Third Quarter 2015 Financial Overview

Marta R. Stewart

Executive Vice President Finance

and Chief Financial Officer

1

Operating Results Third Quarter 2015 vs. 2014 ($ millions)

(Unfavorable)

Favorable

2015 2014 $ %

Railway operating revenues $ 2,713 $ 3,023 $ (310) (10%)

Railway operating expenses 1,891 2,025 134 7%

Income from railway operations $ 822 $ 998 $ (176) (18%)

Railway operating ratio 69.7 67.0 (2.7) (4%)

2

Sub 70 operating ratio despite lower volumes and restructuring costs

Net decrease of $134 / 7%

$2,025

$166

$26

$3

$39

$22

$1,891

2015

Railway Operating Expenses Third Quarter 2015 vs. 2014 ($ millions)

Fuel Compensation

& Benefits

Depreciation Purchased

Svcs & Rents

2014 Materials

& Other

3

Restructuring Costs Third Quarter 2015 ($ millions)

Triple Crown Roanoke

Restructuring Closure Total

Accelerated depreciation $ 26 $ -- $ 26

Moving and other costs 1 10 11

Effect on Operating Expenses $ 27 $ 10 $ 37

Effect on Net Income $ 23

Effect on Earnings per Share $ 0.08

4

Fuel Third Quarter 2015 vs. 2014 ($ millions)

2014 Price * Consumption * Other Fuel 2015

$387

$147

$2 $17

$221

* Reflects locomotive fuel only 5

Total decrease of $166 / 43%

$2.96

per gallon *

$1.71

per gallon *

Compensation and Benefits Third Quarter 2015 vs. 2014 ($ millions)

6

Lower incentive compensation

Increased pay rates

Higher payroll taxes

Increased trainee levels

2014 2015

$728 $702

Net decrease of $26 / 4%

Materials and Other Third Quarter 2015 vs. 2014 ($ millions)

7

Decline in material usage

Lower derailment related

expenses

Roanoke relocation costs

2014 2015

$245 $242

Net decrease of $3 / 1%

Depreciation Third Quarter 2015 vs. 2014 ($ millions)

8

2014 2015

$236 $275

Increase of $39 / 17%

Sept 2014 Sept 2015

$37,970 $40,026

Properties Balance

TCS restructuring

Increased capital base

Purchased Services and Rents Third Quarter 2015 vs. 2014 ($ millions)

Higher equipment rents

Increased engineering costs

Roanoke relocation costs

9

2014 2015

$429 $451

Net increase of $22 / 5%

10

Other Income - Net Third Quarter 2015 vs. 2014 ($ millions)

Net increase of $7 / 22%

2014 2015

$32

$39

Gain from sales of property

Lower returns from corporate-

owned life insurance

Decline in coal royalties

Income Taxes Third Quarter 2015 vs. 2014 ($ millions)

11

2014 2015

$333

$272

Effective tax rate for the quarter was 37.6%

Eff. Rate

37.3%

Eff. Rate

37.6%

12

2014 2015

$1.79 $1.49

2014 2015

$559

$452

Net Income and Diluted Earnings per Share Third Quarter 2015 vs. 2014 ($ millions except per share)

Net Income Change vs. Prior Period: (19%)

Diluted Earnings per Share Change vs. Prior Period: (17%)

Decline of $107 million or 30 cents per share

2015 results included expenses associated with restructuring the company’s Triple Crown Services subsidiary and closing

its Roanoke, Va., office, which together reduced net income by $23 million, or $0.08 per diluted share.

Thank You

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