it shall (at the same time it makes such 
determination) furnish you and the Corporation an opinion that you have 
substantial authority not to report any Excise Tax on your federal income tax 
return.  However, in view of uncertainty concerning application of Section 
4999 of the Code (or any successor provision thereto) at the time of any

                                     130

determination made hereunder by the Accounting Firm, it is possible that a Tax 
Assistance Payment that should have been made by the Corporation will not have 
been made (Underpayment), consistent with the calculations required to be made 
hereunder.  In the event the Corporation exhausts or fails to pursue its 
remedies pursuant to the provisions concerning notice of a claim by the 
Internal Revenue Service, and you thereafter are required to make a payment of 
any Excise Tax, you shall direct the Accounting Firm to determine the amount 
of the Underpayment and to submit its determination and detailed supporting 
calculations as promptly as possible both to you and to the Corporation, which 
shall pay the amount of such Underpayment to you or for your benefit within 
ten (10) business days following the Corporation's receipt of such 
determination and calculations. 

          Each of you and the Corporation shall provide the Accounting Firm 
access to and copies of any books, records and documents in your or its 
possession, as the case may be, reasonably requested by the Accounting Firm, 
and shall otherwise cooperate with the Accounting Firm in connection with the 
preparation and issuance of the determination and calculations required or 
contemplated hereunder.

          The Corporation shall bear the fees and expenses of the Accounting 
Firm for services hereunder.  If, for any reason, you initially pay such 
fees and expenses, the Corporation shall reimburse you the full amount of 
the same within ten (10) business days following receipt from you of a 
statement and reasonable evidence of your payment thereof.

          You shall notify the Corporation in writing of any claim by the 
Internal Revenue Service that, if successful, would require the Corporation 
to pay a Tax Assistance Payment.  You shall give such notification as promptly 
as practicable, but in no event later than the tenth (10th) business day next 
following your receipt of such claim, and you further shall apprise the 
Corporation of the nature of such claim and the date on which it is required 
to be paid (in each case, to the extent known to you).  You shall not pay or 
otherwise satisfy such claim prior to the earlier of (a) the expiration of the 
thirty (30)-calendar-day period next following the date on which you give 
notice to the Corporation or (b) the date any payment of the amount with 
respect to such claim is due.  If the Corporation notifies you in writing 
prior to the expiration of such period that it desires to contest such claim, 
you shall:

(1) provide the Corporation any written records or documents in your 
possession relating to such claim and reasonably requested by the Corporation;

(2) take such action in connection with contesting such claim as the
Corporation reasonably shall request in writing from time to time, including 
without limitation accepting legal representation with respect to such claim 
by an attorney competent in respect of the subject matter and reasonably 
selected by the Corporation;

(3)   cooperate with the Corporation in good faith in order effectively to 
contest such claim; and

                                      131

(4)    permit the Corporation to participate in any proceedings relating to 
such claim, provided, however, that the Corporation directly shall bear and 
pay all costs and expenses (including without limitation, interest and 
penalties) incurred in connection with such contest and shall indemnify you 
and hold you harmless, on an after-tax basis, from and against any and all 
Excise Tax or income tax (including without limitation, interest and penalties 
with respect thereto), imposed as a result of such representation and payment 
of costs and expenses.  Without limiting the foregoing, the Corporation shall 
control all proceedings taken in connection with the contest of any claim 
contemplated by these provisions and, at its sole option, may pursue or forego 
any and all administrative appeals, proceedings, hearings and conferences with 
the taxing authority in respect of such claim (provided, however, that you may 
participate therein at your own cost and expense) and may, at its option, 
either direct you to pay the tax claimed and sue for a refund or contest the 
claim in any permissible manner, and you agree to prosecute such contest to a 
determination before any administrative tribunal, in a court of initial 
jurisdiction and in one or more appellate courts, as the Corporation shall 
determine; provided, however, that if the Corporation directs you to pay the 
tax claimed and to sue for a refund, the Corporation shall advance the amount 
of such payment to you, and pay on a current basis all costs of litigation, 
including without limitation attorneys' fees, on an interest-free basis and 
shall agree to and shall indemnify you and hold you harmless, on an after-tax 
basis, from any Excise Tax or income tax, including without limitation, 
interest and penalties with respect thereto, imposed with respect to such 
advance; and provided further, however, that any extension of the statute of 
limitations relating to payment of taxes for your taxable year with respect 
to which the contested amount is claimed to be due is limited solely to such 
contested amount.  Furthermore, the Corporation's control of any such 
contested claim shall be limited to issues with respect to which a Tax 
Assistance Payment would be payable hereunder, and you shall be entitled to 
settle or to contest, as the case may be, any other issue(s) raised by the 
Internal Revenue Service or any other taxing authority.  

          If, after you receive an amount advanced by the Corporation pursuant 
to provisions of the last full paragraph, you receive any refund with respect 
to such claim, you shall (subject to the Corporation's complying with any 
applicable provisions of the same paragraph) promptly pay to the Corporation 
the amount of such refund (together with any interest paid or credited thereon 
after any taxes applicable thereto).  If, after you receive such an amount 
advanced by the Corporation, a determination is made that you shall not be 
entitled to any refund with respect to such claim and the Corporation does not 
notify you in writing of its intent to contest such denial or refund prior to 
expiration of thirty (30) calendar days after such determination, then such 
advance shall be forgiven and shall not be required to be repaid, and the 
amount of such advance shall offset, to the extent thereof, the amount of 
the Tax Assistance Payment the Corporation is required to pay you hereunder.

                                     132

     V.   No Mitigation Obligation

          You and the Corporation agree that payments made by the Corporation 
pursuant to this Agreement will be liquidated damages (and in lieu of any 
claim for any breach whatsoever of this Agreement by the Corporation) and 
that you will not be required to mitigate the amount of any such payment by 
seeking other employment or otherwise, nor shall any profits, income, earnings 
or other benefits from any source whatsoever, other than from Competing 
Employment, create any mitigation, offset reduction or other obligation on 
your part hereunder or otherwise, except as expressly provided in the 
materials, supra, concerning Additional Benefits.


     VI.  Arbitration

          Except as otherwise expressly provided under the caption "Certain 
Tax Payments by the Corporation," any controversy or claim between you and 
the Corporation arising out of or relating to the existence, enforceability, 
terms or application of this Agreement or any breach or alleged breach 
thereof, shall be settled by three (3) arbitrators, one of whom shall be 
appointed by the Corporation, one by you and the third of whom shall be 
appointed by the first two arbitrators.  If the first two arbitrators cannot 
agree on the third arbitrator required to be appointed hereunder, then such 
arbitrator shall be appointed by the Chief Judge of the United States District 
Court for the district having jurisdiction of the city or other municipality 
in which the arbitration is to be held.  The arbitration shall be conducted in 
accordance with the rules of the American Arbitration Association, except with 
respect to the selection of arbitrators, which shall be as hereinbefore 
provided.  Judgment upon the award rendered by the arbitrators may be entered 
in any court having jurisdiction thereof.  The arbitrators shall have no 
authority to award punitive, incidental or consequential damages, and they 
shall apply the substantive law of the Commonwealth of Virginia in reaching 
a decision.

          If you determine in good faith to retain legal counsel and/or to 
incur other reasonable costs or expenses in connection with any such 
arbitration or to enforce any or all of your rights under this Agreement or 
under any arbitration award, the Corporation shall pay all such attorneys' 
fees, costs and expenses you incur in connection with non-frivolous 
applications to interpret or enforce your rights, including enforcement of 
any arbitration award in court, regardless of the final outcome.  In addition, 
during the pendency of such arbitration, the Corporation will continue to pay 
you, with the customary frequency, the greater of your Base Pay as in effect 
immediately prior to the Change in Control or immediately prior to your 
Termination and to provide Benefits until the controversy or claim finally is 
resolved in accordance herewith.  These payments and the provision of 
Benefits hereunder shall be in addition to, and not in derogation or 
mitigation of any other payment or benefit due you under this Agreement.

          Notwithstanding any other provision hereof, the parties' respective 
rights and obligations under this Caption will survive a termination or 
expiration of this Agreement or the Termination of your employment for any 
reason whatsoever.

                                     133

   VII.  Employment Rights

         Nothing expressed or implied in this Agreement shall create any 
right or duty on your part or that of the Corporation to have you remain 
in the employment of the Corporation prior to or following any Change 
in Control.


  VIII.  Withholding of Taxes

         The Corporation may withhold from any amounts payable under this 
Agreement all federal, state, city, local or other taxes as shall be required 
pursuant to any law or governmental regulation or ruling.


    IX.  Personal Nature of Agreement 

         This Agreement is personal in nature, and neither you nor the 
Corporation (except as provided under the caption "Binding on Successors"), 
without the prior written consent of the other, shall assign or transfer 
any of its rights, or delegate any of its duties or obligations, except as 
expressly provided under this caption.  Without limiting the generality and 
effect of the foregoing, your right to receive payments hereunder shall not 
be assignable or transferable, whether by pledge, creation of a security 
interest or otherwise, other than by a transfer by will or by the laws of 
descent and distribution; in no event shall the Corporation have any 
obligation or liability to recognize or honor any attempted assignment or 
transfer that is contrary hereto. 


     X.  Notice

         For all purposes of this Agreement, except as otherwise expressly 
provided in subparagraph (ix) of Article III, all communications, including 
without limitation, notices, consents, requests and approvals, provided for 
herein shall be in writing and shall be deemed to have been duly given when 
(1) actually delivered or (2) if mailed, five (5) business days after having 
been mailed by United States registered or certified mail, return receipt 
requested, postage prepaid, 

(i)  if to the Corporation, to the attention of its Corporate 
Secretary at its principal executive office at the time, and 

(ii)  if to you, at the address at the time on file with the 
Corporation as your principal residence address, or 

(iii) in either case, to such other address as either the Corporation 
or you shall have furnished the other in writing and in accordance herewith, 
provided, however, that notices of change of address hereunder shall be 
effective only upon actual receipt.




                                      134

    XI.  Governing Law 

         The validity, interpretation, construction and performance of this 
Agreement shall be governed by the laws of the Commonwealth of Virginia, 
without giving effect to the Commonwealth's principles of conflicts of law, 
save those permitting the parties to an agreement to stipulate the 
substantive law applicable to the agreement and the procedural law 
applicable to suits, actions or proceedings relating to it.


   XII.  Validity/Severability

         If any provision of this Agreement or the application of any 
provision hereof to any person (including a Person) or circumstance is held 
invalid, illegal or unenforceable, the remainder of this Agreement and the 
application of such provision to any other person (including a Person) shall 
not be affected, and the provision(s) so held to be invalid, illegal or 
unenforceable shall be reformed or excised in good faith by the Corporation, 
without the necessity of your agreeing thereto, to the extent (and only to 
the extent) necessary to make it or them valid, legal or enforceable.


   XIII.  Miscellaneous


          No provision of this Agreement may be amended, modified, waived or 
discharged unless such amendment, modification, waiver or discharge is agreed 
to in a writing signed by you and the Corporation.  No waiver by either party 
hereto at any time of any breach or of compliance with any condition or 
provision of this Agreement to be performed by such other party shall be 
deemed a waiver of similar or dissimilar provisions or conditions at the same 
or any prior or subsequent time.  No agreements or representations, oral or 
otherwise, express or implied, with respect to the subject matter hereof have 
been made by either party which are not set forth expressly in this Agreement. 


    XIV.  Counterparts

          This Agreement may be executed in any number of counterparts, each 
of which shall be deemed an original, and all of which together shall 
constitute but one and the same instrument.

     IN WITNESS WHEREOF, the Board of Directors of the Corporation has 
directed that this Agreement be executed and delivered on its behalf by one 
or more officers of the Corporation thereunto duly authorized, as of the 
day and year first above written, and you have indicated your acceptance of 
and intent to be bound by this Agreement in the space provided below.

                                     135

                               NORFOLK SOUTHERN CORPORATION


                               By__________________________________

                               Name:  H. C. Wolf

                               Title:  EVP Finance









ATTEST

     {SEAL}

____________________________________
          Corporate Secretary



                               Accepted:

                               By____________________________________
 
                               Name:_________________________________
                                    (Please print full name)

                               Being the same individual named
                               in the preamble hereto and 
                               referred to as "You" in the text.




                                136

                    NORFOLK SOUTHERN CORPORATION
                DIRECTORS' CHARITABLE AWARD PROGRAM


Purpose	     To promote the interests of Norfolk Southern
               Corporation and its Directors in supporting 
               charitable and educational organizations, and 
               to provide an additional source of funding for 
               the Norfolk Southern Foundation (Foundation).

Eligibility    All Directors serving on, or elected after, 
               February 1, 1996.

Contribution   Directors serving on February 1, 1996:
Amount         $500,000

               Directors elected after February 1, 1996:  
               vest in 20% increments over a 5 year period 
               in accordance with the attached table.

Eligible       Educational, scientific, literary, cultural
Organizations  and other organizations with similar non-
               religious purposes, contributions to which are
               deductible for Federal income tax purposes 
               (excluding a private foundation founded, 
               maintained or operated by a Director or a member 
               of the Directors' immediate family).

               The Corporation reserves the right to decline to 
               make a contribution to any organization, if (1) 
               the contribution will not be deductible for 
               Federal income tax purposes at the time it will 
               be made, or (2) the Corporation in its sole 
               discretion, exercised in good faith by persons 
               other than Directors, determines
 that making 
               a contribution to such organization will not be 
               in the Corporation's best interest.

                                     137

Number of      Each Director may nominate, on forms provided by
Charities      the Corporation or its agent, up to five (5) 
               Eligible Organizations to receive an aggregate 
               amount up to the Contribution Amount following 
               that Director's death.  The Director may revoke 
               any such nomination(s), make a new nomination 
               or nominations, or modify the amount designated 
               for any nominee at any time.

Payments       Following a Director's death, the Corporation will 
               make ratable payments, in an aggregate annual 
               amount not to exceed one fifth of the Contribution
               Amount, to each of the Eligible Organizations that,
               according to records maintained by the Corporation 
               or its agent, were the deceased Director's 
               nominees immediately prior to death.  Amounts 
               unpaid for reason of ineligibility will be paid 
               prorata to the Director's other nominees, or if 
               there are no other qualified nominees, then to 
               the Foundation.

Funding        The Corporation will be the beneficiary of a 
               $1 million, corporate-owned joint-life insurance 
               policy on each Director.  Death benefits will be 
               paid to the Corporation, and the Corporation 
               will donate up to the Contribution Amount to no 
               more than five Eligible Organizations nominated 
               by the Director and the balance to the Foundation.

Termination    The Corporation reserves the right, in its sole
               discretion, to alter, amend, modify or terminate 
               the program at any time.  However, in the event 
               of a change in Control of the Corporation (as 
               defined on Attachment A), the Corporation 
               immediately will donate in a lump sum the 
               Contribution Amount in accordance with the then 
               current nominations of each living Director and 
               the amount of any unpaid Contribution Amount to
               eligible nominees of a deceased Director.

                                     138

Administration	The program will be administered by the 
               Corporation's Corporate Secretary (or designated 
               agent) whose interpretations and decisions will 
               be final and binding on the Corporation and the
               Director.


                          DIRECTORS ELECTED
                            AFTER 2/1/96


      Full                            Contribution
Months of Service                        Amount

Less than 12                            $      0

    12-23                                100,000

    24-35                                200,000

    36-47                                300,000

    48-59                                400,000

60 or more                               500,000



                                 139

                            Attachment A


     For purposes of the Directors' Charitable Award Program, a Change in 
Control shall occur if:

(i)    any person, other than the Corporation or a Subsidiary 
       Company* or any employee benefit plan sponsored by the
       Corporation or a Subsidiary Company, shall become the
       beneficial owner of, or obtain voting control over, 
       20% or more of the Corporation's outstanding Common Stock;

(ii)   the stockholders of the Corporation shall approve (A) any
       consolidation or merger of the Corporation in which the
       Corporation is not the continuing or surviving corporation
       or pursuant to which shares of Common Stock would be 
       converted into cash, securities, or other property, other 
       than a merger of the Corporation in which holders of 
       Common Stock immediately prior to the merger have the 
       same proportionate ownership of common stock of the 
       surviving corporation immediately after the merger as
       immediately before, or (B) any sale, lease, exchange, 
       or other transfer (in one transaction or a series of 
       related transactions) of all or substantially all of the 
       assets of the Corporation; or

(iii)  there shall have been a change in the composition of the 
       Board of Directors such that within any period of two (2)
       consecutive years or less individuals who at the beginning
       of such period constituted such Board, together with any 
       new directors whose election, or nomination for election 
       by the Corporation's stockholders, was approved by a vote 
       of at least two-thirds of the directors then in office who 
       were directors at the beginning of such period, shall for 
       any reason no longer constitute a majority of the 
       directors of the Corporation.

*     "Subsidiary Company" means a corporation of which at least
      eighty percent (80%) of the total combined voting power of 
      all classes of stock entitled to vote is owned, directly 
      or indirectly, by the Corporation.


                                      140

                                                      EXHIBIT 12, Page 1 of 1


<TABLE>
                 NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
               COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                             (Millions of Dollars)

<CAPTION>
                                                       Year ended December 31
                                         ------------------------------------------------
                                         2001       2000       1999       1998       1997
                                         ----       ----       ----       ----       ----
<S>                                    <C>         <C>        <C>        <C>        <C>
EARNINGS
Income from continuing
 operations before income
 taxes as reported                     $    553    $   250    $   351    $   845    $   998
Add: 
	Total interest expenses
       (as detailed below)                  674        721        708        688        530
	Amortization of
	 capitalized interest                   5          5          4          3          3
	Income (loss) of
	 partially owned
	 entities (1)                          39         60         47        165        113
	Subsidiaries' preferred
	 dividend requirement                   2          2          2          2          2
                                        -------     ------     ------     ------     ------
		Income before
		 income taxes,
		 as adjusted               $  1,273    $ 1,038    $ 1,112    $ 1,703    $ 1,646
                                        =======     ======     ======     ======     ======

FIXED CHARGES
Interest expense on debt               $    553    $   551    $   531    $   516    $   385
Other interest expense                        2         42         35         27         32
Calculated interest
 portion of rent expense                     41         40         35         31         30
NS' share of Conrail interest                78         88        107        114         83
                                        -------     ------     ------     ------     ------
		Total interest
		 expenses                       674        721        708        688        530

Capitalized interest                         17         18         15         21         17
Subsidiaries' preferred
 dividend requirement
 on a pretax basis                            4          4          4          4          4
                                        -------     ------     ------     ------     ------
		Total fixed charges        $    695    $   743    $   727    $   713    $   551
                                        =======     ======     ======     ======     ======
RATIO OF EARNINGS TO
 FIXED CHARGES                             1.83       1.40       1.53       2.39       2.99
</TABLE>


(1)   Includes: (a) the distributed income of 20%-49% owned entities, net of 
equity recorded in undistributed income and the minority income of 
consolidated entities which have
 fixed charges; and (b) NS' share of 
Conrail's income before income taxes, net of equity in earnings of Conrail 
included in NS' income from continuing operations before taxes as reported.

      The computations do not include $0.3 million of interest expense 
related to $7.8 million of debt guaranteed for a less than 50% owned entity.


                                141

	EXHIBIT 21, Page 1 of 2

NAME AND STATE OF INCORPORATION OF SUBSIDIARIES
OF NORFOLK SOUTHERN CORPORATION
AS OF FEBRUARY 1, 2002

Agency Media Services, Inc., Indiana
Atlantic Acquisition Corporation, Pennsylvania
Atlantic Investment Company, Delaware
Norfolk Southern Properties, Inc., Virginia
Norfolk Southern Railway Company, Virginia
Northern Horizons Insurance Company, Vermont
NS Fiber Optics, Inc., Virginia
NS Transportation Brokerage Corporation, Virginia
PDC Timber LLC, Delaware
PLC Timber LLC, Delaware
Pocahontas Development Corporation, Kentucky
Pocahontas Land Corporation, Virginia
Scioto Fuels, LLC, Virginia
TCS Leasing, Inc., Oklahoma
T-Cubed of North America, Inc., Delaware
T-Cubed of South Carolina, Inc., South Carolina
T-Cubed of Virginia, Inc., Virginia
Thoroughbred Direct Intermodal Services, Inc. Pennsylvania
Thoroughbred Funding, Inc., Virginia
Thoroughbred Technology and Telecommunications, Inc., Virginia
Transworks Company, Indiana
Transworks Inc., Virginia
Transworks of Indiana, Inc., Indiana
Triple Crown Services Company

Norfolk Southern Railway Company subsidiaries:
	Airforce Pipeline, Inc., North Carolina
	Alabama Great Southern LLC, Virginia
	Alabama Great Southern
 Railroad Company, The; Alabama
	Atlantic and East Carolina Railway Company, North Carolina
	Camp Lejeune Railroad Company, North Carolina
	Central of Georgia LLC, Virginia
	Central of Georgia Railroad Company, Georgia
	Chesapeake Western Railway, Virginia
	Cincinnati, New Orleans and Texas Pacific Railway Company, The; Ohio
	Citico Realty Company, Virginia
	Georgia Southern and Florida Railway Company, Georgia
	High Point, Randleman, Asheboro and Southern Railroad Company, 
	 North Carolina
	Interstate Railroad Company, Virginia
	Lamberts Point Barge Company, Inc., Virginia
	Memphis and Charleston Railway Company, Mississippi
	Mobile and Birmingham Railroad Company, Alabama
	Norfolk and Portsmouth Belt Line Railroad Company, Virginia
	Norfolk Southern International, Inc., Virginia
	North Carolina Midland Railroad Company, The; North Carolina
	Rail Investment Company, Delaware

                                142

EXHIBIT 21, Page 2 of 2


Norfolk Southern Railway Company subsidiaries (continued):
	Rail Technologies, Inc., Georgia
	Shenandoah-Virginia Corporation, Virginia
	South Western Rail Road Company, The; Georgia
	Southern Rail Terminals, Inc., Georgia
	Southern Rail Terminals of North Carolina, Inc., North Carolina
	Southern Region Coal Transport, Inc., Alabama
	Southern Region Materials Supply, Inc., Georgia
	State University Railroad Company, North Carolina
	Tennessee, Alabama & Georgia Railway Company, Delaware
	Tennessee Railway Company, Tennessee
	Virginia and Southwestern Railway Company, Virginia
	Wheelersburg Terminal LLC, Virginia
	Yadkin Railroad Company, North Carolina

Norfolk Southern Properties, Inc. subsidiaries:
	Alexandria-Southern Properties, Inc., Virginia
	Arrowood-Southern Company, North Carolina
	Arrowood Southern Executive Park, Inc., North Carolina
	Carlyle CA Corporation, Virginia
	Carlyle Development Corporation, Virginia
	Charlotte-Southern Corporation, North Carolina
	Charlotte-Southern Hotel Corporation, North Carolina
	Lambert's Point Docks, Incorporated, Virginia
	Nickel Plate Improvement Company, Inc., The; Indiana
	NKPI Management, Inc., Indiana
	Norfolk Southern Industrial Development Corp., Virginia
	Norfolk Southern Tower, LLC, Virginia
	Northmont Limited Partnership, Georgia
	NS-Charlotte Tower Corporation, North Carolina
	NS Gas Properties, Inc., Virginia
	NS Gas Properties, II, Inc., Virginia
	Sandusky Dock Corporation, Virginia
	Southern Region Industrial Realty, Inc., Georgia
	SRIR Timber LLC, Delaware
	Virginia Holding Corporation, Virginia


NOTE:	Of the above subsidiaries, each of which is more than 50% owned, only 
Norfolk Southern Railway Company meets the Commission's "significant 
subsidiary" test.  This list does not include CRR Holdings, LLC, in which 
Norfolk Southern Corporation has 50% voting control; Conrail Inc. and 
Consolidated Rail Corporation are subsidiaries of CRR Holdings, LLC.


                                143

EXHIBIT 23(a), Page 1 of 1


CONSENT OF INDEPENDENT AUDITORS



The Board of Directors
Norfolk Southern Corporation:

We consent to incorporation by reference in Registration Statements 
Nos. 33-52031, 333-40993, 333-60722, 333-71321 and 333-78939 on Form S-8 
and Registration Statements Nos. 333-57872 and 333-57872-01 on Form S-3 
of Norfolk Southern Corporation of our report dated January 21, 2002, 
relating to the consolidated balance sheets of Norfolk Southern Corporation 
and subsidiaries as of December 31, 2001 and 2000, and the related 
consolidated statements of income, changes in stockholders' equity and cash 
flows, and the related consolidated financial statement schedule for each of 
the years in the three-year period ended December 31, 2001, which report 
appears in the December 31, 2001, Annual Report on Form 10-K of Norfolk 
Southern Corporation.







/s/ KPMG LLP
Norfolk, Virginia
February 20, 2002


                               144

EXHIBIT 23(b), Page 1 of 1


CONSENT OF INDEPENDENT AUDITORS




We consent to incorporation by reference in Registration Statements 
Nos. 33-52031, 333-40993, 333-60722, 333-71321 and 333-78939 on Form S-8 
and Registration Statements Nos. 333-57872 and 333-57872-01 on Form S-3 of 
Norfolk Southern Corporation of our report dated
 January 21, 2002, 
relating to the consolidated balance sheets of Conrail Inc. and 
subsidiaries as of December 31, 2001 and 2000, and the related 
consolidated statements of income, stockholders' equity and cash flows, 
for each of the years in the three-year period ended December 31, 2001, 
which report appears in the December 31, 2001, Annual Report on Form 10-K 
of Norfolk Southern Corporation.






/s/ KPMG LLP                       /s/ Ernst & Young LLP
KPMG LLP                           Ernst & Young LLP
Norfolk, Virginia                  Jacksonville, Florida

February 20, 2002                  February 20, 2002


                                      145

                                                     Exhibit 99, Page 1 of 26













                                  CONRAIL INC.

                       2001 ANNUAL REPORT TO STOCKHOLDERS


                                      146

                                                    Exhibit 99, Page 2 of 26

                           REPORT OF MANAGEMENT

The Stockholders
Conrail Inc.

Management is responsible for the preparation, integrity and objectivity 
of the Company's consolidated financial statements. The consolidated 
financial statements are prepared in conformity with accounting principles 
generally accepted in the United States of America and include amounts 
based on management's best estimates and judgment.

The Company maintains a system of internal accounting controls and 
procedures, which is continually reviewed and supported by written 
policies and guidelines and supplemented by internal audit services.  
The system provides reasonable assurance that assets are safeguarded 
against loss from unauthorized use and that the books and records reflect 
the transactions of the Company and are reliable for the preparation of 
financial statements.  The concept of reasonable assurance recognizes 
that the cost of a system of internal accounting controls should not 
exceed the benefits derived and also recognizes that the evaluation of 
these factors necessarily requires estimates and judgments by
 management.

The Company's consolidated financial statements are audited by its 
independent accountants.  Their audit is conducted in accordance with 
auditing standards generally accepted in the United States of America 
and includes a study and evaluation of the Company's system of 
internal accounting controls to determine the nature, timing and extent 
of the auditing procedures required for expressing an opinion on the 
Company's financial statements.

The Company's Board of Directors, which is comprised of an equal number 
of directors from Norfolk Southern Corporation ("NSC") and CSX 
Corporation ("CSX"), pursues its oversight responsibilities for the 
consolidated financial statements and corporate conduct through 
periodic meetings with and written reports from the Company's management.




/s/ Gregory R. Weber

Gregory R. Weber
President and Chief
Executive Officer



/s/ Patrick F. Rogers

Patrick F. Rogers
Assistant Vice President-
Accounting and Tax




January 21, 2002

                                      147

                                                      Exhibit 99, Page 3 of 26


				INDEPENDENT AUDITORS' REPORT


The Stockholders and Board of Directors 
Conrail Inc.:


We have audited the accompanying consolidated balance sheets of Conrail 
Inc. and subsidiaries as of December 31, 2001 and 2000, and the related 
consolidated statements of income, stockholders' equity, and cash flows 
for each of the years in the three-year period ended December 31, 2001.  
These consolidated financial statements are the responsibility of the 
Company's management.  Our responsibility is to express an opinion on 
these consolidated financial statements based on our audits.  

We conducted our audits in accordance with auditing standards generally 
accepted in the United States of America.  These standards require that 
we plan and perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material misstatement.  
An audit includes examining, on a test basis, evidence supporting the 
amounts and disclosures in the financial statements.  An audit also 
includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits provide 
a reasonable basis for our opinion. 

In our opinion, the consolidated financial statements referred to 
above present fairly, in all material respects, the financial position 
of Conrail Inc. and subsidiaries as of December 31, 2001 and 2000, 
and the results of their operations and their cash flows for each 
of the years in the three-year period ended December 31, 2001, 
in conformity with accounting principles generally accepted in the 
United States of America.   




/s/ KPMG LLP                              /s/ Ernst & Young LLP

KPMG LLP                                  Ernst & Young LLP
Norfolk, Virginia	                        Jacksonville, Florida	



January 21, 2002




                                       148

                                                     Exhibit 99, Page 4 of 26

                                   CONRAIL INC.
                         CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                  Years ended December 31,   
($ In Millions)                                2001         2000         1999
--------------                                 ----         ----         ----
<S>                                          <C>           <C>          <C>
Revenues - NSC/CSX (Note 2)                  $   823       $   886      $   549   
Revenues - Third parties                          80            99        1,625
                                              ------        ------       ------

      Total operating revenues                   903           985        2,174
                                              ------        ------       ------
	
Operating expenses (Note 3)			
  Compensation and benefits	                   158	         195          645
  Fuel	                                       7	          10           63
  Material, services and rents	             143           162          590
  Depreciation and amortization                  325	         331          328
  Casualties and insurance  	                   (13)           33          228
  Other 	                                      19            18          192
                                              ------        ------       ------

    Total operating expenses                     639           749        2,046
                                              ------        ------       ------

Income from operations                           264           236          128
Interest expense                                (109)         (124)        (150)
Other income, net (Note 10) 	                   103           155           67
                                              ------        ------       ------	

Income before income taxes                       258           267           45
 
Income taxes (Note 7)                             84            97           19
                                              ------        ------       ------

Net income	                                 $   174       $   170      $    26
                                              ======        ======       ======
</TABLE>




See accompanying notes to the consolidated financial statements.

                                  149

                                                      Exhibit 99, Page 5 of 26

                              CONRAIL INC.
                     CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                       December 31,
($ In Millions)	                                   2001	    2000
--------------                                       ----       ----
<S>                                                 <C>        <C>
  ASSETS
Current assets		
  Cash and cash equivalents	                      $    34    $    50
  Accounts receivable	                                 32         33
  Due from NSC/CSX (Note 2)                             172        232
  Notes receivable from NSC/CSX (Note 2)	              515         91
  Material and supplies	                                  9          9
  Deferred tax assets (Note 7)                           76         96
  Other current assets                           	    8	         9
                                                     ------     ------
     Total current assets	                          846        520
Property and equipment, net (Note 4)	            6,688	     6,996
Other assets                                     	  548	       544
                                                     ------     ------

     Total assets	                                  $ 8,082	   $ 8,060
                                                     ======     ======

                  LIABILITIES AND STOCKHOLDERS' EQUITY		
Current liabilities 		
  Current maturities of long-term debt (Note 6)	         60         61
  Accounts payable      	                           41         68
  Due to NSC/CSX (Note 2)	                           12	        31  
  Wages and employee benefits	                           37         42
  Casualty reserves	                                101        127
  Accrued and other current liabilities (Note 5)        157        106
                                                     ------     ------
     Total current liabilities	                    408        435
Long-term debt (Note 6)	                              1,156	     1,229
Casualty reserves	                                      134	       189
Deferred income taxes (Note 7)	                  1,833      1,938
Other liabilities                                       446	       287
                                                     ------     ------

     Total liabilities                                3,977	     4,078
                                                     ------     ------
	
Commitments and contingencies (Note 11)		
Stockholders' equity (Notes 3, 8 and 9)		
  Common stock ($1 par value; 100 shares 
    authorized, issued and outstanding)	               --         --
  Additional paid-in capital	                        2,221      2,222
  Unearned ESOP compensation                             --	       (20)
  Retained earnings                                   1,954	     1,780
  Accumulated other comprehensive loss                  (70)        --
                                                     ------     ------

     Total stockholders' equity                       4,105      3,982
                                                     ------     ------
	
     Total liabilities and stockholders' equity     $ 8,082    $ 8,060
                                                     ======     ======
</TABLE>


See accompanying notes to the consolidated financial statements.


                                                           150


<TABLE>
                                                                                            Exhibit 99, Page 6 of 26

                                                       CONRAIL INC.
                                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY



<CAPTION>
                                                                                               Accumulated
                                            Additional         Unearned                           Other
                                             Paid-In             ESOP           Retained       Comprehensive
($ in Millions)                              Capital         Compensation       Earnings           Loss               Total
--------------                              ----------       ------------       --------       -------------          -----
<S>                                          <C>                <C>             <C>               <C>                <C>   
Balance, January 1, 1999                     $   2,291          $   (75)        $   1,584	        $      --          $  3,800
   Net Income                                                                          26                                  26
   Transfer of portion of prepaid pension
    assets to NSC and CSX (Note 8)                 (54)                                                                   (54)
   Allocation of unearned ESOP compensation                          55                                                    55
   Other                                            (8)                                                                    (8)
                                              --------           ------          --------          --------           -------

Balance, December 31, 1999                       2,229              (20)            1,610                --             3,819
   Net Income                                                                         170                                 170
   Other                                            (7)                                                                    (7)
                                              --------           ------          --------          --------           -------

Balance, December 31, 2000                       2,222              (20)            1,780                --             3,982

Comprehensive income - 2001
   Net Income                                                                         174                                 174
   Minimum pension liability, net of 
    $45 million income taxes (Note 8)                                                                   (70)              (70)
                                                                                                                      -------
   Total comprehensive income                                                                                             104

   Allocation of unearned ESOP compensation         (1)              20                                                    19
                                              --------           ------          ---------        ---------           -------

Balance, December 31, 2001                   $   2,221          $    --         $    1,954       $      (70)         $  4,105
                                              ========           ======          =========        =========           =======
</TABLE>



See accompanying notes to the consolidated financial statements.



                                           151

                                                      Exhibit 99, Page 7 of 26

                                       CONRAIL INC.
                         CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                            Years ended December 31,
($ In Millions)                                          2001         2000         1999
--------------                                           ----         ----         ----
<S>                                                     <C>          <C>          <C>	
Cash flows from operating activities
  Net income                                            $  174       $  170       $   26
  Adjustments to reconcile net income to
   net cash provided by operating activities:
     Depreciation and amortization	                       325          331          328
     Deferred income taxes                                 (18)         101           48
     Gains from sales of property	                        (2)	      (70)          (6)
     Pension credit                                        (19)         (12)         (45)
     Dividends from affiliated companies                    --           55           --
     Changes in:			
      Accounts receivable                                    1           18          529
      Accounts and wages payable                           (32)           8         (431)
      Due from NSC/CSX                                      60          (36)        (196)
      Due to NSC/CSX                                       (19)        (128)         159
     Other                                                  32          (75)         (16)
                                                         -----        -----        -----
	  
      Net cash provided by operating
       activities                              	           502          362          396
                                                         -----        -----        -----

Cash flows from investing activities			
  Property and equipment acquisitions                      (47)        (220)        (176)
  Notes receivable from NSC/CSX                           (424)         125         (216)

  Proceeds from disposals of properties                     14           86            6
  Other                                        	  	      --           (7)         (14)
                                                         -----        -----        -----

      Net cash used in investing 
       activities                                         (457)         (16)        (400)
                                                         -----        -----        -----
	
Cash flows from financing activities			
  Payment of long-term debt                                (61)        (318)        (112)
                                                         -----        -----        -----

    	Net cash used in financing
       activities                                          (61)        (318)        (112)
                                                         -----        -----        -----
	
Increase(decrease) in cash and cash equivalents	           (16)          28         (116)

Cash and cash equivalents
  Beginning of year                                         50           22          138
                                                         -----        -----        -----

  End of year                                           $   34       $   50       $   22
                                                         =====        =====        =====
</TABLE>


See accompanying notes to the consolidated financial statements.


                                   152

                                                      Exhibit 99, Page 8 of 26
			
                               CONRAIL INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies


     Description of Business
		
     Conrail Inc. ("Conrail") is a holding company whose principal 
subsidiary is Consolidated Rail Corporation ("CRC"), the major freight 
railroad in the Northeast. Norfolk Southern Corporation ("NSC") and CSX 
Corporation ("CSX"), the major railroads in the Southeast, jointly control 
Conrail through their ownership interests in CRR Holdings LLC ("CRR"), 
whose primary subsidiary is Green Acquisition Corporation ("Green 
Acquisition"), which owns Conrail. NSC and CSX have equity interests in 
CRR of 58% and 42%, respectively, and voting interests of 50% each. From 
May 23, 1997, the date NSC and CSX completed their acquisition of Conrail 
stock, until June 1, 1999, Conrail's operations continued substantially 
unchanged while NSC and CSX awaited regulatory approvals and prepared for 
the integration of their respective Conrail routes and assets to be leased 
to their railroad subsidiaries, Norfolk Southern Railway Company ("NSR") and 
CSX Transportation, Inc. ("CSXT"). The operations of CRC substantially 
changed beginning June 1, 1999, when NSC and CSX began operating a portion 
of the Conrail properties under operating agreements (the "Closing Date")
(Note 2).

     Beginning June 1, 1999, Conrail's major sources of operating revenues 
are operating fees and lease rentals from NSC and CSX.  The composition of 
CRC's operating expenses also reflects this change in operations.  As a 
result, Conrail's 1999 results reflect the freight railroad operations of 
CRC through May 31, 1999, and reflect Conrail's new structure and 
operations that commenced on the Closing Date (Note 2).

     Principles of Consolidation

     The consolidated financial statements include Conrail and majority-
owned subsidiaries. Investments in 20% to 50% owned companies are 
accounted for by the equity method.

                                   153

 
                                                     Exhibit 99, Page 9 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


     Cash Equivalents
	
     Cash equivalents consist of commercial paper, certificates of 
deposit and other liquid securities purchased with a maturity of three 
months or less, and are stated at cost which approximates market value.

     Material and Supplies

     Material and supplies consist of maintenance material valued at 
the lower of cost or market.

     Property and Equipment

     Property and equipment are recorded at cost.  Expenditures, 
including those on leased assets, that extend an asset's useful life 
or increase its utility are capitalized.  Maintenance expense is 
recognized when repairs are performed.  Depreciation is provided using 
the composite straight-line method over estimated service lives.  In 2001, 
the overall depreciation rate averaged 3.5% for all roadway and equipment. 
The cost (net of salvage) of depreciable property retired or replaced in 
the ordinary course of business is charged to accumulated depreciation 
and no gain or loss is recognized.

     Asset Impairment

     Long-lived assets are reviewed for impairment whenever events or 
changes in circumstances indicate that the carrying amount of an asset 
may not be recoverable.  Expected future cash flows from the use and 
disposition of long-lived assets are compared to the current carrying 
amounts to determine the potential impairment loss.

     Revenue Recognition

     Revenue prior to June 1, 1999, was recognized proportionally as a 
shipment moved on the Conrail system from origin to destination.  Beginning 
June 1, 1999, the Company's major sources of revenues are from NSC and 
CSX, primarily in the form of rental revenues and operating fees which 
are recognized when earned. Conrail continues to have third party 
revenues, which are recognized when earned, related to the operations 
of Indiana Harbor Belt Railroad Company, a 51% owned terminal 
railroad subsidiary. 

                                   154

                                                     Exhibit 99, Page 10 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     Use of Estimates

     The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities, 
the disclosure of contingent assets and liabilities at the date of the 
financial statements and the reported amounts of revenues and expenses 
during the reporting period. Management reviews its estimates, including 
those related to the recoverability and useful lives of assets as well 
as liabilities for litigation, environmental remediation, casualty 
claims, income taxes, pension and postretirement benefits. Changes in 
facts and circumstances may result in revised estimates.
 
2.   Related Parties Transactions

     Background

     On May 23, 1997, NSC and CSX completed their joint acquisition of 
Conrail stock.  On June 17, 1997, NSC and CSX executed an agreement which 
generally outlines the methods of governing and operating Conrail and its 
subsidiaries ("Transaction Agreement").  On July 23, 1998, the Surface 
Transportation Board ("STB") issued a written opinion that permitted NSC 
and CSX to exercise operating control of Conrail beginning August 22, 1998.  
On June 1, 1999, NSC and CSX began to operate over certain Conrail lines.

     Commencement of Operations by NSR and CSXT

     On June 1, 1999, the majority of CRC's routes and assets were 
segregated into separate subsidiaries of CRC, Pennsylvania Lines LLC 
("PRR") and New York Central Lines LLC ("NYC"). PRR and NYC entered into 
separate but identical operating and lease agreements with NSR and CSXT, 
respectively, (the "Operating Agreements") which govern substantially all 
nonequipment assets to be used by NSR and CSXT and have initial 25-year 
terms, renewable at the options of NSR and CSXT for two 5-year terms.  
Payments made under the Operating Agreements are based on appraised values 
that are subject to adjustment every six years to reflect changes in such 
values.  NSR and CSXT have also leased or subleased certain equipment 
assets at rentals based on appraised values for varying term lengths from 
PRR and NYC, respectively, as well as from CRC.

                                   155

                                                     Exhibit 99, Page 11 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     NSC and CSX have also entered into agreements with CRC governing 
other Conrail properties that continue to be owned and operated by Conrail 
("the Shared Assets Areas"). NSR and CSXT pay CRC a fee for joint and 
exclusive access to the Shared Assets Areas.  In addition, NSR and CSXT 
pay, based on usage, the costs incurred by CRC to operate the Shared Assets 
Areas plus a profit factor.

     Payments made by NSR to Conrail under the Shared Assets agreements were 
$168 million and $117 million during 2001 and 2000, respectively, of which 
$27 million and $17 million, were minimum rents.  Payments made by CSXT to 
Conrail under the Shared Assets agreements were $140 million and $107 million
during 2001 and 2000, respectively, of which $19 million and $12 million, 
were minimum rents.  

     Payments from NSR under the Operating Agreements to PRR amounted to 
$331 million and $346 million during 2001 and 2000, respectively.  Payments 
from CSXT under the Operating Agreements to NYC amounted to $241 million 
and $249 million during 2001 and 2000, respectively.  In addition, costs 
necessary to operate and maintain the related assets under these 
agreements, including leasehold improvements, are borne by NSR and CSXT. 

     Future minimum lease payments to be received from NSR/CSXT are 
as follows:



<TABLE>
<CAPTION>
                      NSR          NSR           CSX            CSX
($ in millions)      To PRR      To CRC         To NYC         To CRC         Total

<S>                  <C>           <C>          <C>              <C>         <C>
2002                 $  327        $ 27         $  240           $ 19        $   613
2003                    326          30            235             21            612
2004                    331          32            239             23            625
2005                    318          34            231             24            607
2006                    303          34            221             24            582
2007 and Beyond       4,701         618          3,425            449          9,193
                      -----         ---          -----            ---         ------
   Total             $6,306        $775         $4,591           $560        $12,232
                      =====         ===          =====            ===         ======

</TABLE>


                                   156

                                                      Exhibit 99, Page 12 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     Related Party Balances and Transactions

     "Due from NSC/CSX" at December 31, 2001 and 2000, is primarily 
comprised of amounts due for the above-described operating and 
rental activities.  

     PRR and NYC have interest-bearing notes receivable, payable on demand 
from NSC and CSX of $301 million and $214 million, respectively, at 
December 31, 2001, included in the "Notes receivable from NSC/CSX" line 
item on the balance sheet.  The notes receivable balances due from 
NSC and CSX were $51 million and $40 million, respectively, at 
December 31, 2000.  The interest rates on the notes receivable from 
NSC and CSX are variable and were both 2.45% at December 31, 2001.  
Interest income related to the PRR and NYC notes receivable was $13 million 
in 2001, $10 million in 2000 and $4 million in 1999.

     "Due to NSC/CSX" includes amounts related to service provider 
agreements with both NSC and CSX to provide such services as accounting 
and administrative processing, personal injury and environmental case 
handling and other miscellaneous services ("Service Provider Agreements").  
Additionally, "Due to NSC/CSX" includes amounts payable for rentals of 
locomotive and other equipment rentals; rental of various facilities 
CRC has occupied subsequent to May 31, 1999; and completion of various 
1999 capital projects.  Also in 2000, CRC paid NSC and CSX $42 million 
and $24 million, respectively, for CRC's vacation liability related to 
the portion of its workforce that became NSC and CSX employees subsequent 
to May 31, 1999. 

                                   157

                                                     Exhibit 99, Page 13 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 
     A summary of the "Due to NSC and CSX"  activity for the services
described above follows:
							


<TABLE>
<CAPTION>
                                    Payments                      Payments
                                     to NSC                        to CSX
($ in millions)                    2001    2000                  2001    2000
--------------                     ----    ----                  ----    ----
<S>                                <C>    <C>                  <C>      <C>
Service Provider Agreements        $ 6    $  9                 $   -    $  2
Material purchases                  31      35                     -       -
Rentals of locomotives and
  other equipment                    8       8                     5       4
Rental of facilities                 -       -                     1       5
Capital project activities          17      86                     3     122
Vacation liability                   -      42                     -      24
                                    --     ---                   ---     ---
  Total payments                   $62    $180                  $  9    $157
                                    ==     ===                   ===     ===


                                  2001    2000                   2001    2000
                                  ----    ----                   ----    ----
Due to "NSC and CSX" at 
 December 31                       $ 9    $ 29                  $  3    $  2 
</TABLE>



     From time to time, NSC and CSX, as the indirect owners of Conrail, may 
need to provide some of Conrail's cash requirements through capital 
contributions, loans or advances. Through December 31, 2001 there have been 
no transactions under these arrangements.

     Prior to the Closing Date, the Company interchanged freight with both 
NSC and CSX for transport to destinations both within and outside of 
Conrail's service region.  The Company shares ownership interests with 
either one or both railroads in various transportation-related entities, 
all of which are immaterial to the Company's operating results and 
financial position.  

                                   158

                                                     Exhibit 99, Page 14 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3.   Transition, Acquisition-Related and Other Items

     During the fourth quarter of 2001, the Company received cash proceeds 
totaling $42 million from several London-based insurance carriers as 
settlement for current and future exposures related to personal injury, 
occupational, environmental and other claims. The Company ecognized a 
pretax gain of $14 million, which is included in the Casualties and 
insurance" line item of the income statement for 2001.

     During the second quarter of 2001, the Company received a $50 million 
cash payment for transferring to a third party certain of its rights to 
license, manage and market signboard advertising on the Company's property 
for 25 years. The payment is being recognized into other income on a 
straight-line basis over the 25 year contract period. 

     During 2001, accrued termination payments totaling $15 million were 
made to 107 non-union employees whose non-executive positions were 
eliminated as a result of the joint acquisition of Conrail. Most of 
these termination payments have been made in the form of supplemental 
retirement benefits from the Company's pension plan. During 2000 and 
1999 accrued termination payments of $50 million and $77 million were 
made, respectively. The remaining amount of this liability is expected 
to be paid out within the next year. 

     Also during 2001, the Company made final settlement of a long-term 
liability related to the non-union Employee Stock Ownership (ESOP) 
termination, which has not required use of the Company's cash for 
settlement. The liability, the balance of which was $20 million at 
December 31, 2000,  was settled as the remaining cash proceeds held 
by the ESOP as a result of selling its ESOP preferred stock in 
conjunction with the joint acqusition, were allocated to eligible 
participants.

     During the first quarter of 2000, the Company completed a significant 
property sale and recognized a gain of $61 million on the sale ($37 million 
after income taxes), which is included in "Other income, net" (Note 10).

                                   159

                                                     Exhibit 99, Page 15 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     During 1999, the Company recorded net expenses of $138 million 
($85 million after income taxes) for adjustments to certain litigation and 
environmental reserves related to settlements and completion of site 
reviews and, in accordance with the Transaction Agreement, for the 
method of settlement of certain casualty liabilities based on an 
actuarial study and for the assumption of a lease obligation by a 
subsidiary of CSX.  The effects of these adjustments are reflected in 
the "Casualties and insurance" and "Other" operating expense line items 
of the income statement for 1999. 

     In 1997, the Company recorded a long-term liability of $110 million in 
connection with employment "change in control" agreements with certain 
executives, which became operative as a result of the joint acquisition of 
Conrail.  A portion of the benefits under these agreements, $68 million, 
was paid in 1998 from the Employee Benefits Trust ("EBT").  In 2001, 
additional payments of $9 million were made primarily from the Company's 
pension plan.  The remaining amount will be paid out at the discretion of 
the executives participating in this program.


4.	Property and Equipment

<TABLE>
<CAPTION>
                                                   December 31,
                                                2001          2000
                                                ----          ----
                                                  (In millions)

<S>                                           <C>            <C>
Roadway                                       $ 7,496        $ 7,500
Equipment                                       1,519          1,573
 Less:  Accumulated depreciation               (2,570)        (2,340)
                                               ------         ------
                                                6,445          6,733
                                               ------         ------

Capital leases (primarily equipment)              616            645
Accumulated amortization                         (373)          (382)
                                               ------         ------
                                                  243            263
                                               ------         ------
                                              $ 6,688	       $ 6,996
                                               ======         ======
</TABLE>


Substantially all assets are leased to NSR or CSXT (Note 2).

                                   160

                                                     Exhibit 99, Page 16 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5.    Accrued and Other Current Liabilities


<TABLE>
<CAPTION>
                                                   December 31,
                                                2001          2000
                                                ----          ----
                                                  (In Millions)

<S>                                            <C>          <C>
Operating leases                               $   45       $   38
Property and corporate taxes                       37           36
Income taxes payable                               27          (21)
Other                                              48           53
                                                -----        -----
                                               $  157       $  106
                                                =====        =====
</TABLE>



6.   Long-Term Debt and Leases

     Long-term debt

     Long-term debt outstanding, including the weighted average interest 
rates at December 31, 2001, is composed of the following:


<TABLE>
<CAPTION>
                                                     December 31,
                                                  2001          2000
                                                  ----          ----
                                                     (In Millions)

<S>                                              <C>           <C>
Capital leases                                   $   208       $   262
Debentures payable,7.88%,due 2043                    250           250
Debentures payable,9.75%,due 2020                    550           550
Equipment and other obligations,6.92%                208           228
                                                  ------        ------
                                                   1,216         1,290
Less current portion                                 (60)          (61)
                                                  ------        ------
                                                 $ 1,156       $ 1,229
</TABLE>


     Interest payments were $113 million in 2001, $121 million in 2000 
and $149 million in 1999.

     Equipment and other obligations mature in 2002 through 2043 and are 
collateralized by assets with a net book value of $230 million at 
December 31, 2001.  Maturities of long-term debt other than capital 
leases are $19 million in 2002, $20 million in 2003, $21 million in 
2004, $20 million in 2005, $21 million in 2006 and $907 million in 
total from 2007 through 2043.

                                   161

                                                     Exhibit 99, Page 17 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     Leases

     The Company's noncancelable long-term leases generally include 
options to purchase at fair value and to extend the terms.  Capital leases 
have been discounted at rates ranging from 3.09% to 14.26% and are 
collateralized by assets with a net book value of $243 million at 
December 31, 2001.

    Minimum commitments, exclusive of executory costs borne by the 
Company, are:


<TABLE>
<CAPTION>
                                                   Capital       Operating
                                                   Leases         Leases
                                                   -------       ---------
                                                        (In Millions)
<S>                                                <C>             <C>
2002                                               $   56          $   62
2003                                                   52              53
2004                                                   53              53
2005                                                   38              56
2006                                                   24              54
2007 - 2025                                            56             358
                                                    -----           -----
   Total                                           $  279          $  636
                                                                    =====
Less interest portion                                 (71)
                                                    -----
Present value                                      $  208
                                                    =====
</TABLE>


Operating lease rent expense was $70 million in 2001, $75 million in 
2000 and $120 million in 1999.


7.	Income Taxes
	
The provisions for income taxes are composed of the following:


<TABLE>
<CAPTION>
                                                2001        2000        1999
                                                ----        ----        ----
                                                       (In Millions)

<S>                                            <C>         <C>         <C>
Current
   Federal                                     $   77      $   (5)     $  (30)
   State                                           25           1           1
                                                -----       -----       -----
                                                  102          (4)        (29)
                                                -----       -----       -----

Deferred
   Federal                                        (22)         81          52
   State                                            4          20          (4)
                                                -----       -----       -----
                                                  (18)        101          48
                                                -----       -----       -----
                                               $   84      $   97      $   19
                                                =====       =====       =====
</TABLE>


                                   162

                                                     Exhibit 99, Page 18 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     Reconciliation of the U.S. statutory tax rates with the effective tax 
rates is as follows:


<TABLE>
<CAPTION>
                                                 2001        2000        1999
                                                 ----        ----        ----

<S>                                             <C>         <C>         <C>
Statutory tax rate                              35.0%       35.0%       35.0%
State income taxes,
  net of federal benefit                         4.2         4.2         4.2
Nondeductible transition 
  and acquisition-related costs                    -           -        23.9
Settlement of state tax issues                  (3.5)          -           -
Other                                           (3.1)       (2.9)      (20.9)
                                                ----        ----       -----
Effective tax rate                              32.6%       36.3%       42.2%
                                                ====        ====       =====
</TABLE>



     The Company has reached final settlements with the Internal Revenue 
Service ("IRS") related to all of the audits of the Company's 
consolidated federal income tax returns through fiscal year 1995. 
The Company's consolidated federal income tax returns for April 30, 
1996, December 31, 1996 and May 23, 1997, are currently being examined 
by the IRS. Federal and state income tax payments were $86 million in 
2001, $3 million in 2000 and $38 million in 1999.

     Significant components of the Company's deferred income tax 
liabilities (assets) are as follows:


<TABLE>
<CAPTION>
                                                          December 31,
                                                       2001          2000
                                                       ----          ----
                                                          (In Millions)

<S>                                                   <C>           <C>
Current assets                                        $   57        $   29
Current liabilities                                     (125)         (117)
Miscellaneous                                             (8)           (8)
                                                       -----         -----
Current deferred tax asset, net                       $  (76)       $  (96)
                                                       =====         =====

Noncurrent liabilities:		
  Property and equipment                               2,008         2,049
  Other long-term assets (primarily prepaid
   pension asset)                                        127            93
  Other (mostly equipment obligations)                    64           117
                                                       -----         -----
                                                       2,199         2,259
                                                       -----         -----

                                   163

                                                     Exhibit 99, Page 19 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Noncurrent assets:
  Nondeductible reserves and other liabilities          (245)         (204)
  Tax benefit transfer receivable                        (36)          (36)
  Other (mostly equity investments)                      (85)          (81)
                                                       -----         -----
                                                        (366)         (321)
                                                       -----         -----
Deferred income tax liabilities, net                  $1,833        $1,938
                                                       =====         =====
</TABLE>



8.   Pension and Postretirement Benefits

     The Company and its subsidiaries sponsor several qualified and 
nonqualified pension plans and other postretirement benefit plans for 
its employees.

     During 1999, the Company transferred approximately $350 million and 
$260 million of pension assets to NSC and CSX, respectively.  NSC and CSX 
also assumed certain pension obligations related to former Conrail 
employees.  The net effect on Conrail's financial statements was to reduce 
pension assets by $89 million.  This transfer resulted in a $35 million 
reduction of deferred tax liabilities and is reflected as a capital 
distribution of $54 million.

                                   164

                                                     Exhibit 99, Page 20 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     The following tables provide a reconciliation of the changes in the 
plans' benefit obligations and fair value of assets over the two-year 
period ending December 31, 2001, and a statement of the funded status as 
of December 31 of both years:


<TABLE>
<CAPTION>
                                                                     Other Postretirement
                                          Pension Benefits                 Benefits
                                          ----------------           --------------------
(In Millions)                           2001            2000         2001            2000
------------                            ----            ----         ----            ----
<S>                                    <C>             <C>          <C>             <C>
Change in benefit obligation
----------------------------	
Net benefit obligation
 at beginning of year                  $  687          $  739       $   37          $   44
Service cost                                2               4            -               -
Interest cost                              45              51            3               3
Plan participant's contributions            -               -            5               6
Plan amendments                             -               -            -              (1)
Actuarial (gains) losses                   16               5            -              (5)
Benefits paid                             (88)           (112)          (9)            (10)
                                        -----           -----        -----           -----
Net benefit obligation
 at end of year                        $  662          $  687       $   36          $   37

Change in plan assets
---------------------
Fair value of plan assets
 at beginning of year                  $  720          $  791       $    8          $    8
Actual return on plan assets              (20)             40            1               1
Employer contributions                      1               1            3               3
Plan participant's contributions            -               -            5               6
Benefits paid                             (88)           (112)          (9)            (10)
                                        -----           -----        -----           -----
Fair value of plan assets
 at end of year                        $  613          $  720       $    8          $    8
Funded status at
 end of year                           $  (49)         $   33       $  (28)         $  (29)
Unrecognized transition asset               -              (2)           -               -
Unrecognized prior service cost             8               9           (1)             (1)
Unrecognized actuarial
 (gains)losses                            111               8          (11)            (12)
                                        -----           -----        -----           -----  
Net amount recognized at
 year end                              $   70          $   48       $  (40)         $  (42)
                                        =====           =====        =====           =====
</TABLE>


                                   165

                                                     Exhibit 99, Page 21 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     The following amounts have been recognized in the balance sheets as 
of December 31:


<TABLE>
<CAPTION>
                                                                       Other Postretirement
                                           Pension Benefits                  Benefits
                                           ----------------            --------------------
(In Millions)                            2001            2000          2001            2000
------------                             ----            ----          ----            ----
<S>                                     <C>             <C>           <C>             <C>
Prepaid pension cost                    $  110          $   92        $    -          $    -
Accrued benefit cost                      (163)            (44)          (40)            (42)
Intangible asset                             8               -             -               -
Accumulated other comprehensive loss       115               -             -               -
                                         -----           -----         -----           -----
                                        $   70          $   48        $  (40)         $  (42)
                                         =====           =====         =====           =====
</TABLE>



     All of the Company's plans for postretirement benefits other than 
pensions have no plan assets except for the retiree life insurance plan, 
which had $8 million of assets in both 2001 and 2000.  The aggregate 
benefit obligation for the postretirement plans other than pensions was 
$36 million and $37 million at December 31, 2001 and 2000, respectively. 

     The projected benefit obligation, accumulated benefit obligation and 
fair value of plan assets for the pension plans with accumulated benefit 
obligations in excess of plan assets were $656 million, $655 million and 
$605 million, respectively, as of December 31, 2001 and $45 million, 
$45 million and $0, respectively as of December 31, 2000.  As required by 
Statement of Financial Accounting Standard No. 87 "Employers' Accounting 
for Pensions", the Company recorded an additional minimum liability of 
$123 million at December 31, 2001. The additional liability was partially 
offset by an intangible asset to the extent of previously unrecognized 
prior service costs of $8 million at December 31, 2001.  The remaining 
amount is recorded as a component of stockholders' equity, net of related 
tax benefits as "Accumulated Other Comprehensive Loss". 

                                   166

                                                     Exhibit 99, Page 22 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     The assumptions used in the measurement of the Company's benefit 
obligation are as follows:


<TABLE>
<CAPTION>
                                                               Other Postretirement
                                     Pension Benefits                Benefits
                                     ----------------          --------------------
                                   2001            2000        2001            2000
                                   ----            ----        ----            ----
<S>                                <C>             <C>         <C>             <C>
Discount rate                      7.25%           7.50%       7.25%           7.50%
Expected return on plan assets     9.00%           9.00%       8.00%           8.00%
Rate of compensation increase      5.00%           5.00%       5.00%           5.00%
</TABLE>


     A 6.5% annual rate of increase in the per capita cost of covered 
health care benefits was assumed for 2002, gradually decreasing to 6% by 
the year 2007.

     Assumed health care cost trend rates have a significant effect on the 
amounts reported for the health care plans.  The effect of a one percentage 
point increase and (decrease) in the assumed health care cost trend rate on 
the accumulated postretirement benefit obligation is $1 million and 
$(1) million, respectively. 

     The components of the Company's net periodic benefit cost for the 
plans are as follows:


<TABLE>
<CAPTION>
                                                                          Other Postretirement
                                             Pension Benefits                   Benefits
                                             ----------------             --------------------
(In Millions)                            2001      2000      1999      2001       2000       1999
------------                             ----      ----      ----      ----       ----       ----
<S>                                     <C>       <C>       <C>       <C>        <C>        <C>
Service cost                            $    2    $    4    $   10    $    -     $    -     $    -
Interest cost                               45        51        53         3          3          4
Expected return on assets                  (66)      (70)      (94)       (1)        (1)        (1)
Curtailment (gain) loss                      -         -        19         -          -         (4)
Amortization of:
  Transition asset                          (1)       (1)      (11)        -          -          -
  Prior service cost                         1         1         4         -          -          -
  Actuarial (gain)loss                      (1)        1        (8)       (1)        (1)         -
                                         -----     -----     -----     -----      -----      -----
                                        $  (20)   $  (14)   $  (27)   $    1     $    1     $   (1)
                                         =====     =====     =====     =====      =====      =====
</TABLE>


                                   167

                                                     Exhibit 99, Page 23 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     Savings Plans

     The Company and certain subsidiaries provide 401(k) savings plans for 
union and non-union employees.  Under the Company's current non-union savings 
plan, 50% of employee contributions are matched for the first 6% of a 
participating employee's base pay and 25% of employee contributions are 
matched in excess of 10% of a participating employee's base pay.  Savings 
plan expense related to the current non-union savings plan was $1 million 
in 2001, 2000 and 1999. There is no Company match provision under the union 
employee plan except for certain unions, which negotiated a Company match as 
part of their contract provisions.

     Incentive Compensation Plans

     The Company has an incentive compensation plan for all non-union 
employees in which employees receive targeted cash awards upon attainment 
of certain performance criteria established by the Company's Board of 
Directors. Compensation expense under this plan was $2 million in 2001, 
$5 million in 2000 and $0 in 1999.

     The Company also has a long-term incentive plan under which the 
Company grants phantom stock options to officers and other key non-union 
employees. The option price for the phantom shares are equal to the blended 
fair market value of NSC and CSX common stock at the date of grant. Options 
will vest one year after grant date and the option term may not exceed ten 
years. Upon exercise, eligible participants will receive cash payments equal 
to the appreciation on the composite NSC and CSX common stock fair values.  
Compensation expense for this plan was $2 million in 2001 and $0 in both 
2000 and 1999.

9.   Stockholders' equity

     Common Stock

     On May 23, 1997, the NSC/CSX joint tender offer for the remaining 
outstanding shares of Conrail's common and preferred stock was concluded, 
and on June 2, 1997, Conrail became the surviving corporation in a merger 
with Green Merger Corp. and remained the only subsidiary of Green 
Acquisition, an entity jointly-owned by NSC and CSX.  As a result, the 
remaining outstanding capital stock of Conrail was acquired by NSC and 
CSX and Green Acquisition was issued 100 shares  of Conrail's common stock.

                                   168

                                                     Exhibit 99, Page 24 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     Undistributed Earnings of Equity Investees

     "Retained earnings"  includes undistributed earnings of equity 
investees of $180 million, $157 million and $188 million at 
December 31, 2001, 2000 and 1999, respectively.
	

10.	Other Income, Net


<TABLE>
<CAPTION>
                                          2001        2000         1999
                                          ----        ----         ----
                                                  (In Millions)
<S>                                      <C>         <C>          <C>
Interest income                          $    21     $    21      $    19
Rental income                                 47          45           37
Property sales                                 2          70            6
Equity earnings of affiliates                 24          24           15
Other, net                                     9          (5)         (10)
                                          ------      ------       ------
                                         $   103     $   155      $    67
                                          ======      ======       ======
</TABLE>



11.  Commitments and Contingencies

     Environmental

     The Company is subject to various federal, state and local laws and 
regulations regarding environmental matters.  CRC is a party to various 
proceedings brought by both regulatory agencies and private parties under 
federal, state and local laws, including Superfund laws, and has also 
received inquiries from governmental agencies with respect to other 
potential environmental issues.  At December 31, 2001, CRC has received, 
together with other companies, notices of its involvement as a potentially 
responsible party or requests for information under the Superfund laws with 
respect to cleanup and/or removal costs due to its status as an alleged 
transporter, generator or property owner at 39 locations.  However, based 
on currently available information, the Company believes CRC may have some 
potential responsibility at only 36 of these sites.  Due to the number of 
parties involved at many of these sites, the wide range of costs of 
possible remediation alternatives, the changing technology and the length 
of time over which these matters develop, it is often not possible to 
estimate CRC's liability for the costs associated with the assessment and 
remediation of contaminated sites.

                                   169
                                                     Exhibit 99, Page 25 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     Although the Company's operating results and liquidity could be 
significantly affected in any quarterly or annual reporting period if CRC 
were held principally liable in certain of these actions, at December 31, 
2001, the Company had accrued $70 million, an amount it believes is 
sufficient to cover the probable liability and remediation costs that will 
be incurred at Superfund sites and other sites based on known information 
and using various estimating techniques. The Company anticipates that much 
of this liability will be paid out over five years; however some costs will 
be paid out over a longer period.  The Company believes the ultimate 
liability for these matters will not materially affect its consolidated 
financial condition.

     The Company spent $10 million in 2001 and $9 million each in 2000 
and 1999 for environmental remediation and related costs.  In addition, 
the Company's capital expenditures for environmental control and abatement 
projects were approximately $1 million each in 2000 and 1999.

     Casualty

     The Company is involved in various legal actions, principally relating 
to occupational health claims, personal injuries, casualties, property 
damage and damage to lading. The casualty claim liability is determined 
actuarially, based upon claims filed and an estimate of claims incurred but 
not yet reported.  During 2001, the Company experienced favorable claims 
development and, based on the actuarial studies, recorded a net reduction 
of expense of approximately $12 million, which is included in the 
"Casualties and insurance" line item of the income statement.  While the 
ultimate amounts of claims incurred are dependent upon future developments, 
in management's opinion, the recorded liability is adequate to cover 
expected probable payments. The Company is generally self-insured for 
casualty claims. Claims in excess of self-insurance levels are insured up 
to excess coverage limits.

     Labor 

     CRC had 1,544 employees at December 31, 2001; approximately 90% of 
whom are represented by 12 different labor organizations and are covered by 
16 separate collective bargaining agreements.  The Company was engaged in 
collective bargaining at December 31, 2001 with labor organizations 
representing approximately 79% of its labor force.

                                   170

                                                     Exhibit 99, Page 26 of 26
			
                               CONRAIL INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

     Guarantees

     CRC currently guarantees the principal and interest payments in the 
amount of $33 million on Equipment Trust Certificates for Locomotive 
Management Services, a general partnership of which CRC holds a fifty 
percent non-controlling interest. 

12.  Fair Values of Financial Instruments

     The fair values of "Cash and cash equivalents," "Accounts 
receivable," "Notes receivable from NSC/CSX" and  "Accounts payable"  
approximate carrying values because of the short maturity of these 
financial instruments.

     Using current market prices when available, or a valuation based on 
the yield to maturity of comparable debt instruments having similar 
characteristics, credit rating and maturity, the total fair value of the 
Company's long-term debt, including the current portion, but excluding 
capital leases, is $1,204 million and $1,150 million at December 31, 2001 
and 2000, respectively, compared with carrying values of $1,008 million and 
$1,028 million at December 31, 2001 and 2000, respectively.