Ratings on Norfolk Southern Corp. reflect its strong competitive position as one of the two large eastern freight railroads and the strong industry risk characteristics of the U.S. freight railroad industry, offset by a somewhat leveraged (albeit improving) financial profile. The Norfolk, Va.-based freight railroad company has about $8.5 billion of lease-adjusted debt. Norfolk Southern is currently benefiting from strong demand. This, and a continuing focus on improving service and operating efficiency, has enabled the company to generate significantly better results in recent quarters. Norfolk Southern's operating metrics have been among the best in the industry in recent months. Its rail operating ratio (operating expenses, including depreciation, as a percentage of revenues), was 76.7% at full-year 2004, much healthier than
