NSC 10-K Fiscal year ended Dec. 31, 2012

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended DECEMBER 31, 2012

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from ___________ to___________

Commission file number 1-8339

NORFOLK SOUTHERN CORPORATION
(Exact name of registrant as specified in its charter)

Virgini a (State or other jurisdiction of incorporation)	52-1188014 (IRS Employer Identification No.)
Three Commercial Place Norfolk, Virginia (Address of principal executive offices)	23510-2191 Zip Code
Registrant’s telephone number, including area code:	(757) 629-2680
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class	Name of each exchange on which registered
Norfolk Southern Corporation
Common Stock (Par Value $1.00)	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well - known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (X) No ( )

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ( ) No (X)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( )

Indicate by check mark whether the registrant has submitted electroni cally and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months. Yes (X) No ( )

Indicate by check mark if disclosure of delinqu ent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any a mendme nt to this Form 10-K. (X )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer (X) Accelerated filer ( ) Non-accelerated filer ( ) Smaller reporting company ( )

Indicate by check mark whether the registrant is a shell comp any (as defined in Rule 12b-2 of the Exchange Act). Yes ( ) No (X)

The aggregate market value of the voting common equity held by non-affiliates a t June 30, 2012 , was $ 22,858,970, 93 2 (based on the closing price as quoted on the New York Stock Exchange on that date).

The number of shares outstanding of each of the registrant’s classes of common stock, a t January 31, 2013 : 314,516,374 (excluding 20,320,777 shares held by the registrant's consolidated subsidiaries).

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Registrant’s definitive proxy statements to be filed electronically pursuant to Regulation 14A not later than 120 days after the end of the fiscal year, are incorporated herein by reference in Part III.

		TABLE OF CONTENTS
		NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES
				Page
Part I.	Items 1 and 2.	Business and Properties		K3
	Item 1A.	Risk Factors		K1 3
	Item 1B.	Unresolved Staff Comments		K1 6
	Item 3.	Legal Proceedings		K1 6
	Item 4.	Mine Safety Disclosures		K1 6
		Executive Officers of the Registrant		K1 7
Part II.	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and		K1 8
		Issuer Purchases of Equity Securities
	Item 6.	Selected Financial Data		K1 9
	Item 7.	Management’s Discussion and Analysis of Financial Condition and		K20
		Results of Operations
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		K 37
	Item 8.	Financial Statements and Supplementary Data		K 38
	Item 9.	Changes in and Disagreements with Accountants on Accounting and		K 78
		Financial Disclosure
	Item 9A.	Controls and Procedures		K 78
	Item 9B.	Other Information		K7 8
Part III.	Item 10.	Directors, Executive Officers, and Corporate Governance		K7 9
	Item 11.	Executive Compensation		K7 9
	Item 12.	Security Ownership of Certain Beneficial Owners and Management		K 80
		and Related Stockholder Matters
	Item 13.	Certain Relationships and Related Transactions, and Director Independence		K8 3
	Item 14.	Principal Accountant Fees and Services		K8 3
Part IV.	Item 15.	Exhibits and Financial Statements Schedules		K8 4
		Power of Attorney		K 99
		Signatures		K 99

PART I

NORFOLK SOUTHERN C ORPORATION AND SUBSIDIARIES

Item 1. Business and Item 2. Properties

GENERAL – Norfolk Southern Corporation is a Norfolk, Virginia based company that owns a major freight railroad, Norfolk Southern Railway Company .  Norfolk Southern Corporation was incorporated on July 23, 1980, under the laws of the Commonwealth of Virginia. Our common stock (Common Stock) is listed on the New York Stock Exchange (NYSE) unde r the symbol “NSC.”

Unless indicated otherwise, Norfolk Southern Corporation and its subsidiaries , including Norfolk Southern Railway Company, are referred to collectively as NS , we, us, and our .

We are primarily engaged in the rail transportation of raw materials, intermediate products, and finished goods primarily in the Southeast, East, and Midwest and, via interchange with rail carriers, to and from the rest of the United States. We also transport overseas freight through several Atlantic and Gulf Coast p orts. We provide comprehensive logistics services and offer the most extensive intermodal network in the eastern half of the United States.

We make available free of charge through our website, www.nscorp.com, our annual report on Form 10-K, quar terly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and Exchange Commission (SEC). In addition, the following documents are available on our website and in print to any shareholder who requests them:

• Corporate Governance Guidelines

• Charters of the Committees of the Board of Directors

• The Thoroughbred Code of Ethics

• Code of Ethical Conduct for Senior Financial Officers

• Categorical Independence Standards for Directors

RAILROAD OPERATIONS – A t December 31, 2012 , our railroads operated approximately 20,000 miles of road in 22 states and the District of Columbia.

Our system reach es many individual industries, electric generating facilities, mines (in western Virginia, eastern Kentucky, southern and northern West Virginia, and western Pennsylvania), distribution centers, transload facilitie s, and other businesses located in our service area.

Corridors with heaviest freight volume:

• New York City area to Chicago (via Allentown and Pittsburgh)

• Chicago to Macon (via Cincinna ti, Chattanooga, and Atlanta)

• Appalachian coal fields of Virginia, West Virginia, and Kentucky to Norfolk, Virginia and Sandusky, Ohio

• Cleveland to Kansas City

• Birmingham to Meridian

• Memphis to Chattanooga

The miles operated, which include major leased li nes between Cincinnati, Ohio, and Chattanooga, Tennessee , and an exclusive operating agreement for trackage rights over property owned by North Carolina Railroad Company, were as follows:

	Mileage Operated at December 31, 2012
			Second		Passing
			and		Track,
	Miles		Other		Crossovers		Way and
	of		Main		and		Yard
	Road		Track		Turnouts		Switching		Total
Owned	15,375		2,780		2,001		8,292		28,448
Operated under lease, contract or trackage rights	4,648		1,881		381		802		7,712
Total	20,023		4,661		2,382		9,094		36,160

Triple Crown Operations - Triple Crown Services Company (Triple Crown), one of our subsidiar ies , provides bimodal truckload transportation service utilizing RoadRailer® trailers, a hybrid technology that facilitates both over-the-road and on-the-rail transportation utilizing enclosed trailers that are pulled over the highways in tractor-trailer conf iguration and over the rails by locomotives. In addition, Triple Crown utilizes conventional trailers that are also moved on rail flatcars. Triple Crown provides service in the eastern United States as well as Ontario and Quebec through a network of term inals strategically located in 13 cities.

The following table sets forth certain statistics relating to our railroads’ operations for the past 5 years:

	Years ended December 31,
	2012		2011		2010		2009		2008
Revenue ton miles (billions)	186		192		182		159		195
Freight train miles traveled (millions)	76.3		75.7		72.6		67.5		80.0
Revenue per ton mile	$0.0595		$0.0582		$0.0523		$0.0503		$0.0546
Revenue ton miles per employee-hour worked	3,153		3,207		3,218		2,900		3,075
Ratio of railway operating expenses to railway operating revenues	71.7%		71.2%		71.9%		75.4%		71.1%

RAILWAY OPERATING REVENUES – T otal railway operating revenues were $ 11.0 billion in 2012 .  Following is an overview of our three major market groups.

COAL – Coal is our largest commodity group as measured by revenues. Revenues from coal accounted for about 26% of our total railway operating revenues in 2012 . We handled a total of 156.1 million tons , or 1.4 million carloads, in 2012 , mo st of which originated on our lines from major eastern coal basins , with the balance from major western coal basins via Memphis and Chicago gate ways. Our coal franchise supports the electric generation market, serving approximately 100 coal generation pla nts, as well as the export, metallurgical and industrial markets primarily through direct rail and river, lake, and coastal facilities, including various terminals on the Ohio River , Lambert’s Point in Norfolk, Virginia, the Port of Baltimore, and Lake Eri e.

See the discussion o f coal revenues and tonnage , by type of coal, in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

GENERAL MERCHANDISE – Our general merchandise market group is composed of f ive major commodity groupings: chemicals; agriculture, consumer products and government ; metals and construction ; automotive; and paper, clay and forest products.

• Chemicals includes sulfur and related chemicals, petroleum products, chlorine and bleachin g compounds, plastics, rubber, industrial chemicals, chemical wastes, and municipal wastes.

• A griculture, consumer products, and government includes soybeans, wheat, corn, fertilizer, livestock and poultry feed, food oils, flour, beverages, canned goods, sweeteners, consumer products, ethanol, and items for the military.

• M etals and construction includes steel, aluminum products, machinery, scrap metals, cement, aggregates, bricks, and minerals .

• A utomotive includes finished v ehicles for BMW, Chrysler, F ord , General Motors, Honda, Hyundai, Mercedes-Benz, Mitsubishi, Subaru, Toyota and Volk swagen, and auto parts for Chrysler, Ford , General Motors, Honda, Mazda, Mitsubishi, Nissan, Subaru, a nd Toyota.

• P aper , clay and forest products includes lumber and wood products, pulp board and paper products, wood fibers, wood pulp, scrap paper, and clay.

In 2012 , 119 million tons of general merchandise freight, or approximately 65% of total general merchandise tonnage we handled , originated online. The balance of general merchandise freight was received from connecting carriers at interterritorial gateways. Our p rincipal interchange points for received freight included Chicago, New Orleans, East St. Louis, Memphis, Buffalo, and Detroit . General merchandise carloads handled in 2012 were 2.3 million, the revenues from which accounted for 54% of our to tal railway operating revenues.

See the discussion of general merchandise revenues by commodity group in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

INTERMODAL – Our intermodal market group co nsists of shipments moving in trailers, domestic and international containers, and RoadRailer® equipment. These shipments are handled on behalf of intermodal marketing companies, international steamship lines, truckers, and other shippers. Intermodal uni ts handled in 2012 were 3.4 million, the revenues from which accounted for 20% of our total railway operating revenues.

See th e discussion of intermodal revenues in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

FREIGHT RATES – In 2012 , we continued our reliance on priv ate contracts and exempt price quotes as the predominant pricing mechanisms. Thus, a major portion of our freight business is not currently economically regulated by the government. In general, market forces have been substituted for government regulatio n and now are the primary determinant of rail service prices.

In 2012 , our railroads were found by the Surface Transportation Board ( STB ), the regulatory board that has broad jurisdiction over railroad practices, to be “revenue adeq uate” on an annual basis based on results for the year 2011 . The STB has not made its revenue adequacy determination for the year 2012 . A railroad is “revenue adequate” on an annual basis under the applicable law when its return on net investment exceeds the rail industry’s composite cost of capital. This determination is made pursuant to a statutory requirement.

PASSENGER OPERATIONS – Amtrak operates regularly scheduled passenger trains on our lines between the following locations:

• Alexandria and Lynchburg, Virginia

• Alexandria and Orange, Virginia

• Petersburg and N orfolk, Virginia

• Raleigh and Charl otte, North Carolina

• Selma and Charl otte, Nort h Carolina

• Chicago, Illinois, and Porter, Indiana

• Chicago, Illinois, and Cleveland, Ohio

• Chic ago, Illinois, and Pittsburgh, Pennsylva nia

• Kalamazoo and Battle Creek, Michigan

• Kalamazoo a nd Detroit, Michigan

• Pittsburgh and Harrisburg, Pennsylvania

Two transportation commissions of the Commonwealth of Virginia o perate commuter trains on our line between Manassas and Alexandria .

We lease the Chicago to Manhattan, Illinois, line to the Commuter Rail Division of the Regional Transportation Authority of No rtheast Illinois (METRA) .

We operate freight service over lines with significant ongoing Amtrak and com muter passenger operations, and conduct freight operations over trackage owned or leased by:

• Amtrak

• New Jersey Transit

• Southeastern Pennsylvania Transportation Au thority

• Metro- North Commuter Railroad Company

• Maryland Department of Transportation

Amtrak and various commuter agencies conduct passenger operations over trackage owned by Conrail in th e Shared Assets Areas (

Note 5 to the Consolidated Fi nancial Statements) .

NONCARRIER OPERATIONS – Our noncarrier subsidiaries engage principally in the acquisition, leasing, and management of coal, oil, gas and minerals; the development of comme rcial real estate; telecommunications; and the leasing or sale of rail property and equipment. In 2012 , no such noncarrier subsidiary or industry segment grouping of noncarrier subsidiaries met the requirements fo r a re portable business segment under relevant authoritative accounting guidance.

RAILWAY PROPERTY

Our railroad system extends across 22 states and the District of Col umbia. The railroad infrastructure makes us capital intensive with net property of approximately $ 26 billion on a historical cost basis.

Property Additions – Property additions for the past five years were as follows (including capitalized leases):

	2012			2011			2010			2009			2008
	($ in millions)
Road and all other property	$	1,465		$	1,222		$	1,153		$	1,128		$	1,070
Equipment		776			938			317			171			488
Total	$	2,241		$	2,160		$	1,470		$	1,299		$	1,558

Our c apital spending and replacement programs are and have been designed to assure the ability to provide safe, efficient, and reliable rail transportation services. For 2013 , we ha ve budgeted $ 2.0 billion of property additions.

We have invest ed and will continue to invest in various projects and c orridor initiatives to expand our rail network to increase capacity and improve transit times, while returning value to shareholders. Initiatives include the following:

• The MidAmerica Corrid or is a proposed arrangement between us and Canadian National Railway (CN) to share track between Chicago, St. Louis, Kentucky, and Mississippi in order to establish m ore efficient routes for shipments moving between the Midwest and Southea st, including potential shipments from CN-served Illinois Basin coal producers to southeastern utility plants we serve .

• Pan Am Southern LLC, a joint venture with Pan Am Railways, Inc., is a 155-mile main line track that runs between Mechanicville, New York and Ayer, Massachusett s, along with 281 miles of secondary and branch lines, including trackage rights in New York, Connecticut, Massachusetts, New Hampshire, and Vermont designed to increase intermodal and automotive capacity.

• The Crescen t Corridor consists of a program of pr ojects for infrastructure and other facility improvements geared toward creating seamless, high-capacity intermodal route s spanning 11 states from New Jersey to Louisiana and offering truck-competitive service along several major interstate highway corrido rs, including I-81, I-85, I-20, I-40, I-59, I-78, and I-75.

• The Heartland Corridor, which opened in 2010, was a package of clearance improvements and other facilities that created a seamless , high-capacity intermodal route across Virginia and We st Virgini a to Midwest markets.

• Meridian Speedway LLC, a joint venture with Kansas City Southern, is a 320-mile rail line between Meridian, Mississippi and Shreveport, Louisiana designed to increas e capacity and improve service.

• The CREATE project is a public-private partnership to reduce rail and highway congestion and add freight and passenger capacity in the metropolitan Chicago area. We and other railroads have agreed to participate in CREATE.

Equipment – A t December 31, 2012 , we owned or leased the following units of equipment:

							Capacity of
	Owned*		Leased**		Total		Equipment
							(Horsepower)
Locomotives:
Multiple purpose	3,763		79		3,842		13,606,600
Auxiliary units	122		-		122		-
Switching	110		-		110		165,250
Total locomotives	3,995		79		4,074		13,771,850
							(Tons)
Freight cars:
Gondola	33,820		3,839		37,659		4,098,830
Hopper	15,234		521		15,755		1,737,636
Box	12,356		1,470		13,826		1,151,821
Covered hopper	10,558		158		10,716		1,182,466
Flat	2,506		1,133		3,639		335,196
Other	4,608		87		4,695		225,067
Total freight cars	79,082		7,208		86,290		8,731,016
Other:
Highway trailers and containers	8,199		8,179		16,378
RoadRailer®	6,378		27		6,405
Work equipment	4,525		313		4,838
Vehicles	4,011		-		4,011
Miscellaneous	12,765		9,031		21,796
Total other	35,878		17,550		53,428

*	Includes equipment leased to outside parties and equipment subject to equipment trusts, conditional sale agreements, and capitalized leases.
**	Includes short-term and long-term operating leases. Freight cars include 521 leased from Con solidated Rail    Corporation (CRC).

The following table indicates the number and year built for locomotives and freight cars owned at December 31, 2012 :

											2003-		1998-		1997&
	2012		2011		2010		2009		2008		2007		2002		Before		Total
Locomotives:
No. of units	60		90		42		-		40		628		648		2,487		3,995
% of fleet	2%		2%		1%		-%		1%		16%		16%		62%		100%
Freight cars:
No. of units	2,025		3,840		150		514		2,349		1,691		3,317		65,196		79,082
% of fleet	3%		5%		-%		1%		3%		2%		4%		82%		100%

The following table shows the average age of our owned locomotive and freight car fleets at December 31, 2012 , and information regarding 2012 retirements:

	Locomotives		Freight Cars
Average age – in service	21.6 years		30.2 years
Retirements	49 units		2,482 cars
Average age – retired	41.2 years		42.4 years

Our o ngoing locomotive and freight car maintenance programs are intended to ensure the highest standards of safety, reliability, customer satisfact ion, and equipment availability . The locomotive bad order ratio includes all units (owned and leased) out of service for required periodic inspections, unscheduled maintenance and program work which includes such activity as overha uls .

	Annual Average Bad Order Ratio
	2012		2011		2010		2009		2008
Locomotives	7.1%		7.3%		6.7%		6.1%		5.8%
Freight cars	5.3%		5.7%		5.8%		4.5%		4.5%

Encumbrances – Certain railroad equipment is subject to the prior lien of equipment fina ncing obligations totaling $ 34 million a t December 31, 2012 .

Track Maintenance – Of the approximately 36,160 total miles of track we operate, we are responsib le for maintaining about 29,220 miles , with the remainder being operated under trackage rights from other parties responsible for maintenance.

Over 81% of the main line trackage (including first, second, third, and branch main tracks, all excluding rail operated pursuant to trackage rights) has rail ranging from 131 to 155 pounds per yard with the standard installation currently at 136 pounds per yard. Approximately 42% of our lines, excluding rail operated pursuant to trackage rights, carried 20 million or more gross tons per track mile during 2012 .

The following table summarizes several measurements regarding our track roadway additions and replacements during the past five years:

	2012		2011		2010		2009		2008
Track miles of rail installed	509		484		422		434		459
Miles of track surfaced	5,642		5,441		5,326		5,568		5,209
New crossties installed (millions)	2.6		2.7		2.6		2.7		2.7

Microwave System – Our microwave system, consisting of approximately 6,968 radio route miles, 421 core stations, 30 secondary stations, and four passive repeater stations, provides communications be tween most operating locations.  We use the microwave system primarily for voice communications, VHF radio control circuits, data and facsimile transmissions, traffic control operations, and AEI data transmissions.

Traffic Control – Of the approximately 16,500 route miles we dispatch, about 11,025 miles are signalized, including 8,150 mile s of centralized traffic control (CTC) and 2,875 miles of automatic block signals. Of the 8,150 miles of CTC, approximately 5,100 miles are controlled by data radio originati ng at 340 base station radio sites.

Computers – A computer network consisting of a centralized production and backup data center near Atlanta, Georgia, and various distributed computers throughout the company connects the yards, terminals, transportation offices, rolling stock repair points, sales offi ces, and other key system locations. Operating and traffic data are processed and stored to provide customers with information on their shipments throughout the system. Computer systems provide current information on the location of every train and each car on line, as well as related waybill and other train and car movement data. In addition, our computer systems assist us in the performance of a

variety of functions and services including payroll, car and revenue accounting, billing, material managemen t activities and controls, and special studies.

ENVIRONMENTAL MATTERS – Compliance with federal, state, and local laws and regulations relating to the protection of the environment is a princip al goal of ours . To date, such compliance has not had a material effect on our financial position, results of operations , liquidity, or competitive position. See “Legal Proceedings,” Part I, Item 3; “Personal Injury, Environmental, and Legal Liabilities” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 16 to the Consolidated Financial Statements.

EMPLOYEES – The following table shows the average number of employees and the average cost per employee for wages and benefits:

	2012			2011			2010			2009			2008
Average number of employees		30,943			30,329			28,559			28,593			30,709
Average wage cost per employee	$	69,000		$	71,000		$	69,000		$	63,000		$	66,000
Average benefit cost per employee	$	38,000		$	39,000		$	37,000		$	32,000		$	31,000

More than 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. See the discussion of “Labor Agreements” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

GOVERNMENT REGULATION – In addition to environmental, safety, securities, and other regulations generall y applicable to all business, our railroads are subject to regulation by the STB. The STB has jurisdiction over some rates, routes, fuel surcharges, conditions of service, and the extension or abandonment of rail lines. The STB also has jurisdiction over the consolidation, merger, or ac quisition of control of and by rail common carriers. The Federal Railroad Administration (FRA) regulates certain track and mechanical equipment standards.

The relaxation of economic regulation of railroads, following the Staggers Rail Act of 1980, includ ed exemption from STB regulation of the rates and most service terms for intermodal business (trailer-on-flat-car, container-on-flat-car), rail boxcar shipments, lumber, manufactured steel, automobiles, and certain bulk commodities such as sand, gravel, pu lpwood, and wood chips for paper manufacturing.  Further, all shipments that we have under contract are effectively removed from regulation for the duration of the contract.  About 86% of our revenues comes from either exempt shipments or shipments moving under transportation contracts; the remainder comes from shipments moving under public tariff rates.

Efforts have been made over the past several years to re-subject the rail industry to increased federal economic regulation , and such efforts are expected to continue in 201 3 . The Staggers Rail Act of 1980, which substantially balanced such regulation, encouraged and enabled rail carriers to innovate, invest in their infrastructure, and compete for business, thereby contributi ng to the economic health of the nation and to the revitalization of the industry. Accordingly, we will continue to oppose efforts to reimpose increased economic regulation.

Government regulations concerning the safety and security of our railroads are discussed within the “Security of Operations” section contained herein.

COMPETITION – There is continuing strong competition among rail, water, and highway carriers. Price is usually only one factor of importance as shippers and receivers choose a transport mode and specific hauling company. Inventory carrying costs, service reliability, ease of handling, and the desire to avoid loss and damage during transit are also important considerati ons, especially for higher-valued finished goods, machinery, and consumer products. Even for raw materials, s emi-finished goods, and work-in- progress, users are increasingly sensitive to transport arrangements that minimize problems at successive producti on stages.

Our primary rail competitor is CSX Corporation ; both railroads operate throughout much of the same territory. Other railroads also operate in parts of the territory. We also compete with motor carriers, water carriers, and with shippers who h ave the additional options of handling their own goods in private carriage, sourcing products from different geographic areas, and using substitute products.

Certain marketing strategies among railroads and between railroads and motor carriers enable railroads to compete more effectively in specific markets.

SECURITY OF OPERATIONS – We ha ve taken significant steps to provide enhanced s ecurity for our rail system. In particular, we have developed and implemented a comprehensive security plan that is modeled on and was developed in conjunction with the security plan prepared by the Association of American Railroads (AAR) post September 11, 2001. The AAR Security Plan defines four Alert Le vels and details the actions and countermeasures that are being applied across the railroad industry as a terrorist threat increases or decreases. The Alert Level actions include countermeasures that will be applied in three general areas: (1) operations (including transportation, engineering, and mechanical); (2) information technology and communications; and, (3) railroad police. Although security concerns preclude public disclosure of its contents, our System Security Plan outlines the protocol within our company for all concerned to be notified of AAR Alert Level changes. All of our Operations Division employees are advised by their supervisors or train dispatchers, as appropriate, of any change in Alert Level and any additional responsibilities they may incur due to such change.

Our plan also effectively addresses and complies with U.S. Department of Transportation (DOT) security regulations pertaining to training and security plans with respect to the transportation of hazardous materials. As part of the plan, security awareness training is given to all railroad employees who directly affect hazardous material transportation safety, and this training is integrated into recurring hazardous material training and re-certification programs. Toward tha t end, we , working closely with the National Transit Institute at Rutgers University, ha ve developed a four-module uniform national training program. We ha ve also worked with the Transportation Security Administration (TSA) in developing other industry tr aining programs. More in-depth security training has been given to select employees of ours who have been given specific security responsibilities, and additional, location-specific security plans have been developed for certain metropolitan areas and eac h of the six port facilities we serve. With respect to the ports, each facility plan has been approved by the applicable Captain of the Port and is subject to inspection by the U.S. Coast Guard.

Additionally, we engage in close and regular coordination with numerous federal and state agencies, including the U.S. Department of Homeland Security (DHS), the TSA, the Federal Bureau o f Investigation (FBI), the FRA , the U.S. Coast Guard, U.S. Customs and Border Protection, and various state Homeland Security o ffices. As one notable example, one of our Police Special Agent s in Charge (SAC), under the auspices of the AAR, has been assigned to the National Joint Terrorism Task Force (NJTTF) operated by the FBI, and located at the National Counter Terrorism Center (NCTC) in Arlington, V irginia to represent and serve as liaison to the North American rail industry. This arrangement improves logistical flow of vital security and law enforcement information with respect to the rail industry as a whole, while having th e post filled by one of our SAC s has also served to foster a strong working relationship between us and the FBI. We also ha ve become a member of the Customs-Trade Partnership Against Terrorism (C-TPAT) prog ram sponsored by U.S. Customs. C-TPAT allows us to work closely with U.S. Customs and our customers to develop measures that will help ensure the integrity of freight shipments moving on our railroads , particularly those moving to or from a foreign country. Based on participation in C-TPAT, we ha ve ens ured that our plan meets all current applicable security recommendations made by U.S. Customs.

Similarly, we are guided in our operations by various supplemental security action items issued by DHS and DOT, U.S. Coast Guard Maritime Security requirements, as well as voluntary security action items developed in collaboration with TSA, DOT, and the freight railroads. Many of the action items are based on lessons learned from DHS and DOT security assessments of rail corridors in High Threat Urban Areas (HTUA) . Particular attention is aimed at reducing risk in HTUA by: (1) the establishment of secure storage areas for rail cars carrying toxic-by-inhalation (TIH) materials; (2) the expedited movement of trains transporting rail cars carrying TIH materials; (3) the minimization of unattended loaded tank cars carrying TIH materials; and (4) cooperation with

federal, state, local and tribal governments to identify, through risk assessments, those locations where security risks are the highest. These action items a nd our compliance initiatives are outlined in the vario us departmental sections of our System Security Plan. We ha ve taken appropriate actions to be compliant with the TSA Final Security Rule addressing Rail Security Sensitive Materials (RSSM) to ensure t hese shipments are properly inspected and that positive chain-of-custody is maintained when required. We are in compliance with the Pipeline and Hazardous Materials Safety Administration (PHMSA) rail-routing regulations outlined in Docket HM-232E. We con duct ongoing route evaluations. In 2011, as part of the FRA’s bi-annual review, this metho dology and selected routes were found to be compliant with the regulation .  The next review by the FRA is expected mid-year 2013.

In 2012 , th rough participation in the Transportation Community Awareness and Emergency Response (TRANSCAER) Program, we provided rail accident response training to approximately 5,087 emergency responders, such as local police and fire pers onnel, representing over 19,023 hours of emergency response training. We also conducted railroad operations classes for FBI agents and the railroad liaison agents from NJTT F and participated in four drills for local, state, and federal agencies. We also ha ve ongoing programs to sponsor local emergency responders at the Security and Emergency Response Training Course conducted at the AAR Transportation Technology Center in Pueblo, Colorado.

Improvements in equipment design also are expected to play a role in enhancing rail security. PHMSA, in coordination with the FRA, has amend ed the Hazardous Materials Regulations to prescribe enhanced safety for rail transportation of TIH materials, has p rovided interim design standards for railroad tank cars. The rule mandates commodity-specific improvements in safety features and design standards for newly manufactured DOT specification tank cars and an improved top fittings performance standard. The i nterim standards established in this rule will enhance the accident survivability of TIH tank cars.

Item 1A. Risk Factors

We are subject to significant governmental legislation and regulation over commercial, operating and environmental matters. Railroads are subject to the enactment of laws by Congress that could increase economic regulation of the industry. Railroads presently are subject to commercial regulation by the STB, which has jurisdiction over some rates , routes, fuel surcharges, conditions of service, and the extension or abandonment of rail lines. The STB also has jurisdiction over the c onsolidation, merger, or acqui sition of control of and by rail common carriers. Additional economic regulation of the rail industry by Congre ss or the STB, whether under new or existing laws, could have a significant negative impact on our ability to determine prices for rail services and result in a material adverse effect in the future on our financial position, results of operations, or liquidity in a particular year or quarter. This potential material adverse effect could also result in reduced capital spending on our rail network or abandonment of lines.

Railroads are subject to safet y and security regulation by DOT and DHS, which regulate most aspects of our operations. Compliance with the Rail Safety Improvement Act of 2008 will result in additional operating costs associated with the statutorily mandated implementation of positive train control by 2015. In addition to increased capital expenditures, implementation may result in reduced operational efficiency and service levels, as well as increased compensation and benefits e xpenses, and increased claims and litigation costs.

Our operations are subject to extensive federal and state environmental laws and regulations concerning, among other things, emissions to the air; discharges to waterways or groundwater supplies; handlin g, storage, transportation, and disposal of waste and other materials; and the cleanup of hazardous material or petroleum releases. The risk of incurring environmental liability – for acts and omissions, past, present, and future – is inherent in the rail road business. This risk includes property owned by us , whether currently or in the past, that is or has been subject to a variety of uses, including our railroad operations and other industrial activity by past owners or our past and present tenants.

Environmental problems that are latent or undisclosed may exist on these properties, and we could incur environmental liabilities or costs, the amount and materiality of which cannot be estimated reliably at this time,

with respect to one or more of these properties. Moreover, lawsuits and claims involving other unidentified environmental sites and matters are likely to arise from time to time, and the resulting liabilities could have a significant effect on our financial position, results of operations, o r liquidity in a particular year or quarter.

A s a common carrier by rail, we must offer to transport hazardous materials, regardless of risk. T ransportation of certain hazardous materials could create catastrophic losses in terms of personal injury and pr operty damage costs, and compromise critical parts of our rail network.

We may be affected by terrorism or war. Any terrorist attack, or other similar event, any government response thereto, and war or risk of war could cause significant business interru ption and may adversely affect our financial position, results of operations, or liquidity in a particular year or quarter. Because we play a critical role in the nation’s transportation system, we could become the target of such an attack or have a signi ficant role in the government’s preemptive approach or response to an attack or war.

Although we currently maintain insurance coverage for third-party liability arising out of war and acts of terrorism, we maintain only limited insurance coverage for firs t-party property damage and damage to property in our care, custody, or control caused by certain acts of terrorism. In addition, premiums for some or all of our current insurance programs covering these losses could increase dramatically, or insurance co verage for certain losses could be unavailable to us in the future.

We may be affected by general economic conditions. Prolonged negative changes in domestic and global economic conditions affecting the producers and consumers of the commodities we carr y may have an adverse effect on our financial position, results of operations, or liquidity in a particular year or quarter . Economic conditions resulting in bankruptcies of one or more large customers could have a significant impact on our financial posit ion, results of operations, or liquidity in a particular year or quarter.

We may be affected by climate change legislation or regulation. Concern over climate change has led to significant federal, state, and international legislative and regulatory effo rts to limit greenhouse gas (GHG) emissions. Moreover, even without such legislation or regulation, government incentives and adverse publicity relating to GHGs could affect certain of our customers and the markets for certain of the commodities we carry. Restrictions, caps, taxes, or other controls on GHG emissions, including diesel exhaust, could significantly increase our operating costs, decrease the amount of traffic handled, and decrease the value of coal reserves we own , and thus could have an adve rse effect on our financial position, results of operations, or liquidity in a particular year or quarter . Such restrictions could affect our customers that (1) use commodities that we carr y to produce energy, including coal, (2) use significant amounts o f energy in producing or delivering the commodities we carr y , or (3) manufacture or produce goods that consume significant amounts of energy.

We face competition from other transportation providers. We are subject to competition from motor carriers, railroads and , to a lesser extent, ships, barges, and pipelines, on the basis of tr ansit time, pricing, and quality and reliability of service. While we ha ve used primarily internal resources to build or acquire and maintain our rail system, trucks and barges have been able to use public rights-of-way maintained by public entities. Any future improvements or expenditures materially increasing the quality or reducing the cost of alternative modes of transportation in the regions in wh ich we operate, or legislation granting materially greater latitude for motor carriers with respect to size or weight limitations, could have a material adverse effect on our financial position, results of operations, or liquidity in a particular year or q uarter.

The operations of carriers with which we interchange may adversely affect our operations. Our ability to provide rail service to customers in the U.S. and Canad a depends in large part upon our ability to maintain cooperative relationships with connecting carriers with respect to, among other matters, freight rates, revenue division, car supply and locomotive availability, data exchange and communications, reciprocal switching, interchange, and trackage rights. Deterioration in the operations of or service provided by connecting carriers, or in our relationship with those connecting carriers, could result in our inability to meet our customers’ demands or require us to use alternate train routes, which could result in significant additional costs and network inefficiencies.

We rel y on technology and technology improvements in our business operations. If we experience significant disruption or failure of one or more of our information technology systems, including computer hardware, software, and communications equipment, we could experience a service interruption, a security breach, or other operational difficulties . Additionally, if we do not have sufficient capital to acquire new technology or we are unable to implement new technology, we may suffer a competitive disadvantage within the rail industry and with companies providing other modes of transportation service .  Any of these factors could have a material adverse effect on our financial po sition, results of operations, or liquidity in a particular year or quarter.

The vast majority of our employees belong to labor unions, and labor agreements, strikes, or work stoppages could adversely affect our operations. More than 80% of our railroad employees are covered by collective bargaining agreements with various labor unions. If unionized workers were to engage in a strike, work stoppage, or other slowdown, we could experience a significant disruption of our operations. Additionally , future national labor agreements, or renegotiation of labor agreements or provisions of labor agreements, could significantly increase our costs for healthcare, wages, and other benefits. Any of these factors could have a material adverse impact on our financial position, results of operations, or liquidity in a particular year or quarter.

We may be subject to various claims and lawsuits that could result in significant expenditures. The nature of our business exposes us to the potential for various cl aims and litigation related to labor and employment, personal injury, commercial disputes, freight loss and other property damage, and other matters. Job-related personal injury and occupational claims are subject to the Federal Employer’s Liability Act ( FELA), which is applicable only to railroads. FELA’s fault-based tort system produces results that are unpredictable and inconsistent as compared with a no-fault worker’s compensation system. The variability inherent in this system could result in actual costs being very different from the liability recorded.

Any material changes to current litigation trends or a catastrophic rail accident involving any or all of freight loss  property damage, personal injury, and environmental liability could have a mate rial adverse effect on our financial position, results of operations, or liquidity to the extent not covered by insurance. We ha ve obtained insurance for potential losses for third-party liability and first-party property damages. Specified levels of ris k are retained on a self-insurance basis (currently up to $50 million and above $1 billion per occurrence for bodily injury and property damage to third parties and up to $25 million and above $175 million per occurrence for property owned by us or in our care, custody, or control). Insurance is available from a limited number of insurers and may not continue to be available or, if available, may not be obtainable on terms acceptable to us .

Severe weather could result in significant business interruptions and expenditures. Severe weather conditions and other natural phenomena, including hurricanes, floods, fires, and earthquakes, may cause significant business interruptions and result in increased costs, increased liabilities, and decreased revenues, whic h could have an adverse effect on our financial position, results of operations, or liquidity in a particular year or quarter.

Unpredictability of demand for rail services resulting in the unavailability of qualified personnel could adversely affect our o perational efficiency and ability to meet demand. Workforce demographics, training requirements, and the availability of qualified personnel, particularly engineers and trainmen, could each have a negative impact on our ability to meet demand for rail ser vice. Unpredictable increases in demand for rail services may exacerbate such risks, which could have a negative impact on our operational efficiency and otherwise have a material adverse effect on our financial position, results of operations, or liquidi ty in a particular year or quarter.

We may be affected by supply constraints resulting from disruptions in the fuel markets or the nature of some of our supplier markets. We consumed about 4 60 million gallons of diesel fuel in 2012 . Fuel availability could be affected by any limitation in the fuel supply or by any imposition of mandatory allocation or rationing regulations. A severe fuel supply shortage arising from production curtailments, increased demand in existing or emerging foreign markets, disruption of oil imports, disruption of domestic refinery production, damage to

refinery or pipeline infrastructure, political unrest, war or other factors, could have a material adverse effect on our financial position, resu lts of operations, or liquidity in a particular year or quarter. Also, such an event c ould impact us as well as our customers and other transportation companies.

Due to the capital intensive nature and industry-specific requirements of the rail industry, high barriers of entry exist for potential new suppliers of core railroad items, such as locomotives and rolling stock equipment. Additionally, we compete with o ther industries for available capacity and raw materials used in the production of certain track materials, such as rail and ties. Changes in the competitive landscapes of these limited-supplier markets could result in increased prices or significant shor tages of materials that could have a material adverse e ffect on our financial position, results of operations, or liquidity in a particular year or quarter.

The state of capital markets could adversely affect our liquidity. F rom time-to-time we rel y on t he capital markets to provide some of our capital requirements, including the issuance of long-term debt instruments and commercial paper, as well as the sale of certain receivables. Significant instability or disruptions of the capital markets, including the credit markets, or deterioration of our financial condition due to internal or external factors could restrict or eliminate our access to, and/or significantly increase the cost of, various financing sources, including bank credit facilities and issua nce of corporate bonds. Instability or disruptions of the capital markets and deterioration of our financial condition, alone or in combination, could also result in a reduction in our credit rating to below investment grade, which could prohibit or restr ict us from accessing external sources of short- and long-term debt financing and/or significantly increase the associated costs.

Item 1B. Unresolved Staff Comments

N one.

Item 3. Legal Proceedings

On November 6, 2007, various antitrust class actions filed against us and other Class I railroads in various Federal district courts regarding fuel surcharges were consolidated in the District of Columbia by the Judicial Panel on Multidistrict Litigation. On June 21, 2012, the court certified the case as a class action.  The defendant railr oads have appealed such certification, and a decision by the court to either reject the appeal outright or proceed with ruling on its merits is pending.  We believe the allegations in the complaints are without merit and intend to vigorously defend the cas es. We do not believe the outcome of these proceedings will have a material effect on our financial position, results of operations, or liquidity. A lawsuit containing similar allegations against us and four other major railroads that was filed on March 25, 2008, in the U.S. District Court for the District of Minnesota was voluntarily dismissed by the plaintiff subject to a tolling agreement entered into in August 2008.

We received a Notice of Violation (NOV) issued by the Tennessee Department of Environmental Conservation concerning soil runoff in connection with construction of the Memphis Regional Intermodal Facility in Rossville, Tennessee.  Although we will contest liability and the imposi tion of any penalties, this matter is described here consistent with SEC rules and requirements concerning governmental proceedings with respect to environmental laws and regulations.  We do not believe that the outcome of this proceeding will have a mater ial effect on our financial position, results of operations, or liquidity.

Item 4. Mine Safety Disclosures

Not applicable.

Executive Officers of the Registrant

Our executive officers generall y are elected and designated annually by the Board of Directors at its first meeting held after the annual meeting of stockholders, and they hold office until their successors are elected. Executive officers also may be elected and designated throughout t he year as the Board of Di rectors considers appropriate. There are n o family relationships among our officers, nor any arrangement or understanding between any officer and any other person pursuant to which the officer was selected. The following table s ets f orth certain information, at February 1, 2013 , relating to our officers.

Name, Age, Present Position		Business Experience During Past Five Years
Charles W. Moorman, 60 , Chairman, President and Chief Executive Officer		Present position since February 1, 2006.
Deborah H. Butler, 5 8 , Executive Vice President – Planning and Chief Information Officer		Present position since June 1, 2007.
James A. Hixon, 5 9 , Executive Vice President – Law and Corporate Relations		Present position since October 1, 2005.
Mark D. Manion, 60 , Executive Vice President and Chief Operating Officer		Present position since April 1, 2009. Served as Executive Vice President – Operations from October 1, 2004 to April 1, 2009.
John P. Rathbone, 60 , Executive Vice President – Finance and Chief Financial Officer		Present position since August 1, 2012. Served as Executive Vice President – Administration from October 1, 2004 to August 1, 2012.
Donald W. Seale, 60 , Executive Vice President and Chief Marketing Officer		Present position since April 1, 2006.
James A. Squires, 51 , Executive Vice President – Administration		Present position since August 1, 2012 . Served as Executive Vice President – Finance and Chief Financial Officer from July 1, 2007 to August 1, 2012.
Clyde H. Allison, Jr., 4 9 , Vice President and Controller		Present position since April 1, 2009. Served as Assistant Vice Pres ident Corporate Accounting from Fe bruary 1, 2008 to April 1, 2009.

PART II

NORFOLK SOUTHERN C ORPORATION AND SUBSIDIARIES

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

STOCK PRICE AND DIVIDEND INFORMATION

Common Stock is owned by 32,347 stockh olders of record as of December 31, 2012 and is traded on the New York Stock Exchange under the symbol “NSC.” The following table shows the high and low sales prices as reported by Bloomberg L.P. on its internet-based service and d ividends per share, by quarter, for 2012 and 2011 .

	Quarter
2012	1st			2nd			3rd			4th
Market Price
High	$	78.24		$	74.41		$	75.10		$	67.71
Low		64.45			63.67			63.63			56.34
Dividends per share		0.47			0.47			0.50			0.50
2011	1st			2nd			3rd			4th
Market Price
High	$	69.56		$	74.93		$	76.99		$	75.75
Low		60.38			66.27			60.44			60.01
Dividends per share		0.40			0.40			0.43			0.43

ISSUER PURCHASES OF EQUITY SECURITIES

									Total				Maximum Number
									Number of				(or Approximate
									Shares (or Units)				Dollar Value)
		Total Number				Average			Purchased as				of Shares (or Units)
		of Shares				Price Paid			Part of Publicly				that may yet be
		(or Units)				per Share			Announced Plans				Purchased under
Period		Purchased		(1)		(or Unit)			or Programs		(2)		the Plans or Programs	(2)
October 1-31, 2012			310,189			$	62.31			307,000			48,616,759
November 1-30, 2012			2,029,148				58.70			2,029,148			46,587,611
December 1-31, 2012			2,917				61.55			-			46,587,611
Total			2,342,254							2,336,148

(1)	Of this amount, 6,106 represents shares tendered by employees in connection with the exe rcise of stock options under the stockholder-approved Long- T erm Incentive Plan.
(2)	Our Board of Directors authorized a share repurchase program, pursuant to which up to 125 million shares of Common Stock could be purchased through December 31, 2014.  On August 1, 2012, our Board of Directors authorized the repurchase of up to an additional 50 million shares of Common Stock throu gh December 31, 2017.