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, volumes, rates, cost-saving
Slide 2: Executive Summary
Executive Summary Michael Ward Chairman, President and Chief Executive Officer Third quarter performance . . . Volume 1,619K Revenue $2,963M Operating Income $878M Operating Ratio 70.4% EPS $0.43 Earnings Per Share Revenue increases 11% — Driven by compelling value of rail transportation and fuel
Slide 3: Sales and Marketing Review
Sales and Marketing Review Clarence Gooden Executive Vice President Sales and Marketing Moderating economy continues to expand Industrial economy expanding . . . . . . and inventories remain low ISM Manufacturing ISM Manufacturing Purchasing Managers Index Customer Inventories Index 70 70 60 60 50 5
Slide 4: Revenue increases 11%; Total volume increases 1%
Revenue increases 11% Revenue $2,963M Volume 1,619K RPU $1,830 Revenue in Millions $124 $2,963 $153 $2,666 $20 Q3 2010 Volume Rate/Mix Fuel Price Q3 2011 Impact 7 Total volume increases 1% Revenue $2,963M Volume 1,619K RPU $1,830 Year-Over-Year Change in Volume Volume % of (000) Total Merchandise 65
Slide 5: Revenue per unit increases 10%; Coal revenue increases 15%
Revenue per unit increases 10% Revenue $2,963M Volume 1,619K RPU $1,830 Revenue Per Unit Third quarter summary $1,830 Same store sales pricing up $1,710 7.1% year-over-year $1,657 $1,562 — Full-year railroad cost inflation is forecasted to be 4.2% Increased fuel recovery contributed to RPU growt
Slide 6: Intermodal revenue increases 16%; Merchandise revenue increases 10%
Intermodal revenue increases 16% Revenue $369M Volume 576K RPU $641 Third Quarter Third Quarter Year-Over-Year Change — Record domestic volume on truck capacity and highway conversions Revenue 16% — International weakness with later Volume 0% peak season and softer economy RPU 15% — RPU higher on
Slide 7: Sales & Marketing wrap-up
Sales & Marketing wrap-up… Fourth quarter outlook is positive overall — Moderating economy supports growth across most markets — Intermodal, Metals and Phosphate & Fertilizer lead growth — Strong export volumes offset utility coal challenges Current view of 2012 points to modest growth — Strong
Slide 8: Building operating performance excellence
Building operating performance excellence Culture of commitment focused on driving performance — Safety Performance measures remain strong OPERATIONS SAFETY RELIABILITY — Productivity Additional resources brought on-line Mutual Accountability — Operations Reliability CUSTOMER Maintained network fl
Slide 9: Third quarter operations summary
Third quarter operations summary . . . Train Performance System Performance On-time Originations Train Velocity (mph) 82% 21.8 77% 77% 21.1 72% 20.6 20.1 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2008 Q3 2009 Q3 2010 Q3 2011 On-time Arrivals Terminal Dwell Time (hours) 79% 24.8 25.5 24.1 24.0 67% 69% 61% Q
Slide 10: Velocity and dwell also improving to 2010 levels
. . . velocity and dwell also improving to 2010 levels Train Velocity (mph) Terminal Dwell (hours) 2010 Full 2010 Full Q3 Q4 Q3 Q4 Year Average Year Average 21.5 27.0 21.0 21.1 20.7 25.0 24.6 23.6 Storms Storms 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41
Slide 11: Operations wrap-up
Operations wrap-up . . . Safety performance remains strong — Maintaining continuous improvement Key customer service measurements trending higher — Improving performance to 2010 levels Operating capabilities position company well for 2012 — Hiring plans anticipate attrition, peak volumes and g
Slide 12: Third quarter financial results
Third quarter financial results . . . Third Quarter Results Dollars in millions, except EPS 2011 2010 Variance Revenue $ 2,963 $ 2,666 11% Expense 2,085 1,841 (13%) Operating Income $ 878 $ 825 6% Interest Expense (138) (131) Other Income (net) 6 8 Income Taxes (282) (288) Net Earnings $ 464 $ 414 1
Slide 13: Labor and Fringe expense increased 5%; MS&O expense increased 10%
Labor and Fringe expense increased 5% Employee Headcount Third Quarter Labor Analysis in Millions 33,428 31,664 2010 Labor Expense $ 731 30,370 29,883 4% Variance Increase Inflation (29) Service and Training (27) Facility Closure (14) Incentive Compensation 30 Other 6 Subtotal (34) 2011 Labor Expens
Slide 14: Fuel expense increased 48%; Repurchased $1.0 billion of shares
Fuel expense increased 48% Locomotive Fuel Price Third Quarter Dollars per Gallon Fuel Analysis in Millions $3.57 2010 Fuel Expense $ 279 $3.13 Variance $2.17 $1.88 Price (117) Efficiency and Volume (7) Non-locomotive Fuel (9) Subtotal (133) 2011 Fuel Expense $ 412 Q3 2008 Q3 2009 Q3 2010 Q3 2011 27
Slide 15: Remain focused on achieving long-term targets
Remain focused on achieving long-term targets 2010 2011 – 2015 Base Guidance Operating 65% by 71.1% Ratio 2015 Operating $3.1 12% – 14% Income billion CAGR Earnings 18% – 20% $1.35 Per Share CAGR 29 Concluding Remarks Michael Ward Chairman, President and Chief Executive Officer
Slide 16: Relentless pursuit of excellence
Relentless pursuit of excellence . . . 31 32