Slide 1: Forward-Looking Statements
1 Forward-Looking Statements This information and other statements by the company may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, margins, volumes, rates, co
Slide 2: Executive Summary: Fourth quarter performance
Executive Summary Michael Ward Chairman, President and Chief Executive Officer Fourth quarter performance . . . Volume 1,662K Revenue $3,032M Operating Income $813M Operating Ratio 73.2% EPS $0.42 Earnings Per Share Revenue growth — Revenue up 5% on broad-based strength across most markets $0.44 $
Slide 3: Full-year performance
Full-year performance . . . Volume 6,539K Revenue $12,026M Operating Income $3,473M Operating Ratio 71.1% EPS $1.83 Earnings Per Share Revenue growth — Revenue up 2% to $12.0 billion, establishing a new record $1.83 $1.79 Operational excellence — Safety, service and efficiency remain strong thro
Slide 4: Sales and Marketing summary
Sales and Marketing summary . . . Volume (000) Revenue (millions) Revenue per Unit All-in Core Pricing 1,662 $3,032 $1,847 1.6% 1.6% $1,824 1,567 $2,895 Q4 2012 Q4 2013 Q4 2012 Q4 2013 Q4 2012 Q4 2013 Q4 2012 Q4 2013 Market Split Market Split Market Split Core Merchandise Merchandise Coal Merchandis
Slide 5: Merchandise and intermodal revenue increase 10%
Merchandise revenue increases 10% Revenue $1,819M Volume 707K RPU $2,573 Fourth Quarter Fourth Quarter Summary Year-Over-Year Change Agricultural sector driven by the Revenue 10% benefit of a strong fall harvest Volume 7% — Largest impact in feed grain, export grain and ethanol RPU 3% Increase i
Slide 6: First quarter outlook is favorable
First quarter outlook is favorable Outlook Markets Drivers Agriculture Products Strong 2013 fall harvest shipments carryover into 2014 Automotive Increase in North American light vehicle production Chemicals Strength in energy-related markets expected to continue Favorable 82% of volume Domest
Slide 7: Operations Review: Operations summary
Operations Review Oscar Munoz Executive Vice President Chief Operating Officer Operations summary . . . Safety Service Network FRA Personal Injury On-time Originations Train Velocity (mph) 0.89 89.8% 84.7% 0.57 23.3 22.9 Q4 2012 Q4 2013 Q4 2012 Q4 2013 Q4 2012 Q4 2013 FRA Train On-time Terminal Acci
Slide 8: Absorbing growth with modest resource additions
Absorbing growth with modest resource additions Fourth Quarter Year-Over-Year Change in Volume and Resources Carloads 6.0% Gross Ton Miles 6.5% Road Crew Starts 3.6% Active Locomotives 3.1% Operations Employees (0.2%) 15 Expecting operations efficiency gains to continue Efficiency Savings $158M in
Slide 9: Operations wrap-up
Operations wrap-up . . . Remain committed to safety leadership — Focus is on reducing accidents, injuries and severity Service remains at high levels — Customer satisfaction is an all-time record Building our capability for near and long-term growth — Remain focused on flexing resources and im
Slide 10: Fourth quarter earnings summary
Fourth quarter earnings summary . . . Fourth Quarter Results Dollars in millions, except EPS 2013 2012 Variance Revenue $ 3,032 $ 2,895 5% Expense 2,219 2,080 (7%) Operating Income $ 813 $ 815 0% Interest Expense (139) (145) Other Income (net) - 59 Income Taxes (248) (280) Net Earnings $ 426 $ 449 (
Slide 11: Total expense increases 7% overall
Total expense increases 7% overall Fourth Quarter 2013 Operating Expenses and Year-Over-Year Percentage Change Labor and Fringe $ 803 7% Material, Supplies, and Other 632 17% Fuel 408 (3%) Depreciation 281 4% Equipment Rent 95 (2%) Total Expenses $ 2,219 7% 21 Fourth quarter expense analysis . . . L
Slide 12: Full-year earnings summary
Full-year earnings summary . . . Full-year Results Dollars in millions, except EPS 2013 2012 Variance Revenue $ 12,026 $ 11,763 2% Expense 8,553 8,299 (3%) Operating Income $ 3,473 $ 3,464 0% Operating Ratio 71.1% 70.6% (50 bps) Net Earnings $ 1,864 $ 1,863 0% Fully Diluted Shares in Millions 1,019
Slide 13: Targeting $2.3 billion of capital investment in 2014
Targeting $2.3 billion of capital investment in 2014 Capital Investment Core investment remains at $2.3 billion 16% – 17% of revenue for 2014 — Infrastructure spend maintains a Infrastructure Equipment safe and reliable network Strategic PTC — Locomotive, car investment driven by commercial demand
Slide 14: Financial wrap-up
Financial wrap-up . . . On track to sustain a high-60s operating ratio by 2015 — A mid-60s operating ratio remains the target longer-term Favorable items produce better than expected 2013 EPS — Lifted the base year, making 2014-2015 10-15% EPS CAGR more challenging Coal will continue to be a h
Slide 15: Relentless pursuit of excellence
Relentless pursuit of excellence . . . 29 30