Third Quarter 2014 Financial Results

Marta R. Stewart

Executive Vice President Finance

and Chief Financial Officer

1

Operating Results Third Quarter 2014 vs. 2013 ($ millions)

Favorable

(Unfavorable)

2014 2013 $ %

Railway operating revenues $ 3,023 $ 2,824 $ 199 7%

Railway operating expenses 2,025 1,975 (50) (3%)

Income from railway operations $ 998 $ 849 $ 149 18%

Railway operating ratio 67.0 69.9 2.9 4%

2

Revenue tops $3 billion for second consecutive quarter.

Net increase of $50 / 3%.

$1,975

$45 $9 $6

$3 $7

$2,025

2014

Railway Operating Expenses Third Quarter 2014 vs. 2013 ($ millions)

Fuel Compensation

& Benefits

Depreciation Purchased

Svcs & Rents

2013 Materials

& Other

3

Materials and Other Third Quarter 2014 vs. 2013 ($ millions)

4

• Increased use of locomotive

materials

• Less favorable personal injury

reserve adjustment

•Higher lading damage costs

2013 2014

$200 $245

Net increase of $45 / 23%.

Purchased Services and Rents Third Quarter 2014 vs. 2013 ($ millions)

•Higher volume-related costs:

– Intermodal operations

– Equipment rents

– Joint facilities

• Lower Conrail shared asset

areas expenses

5

2013 2014

$420 $429

Net increase of $9 / 2%.

Depreciation Third Quarter 2014 vs. 2013 ($ millions)

6

2013 2014

$230 $236

Increase of $6 / 3%.

Sept 2013 Sept 2014

$36,684

$37,970

Properties Balance

• Increased capital base

Sept

2013

Sept

2014

Fuel Third Quarter 2014 vs. 2013 ($ millions)

2013 Price* Consumption* Other Fuel 2014

$390

$21 $16

$2

$387

4% 6% *% reflects locomotive fuel only

7

Net decrease of $3 / 1%.

Compensation and Benefits Third Quarter 2014 vs. 2013 ($ millions)

8

• Lower post-retirement and

pension costs

• Lower health and welfare benefit

costs

• Increased pay rates

•Higher incentive compensation

•Additional overtime

2013 2014

$735 $728

Net decrease of $7 / 1%.

9

2013 2014

$131 $138

2013 2014

$30 $32

Non-Operating Items Third Quarter 2014 vs. 2013 ($ millions)

Other Income – Net

Change vs. Prior Period: + 7%

Interest Expense on Debt

Change vs. Prior Period: + 5%

Income Taxes Third Quarter 2014 vs. 2013 ($ millions)

10

2013 2014

$266 $333

Effective tax rate for the quarter was 37.3%.

Eff. Rate

37.3%

Eff. Rate

35.6%

11

2013 2014

$1.53 $1.79

2013 2014

$482 $559

Net Income and Diluted Earnings per Share Third Quarter 2014 vs. 2013 ($ millions except per share)

Net Income

Change vs. Prior Period: + 16%

Diluted Earnings per Share

Change vs. Prior Period: + 17%

Net Income and Earnings per Share set 3rd quarter records.

Cash Flows and Balances First Nine Months 2014 vs. 2013 ($ millions)

2014 2013

Cash from operating activities $ 2,346 $ 2,404

Capital expenditures (1,379) (1,470)

*Free cash flow $ 967 $ 934

Returns to shareholders:

Dividends $ (511) $ (476)

Share repurchases $ (166) $ (564)

*Please see reconciliation to GAAP posted on our web site.

12

Continued strong cash flow generation.

Thank You

13