The ratings on Norfolk Southern Corp. reflect a strong competitive position as one of the two large eastern railroads, and the better-than-average risk profile of the U.S. freight railroad industry. These factors partly offset a substantial debt burden incurred to acquire 58% of northeastern railroad Conrail Inc. in 1997 and a financial profile weaker than anticipated due to post-Conrail merger integration problems. Norfolk, Va.-based Norfolk Southern operates the fourth-largest U.S. rail system, enjoying strong positions in coal transportation to domestic utilities and in chemical movements. Domestic coal carriage, based on substantial reserves in Virginia, West Virginia, and Kentucky, is very stable and affords high margins. However, half of the company's coal contracts will reprice in 2002, and more variable export
