0000702165 nsc:FederalGovernmentBondsMember 2011-03-31 0000702165 nsc:FederalGovernmentBondsMember 2010-12-31 0000702165 nsc:ConrailVotingMember 2011-03-31 0000702165 nsc:ConrailEquityMember 2011-03-31 0000702165 nsc:PensionBenefitsMember 2011-01-01 2011-03-31 0000702165 nsc:OpebMember 2011-01-01 2011-03-31 0000702165 nsc:PensionBenefitsMember 2010-01-01 2010-03-31 0000702165 nsc:OpebMember 2010-01-01 2010-03-31 0000702165 2010-03-31 0000702165 2009-12-31 0000702165 us-gaap:CommercialPaperMember 2011-03-31 0000702165 us-gaap:CertificatesOfDepositMember 2011-03-31 0000702165 us-gaap:AllOtherCorporateBondsMember 2011-03-31 0000702165 us-gaap:CommercialPaperMember 2010-12-31 0000702165 us-gaap:CertificatesOfDepositMember 2010-12-31 0000702165 us-gaap:AllOtherCorporateBondsMember 2010-12-31 0000702165 nsc:TsopMember 2011-01-01 2011-03-31 0000702165 nsc:LtipMember 2011-01-01 2011-03-31 0000702165 nsc:RsuMember 2010-01-01 2010-03-31 0000702165 nsc:PsuMember 2010-01-01 2010-03-31 0000702165 nsc:RsuMember 2011-01-01 2011-03-31 0000702165 nsc:PsuMember 2011-01-01 2011-03-31 0000702165 2010-12-31 0000702165 2010-01-01 2010-03-31 0000702165 2011-03-31 0000702165 2011-01-01 2011-03-31 iso4217:USD xbrli:shares xbrli:pure iso4217:USD xbrli:shares false --12-31 Q1 2011 2011-03-31 10-Q 0000702165 353216661 Large Accelerated Filer NORFOLK SOUTHERN CORP 100000000 43000000 5 4 4 2 4 2 <div> <table style="font-size: 20px;"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><strong><font size="2" class="_mt">Three Months Ended</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><strong><font size="2" class="_mt">March 31,</font></strong></div></td></tr> <tr><td width="390"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><em><font size="2" class="_mt">($ in millions)</font></em></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Net income</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">325</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">257</font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Other comprehensive income</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">19</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">19</font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">    Total comprehensive income</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">344</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">276</font></div><font size="2" class="_mt"> </font></td></tr></table> </div> 43000000 0.044 128000000 140000000 142 nine 13000000 5 30 29000000 33000000 <div> <table style="font-size: 20px;" width="882"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><strong><font size="2" class="_mt">March 31, 2011</font></strong></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><strong><font size="2" class="_mt">December 31, 2010</font></strong></div></td></tr> <tr><td width="370"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td colspan="2"> <div align="center"><strong><font size="2" class="_mt">Carrying</font></strong></div></td> <td colspan="2"> <div align="center"><strong><font size="2" class="_mt">Fair</font></strong></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td colspan="2"> <div align="center"><strong><font size="2" class="_mt">Carrying</font></strong></div></td> <td colspan="2"> <div align="center"><strong><font size="2" class="_mt">Fair</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="2"> <div align="center"><u><strong><font size="2" class="_mt">Amount</font></strong></u></div></td> <td colspan="2"> <div align="center"><u><strong><font size="2" class="_mt">Value</font></strong></u></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="2"> <div align="center"><u><strong><font size="2" class="_mt">Amount</font></strong></u></div></td> <td colspan="2"> <div align="center"><u><strong><font size="2" class="_mt">Value</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><em><font size="2" class="_mt">($ in millions)</font></em></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Long-term investments</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">170 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">197 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">192 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">222 </font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Long-term debt, including current maturities</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">(6,617)</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">(7,768)</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">(6,925)</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">(7,971)</font></div><font size="2" class="_mt"> </font></td></tr></table> </div> 10 7 9 7 62.75 62.75 47.76 62.75 456000000 515000000 959000000 965000000 6000000 6000000 16000000 21000000 <div> <div style="font-size: 20px;"> <p align="left"><strong><font size="2" class="_mt">6.  Investments</font></strong></p><font size="2" class="_mt"> </font> <table style="font-size: 20px;" width="897"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td colspan="3"> <div align="center"><strong><font size="2" class="_mt">March 31,</font></strong></div></td> <td><font size="2" class="_mt"> </font></td> <td colspan="5"> <div align="center"><strong><font size="2" class="_mt">December 31,</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td colspan="3"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td><font size="2" class="_mt"> </font></td> <td colspan="5"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td colspan="9"> <div align="center"><em><font size="2" class="_mt">($ in millions)    </font></em></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td width="531"><font size="2" class="_mt">Short-term investments with average remaining maturities:</font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">  Available-for-sale:</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Certificates of deposit, <font class="_mt">4</font> and <font class="_mt">5</font> months, respectively</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">56</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">76</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Corporate bonds, <font class="_mt">2</font> and <font class="_mt">4</font> months, respectively</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">38</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">64</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Commercial paper, <font class="_mt">2</font> and <font class="_mt">4</font> months, respectively</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">25</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">35</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">       Total available-for-sale</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">119</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">175</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">  Held-to-maturity:</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Federal government bonds, <font class="_mt">7</font> and <font class="_mt">9</font> months, respectively</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">74</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">49</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Corporate bonds, <font class="_mt"><font class="_mt">7</font> </font>and <font class="_mt">10</font> months, respectively</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">59</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">59</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">       Total held-to-maturity</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">133</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">108</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">       Total short-term investments</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">252</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">283</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr></table><font size="2" class="_mt"><br /></font> <p><strong><font size="2" class="_mt">Investment in Conrail</font></strong></p> <p align="left"><font size="2" class="_mt">Through a limited liability company, Norfolk Southern and CSX Corporation (CSX) jointly own Conrail Inc. (Conrail), whose primary subsidiary is Consolidated Rail Corporation (CRC).  NS has a <font class="_mt">58</font>% economic and <font class="_mt">50</font>% voting interest in the jointly owned entity, and CSX has the remainder of the economic and voting interests.  NS' investment in Conrail was $<font class="_mt">965</font> million at March 31, 2011, and $<font class="_mt">959</font> million at December 31, 2010. </font></p> <p align="left"><font size="2" class="_mt">CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of Norfolk Southern Railway Company (NSR) and CSX Transportation, Inc. (CSXT).  The costs of operating the Shared Assets Areas are borne by NSR and CSXT based on usage.  In addition, NSR and CSXT pay CRC a fee for access to the Shared Assets Areas.  "Purchased services and rents" and "Fuel" include expenses for the use of the Shared Assets Areas totaling $<font class="_mt">33</font> million for the first quarter of 2011 and $<font class="_mt">29</font> million for the first quarter of 2010.  NS' equity in the earnings of Conrail, net of amortization, included in "Other income – net" was $<font class="_mt">6</font> million for the first quarters of 2011 and 2010.</font></p> <p align="left"><font size="2" class="_mt">"Accounts payable" includes $<font class="_mt">140</font> million at March 31, 2011, and $<font class="_mt">128</font> million at December 31, 2010, due to Conrail for the operation of the Shared Assets Areas.  In addition, "Other liabilities" includes $<font class="_mt">133</font> million at both March 31, 2011 and December 31, 2010, for long-term advances from Conrail, maturing <font class="_mt">2035</font>, that bear interest at an average rate of <font class="_mt">4.4</font>%.</font></p></div> </div> 2035 4 191000000 272000000 169000000 190000000 27000000 <div> <table style="font-size: 20px;"> <tr><td width="530"><font size="2" class="_mt">Expected volatility range</font></td> <td width="105"> <div align="right"><font size="2" class="_mt"><font class="_mt">28</font>% - <font class="_mt">32</font>%</font></div></td></tr> <tr><td><font size="2" class="_mt">Average expected volatility</font></td> <td> <div align="right"><font size="2" class="_mt">28%</font></div></td></tr> <tr><td><font size="2" class="_mt">Average expected option life</font></td> <td> <div align="right"><font size="2" class="_mt">8.5 years</font></div></td></tr> <tr><td><font size="2" class="_mt">Average risk-free interest rate</font></td> <td> <div align="right"><font size="2" class="_mt">3.42%</font></div></td></tr> <tr><td><font size="2" class="_mt">LTIP per-share grant-date fair value</font></td> <td> <div align="right"><font size="2" class="_mt">$22.26</font></div></td></tr> <tr><td><font size="2" class="_mt">TSOP per-share grant-date fair value</font></td> <td> <div align="right"><font size="2" class="_mt">$18.10</font></div></td></tr></table> </div> 0 0 15000000 147000000 104000000 0.50 0.50 0.50 0.50 851893 850595 12000000 20000000 335000000 383000000 five 286709 0 -2000000 -1000000 <div> <table style="font-size: 20px;"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="10"> <div align="center"><strong><font size="2" class="_mt">Three months ended March 31,</font></strong></div></td></tr> <tr><td width="389"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><u><strong><font size="2" class="_mt">Pension Benefits</font></strong></u></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><u><strong><font size="2" class="_mt">Other Benefits</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><em><font size="2" class="_mt">($ in millions)</font></em></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Service cost</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">7 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">7 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">4 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">4 </font></div></td></tr> <tr><td><font size="2" class="_mt">Interest cost</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">23 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">24 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">15 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">15 </font></div></td></tr> <tr><td><font size="2" class="_mt">Expected return on plan assets</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">(35)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">(36)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">(4)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">(4)</font></div></td></tr> <tr><td><font size="2" class="_mt">Amortization of net losses</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">17 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">12 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">11 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">12 </font></div></td></tr> <tr><td><font size="2" class="_mt">Amortization of prior service cost</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">- </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">1 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">- </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">- </font></div></td></tr> <tr><td><font size="2" class="_mt">    Net cost</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">12 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">8 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">26 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">27 </font></div></td></tr></table> </div> <div> <table style="font-size: 20px;" border="0" width="986"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="10"> <div align="center"><strong><font size="2" class="_mt">Three months ended March 31,</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td></tr> <tr><td width="524"><font size="2" class="_mt"> </font></td> <td width="19"><font size="2" class="_mt"> </font></td> <td colspan="4"> <div style="border-bottom: thin solid;" align="center"><strong><font size="2" class="_mt">Basic</font></strong></div></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="18"><font size="2" class="_mt"> </font></td> <td colspan="4"> <div style="border-bottom: thin solid;" align="center"><strong><font size="2" class="_mt">Diluted</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td colspan="8"><em><font size="2" class="_mt">        ($ in millions except per share, shares in millions)</font></em></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Net income</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">325 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">257 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">325 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">257 </font></div></td></tr> <tr><td><font size="2" class="_mt">Dividend equivalent payments</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">(2)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">(2)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">(2)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">(2)</font></div></td></tr> <tr><td><font size="2" class="_mt">Income available to common stockholders</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">323 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">255 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">323 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">255 </font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Weighted-average shares outstanding</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">355.2 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">369.5 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">355.2 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">369.5 </font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Dilutive effect of outstanding options and share-settled awards</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">5.3 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">5.4 </font></div></td></tr> <tr><td><font size="2" class="_mt">Adjusted weighted-average shares outstanding</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">360.5 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">374.9 </font></div></td></tr> <tr><td><font size="2" class="_mt">Earnings per share</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">0.91 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">0.69 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">0.90 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">0.68 </font></div><font size="2" class="_mt"> </font></td></tr></table> </div> 1000000000 50000000 175000000 25000000 40000000 42000000 0.0255 0.00 0.32 0.28 0.28 22.26 18.10 49.56 50.47 34.10 13000000 14000000 62.75 84700000 4500000000 <div> <div style="font-size: 20px;"> <p align="left"><strong><font size="2" class="_mt">5.  Stock Repurchase Program</font></strong></p> <p align="left"><font size="2" class="_mt">NS repurchased and retired <font class="_mt">5.3</font> million shares of Common Stock in the first quarter of 2011, at a cost of $<font class="_mt">343</font> million. There were no shares repurchased under this program in the first quarter of 2010.  The timing and volume of purchases is guided by management's assessment of market conditions and other pertinent factors.  Any near-term share repurchases are expected to be made with internally generated cash, cash on hand, or proceeds from borrowings.  Since 2005, NS has repurchased and retired <font class="_mt">84.7</font> million shares at a total cost of $<font class="_mt">4.5</font> billion.</font></p><br /><br /></div> </div> 1000000 2000000 40000000 276000000 344000000

1181000000

1093000000

807000000

934000000

33000000

32000000

12000000

9262000000

9386000000

-805000000

-786000000

1892000000

1939000000

28199000000

27728000000

2471000000

1832000000

175000000

119000000

64000000

76000000

35000000

38000000

56000000

25000000

175000000

119000000

996000000

1161000000

827000000

236000000

165000000

-591000000

827000000

236000000

<div> <div style="font-size: 20px;"> <p><strong><font size="2" class="_mt">10.  Commitments and Contingencies</font></strong></p> <p align="left"><strong><font size="2" class="_mt">Lawsuits</font></strong></p> <p align="left"><font size="2" class="_mt">Norfolk Southern and/or 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 earnings.  While the ultimate amount of liability incurred in any of these lawsuits and claims is dependent on future developments, in management's opinion, the recorded liability is adequate to cover the future payment of such liability and claims.  However, the final outcome of any of these lawsuits and claims cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter.  Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments are known.</font></p> <p align="left"><font size="2" class="_mt">Two of NS' customers, DuPont and South Mississippi Electric Power Association (SMEPA), have filed rate reasonableness complaints at the Surface Transportation Board (STB) alleging that the NS tariff rates for transportation of regulated movements are unreasonable.  NS is disputing these allegations.  Since June 1, 2009, in the case of DuPont, and since January 1, 2011, in the case of SMEPA, NS has been billing and collecting amounts from the customers based on the challenged tariff rates.  Management presently expects resolution of these cases to occur in late 2012 or 2013.  The cases have not progressed to a point where management can provide an estimate of the possible loss or range of loss, if any.</font></p> <p align="left"><strong><font size="2" class="_mt">Casualty Claims</font></strong></p> <p align="left"><font size="2" class="_mt">Casualty claims include employee personal injury and occupational claims as well as third-party claims, all exclusive of legal costs.  To aid in valuing its personal injury liability and determining the amount to accrue with respect to such claim during the year, NS' management utilizes studies prepared by an independent consulting actuarial firm.  Job-related accidental injury and occupational claims are subject to the Federal Employers' Liability Act (FELA), which is applicable only to railroads.  FELA's fault-based system produces results that are unpredictable and inconsistent as compared with a no-fault workers' compensation system.  The variability inherent in this system could result in actual costs being different from the liability recorded.  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 and is supported by the most recent actuarial study.  In all cases, NS records a liability when the expected loss for the claim is both probable and estimable.</font></p> <p align="left"><font size="2" class="_mt">The Consolidated Balance Sheets reflect long-term receivables for estimated recoveries from NS' insurance carriers for claims associated with the January 6, 2005, derailment in Graniteville, S.C.  During the first quarter of 2010, NS settled an arbitration claim ($<font class="_mt">100</font> million) with one of its insurance carriers with no adverse effect on NS' financial position, results of operations, or liquidity.  In March 2011, NS received an unfavorable ruling for an arbitration claim with another insurance carrier, and was denied recovery of the contested portion ($<font class="_mt">43</font> million) of the claim.  As a result, NS recorded a $<font class="_mt">43</font> million expense during the first quarter of 2011 for the receivables associated with the contested portion of the claim and a $<font class="_mt">15</font> million expense for other receivables affected by the ruling for which recovery is no longer probable.</font></p> <p align="left"><font size="2" class="_mt"><strong>Employee personal injury claims</strong> – The largest component of casualties and other claims expense is employee personal injury costs.  The independent actuarial firm engaged by NS provides quarterly studies to aid in valuing its employee personal injury liability and estimating its employee personal injury expense.  The independent actuarial firm studies NS' historical patterns of reserving for claims and subsequent settlements, taking into account relevant outside influences.  The actuary uses the results of these analyses to estimate the ultimate amount of liability, which includes amounts for incurred but unasserted claims.  NS adjusts its liability quarterly based upon management's assessment and the results of the study.  The estimate of loss liabilities is subject to inherent limitation given the difficulty of predicting future events such as jury decisions, court interpretations, or legislative changes and as such the actual loss may vary from the estimated liability recorded.</font></p><font size="2" class="_mt"><strong>Occupational claims</strong> – Occupational claims (including asbestosis and other respiratory diseases, as well as conditions allegedly related to repetitive motion) are often not caused by a specific accident or event but rather allegedly result from a claimed exposure over time.  Many such claims are being asserted by former or retired employees, some of whom have not been employed in the rail industry for decades.  The independent actuarial firm provides an estimate of the occupational claims liability based upon NS' history of claim filings, severity, payments, and other pertinent facts.  The liability is dependent upon management's judgments made as to the specific case reserves as well as judgments of the consulting independent actuarial firm in the periodic studies.  The independent actuarial firm's estimate of ultimate loss includes a provision for those claims that have been incurred but not reported.  This provision is derived by analyzing industry data and projecting NS' experience into the future as far as can be reasonably determined.  NS adjusts its liability quarterly based upon management's assessment and the results of the study.  However, it is possible that the recorded liability may not be adequate to cover the future payment of claims.  Adjustments to the recorded liability are reflected in operating expenses in the periods in which such adjustments become known. </font> <p><font size="2" class="_mt"><strong>Third-party claims</strong> – NS records a liability for third-party claims including those for highway crossing accidents, trespasser and other injuries, automobile liability, property damage, and lading damage.  The independent actuarial firm assists with the calculation of potential liability for third-party claims, except lading damage, based upon NS' experience including number and timing of incidents, amount of payments, settlement rates, number of open claims, and legal defenses.  The actuarial estimate includes a provision for claims that have been incurred but have not yet been reported.  Each quarter NS adjusts its liability based upon management's assessment and the results of the study.  Given the inherent uncertainty in regard to the ultimate outcome of third-party claims, it is possible that the actual loss may differ from the estimated liability recorded.</font></p> <p align="left"><strong> </strong><font size="2" class="_mt"><strong>Environmental Matters</strong> </font></p> <p align="left"><font size="2" class="_mt">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 Consolidated Balance Sheets and are not netted against the associated NS liability.  Environmental engineers regularly participate in ongoing evaluations of all known sites and in determining any necessary adjustments to liability estimates.  NS also has an Environmental Policy Council, composed of senior managers, to oversee and interpret its environmental policy.</font></p> <p align="left"><font size="2" class="_mt">NS' Consolidated Balance Sheets include liabilities for environmental exposures of $<font class="_mt">32</font> million at March 31, 2011, and $<font class="_mt">33</font> million at December 31, 2010 (of which $<font class="_mt">12</font> million is classified as a current liability at the end of each period).  At March 31, 2011, the liability represents NS' estimate of the probable cleanup and remediation costs based on available information at <font class="_mt">142</font> known locations.  As of that date, <font class="_mt">nine</font> sites accounted for $<font class="_mt">13</font> 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 <font class="_mt">five</font> years; however, some costs will be paid out over a longer period.</font></p> <p align="left"><font size="2" class="_mt">At <font class="_mt">30</font> locations, one or more Norfolk Southern 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. </font></p> <p align="left"><font size="2" class="_mt">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.</font></p> <p><font size="2" class="_mt">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, 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 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 environmental 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 potentially other unidentified environmental sites and matters are likely to arise from time to time.  The resulting liabilities could have a significant effect on financial position, results of operations, or liquidity in a particular year or quarter.</font></p> <p align="left"><font size="2" class="_mt">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 NS is aware.  Further, 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.</font></p> <p align="left"><strong><font size="2" class="_mt">Insurance</font></strong></p> <p align="left"><font size="2" class="_mt">Norfolk Southern obtains on behalf of itself and its subsidiaries insurance for potential losses for third-party liability and first-party property damages.  NS is currently self-insured up to $<font class="_mt">50</font> million and above $<font class="_mt">1</font> billion per occurrence for bodily injury and property damage to third parties and up to $<font class="_mt">25</font> million and above $<font class="_mt">175</font> million per occurrence for property owned by NS or in NS' care, custody, or control.</font></p> <p align="left"><strong><font size="2" class="_mt">Purchase Commitments</font></strong></p> <p align="left"><font size="2" class="_mt">At March 31, 2011, NS had outstanding purchase commitments totaling approximately $<font class="_mt">1.2</font> billion for long-term service contracts through 2019 as well as locomotives, track material, RoadRailer® trailers, and freight cars, in connection with its capital programs through 2014.</font></p></div> </div>

0.34

0.4

1350000000

357362604

353216661

358000000

354000000

<div> <p align="left"><strong><font size="2" class="_mt">8.  Comprehensive Income</font></strong></p><font size="2" class="_mt"> </font> <table style="font-size: 20px;"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><strong><font size="2" class="_mt">Three Months Ended</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><strong><font size="2" class="_mt">March 31,</font></strong></div></td></tr> <tr><td width="390"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><em><font size="2" class="_mt">($ in millions)</font></em></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Net income</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">325</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">257</font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Other comprehensive income</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">19</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">19</font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">    Total comprehensive income</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">344</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">276</font></div><font size="2" class="_mt"> </font></td></tr></table><font size="2" class="_mt"> </font> <p align="left"><font size="2" class="_mt">"Other comprehensive income" in 2011 and 2010 reflects primarily, net of tax, the amortization of the actuarial net losses and prior service cost for the pension and other postretirement benefit plans.</font></p> </div>

204000000

211000000

7971000000

7768000000

40000000

112000000

145000000

148000000

7088000000

7212000000

12000000

11000000

17000000

1000000

4000000

36000000

4000000

35000000

15000000

24000000

15000000

23000000

27000000

8000000

26000000

12000000

4000000

7000000

4000000

7000000

206000000

213000000

<div> <p align="left"><font size="2" class="_mt"><strong>1.  Stock-Based Compensation</strong> </font></p> <p align="left"><font size="2" class="_mt">In the first quarter of 2011, a committee of non-employee directors of Norfolk Southern's Board of Directors granted stock options, restricted stock units and performance share units (PSUs) pursuant to the Long-Term Incentive Plan (LTIP) and granted stock options pursuant to the Thoroughbred Stock Option Plan (TSOP) as discussed below.  Stock-based compensation expense was $<font class="_mt">42</font> million during the first quarter of 2011 and $<font class="_mt">40</font> million during the same period of 2010.  The total tax effects recognized in income in relation to stock-based compensation were net benefits of $<font class="_mt">14</font> million and $<font class="_mt">13</font> million for the quarters ended March 31, 2011 and 2010, respectively.</font></p> <p align="left"><strong><font size="2" class="_mt">Stock Options</font></strong></p> <p><font size="2" class="_mt">In the first quarter of 2011, <font class="_mt">627,700</font> options were granted under the LTIP and <font class="_mt">257,000</font> options were granted under the TSOP.  In each case, the grant price was $<font class="_mt">62.75</font>, which was the greater of the average fair market value of Norfolk Southern common stock (Common Stock) or the closing price of the Common Stock on the effective date of the grant, and the options have a term of <font class="_mt">ten</font> years.  The options granted under the LTIP and TSOP in 2011 may not be exercised prior to the <font class="_mt">fourth</font> and <font class="_mt">third</font> anniversaries of the date of grant, respectively.  Holders of the 2011 options granted under the LTIP who remain actively employed receive cash dividend equivalent payments for <font class="_mt">four</font> years in an amount equal to the regular quarterly dividends paid on Common Stock.  Dividend equivalent payments are not made on TSOP options.</font></p> <p align="left"><font size="2" class="_mt">The fair value of each option award in 2011 was measured on the date of grant using a lattice-based option valuation model.  Expected volatilities are based on implied volatilities from traded options on Common Stock and historical volatility of Common Stock.  NS uses historical data to estimate option exercises and employee terminations within the valuation model.  The average expected option life is derived from the output of the valuation model and represents the period of time that options granted are expected to be outstanding.  The average risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.  A dividend yield of <font class="_mt">zero</font> was used for LTIP options during the four-year period in which dividend equivalent payments are made.  A dividend yield of <font class="_mt">2.55</font>% was used for LTIP options for periods where no dividend equivalent payments are made as well as for TSOP options which do not receive dividend equivalents.  The assumptions for the 2011 LTIP and TSOP grants are shown in the following table:</font></p><font size="2" class="_mt"> </font> <table style="font-size: 20px;"> <tr><td width="530"><font size="2" class="_mt">Expected volatility range</font></td> <td width="105"> <div align="right"><font size="2" class="_mt"><font class="_mt">28</font>% - <font class="_mt">32</font>%</font></div></td></tr> <tr><td><font size="2" class="_mt">Average expected volatility</font></td> <td> <div align="right"><font size="2" class="_mt">28%</font></div></td></tr> <tr><td><font size="2" class="_mt">Average expected option life</font></td> <td> <div align="right"><font size="2" class="_mt">8.5 years</font></div></td></tr> <tr><td><font size="2" class="_mt">Average risk-free interest rate</font></td> <td> <div align="right"><font size="2" class="_mt">3.42%</font></div></td></tr> <tr><td><font size="2" class="_mt">LTIP per-share grant-date fair value</font></td> <td> <div align="right"><font size="2" class="_mt">$22.26</font></div></td></tr> <tr><td><font size="2" class="_mt">TSOP per-share grant-date fair value</font></td> <td> <div align="right"><font size="2" class="_mt">$18.10</font></div></td></tr></table><font size="2" class="_mt"> </font> <p align="left"><font size="2" class="_mt">For the first three months of 2011, options relating to <font class="_mt">759,193</font> shares were exercised, yielding $<font class="_mt">20</font> million of cash proceeds and $<font class="_mt">10</font> million of tax benefit recognized as additional paid-in capital.  For the first three months of 2010, options relating to <font class="_mt">592,110</font> shares were exercised yielding $<font class="_mt">12</font> million of cash proceeds and $<font class="_mt">7</font> million of tax benefit recognized as additional paid-in capital.</font></p> <p align="left"><strong><font size="2" class="_mt">Restricted Stock Units and Restricted Shares</font></strong></p> <p align="left"><font size="2" class="_mt">There were <font class="_mt">177,400</font> restricted stock units granted in 2011, with an average grant-date fair value of $<font class="_mt">62.75</font> and a <font class="_mt">five</font>-year restriction period.  The restricted stock units granted in 2011 will be settled through the issuance of shares of Common Stock.</font></p> <p align="left"><font size="2" class="_mt">During the first quarter of 2011, no restricted stock units were earned and paid out.  The total related tax benefit recognized as additional paid-in capital was less than $<font class="_mt">1</font> million in the first quarter of 2011.</font></p> <p align="left"><font size="2" class="_mt">During the first quarter of 2010, <font class="_mt">286,709</font> restricted stock units were earned and paid out in cash with a weighted average fair value of $<font class="_mt">48.88</font>.  Also earned and distributed were <font class="_mt">433,236</font> restricted shares with a weighted-average grant-date fair value of $<font class="_mt">34.10</font>.  The total related tax benefit recognized as additional paid-in capital was $<font class="_mt">2</font> million in the first quarter of 2010.</font></p> <p align="left"><strong><font size="2" class="_mt">Performance Share Units</font></strong></p> <p align="left"><font size="2" class="_mt">PSUs provide for awards based on achievement of certain predetermined corporate performance goals at the end of a three-year cycle.  During the first quarter of 2011, there were <font class="_mt">580,900</font> PSUs granted with a grant-date fair value of $<font class="_mt">62.75</font>.  The PSUs granted in 2011 and 2010 will be paid in the form of shares of Common Stock.</font></p> <p align="left"><font size="2" class="_mt">During the first quarter of 2011, <font class="_mt">850,595</font> PSUs were earned and paid out, one-half in shares of Common Stock and one-half in cash.  These PSUs had a grant-date fair value of $<font class="_mt">50.47</font> per unit and a fair value at payout of $<font class="_mt">62.75</font> per unit.  The total related tax benefit recognized as additional paid-in capital was $<font class="_mt">2</font> million for the first quarter of 2011.</font></p> <p align="left"><font size="2" class="_mt">During the first quarter of 2010, <font class="_mt">851,893</font> PSUs were earned and paid out, one-half in shares of Common Stock and one-half in cash.  These PSUs had a grant-date fair value of $<font class="_mt">49.56</font> per unit and a fair value at payout of $<font class="_mt">47.76</font> per unit.  The total related tax expense recognized as additional paid-in capital was less than $<font class="_mt">1</font> million for the first quarter of 2010.</font></p> </div>

133000000

0.69

0.91

0.68

0.90

<div> <p align="left"><strong><font size="2" class="_mt">3.  Earnings Per Share</font></strong></p><font size="2" class="_mt"> </font> <table style="font-size: 20px;" border="0" width="986"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="10"> <div align="center"><strong><font size="2" class="_mt">Three months ended March 31,</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="61"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td></tr> <tr><td width="524"><font size="2" class="_mt"> </font></td> <td width="19"><font size="2" class="_mt"> </font></td> <td colspan="4"> <div style="border-bottom: thin solid;" align="center"><strong><font size="2" class="_mt">Basic</font></strong></div></td> <td width="18"><font size="2" class="_mt"> </font></td> <td width="18"><font size="2" class="_mt"> </font></td> <td colspan="4"> <div style="border-bottom: thin solid;" align="center"><strong><font size="2" class="_mt">Diluted</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td colspan="8"><em><font size="2" class="_mt">        ($ in millions except per share, shares in millions)</font></em></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Net income</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">325 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">257 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">325 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">257 </font></div></td></tr> <tr><td><font size="2" class="_mt">Dividend equivalent payments</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">(2)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">(2)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">(2)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">(2)</font></div></td></tr> <tr><td><font size="2" class="_mt">Income available to common stockholders</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">323 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">255 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">323 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">255 </font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Weighted-average shares outstanding</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">355.2 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">369.5 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">355.2 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">369.5 </font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Dilutive effect of outstanding options and share-settled awards</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">5.3 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">5.4 </font></div></td></tr> <tr><td><font size="2" class="_mt">Adjusted weighted-average shares outstanding</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">360.5 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">374.9 </font></div></td></tr> <tr><td><font size="2" class="_mt">Earnings per share</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">0.91 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">0.69 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">0.90 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">0.68 </font></div><font size="2" class="_mt"> </font></td></tr></table><font size="2" class="_mt"> </font> <p align="left"><font size="2" class="_mt">During the first quarters of 2011 and 2010, dividend equivalent payments were made to holders of stock options and restricted stock units.  For purposes of computing basic earnings per share, the total amount of dividend equivalent payments made to holders of stock options and restricted stock units were deducted from net income to determine income available to common stockholders.  For purposes of computing diluted earnings per share, NS evaluates on a grant-by-grant basis those stock options and restricted stock units receiving dividend equivalent payments under the two-class and treasury stock methods to determine which method is the more dilutive for each award.  For all stock option awards, for all periods presented, the two-class method was more dilutive and, as a result, net income was reduced by the amount of dividend equivalent payments on these awards to determine income available to common stockholders.  For all restricted stock unit awards, for all periods presented, the treasury stock method was more dilutive and, as such, net income was not adjusted for the effect of these dividend equivalent payments.  The diluted calculations exclude options having exercise prices exceeding the average market price of Common Stock as follows: <font class="_mt">zero</font> in 2011 and 2010. </font></p> </div>

-2000000

0.58

0.50

<div> <p align="left"><strong><font size="2" class="_mt">9.  Fair Value</font></strong></p> <p align="left"><strong><font size="2" class="_mt">Fair Value Measurements</font></strong></p> <p align="left"><font size="2" class="_mt">ASC 820-10, <em>"Fair Value Measurements,"</em> established a framework for measuring fair value and a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows: </font></p> <blockquote> <center> <table style="font-size: 20px;" border="0" width="905"> <tr><td valign="top" width="79"> <p align="left"><font size="2" class="_mt">Level 1</font></p></td> <td valign="top" width="538"> <p align="left"><font size="2" class="_mt">Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that NS has the ability to access.</font></p></td></tr> <tr><td> <p align="left"> </p></td> <td> <p align="left"> </p></td></tr> <tr><td> <p align="left"><font size="2" class="_mt">Level 2</font></p></td> <td> <p align="left"><font size="2" class="_mt">Inputs to the valuation methodology include:</font></p></td></tr> <tr><td colspan="2"> <blockquote> <blockquote> <ul> <li> <div align="left"><font style="font-family: times new roman;" size="2" class="_mt">Quoted prices for similar assets or liabilities in active markets; <br /></font></div> </li> <li> <div align="left"><font style="font-family: times new roman;" size="2" class="_mt">Quoted prices for identical or similar assets or liabilities in inactive markets; <br /></font></div> </li> <li> <div align="left"><font style="font-family: times new roman;" size="2" class="_mt">Inputs other than quoted prices that are observable for the asset or liability; <br /></font></div> </li> <li> <div align="left"><font style="font-family: times new roman;" size="2" class="_mt">Inputs that are derived principally from or corroborated by observable market data by correlation or other means. </font></div></li></ul></blockquote></blockquote></td></tr> <tr><td> <p align="left"> </p></td> <td> <p align="left"> </p></td></tr> <tr><td> <p align="left"> </p></td> <td> <p align="left"><font size="2" class="_mt">If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.</font></p></td></tr> <tr><td> <p align="left"> </p></td> <td> <p align="left"> </p></td></tr> <tr><td valign="top"> <p align="left"><font size="2" class="_mt">Level 3</font></p></td> <td valign="top"> <p align="left"><font size="2" class="_mt">Inputs to the valuation methodology are unobservable and significant to the fair value measurement.</font></p></td></tr></table></center></blockquote> <p align="left"><font size="2" class="_mt">The asset's or liability's fair value measurement level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  At March 31, 2011 and December 31, 2010, for assets measured at fair value on a recurring basis, there were $<font class="_mt">119</font> million and $<font class="_mt">175</font> million of available-for-sale securities valued under level 2 of the fair value hierarchy, respectively.  There were no available-for-sale securities valued under level 1 or level 3 valuation techniques. </font></p> <p align="left"><strong><font size="2" class="_mt">Fair Values of Financial Instruments</font></strong></p> <p align="left"><font size="2" class="_mt">NS has evaluated the fair values of financial instruments and methods used to determine those fair values.  The fair values of "Cash and cash equivalents," "Short-term investments," "Accounts receivable," "Accounts payable," and "Short-term debt" approximate carrying values because of the short maturity of these financial instruments.  The carrying value of corporate-owned life insurance is recorded at cash surrender value and, accordingly, approximates fair value.  The carrying amounts and estimated fair values for the remaining financial instruments, excluding derivatives and investments accounted for under the equity method, consisted of the following:</font></p><font size="2" class="_mt"> </font> <table style="font-size: 20px;" width="882"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><strong><font size="2" class="_mt">March 31, 2011</font></strong></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><strong><font size="2" class="_mt">December 31, 2010</font></strong></div></td></tr> <tr><td width="370"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td colspan="2"> <div align="center"><strong><font size="2" class="_mt">Carrying</font></strong></div></td> <td colspan="2"> <div align="center"><strong><font size="2" class="_mt">Fair</font></strong></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td colspan="2"> <div align="center"><strong><font size="2" class="_mt">Carrying</font></strong></div></td> <td colspan="2"> <div align="center"><strong><font size="2" class="_mt">Fair</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="2"> <div align="center"><u><strong><font size="2" class="_mt">Amount</font></strong></u></div></td> <td colspan="2"> <div align="center"><u><strong><font size="2" class="_mt">Value</font></strong></u></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="2"> <div align="center"><u><strong><font size="2" class="_mt">Amount</font></strong></u></div></td> <td colspan="2"> <div align="center"><u><strong><font size="2" class="_mt">Value</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><em><font size="2" class="_mt">($ in millions)</font></em></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Long-term investments</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">170 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">197 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">192 </font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">222 </font></div><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Long-term debt, including current maturities</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">(6,617)</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">(7,768)</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">(6,925)</font></div><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td><font size="2" class="_mt"> </font> <div align="right"><font size="2" class="_mt">(7,971)</font></div><font size="2" class="_mt"> </font></td></tr></table><font size="2" class="_mt"><br /></font> <p align="left"><font size="2" class="_mt">Underlying net assets were used to estimate the fair value of investments with the exception of notes receivable, which are based on future discounted cash flows.  The fair values of long-term 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.</font></p> <p align="left"><font size="2" class="_mt">Carrying amounts of available-for-sale securities reflect immaterial unrealized holding gains on March 31, 2011 and December 31, 2010.  Sales of available-for-sale securities were $<font class="_mt">55</font> million and $<font class="_mt">20</font> million for the three months ended March 31, 2011 and 2010, respectively.</font></p> </div>

254000000

389000000

1000000

49000000

59000000

74000000

59000000

108000000

133000000

<div> <div style="font-size: 20px;"> <p align="left"><strong><font size="2" class="_mt">2.  Income Taxes</font></strong></p> <p align="left"><font size="2" class="_mt">During the first quarter of 2010, the Patient Protection and Affordable Care Act, and the Health Care and Education Reconciliation Act of 2010 were signed into law.  Provisions of the Acts eliminated, after 2012, the tax deduction available for reimbursed prescription drug expenses under the Medicare Part D retiree drug subsidy program.  As required by the Financial Accounting Standards Board Accounting Standards Codification (ASC) 740, <em>"Income Taxes,"</em> NS recorded a $<font class="_mt">27</font> million charge to deferred tax expense in the first quarter of 2010.</font></p> <p align="left"><font size="2" class="_mt">NS' balance of unrecognized tax benefits reported at December 31, 2010, decreased by $<font class="_mt">38</font> million during the first quarter of 2011, primarily because the timing of deductibility of a tax position became certain during the quarter.  NS' consolidated income tax return for 2008 is being audited by the Internal Revenue Service (IRS) and the examination, along with the IRS' review of certain refund claims for prior years, is expected to be completed within the next six months.  If resolved favorably, the completion of the examination and review could reduce unrecognized tax benefits and income tax expense by approximately $<font class="_mt">40</font> million.</font></p><br /><br /></div> </div>

3000000

199000000

190000000

101000000

127000000

-17000000

-19000000

209000000

27000000

119000000

112000000

50000000

72000000

<div> <table style="font-size: 20px;" width="897"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td colspan="3"> <div align="center"><strong><font size="2" class="_mt">March 31,</font></strong></div></td> <td><font size="2" class="_mt"> </font></td> <td colspan="5"> <div align="center"><strong><font size="2" class="_mt">December 31,</font></strong></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td colspan="3"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td><font size="2" class="_mt"> </font></td> <td colspan="5"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td colspan="9"> <div align="center"><em><font size="2" class="_mt">($ in millions)    </font></em></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td width="531"><font size="2" class="_mt">Short-term investments with average remaining maturities:</font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">  Available-for-sale:</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Certificates of deposit, <font class="_mt">4</font> and <font class="_mt">5</font> months, respectively</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">56</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">76</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Corporate bonds, <font class="_mt">2</font> and <font class="_mt">4</font> months, respectively</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">38</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">64</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Commercial paper, <font class="_mt">2</font> and <font class="_mt">4</font> months, respectively</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">25</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">35</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">       Total available-for-sale</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">119</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">175</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">  Held-to-maturity:</font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Federal government bonds, <font class="_mt">7</font> and <font class="_mt">9</font> months, respectively</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">74</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">49</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">   Corporate bonds, <font class="_mt"><font class="_mt">7</font> </font>and <font class="_mt">10</font> months, respectively</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">59</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">59</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">       Total held-to-maturity</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">133</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-left-color: #000; border-top-color: #000; border-bottom: #000 thin solid; border-right-color: #000;" align="right"><font size="2" class="_mt">108</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">       Total short-term investments</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">252</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">283</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr></table> </div>

699000000

765000000

17530000000

17127000000

28199000000

27728000000

2082000000

1567000000

6925000000

6617000000

6567000000

6554000000

358000000

63000000

2193000000

2199000000

1200000000

-233000000

-861000000

-360000000

-382000000

758000000

652000000

255000000

323000000

255000000

323000000

1683000000

2020000000

555000000

600000000

240000000

72000000

304000000

246000000

19000000

244000000

309000000

1793000000

1794000000

20000000

27000000

-51000000

-55000000

343000000

126000000

142000000

155000000

4000000

256000000

423000000

<div> <div style="font-size: 20px;"> <p align="left"><strong><font size="2" class="_mt">7.  Pensions and Other Postretirement Benefits</font></strong></p> <p align="left"><font size="2" class="_mt">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 are covered, reduced by any deductibles, co-payments, Medicare payments, and in some cases, coverage provided under other group insurance policies.</font></p><font size="2" class="_mt"> </font> <table style="font-size: 20px;"> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="10"> <div align="center"><strong><font size="2" class="_mt">Three months ended March 31,</font></strong></div></td></tr> <tr><td width="389"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"> <div align="center"><u><strong><font size="2" class="_mt">2011</font></strong></u></div></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="20"><font size="2" class="_mt"> </font></td> <td width="60"> <div align="center"><u><strong><font size="2" class="_mt">2010</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><u><strong><font size="2" class="_mt">Pension Benefits</font></strong></u></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><u><strong><font size="2" class="_mt">Other Benefits</font></strong></u></div></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td colspan="4"> <div align="center"><em><font size="2" class="_mt">($ in millions)</font></em></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td></tr> <tr><td><font size="2" class="_mt">Service cost</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">7 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">7 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">4 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div align="right"><font size="2" class="_mt">4 </font></div></td></tr> <tr><td><font size="2" class="_mt">Interest cost</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">23 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">24 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">15 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">15 </font></div></td></tr> <tr><td><font size="2" class="_mt">Expected return on plan assets</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">(35)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">(36)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">(4)</font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">(4)</font></div></td></tr> <tr><td><font size="2" class="_mt">Amortization of net losses</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">17 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">12 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">11 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">12 </font></div></td></tr> <tr><td><font size="2" class="_mt">Amortization of prior service cost</font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">- </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">1 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">- </font></div></td> <td><font size="2" class="_mt"> </font></td> <td><font size="2" class="_mt"> </font></td> <td> <div style="border-bottom: thin solid;" align="right"><font size="2" class="_mt">- </font></div></td></tr> <tr><td><font size="2" class="_mt">    Net cost</font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">12 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">8 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">26 </font></div></td> <td><font size="2" class="_mt"> </font></td> <td> <div align="right"><font size="2" class="_mt">$</font></div></td> <td> <div style="border-bottom: double;" align="right"><font size="2" class="_mt">27 </font></div></td></tr></table><font size="2" class="_mt"><br /></font></div> </div>

20000000

55000000

-10000000

21000000

32000000

257000000

325000000

23231000000

23451000000

128000000

408000000

9224000000

9094000000

2238000000

2620000000

<div> <p align="left"><strong><font size="2" class="_mt">4.  Stockholders Equity</font></strong></p> <p align="left"><font size="2" class="_mt">Common stock is reported net of shares held by consolidated subsidiaries of Norfolk Southern, which at March 31, 2011 and December 31, 2010, amounted to <font class="_mt">20,320,777</font> and <font class="_mt">20,336,843</font> shares, respectively, with a cost of $<font class="_mt">19</font> million as of the end of both periods.</font></p> </div>

ten

fourth

third

580900

177400

48.88

8.5

0.0342

627700

257000

100000000

283000000

252000000

10669000000

10601000000

433236

592110

759193

5300000

343000000

192000000

170000000

222000000

197000000

7000000

10000000

199000000

102000000

20336843

20320777

19000000

-38000000

5400000

5300000

374900000

360500000

369500000

355200000