The ratings on Norfolk Southern Corp. reflect the favorable business risk characteristics of the freight railroad industry, a diversified commodity mix, and improving operating performance, offset by a significant debt burden from the 1997 purchase of 58% of Conrail Inc. Initial problems integrating the company's share of Conrail are now largely resolved but operations need further improvement. Norfolk's enlarged, well-positioned rail system and diversified traffic mix provide substantial revenue generation and cash flow potential over the long term. Norfolk Southern Corp. began operational integration of its share of Conrail in mid-1999, although results during 1998 and early 1999 were negatively affected by significant spending to prepare for the Conrail integration. Competitor CSX's acquisition of 42% of Conrail increased competition in
