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

FORM 10-Q

(X)     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2001

( )     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      (IRS Employer Identification No.)
incorporation or organization)

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

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

No Change
--------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)

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.  (X) Yes   ( ) No

The number of shares outstanding of each of the registrant's classes of 
Common Stock, as of the last practicable date:

Class                              Outstanding as of July 31, 2001
-----                              -------------------------------
Common Stock (par value $1.00)     385,325,681 (excluding 21,363,974
shares held by registrant's
consolidated subsidiaries)

2

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

Page
----

Part  I.  Financial Information:

Item 1.     Financial Statements:

Consolidated Statements of Income
Three and Six Months Ended 
June 30, 2001 and 2000                            3

Consolidated Balance Sheets
June 30, 2001 and Dec. 31, 2000                   4

Consolidated Statements of Cash Flows
Six Months Ended June 30, 2001 and 2000           5

Notes to Consolidated Financial Statements        6

Item 2.     Management's Discussion and Analysis of
Financial Condition and Results of 
Operations                                       13

Item 3.     Quantitative and Qualitative Disclosures
About Market Risks                               20

Part II.  Other Information:

Item 4.     Submission of Matters to a Vote of
Security Holders                                 21

Item 6.     Exhibits                                         21

Signatures                                                             22

Exhibit Index                                                          23

3

PART I.  FINANCIAL INFORMATION
------------------------------

Item 1. Financial Statements.
------  --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
($ in millions except per share amounts)
(Unaudited)

Three Months Ended    Six Months Ended
June 30,             June 30,
------------------    -----------------
2001          2000    2001         2000
----          ----    ----         ----

Railway operating revenues:
Coal                                    $   395   $   377    $   788     $   724
General merchandise                         922       942      1,793       1,857
Intermodal                                  275       273        551         519
------   ------     ------      ------
TOTAL RAILWAY OPERATING REVENUES      1,592     1,592      3,132       3,100
-----    ------     ------      ------

Railway operating expenses:
Compensation and benefits (Note 4)          502       516      1,021       1,171
Materials, services and rents               377       347        749         718
Conrail rents and services (Note 5)         106       124        211         245
Depreciation                                128       126        255         251
Diesel fuel                                 106       106        223         221
Casualties and other claims                  40        34         77          66
Other                                        51        61        109         122
------    ------     ------      ------
TOTAL RAILWAY OPERATING EXPENSES      1,310     1,314      2,645       2,794
------    ------     ------      ------
Income from railway operations                 282       278        487         306

Other income - net                              24        45         51          73
Interest expense on debt                      (139)     (139)      (280)       (279)
------    ------     ------      ------

Income from continuing
operations before income taxes        167       184        258         100

Provision for income taxes                      60        68         90          32
------    ------     ------      ------
Income from continuing operations       107       116        168          68

Discontinued operations - gain on sale of 
motor carrier, net of taxes (Note 3)          --        --         13          --
------    ------     ------      ------
NET INCOME                          $   107   $   116    $   181     $    68
======    ======     ======      ======

Per share amounts (Note 9):
Income from continuing
operations, basic and diluted          $  0.28   $  0.30    $  0.44     $  0.18
Net income, basic and diluted            $  0.28   $  0.30    $  0.47     $  0.18
Dividends                                $  0.06   $  0.20    $  0.12     $  0.40

See accompanying notes to Consolidated Financial Statements.

4

Item 1.     Financial Statements.  (continued)
------      --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
($ in millions)
(Unaudited)

June 30,        Dec. 31,
2001            2000
----            ----

ASSETS 
Current assets:
Cash and cash equivalents                         $      47        $      --
Short-term investments                                   --                2
Accounts receivable, net (Note 7)                       430              411
Due from Conrail (Note 5)                                 8               31
Materials and supplies                                   96               91
Deferred income taxes                                   175              182
Other current assets                                     55              132
--------         --------
Total current assets                                811              849

Investment in Conrail (Note 5)                           6,180            6,154
Properties less accumulated depreciation                11,249           11,105
Other assets                                               999              868
--------         --------
TOTAL ASSETS                                  $  19,239        $  18,976
========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt                                   $      24        $      --
Accounts payable                                        861              925
Income and other taxes                                  265              251
Notes and accounts payable to Conrail (Note 5)          285              155

Other current liabilities                               251              259
Current maturities of long-term debt                    605              297
--------         --------
Total current liabilities                         2,291            1,887

Long-term debt (Note 6)                                  7,072            7,339
Other liabilities                                        1,108            1,131
Minority interests                                          45               50
Deferred income taxes                                    2,746            2,745
--------         --------
TOTAL LIABILITIES                                13,262           13,152
--------         --------

Stockholders' equity:
Common stock $1.00 per share par value,
1,350,000,000 shares authorized; 
issued 406,604,756 and 405,421,447 shares,
respectively                                          407               405
Additional paid-in capital                              412               392
Accumulated other comprehensive loss (Note 10)          (10)               (6)
Retained income                                       5,188             5,053
Less treasury stock at cost, 21,363,974 shares          (20)              (20)
--------          --------
TOTAL STOCKHOLDERS' EQUITY                        5,977             5,824
--------          --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $  19,239         $  18,976
========          ========

See accompanying notes to Consolidated Financial Statements.

5

Item 1. Financial Statements.  (continued)
------  --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in millions)
(Unaudited)

Six Months Ended
June 30,
----------------
2001        2000
----        ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                 $   181     $   68
Reconciliation of net income to net cash
provided by operating activities:
Depreciation                                            262        258
Deferred income taxes                                     4         (8)
Equity in earnings of Conrail                           (26)       (10)
Gains and losses on properties and investments          (26)       (61)
Income from discontinued operations                     (13)        --
Changes in assets and liabilities affecting operations:
Accounts receivable (Note 7)                          (29)       432
Materials and supplies                                 (5)       (36)
Other current assets and due from Conrail             102        111
Current liabilities other than debt                   (52)       122
Other - net                                           (88)        10
-----      -----
Net cash provided by operating activities          310        886

CASH FLOWS FROM INVESTING ACTIVITIES: 
Property additions                                            (425)      (351)
Property sales and other transactions                           25         82
Investments, including short-term                              (59)       (43)
Investment sales and other transactions                         32         38
-----      -----
Net cash used for investing activities            (427)      (274)

CASH FLOWS FROM FINANCING ACTIVITIES: 
Dividends                                                      (46)      (153)
Common stock issued - net                                       13          1
Proceeds from borrowings                                     1,606        719
Debt repayments                                             (1,409)    (1,171)
-----      -----
Net cash provided by (used for)
financing activities                             164       (604)
-----      -----
Net increase in cash and cash equivalents           47          8

CASH AND CASH EQUIVALENTS:
At beginning of year                                            --         37
-----      -----
At end of period                                            $   47     $   45
=====      =====

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts capitalized)                    $  285     $  276
Income taxes                                             $   67     $    5

See accompanying notes to Consolidated Financial Statements.

6

Item 1. Financial Statements.  (continued)
------  --------------------

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

1.     In the opinion of Management, the accompanying unaudited interim 
financial statements contain all adjustments (consisting of normal 
recurring accruals) necessary to present fairly the Corporation's 
financial position as of June 30, 2001, its results of operations 
for the three and six months ended June 30, 2001 and 2000, and its 
cash flows for the six months ended June 30, 2001 and 2000.

Although Management believes that the disclosures presented are 
adequate to make the information not misleading, these Consolidated 
Financial Statements should be read in conjunction with:  (a) the 
financial statements and notes included in the Corporation's latest 
Annual Report on Form 10-K and in any subsequent Quarterly Reports 
on Form 10-Q and (b) any Current Reports on Form 8-K.

2.     Commitments and Contingencies

There have been no significant changes since year-end 2000 in the 
matters discussed in NOTE 17, COMMITMENTS AND CONTINGENCIES, appearing
in the NS Annual Report on Form 10-K for 2000, Notes to Consolidated 
Financial Statements, beginning on page 78.

3.     Discontinued Operations

Results for the six months ended June 30, 2001 include an additional 
after-tax gain of $13 million, or 3 cents per share, recorded in the 
first quarter, related to the 1998 sale of NS' motor carrier subsidiary,
North American Van Lines, Inc.  This noncash gain resulted from the 
expiration of certain indemnities contained in the sales agreement.

4.     Work-Force Reduction Costs in 2000

"Compensation and benefits" expenses for the six months ended June 30, 
2000, include $101 million of costs recorded in the first quarter 
related to actions taken to reduce the size of the work force, which 
reduced net income by $62 million, or 16 cents per share.  These costs 
resulted principally from a voluntary early retirement program 
accepted by 919 of 1,180 eligible employees.  The retirements were 
effective March 1, 2000, and most of the related benefits are being 
paid from the Corporation's overfunded pension plan.  The resulting 
noncash reduction to NS' pension plan asset is included in "Other - net"
in the Consolidated Statement of Cash Flows.  In addition, an accrual 
was made for certain postemployment benefits due to some union employees
who were furloughed.

5.     Investment in Conrail and Operations Over Its Lines

Overview
--------
NS and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose 
primary subsidiary is Consolidated Rail Corporation (CRC), the major 
freight railroad in the Northeast.  NS has a 58 percent economic and 
50 percent voting interest in the jointly owned entity, and CSX has the 
remainder of the economic and voting interests.  From time to time, 
NS and CSX, as the indirect owners of Conrail, may need to make capital 
contributions, loans or advances to Conrail. 

7

Item 1. Financial Statements.  (continued)
------  --------------------

Operations of Conrail's Lines
-----------------------------
NS' railroad subsidiary, Norfolk Southern Railway Company (NSR) operates
as a part of its rail system the routes and assets of Pennsylvania Lines 
LLC (PRR), a wholly owned subsidiary of CRC, pursuant to operating and 
lease agreements.  Costs necessary to operate and maintain the PRR 
assets, including leasehold improvements, are borne by NSR.  CSX 
Transportation, Inc. (CSXT) operates the routes and assets of another 
CRC subsidiary under comparable terms.  Certain other Conrail routes and 
assets (the "Shared Assets Areas") continue to be operated by CRC for 
the joint and exclusive benefit of NSR and CSXT.  In addition to a fee 
paid for access, NSR and CSXT pay, based on usage, the costs incurred 
by CRC to operate the Shared Assets Areas.

Investment in Conrail
---------------------
NS is applying the equity method of accounting to its investment in 
Conrail.  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 
June 30, 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 June 30, 2001 includes $99 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 
June 30, 2001, NS has paid $88 million of these costs.

Related-Party Transactions
--------------------------
NS provides certain general and administrative support functions to 
Conrail, the fees for which are billed in accordance with several 
service-provider arrangements.  Any unpaid balance is included in 
"Due from Conrail."

"Conrail rents and services" includes:  (1) expenses for amounts due 
to PRR and CRC for use by NSR of operating properties and equipment 
and operation of the Shared Assets Areas and (2) NS' equity in the 
earnings of Conrail, net of amortization.

"Notes and accounts payable to Conrail" includes $194 million at 
June 30, 2001, and $51 million at Dec. 31, 2000, of interest-bearing 
loans made to NS by a PRR subsidiary, payable on demand.  The interest
rate for these loans is variable and was 4.1 percent at June 30, 2001.
Also included is $91 million at June 30, 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.

Summary Financial Information - Conrail
---------------------------------------
The following historical cost basis financial information should be 
read in conjunction with Conrail's audited financial statements, 
included as Exhibit 99 with NS' 2000 Annual Report on Form 10-K.

8

Item 1. Financial Statements.  (continued)
------  --------------------

Summarized Consolidated Statements of Income - Conrail
------------------------------------------------------

Three Months Ended   Six Months Ended
June 30,            June 30,
------------------   ----------------
2001          2000   2001        2000
----          ----   ----        ----
($ in millions)
(Unaudited)

Operating revenues                       $  229      $  246  $  462     $  505
Operating expenses                          153         194     322        393
-----         -----   -----      -----
Operating income                         76          52     140        112

Other income (expense) - net                 (3)         (5)    (11)        39
-----       -----   -----      -----
Income before income taxes               73          47     129        151

Provision for income taxes                   26          17      37         55
-----       -----   -----      -----
Net income                           $   47      $   30  $   92     $   96
=====       =====   =====      =====

Note:  Conrail's results for the first six months of 2000 included a 
gain from the sale in the first quarter of property that had been 
written up to fair market value in the allocation of NS' investment 
in Conrail.  Accordingly, the gain related to that fair-value 
write-up, totaling $16 million after taxes, was excluded in 
determining NS' equity in Conrail's net income.

Summarized Consolidated Balance Sheets - Conrail
------------------------------------------------

June 30,          Dec. 31,
2001              2000
----              ----
($ in millions)
(Unaudited)

Assets: 
Current assets                                     $    718           $    520
Noncurrent assets                                     7,390              7,540
------             ------
Total assets                                $  8,108           $  8,060
======             ======

Liabilities and stockholders' equity: 
Current liabilities                                $    457           $    435
Noncurrent liabilities                                3,558              3,643
Stockholders' equity                                  4,093              3,982
------             ------
Total liabilities and
stockholders' equity                      $  8,108           $  8,060
======             ======

9

Item 1. Financial Statements.  (continued)
------  --------------------

6.      Long-Term Debt

In February 2001, NS received net proceeds of $987 million from issuing 
$300 million of 6.75 percent, 10-year term Senior Notes and $700 million 
of 7.25 percent, 30-year term Senior Notes.  The notes were issued under 
NS' October 2000 $1 billion shelf registration.

In July 2001, NS issued $250 million floating rate, 2-year term Senior 
Notes under the $1 billion shelf registration that became effective in 
April 2001.  NS intends to use the proceeds to retire commercial paper 
debt.  Accordingly, $250 million of commercial paper outstanding at 
June 30, 2001, is included in "Long-term debt" on NS' Consolidated 
Balance Sheet.  Because the credit facility that supports NS' commercial 
paper expires in May 2002, the remaining $24 million of commercial paper 
is classified as "Short-term debt."

7.    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.  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 of
receivables 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 are 
reinvested in new accounts receivable on behalf of the buyers.

Accounts receivable sold under this arrangement, and therefore not 
included in "Accounts receivable, net" on the Consolidated Balance 
Sheets, were $402 million at June 30, 2001, and $388 million at 
Dec. 31, 2000.  The fees associated with the sale, which are based on 
the buyers' financing costs, are included in "Other income - net."

8.    Derivative Financial Instruments

On January 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. 

10

Item 1. Financial Statements.  (continued)
------  --------------------

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.  NS' management has determined that its 
derivative financial instruments qualify as either fair-value or 
cash-flow hedges, having values which 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
-------------------
During April 2001, NS began a program to hedge a portion of its diesel 
fuel consumption.  Fuel costs in the second quarter represented 
approximately 8 percent of NS' operating expenses, and as a result, 
fluctuations in the price of diesel fuel can significantly affect its 
operating margins and profitability.  The intent of the program is to 
assist in the management of NS' aggregate risk exposure to fuel price 
fluctuations through the use of one or more types of derivative 
instruments.  The program provides that NS will not enter into any fuel 
hedges with a duration of more than thirty-six months, and that no more 
than eighty percent of NS' average monthly fuel consumption will be 
hedged for each month within any thirty-six month period. 

NS entered into two types of diesel fuel derivative transactions during 
the second quarter of 2001.  NS' 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 April, NS purchased eight monthly options at 
a strike price of $0.84 per gallon of Nymex No. 2 heating oil.  The cost 
of the monthly options, which expire serially through Dec. 31, 2001, is 
being amortized as a component of diesel fuel expense, and because the 
price of diesel fuel did not reach the strike price at any time during 
the second quarter, NS has not recorded any benefit related to these 
transactions.  NS also entered into 78 fuel swaps for approximately 
163 million gallons at an average price of approximately $0.74 per 
gallon of Nymex No. 2 heating oil.  As of June 30, 2001, outstanding 
swaps covered approximately 16 percent, 10 percent, and 4 percent of 
estimated fuel purchases for the remainder of 2001 and for the years 
2002 and 2003, respectively.

NS has not recorded any ineffectiveness related to its use of diesel 
fuel hedges through June 30, 2001.  NS' fuel hedging activity resulted 
in a net increase in diesel fuel expense of $0.6 million for the 
second quarter of 2001.

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 $273 million, or 
3.8 percent, and $294 million, or 4.5 percent, of its fixed rate debt 
portfolio hedged at June 30, 2001 and June 30, 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. 

11

Item 1. Financial Statements.  (continued)
------  --------------------

Fair Values
-----------
The fair values of NS' diesel fuel derivative instruments at June 30, 
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 June 30, 2001, Accumulated other comprehensive income, a 
component of Stockholders' equity, includes $2 million relating to 
the decrease in the fair value of the derivative fuel hedging 
transactions that will terminate in 2001.

The asset and liability positions of NS' outstanding derivative 
financial instruments at June 30, 2001 and Dec. 31, 2000 were 
as follows:

June 30,       Dec. 31,
2001           2000
----           ----
($ in millions)

Interest rate hedges: 
Gross fair market asset position                    $  7           $ --
Gross fair market (liability) position                --             --

Fuel hedges:
Gross fair market asset position                      --             --
Gross fair market (liability) position                (2)            --    
----           ----
Total net asset position                                $  5           $ --
====           ====

9.      Earnings Per Share

The following table sets forth the reconciliation of the number of 
weighted-average shares outstanding used in the calculations of 
basic and diluted earnings per share: 

Three Months Ended      Six Months Ended       
June 30,               June 30,
------------------      ----------------
2001          2000      2001        2000
----          ----      ----        ----
(In millions)

Weighted-average shares
outstanding                            385.0         383.2     384.8       383.1

Dilutive effect of
outstanding options and
performance share units
(as determined by the
application of the
treasury stock method)                   1.9           0.4       1.1         0.3
-----         -----     -----       -----
Diluted weighted-average
shares outstanding                     386.9         383.6     385.9       383.4
=====         =====     =====       =====

The calculations exclude options on shares whose exercise price exceeded 
the average market price of Common Stock for the period as follows:  
in 2001, 19 million in the second quarter and 28 million in the first 
quarter; 

12

Item 1. Financial Statements.  (continued)
------  --------------------

and in 2000, 20 million in the second quarter and 28 million in the first 
quarter.  There are no adjustments to "Net income" for the diluted earnings 
per share computations.

10.     Comprehensive Income

NS' total comprehensive income was as follows:

Three Months Ended     Six Months Ended        
June 30,              June 30,
------------------     ----------------
2001          2000     2001        2000
----          ----     ----        ----
($ in millions)

Net income                               $   107      $   116   $   181     $   68
Other comprehensive
income (loss)                             (3)          --        (4)         2
-----        -----     -----      -----

Total comprehensive income               $   104      $   116   $   177     $   70
=====        =====     =====      =====

For NS, "Other comprehensive income (loss)" reflects the unrealized gains 
and losses on certain investments in debt and equity securities and net 
fair value adjustments to derivative financial instruments.

13

Item 2.     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

RESULTS OF OPERATIONS

Net Income
----------
Second-quarter net income was $107 million in 2001, down $9 million, or 
8 percent, compared with the same period last year, reflecting lower 
nonoperating income that was somewhat offset by a 1 percent increase in 
income from railway operations.  For the first six months of 2001, net 
income was $181 million and included $13 million of additional after-tax 
gain related to the 1998 sale of NS' motor carrier subsidiary, which is 
reported as "Discontinued operations" on the Consolidated Statement of 
Income (see Note 3). Income from continuing operations for the first six 
months was $168 million, compared with $68 million for the first half of 
2000.  Results in 2000 included $62 million of after-tax costs related to 
actions taken to reduce the size of the work force (see Note 4).  
Excluding the effects of last year's work-force reduction costs, income 
from continuing operations increased $38 million, principally due to higher 
income from railway operations, which was somewhat offset by lower 
nonoperating income.

Railway Operating Revenues
--------------------------
Second-quarter railway operating revenues were $1.6 billion in 2001, 
unchanged from 2000.  For the first six months, railway operating revenues 
were $3.1 billion, up $32 million, or 1 percent, compared with last year.  
For both periods, the effects of higher revenue per unit were offset, 
entirely for the quarter and in part for the first six months, 
by lower traffic volume.

Second Quarter      First Six Months
2001 vs. 2000        2001 vs. 2000
Increase (Decrease)  Increase (Decrease)
-------------------  -------------------
($ in millions)      ($ in millions)

Traffic volume (carloads)                       $   (62)              $   (83)  
Revenue per unit/mix                                 62                   115
------                ------
$    --               $    32
======                ======

Revenues and carloads for the commodity groups were as follows (prior year 
data has been reclassified to conform to the current presentation):

14

Item 2.     Management's Discussion and Analysis of Financial Condition
------      -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

Revenues
----------------------------------------------
Second Quarter                Six Months
2001         2000            2001         2000
----         ----            ----         ----
($ in millions)

Coal                              $   395     $   377         $   788      $   724
General merchandise:
Automotive                         244         249             458          490
Chemicals                          191         195             379          380
Metals/construction                177         184             342          359
Paper/clay/forest                  162         162             316          317
Agr./consumer prod./govt.          148         152             298          311
------      ------          ------       ------
General merchandise                   922         942           1,793        1,857
Intermodal                            275         273             551          519
------      ------          ------       ------
Total                   $ 1,592     $ 1,592         $ 3,132      $ 3,100
======      ======          ======       ======

Carloads
----------------------------------------------
Second Quarter                Six Months
2001         2000            2001          2000
----         ----            ----          ----
(In thousands)

Coal                                437          436             876           858
General merchandise:
Automotive                       173          189             325           372
Chemicals                        111          116             218           230
Metals/construction              185          206             351           396
Paper/clay/forest                117          126             234           252
Agr./consumer prod./govt.        126          128             256           263
------       ------          ------        ------
General merchandise                 712          765           1,384         1,513
Intermodal                          538          555           1,081         1,062
------       ------          ------        ------
Total                   1,687        1,756           3,341         3,433
======       ======          ======        ======

Coal
----
Coal revenues increased $18 million, or 5 percent, in the second quarter 
and $64 million, or 9 percent, in the first six months, compared with the 
same periods last year.  Total tonnage handled increased 1 percent for the 
quarter and 4 percent year-to-date, principally due to higher utility coal 
volume that was somewhat offset by lower volume for domestic metallurgical 
coal, coke and iron ore and export coal.  Utility coal volume increased 
9 percent in the quarter and 13 percent year-to-date.  Growth moderated in 
the quarter, reflecting milder weather and production problems at some mines.  
Domestic metallurgical coal, coke and iron ore volume declined 21 percent 
for the quarter and 25 percent for the first six months, principally due to 
continued weakness in the steel-production industry.  Export coal volume 
decreased 19 percent in the quarter and 17 percent year-to-date, due in 
part to high domestic prices, which is diverting coal from the export 
market.  Coal revenue per unit increased 4 percent in the quarter and 
7 percent year-to-date, reflecting utilization of higher capacity cars and 
longer hauls.  In addition, higher export rates resulting from the annual 
contract negotiations began to take effect late in the quarter.

15

Item 2.     Management's Discussion and Analysis of Financial Condition
------      -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

For the remainder of the year, coal revenues are expected to continue to 
benefit from increased demand for electricity; however, milder weather in 
NS' service region has negated this favorable outlook early in the third 
quarter.

General Merchandise
-------------------
General merchandise revenues decreased $20 million, or 2 percent, in the 
second quarter and $64 million, or 3 percent, for the first six months, 
compared with the same periods last year.  Traffic volume (carloads) 
declined 7 percent in the quarter and 9 percent year-to-date, as all 
commodity groups posted decreases for both periods.  Automotive traffic 
volume was 9 percent lower in the quarter and 13 percent lower year-to-
date, reflecting continued production cutbacks in the face of the slow 
economy.  Metals and construction traffic volume declined 10 percent in 
the quarter and 11 percent for the first six months, principally due to 
the effects of the automotive slowdown and continued weakness in the 
steel industry.  Paper, clay and forest products traffic volume 
decreased 7 percent in both the quarter and year-to-date, largely due 
to production cutbacks by paper producers, which were mitigated by 
increased lumber volume.  Chemicals traffic volume declined 4 percent 
for the quarter and 5 percent year-to-date, reflecting continued weak 
demand.  For both periods, higher revenue per unit, largely the result 
of higher rates and favorable changes in the mix of traffic, offset much 
of the effects of the traffic volume decreases.  Revenue per unit for the 
automotive group benefited from improved yield associated with the 
redesign of the mixing center network and changes in the type of equipment 
used on certain movements.

In spite of new business initiatives, general merchandise revenues 
are expected to continue to post year-over-year declines in 2001 in view 
of the very weak manufacturing and industrial sectors of the economy.

Intermodal
----------
Intermodal revenues increased $2 million, or 1 percent, in the second 
quarter and $32 million, or 6 percent, for the first six months, compared 
with the same periods last year.  Growth in traffic volume (units) weakened 
in the second quarter, declining 3 percent compared with last year, as a 
23 percent decrease in trailer volume more than offset a 3 percent 
increase in container shipments.  Second-quarter traffic volume was 
uncharacteristically lower than that of the first quarter, reflecting the 
continuation of weak economic conditions and an abundance of competing 
truck capacity.  For the year-to-date, shipments remained ahead of last 
year, supported by a 10 percent increase in container traffic volume, which 
was mitigated by a 20 percent decline in trailer traffic volume.  Revenue 
per unit increased for both periods, largely due to rate increases.

For the remainder of the year, intermodal revenues are expected to benefit 
from new business and facility improvements; however, continued softness 
in the economy could temper this positive outlook.

Railway Operating Expenses
--------------------------
Second-quarter railway operating expenses were $1.3 billion, down slightly 
compared with last year.  For the first six months, expenses were 
$2.6 billion, down $149 million, or 5 percent.  Expenses in 2000 included 
$101 million of work-force reduction costs in the first quarter (see 
Note 4); excluding these costs, year-to-date 2001 expenses were down 
$48 million, or 2 percent.

"Compensation and benefits" expenses decreased $14 million, or 3 percent, 
in the second quarter and $49 million, or 5 percent, year-to-date, 
excluding the first-quarter 2000 work-force reduction costs.  Lower 
salaries and wages, a result of last year's work force reductions, were 
somewhat offset by higher wage rates and benefit costs for union 
employees, a lower pension credit and higher stock-based compensation 
costs that resulted from an increase in NS' stock price.

16

Item 2.     Management's Discussion and Analysis of Financial Condition
------      -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

"Materials, services and rents" expenses increased $30 million, or 
9 percent, in the quarter and $31 million, or 4 percent, year-to-date, 
primarily due to higher mechanical and engineering costs and higher 
expenses for intermodal-related purchased services.  These increases 
were partially offset by lower equipment rents and joint facility 
expenses.

"Conrail rents and services" expenses decreased $18 million, or 
15 percent, in the second quarter and $34 million, or 14 percent, 
year-to-date.  Both declines reflected higher equity earnings in 
Conrail and lower costs in the Shared Assets Areas.

"Diesel fuel" expenses were unchanged in the second quarter, but 
increased $2 million, or 1 percent, for the first six months.  For 
both periods, consumption was lower (5 percent) and price per gallon 
was higher (5 percent for the quarter and 7 percent for the 
year-to-date).

"Casualties and other claims" expenses increased $6 million, or 
18 percent, in the second quarter and $11 million, or 17 percent, 
for the first six months.  Both comparisons reflected the absence of a 
premium refund that benefited last year and adverse claims development.  
The year-to-date also reflected higher costs related to derailments.

"Other" expenses decreased $10 million, or 16 percent, in the second 
quarter and $13 million, or 11 percent, for the first six months.  
Both declines primarily resulted from lower property and sales and use 
taxes, together with lower travel and relocation costs.

The second-quarter railway operating ratio was 82.3 percent in 2001, 
compared with 82.5 percent in 2000.  For the first six months, the ratio 
was 84.5 percent in 2001, compared with 86.9 percent in 2000 (excluding 
the work-force reduction costs, which added 3.2 percentage points to 
the ratio).

Other Income - Net
------------------
"Other income - net" decreased $21 million in the second quarter and 
$22 million for the first six months, compared with the same periods 
last year.  The comparisons reflect the $28 million gain in the second 
quarter of 2000 from the sale of gas and oil royalty and working 
interests.

Provision for Income Taxes
--------------------------
The second-quarter effective income tax rate was 35.9 percent in 2001, 
compared with 37.0 percent last year.  For the first six months, the 
effective rate was 34.9 percent, compared with 32.0 percent last year.  
Excluding NS' equity in Conrail's after-tax income, the second-quarter 
rate was 39.2 percent in 2001 and 36.8 percent in 2000, and the year-to-
date rate was 38.8 percent in 2001 and 35.6 percent in 2000.  Both 
increases resulted from a reduction in the level of benefits from 
investments in coal-seam gas properties.

FINANCIAL CONDITION AND LIQUIDITY

Cash provided by operating activities, NS' principal source of liquidity, 
decreased significantly in the first six months of 2001, compared with the 
same period last year.  The decline resulted from: (1) the absence of the 
large cash infusion received May 1, 2000, upon commencement of the program 
to sell accounts receivable; (2) higher tax payments this year, including 
the settlement of federal tax years 1995 and 1996; (3) the timing of 
payments to Conrail, coupled with the absence of significant one-time 
receipts that occurred in 2000; (4) the absence of bonus payments in 
2000 and (5) a litigation settlement payment this year.  These items 
were somewhat offset by higher operating income and the receipt of cash 
from a non-recurring settlement.  NS' working capital deficit was 
$1.5 billion at June 30, 2001, compared with $1.0 billion at Dec. 31, 2000.

17

Item 2.     Management's Discussion and Analysis of Financial Condition
------      -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

NS currently has the capability to issue commercial paper to meet its 
more immediate working capital needs (see the discussion of financing 
activities, below).

Cash used for investing activities increased significantly in the first 
six months of 2001, compared with the same period last year.  The 
increase resulted from a 21 percent rise in property additions, 
reflecting the purchase of locomotives as compared to the absence of such 
a purchase in the first half of 2000, somewhat offset by less track 
program work and fewer freight car purchases.

Cash provided by financing activities was $164 million for the first six 
months of 2001.  Sources of cash included $987 million of net proceeds from 
the sale of Senior Notes (see Note 6), $174 million of proceeds from the 
sale of equipment trust certificates and a net increase of $144 million in 
borrowings from PRR.  Uses of cash included an $857 million net reduction 
to commercial paper and a $200 million repayment of Senior Notes.  NS' 
debt-to-total capitalization ratio was 56.9 percent at June 30, 2001, 
unchanged compared with Dec. 31, 2000.  NS currently has in place a 
$1 billion credit facility (which expires in May 2002, see Note 6) to 
support the $274 million of commercial paper outstanding at June 30, 2001.  
In addition, NS has issued (in July 2001, see Note 6) 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

Conrail's second-quarter net income was $47 million in 2001, compared 
with $30 million in the second quarter of last year.  The improvement 
reflected lower casualties and other claims expenses, largely due to 
favorable claims development, and an environmental settlement in favor of 
the company.  For the first six months, net income was $92 million this 
year, compared with $96 million last year.  The decline was the result 
of the absence of a $37 million after-tax gain from a property sale in the 
first quarter of 2000 (see Note 5), largely offset by lower casualties 
and other claims expenses, a favorable adjustment to state tax reserves 
and the environmental settlement.

Conrail's operating revenues decreased 7 percent in the second quarter 
and 9 percent for the first six months, compared with the same periods 
of last year.  The declines resulted from lower revenues at Conrail's 
Indiana Harbor Belt subsidiary, the expiration of some equipment leases 
and lower operating fees, largely because of reduced operating costs 
in the Shared Assets Areas.

Conrail's operating expenses decreased 21 percent in the second quarter 
and 18 percent for the first six months, compared with the same periods 
of last year.  Both declines principally resulted from lower expenses 
for materials, services and rents; casualties and other claims; and 
compensation and benefits.

Conrail's working capital was $261 million at June 30, 2001, compared with 
$85 million at Dec. 31, 2000.  Conrail is expected to have sufficient cash 
flow to meet its ongoing obligations.

NS' equity in earnings of Conrail, net of amortization, was $14 million 
in the second quarter, compared with a $1 million loss in the second 
quarter of last year, and was $26 million for the first six months, 
compared with $10 million for the same period last year.

OTHER MATTERS

Telecommunications Subsidiary
-----------------------------
NS' subsidiary, Thoroughbred Technology and Telecommunications, Inc. 
("T-Cubed"), is co-developing 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 
co-developers filed for protection under Chapter 11 of the U.S. 
Bankruptcy Code and foreign laws.  This co-developer owes T-Cubed 

18

Item 2.     Management's Discussion and Analysis of Financial Condition
------      -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

amounts for work performed on joint projects; however, based on known 
facts and circumstances, Management believes that such amounts ultimately 
will be realized.

As a result of changes in the values of telecommunications assets, 
T-Cubed has reviewed the carrying amount of its telecommunications assets, 
including those still under development, as required by SFAS No. 121, 
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets 
to Be Disposed Of."  Management believes that its ultimate investment in 
these assets will be recovered, and accordingly, no impairment has been 
recognized.  Upon completion of the network currently under development,
T-Cubed expects its net investment to be more than $100 million.  Should 
conditions in the telecommunications industry worsen, T-Cubed's prospects 
for recovering its investment in these assets may be reduced.

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 one hundred of these 
claimants.  These claims likely will be arbitrated in the fall of 2001. 
Management believes, based on known facts and circumstances, including 
the availability of legal defenses, that the amount of liability for 
claims currently in arbitration 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 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, an agreement was reached with 
the Brotherhood of Locomotive Engineers, which represents about 5,000 
NS employees, and a national agreement has been reached with the 
Brotherhood of Maintenance of Way Employes, which represents about 
4,500 NS employees.  In addition, tentative national agreements (subject 
to ratification) have been reached with the International Brotherhood of 
Electrical Workers, which represents about 1,000 NS employees, and the 
United Transportation Union, which represents about 7,500 NS employees.

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 8).

Effective April 1, 2001, NS adopted SFAS No. 140, "Accounting for 
Transfers and Servicing of Financial Assets and Extinguishments of 
Liabilities," which replaced SFAS No. 125 of the same name.  
SFAS No. 140 revises the standards for accounting for securitizations 
and other transfers of financial assets and requires certain disclosures, 
but carries over most of the provisions of SFAS No. 125.  NS adopted the 
disclosure requirements with its 2000 Annual Report; the remaining 
provisions of SFAS No. 140 did not have a material effect on NS' 
financial statements.

19

Item 2.     Management's Discussion and Analysis of Financial Condition
------      -----------------------------------------------------------
and Results of Operations. (continued)
-------------------------

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.

20

Item 3. Quantitative and Qualitative Disclosures About Market Risks.
------  -----------------------------------------------------------

There has been no material change to the disclosures made under the 
heading "Market Risks and Hedging Activities" on page 46 of the 
Corporation's 2000 Annual Report on Form 10-K.  Additional information 
required by this item is included in Part I, Item I, "Financial 
Statements" in Note 8 on page 9.

21

PART II.  OTHER INFORMATION
---------------------------

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

Registrant's Annual Meeting of Stockholders was held on May 10, 2001, at 
which meeting three directors were elected to serve for a term of three 
years, the appointment of independent public accountants was ratified, 
the Long-Term Incentive Plan, as amended, was approved and two 
stockholder proposals were defeated.

The three directors were elected by the following vote:

FOR                     AUTHORITY WITHHELD
---                     ------------------
Alston D. Correll       294,963,176 votes       33,832,559 votes
Landon Hilliard         290,688,924 votes       38,106,811 votes
Jane Margaret O'Brien   292,678,662 votes       36,117,073 votes

The appointment of KPMG LLP, independent public accountants, as auditors 
of the Corporation's books and records was ratified by the following vote:

FOR:  307,873,292 shares
AGAINST:  18,878,106 shares
ABSTAINED:  2,044,337 shares

The Long-Term Incentive Plan, as amended, was approved by the following 
vote:

FOR:      239,645,596 shares
AGAINST:  40,588,852 shares
ABSTAINED:  3,434,201 shares

A stockholder proposal concerning the Board's reporting to the 
stockholders on the Corporation's activities and efforts related to 
global warming was defeated by the following vote:

FOR:  21,653,627 shares
AGAINST:  251,349,564 shares
ABSTAINED:  10,665,458 shares

A stockholder proposal concerning the elimination of dividend 
equivalent payments on stock options for Vice Presidents and above was 
defeated by the following vote:

FOR:  31,720,573 shares
AGAINST:  246,744,053 shares
ABSTAINED:  5,204,023 shares

Item 6.     Exhibits
------      --------

10(v)       The Norfolk Southern Corporation Stock Unit Plan, 
effective July 24, 2001, is filed herewith.

22

SIGNATURES
----------

Pursuant to the requirements of the Securities Exchange Act of 1934, 
the Registrant has duly caused this report to be signed on its behalf by 
the undersigned thereunto duly authorized.

NORFOLK SOUTHERN CORPORATION
--------------------------------------
(Registrant)

Date:   August 9, 2001           /s/ Dezora M. Martin
--------------           --------------------------------------
Dezora M. Martin
Corporate Secretary (Signature) 

Date:   August 9, 2001           /s/ John P. Rathbone
--------------           --------------------------------------
John P. Rathbone
Senior Vice President and Controller
(Principal Accounting Officer) (Signature)

23

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

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

10(v)   Norfolk Southern Corporation Stock Unit                24
Plan, effective July 24, 2001

24

NS STOCK UNIT PLAN

Effective July 24, 2001, as Renamed August 6, 2001

Section 1.      PURPOSE

The Phantom Stock Unit Plan was adopted July 24, 2001, and renamed the 
NS Stock Unit Plan (the "Plan") on August 6, 2001.  The purpose of the 
Plan is to promote the success of Norfolk Southern Corporation (the 
"Corporation") by providing compensation to officers and other key 
employees of the Corporation and its Subsidiary Companies (as 
hereinafter defined) which is tied to the performance of the common 
stock of the Corporation, thereby providing an additional incentive to 
officers and other key employees to devote their maximum efforts and 
skills to the success of the Corporation and further aligning their 
interests with those of the shareholders.  The Plan provides for the 
grant of stock units whose value is measured by the fair market value 
of the Corporation's common stock and which will be payable in cash upon 
satisfaction of the applicable restrictions, in accordance with the terms 
and conditions set forth below.

Section 2.      DEFINITIONS

The terms used herein shall have the following meanings unless otherwise 
specified or unless a different meaning is clearly required by the context:

Award           A grant of Stock Units.

Beneficiary   The person or persons designated in writing by the Participant 
as his Beneficiary in respect of Awards under the Corporation's 
Long-Term Incentive Plan or, in the absence of such a 
designation or if the designated person or persons predecease 
the Participant, the person or persons who shall acquire the 
Participant's rights in respect of Awards by bequest or 
inheritance in accordance with the applicable laws of descent 
and distribution. In order to be effective, a Participant's 
designation of a Beneficiary must be on file with the 
Corporation before the Participant's death.

Board of          The Board of Directors of the Corporation.
Directors

Code            The Internal Revenue Code of 1986, as amended from time 
to time.

Committee     The Compensation and Nominating Committee or any other 
committee of the Board of Directors which is authorized to 
grant Awards under this Plan.  

Common Stock  The Common Stock of the Corporation.

Disability    A disability that enables the Participant to be eligible for 
and receive a disability benefit under the Long-Term 
Disability Plan of the Corporation or a long-term disability 
plan of a Subsidiary Company (whichever is applicable), as 
amended from time to time.

25

Fair Market   The value of Common Stock on a particular date as measured 
Value         by the mean of the high and low prices at which it is traded 
on such date as reported in the Composite Transactions for 
such date by The Wall Street Journal, or, if Common Stock 
was not traded on such date, on the next preceding day on 
which Common Stock was traded.

Participant   Any officer or key employee of the Corporation or a 
Subsidiary Company selected by the Committee to participate 
in the Plan.  

Performance   A period of time not less than twelve (12) nor more than 
Period        sixty (60) months, to be determined within those limits by 
the Committee in its sole discretion, commencing on the date 
as of which Stock Units are granted, during which the 
restrictions imposed by paragraph (b) of Section 5 of the 
Plan shall apply.  The Committee shall determine the length 
of the Performance Period at the time that the Stock Units 
are granted.

Retirement    Retirement from the Corporation or a Subsidiary Company 
pursuant to the provisions of the Retirement Plan of the 
Corporation or a retirement plan of a Subsidiary Company 
(whichever is applicable), as amended from time to time.

Stock         Contingent rights to receive cash payment for the Fair 
Units         Market Value of shares of Common Stock granted pursuant to 
Section 5 of the Plan and subject to the restrictions and 
other terms and conditions set forth therein.  Each Stock 
Unit shall equal the Fair Market Value of one share of 
Common Stock.  

Subsidiary    A corporation of which more than fifty percent (50%) of the 
Company       total combined voting power       of all classes of stock entitled 
to vote is owned, directly or indirectly, by the Corporation.

Section 3.      ADMINISTRATION

The Plan shall be administered by the Committee, which, subject to the 
limitations set forth herein, shall have the full and complete authority 
and sole discretion from time to time to construe and interpret the Plan; 
to select the officers and other key employees who shall be granted Awards 
under the Plan; to determine the type, size, terms, and conditions of the 
Award or Awards to be granted to each such Participant; to authorize the 
grant of such Awards pursuant to the Plan; to adjust such Awards based on 
the performance of the Corporation or on the individual performance of the 
Participant; in connection with the merger or consolidation of the 
Corporation, to give a Participant an election to surrender an Award in 
exchange for the grant of a new Award; to adopt, amend and rescind rules 
and regulations relating to the Plan; and to make all other determinations 
and take all other action it may deem necessary or advisable for the 
implementation and administration of the Plan.  The Committee may authorize 
the grant of more than one type of Award, and Awards subject to differing 
terms and conditions, to any eligible employee.  The Committee's decision 
to authorize the grant of an Award to an employee at any time shall not 
require the Committee to authorize the grant of an Award to that employee 
at any other time or to any other employee at any time; nor shall its 
determination with respect to the size, type, or terms and conditions of 
the Award to be granted to an employee at any time require it to authorize 
the grant of an Award of the same type or size or with the same terms and 
conditions to that employee at any other time or to any other employee at 
any time.  The Committee shall not be precluded from authorizing 

26

the grant of an Award to any eligible employee solely because the employee 
previously may have been granted an Award of any kind under the Plan.

All determinations of the Committee shall be by a majority of its members 
and shall be final, conclusive and binding. Each member of the Committee, 
while serving as such, shall be considered to be acting in his capacity as 
a director of the Corporation, and no member of the Committee shall be 
liable for any action taken or decision made in good faith with respect to 
the implementation or administration of the Plan.

Section 4.      ELIGIBILITY

To be eligible for selection by the Committee to participate in the Plan, 
an individual must be a full-time salaried officer or key employee of the 
Corporation, or of a Subsidiary Company, and must reside in the United 
States or Canada, on the date on which the Committee authorizes the grant 
to such individual of an Award. 

Section 5.      STOCK  UNITS 

(a)     Type of Award - The Committee, in its sole discretion, may from 
time to time authorize the grant of Stock Units to a Participant.  
The grant of Stock Units shall be evidenced by a written Stock Unit 
Agreement between the Corporation and the Participant setting forth 
the number of such Stock Units, Performance Period , and the terms, 
conditions, and restrictions applicable thereto.  Such Stock Units 
will be recorded in individual memorandum accounts maintained by the 
Committee or its agent.  The Participant shall have no beneficial 
ownership interest in the Common Stock represented by the Stock 
Units and no right to receive a certificate representing such shares 
of Common Stock.  Further, the Participant shall have no right to 
vote the Common Stock represented by the Stock Units or to receive 
dividends (except for any equivalent payments which may be awarded 
by the Committee in connection with such Stock Units) on the Common 
Stock represented by the Stock Units.  

(b)     Restrictions - Until the expiration of the Performance Period or 
the lapse of restrictions in the manner provided in paragraphs (d) 
or (e) of this Section 5, Stock Units shall be subject to the 
following restrictions and any additional restrictions that the 
Committee, in its sole discretion, may from time to time deem 
desirable in furtherance of the objectives of the Plan:

(i)     the Participant shall not be entitled to receive cash 
payment for the Stock Units which the Participant may 
have a contingent right to receive in the future;

(ii)    the Stock Units may not be sold, transferred, assigned, 
pledged, conveyed, hypothecated, or otherwise disposed of; 
and

(iii)   the Stock Units may be forfeited immediately as provided in 
paragraph (d) of this Section 5.

(c)     Distribution of Stock Units - If a Participant to whom Stock 
Units have been granted remains in the continuous employment of 
the Corporation or a Subsidiary Company during the entire 
Performance Period, upon the expiration of the Performance Period 
all restrictions applicable to the Stock Units shall lapse, and 
the Stock Units shall be settled in cash, not in shares of Common 

27

Stock, based on Fair Market Value on the date all applicable 
restrictions lapse.  The Committee, in its sole discretion, may 
review and adjust the Award at any time prior to expiration of the 
Performance Period to increase or decrease the number of Stock 
Units between 0% and 125% based on the performance of the 
Corporation and/or on the individual performance of the 
Participant.     

(d)     Termination of Employment - If the employment of a Participant is 
terminated for any reason other than the Disability or death of 
the Participant in service before the expiration of the Performance 
Period, the Stock Units shall be forfeited immediately and all 
rights of the Participant to such units shall terminate immediately 
without further obligation on the part of the Corporation or any 
Subsidiary Company. If the employment of a Participant is 
terminated for Retirement before the expiration of the Performance 
Period, the Stock Units shall be forfeited immediately and all 
rights of the Participant to such units shall terminate immediately 
without further obligation on the part of the Corporation or any 
Subsidiary Company.  If the Participant's employment is terminated 
by reason of the Disability or death of the Participant in service 
before the expiration of the Performance Period, the number of 
Stock Units held by the Corporation for the Participant's account 
shall be reduced by the proportion of the Performance Period 
remaining after the Participant's termination of employment; the 
restrictions on the balance of such Stock Units shall lapse on 
the date the Participant's employment terminated; and the cash 
settlement representing the Stock Units upon which the 
restrictions have lapsed shall be delivered to the Participant 
(or, in the event of the Participant's death, to his Beneficiary). 

(e)     Waiver of Restrictions - The Committee, in its sole discretion, 
may waive any or all restrictions with respect to Stock Units.

Section 6.       DIVIDEND EQUIVALENT PAYMENTS

The Committee may authorize the payment of dividend equivalents on some 
or all of the Stock Units representing shares of Common Stock, in an 
amount equal to, and commensurate with, dividends declared by the Board 
of Directors and paid on Common Stock.  Dividend equivalents payable on 
Stock Units under this Section 6 shall be paid immediately in cash or 
converted to additional Stock Units based on the Fair Market Value of 
Common Stock on the date dividends are paid, as may be determined by the 
Committee.  If the dividend equivalents are paid immediately in cash, the 
cash settlement thereof will be paid in cash.  If the dividend equivalents 
are converted to additional Stock Units, the additional Stock Units shall 
be recorded in the Participant's individual memorandum account and subject 
to any remaining Performance Period applicable to the Stock Units on which 
the dividend equivalents were paid.  Upon cash settlement of the Stock 
Units on which the dividend equivalents were paid, the additional Stock 
Units representing dividend equivalents will be paid in cash.  The 
Committee may authorize the payment of dividend equivalents under this 
Section 6 with respect to any Stock Unit for all or some portion of its 
term by including a specific provision, authorizing such payment, in the 
Stock Unit Agreement required under Section 5(a) of the Plan. 

Section 7.      CAPITAL ADJUSTMENTS

In the event of a recapitalization, stock split, stock dividend, exchange, 
combination, or reclassification of shares, merger, consolidation, 
reorganization, or other change in or affecting the capital structure or 
capital stock of the Corporation, the Board of Directors, upon the 
recommendation of the Committee, may make appropriate adjustments in the 
number of Stock Units representing shares of Common Stock, as it deems 

28

equitable, in its absolute discretion, to prevent dilution or enlargement 
of the rights of Participants.

Section 8.      AMENDMENT OR TERMINATION OF THE PLAN

The Corporation may at any time and from time to time alter or amend, in 
whole or in part, any or all of the provisions of the Plan, or may at any 
time suspend or terminate the Plan, through written action of its chief 
executive officer or resolution of its Board of Directors, provided that 
no change in any Awards theretofore granted to any Participant may be made 
which would impair or diminish the rights of the Participant without the 
Participant's consent.

Section 9.      MISCELLANEOUS

(a)     Withholding - The Corporation and its Subsidiary Companies shall 
have the right, to the extent permitted by law, to deduct from 
any payment of any kind otherwise due to a Participant any Federal, 
state or local taxes of any kind required by law to be withheld 
with respect to Awards under the Plan, and to the extent any such 
withholding requirements are not satisfied, each Participant shall 
pay to the Corporation any Federal, state or local taxes of any 
kind required by law to be withheld with respect to Awards under 
the Plan.

(b)     Stockholder Rights - No person shall have any rights of a 
stockholder by virtue of a Stock Unit. 

(c)     No Contract of Employment - This Plan shall not be deemed to be an 
employment contract between the Corporation or any Subsidiary 
Company and any Participant or other employee.  Nothing contained 
herein, or in any agreement, certificate or other document 
evidencing, providing for, or setting forth the terms and 
conditions applicable to any Awards shall be deemed to confer upon 
any Participant or other employee a right to continue in the 
employment of the Corporation or any Subsidiary Company, or to 
interfere with the right of the Corporation or any Subsidiary 
Company to terminate the employment of such Participant or employee 
at any time.

(d)     Unfunded Plan - Except as may otherwise be provided in the Plan, 
the Plan shall be unfunded.  Neither the Corporation nor any 
Subsidiary Company shall be required to segregate any assets that 
may be represented by Stock Units, and neither the Corporation 
nor any Subsidiary Company shall be deemed to be a trustee of any 
amounts to be paid under a Stock Unit.  Any liability of the 
Corporation to pay any Participant or Beneficiary with respect to 
a Stock Unit shall be based solely upon any contractual obligations 
created pursuant to the provisions of the Plan; no such obligation 
shall be deemed to be secured by any pledge or encumbrance on any 
property of the Corporation or a Subsidiary Company.

(e)     Applicable Law - The Plan, its validity, interpretation, and 
administration, and the rights and obligations of all persons 
having an interest therein, shall be governed by and construed in 
accordance with the laws of the Commonwealth of Virginia, except 
to the extent that such laws may be preempted by Federal law.

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(f)     Gender and Number - Wherever used in the Plan, words in the 
masculine form shall be deemed to refer to females as well as 
to males, and words in the singular or plural shall be deemed 
to refer also to the plural or singular, respectively, as the 
context may require.

Dated:                  Approved as Renamed:

August 6, 2001          /s/ David R. Goode
--------------          -----------------------------------------------
David R. Goode
Chairman, President and Chief Executive Officer