1

Third Quarter 2015 Marketing Overview

Alan H. Shaw

Executive Vice President

and Chief Marketing Officer

Current Conditions

‒ Fuel Surcharges

‒ Commodity Prices and Strength of Dollar

‒ Increased Truck Capacity

‒ Solid Pricing

Approach to Broad Economic Changes

‒ Continued Focus on Pricing

‒ Network Reach

‒ Strategic Structuring

Adapting to our Changing Environment

2

Revenue $ in Millions & y-o-y Percent Change Revenue in $ Millions

Railway Operating Revenue Third Quarter 2015 vs. 2014

Merchandise

$1,610

(7%)

Coal

$482

(23%) Intermodal

$621

(7%) $2,655 $2,600

$368

$113

$1,000

$1,400

$1,800

$2,200

$2,600

$3,000

3Q 2014 3Q 2015Revenue Less Fuel * Fuel Surcharge

($255)

($55)

3

Revenue RPU RPU Less Fuel* Volume

$2.7 Billion; $1,401; $1,343; 1,936,300 units;

down (10%) down (7%) up 1% down (3%)

* Please see reconciliation to GAAP posted on our website.

4

0

50

100

150

200

Utility Export Dom Met/Ind

188.8

31.2

58.8

Coal Market Third Quarter 2015 vs. 2014

Units

(000’s)

(11%) (38%) (15%)

Low natural gas prices, strong U.S. dollar, and a weak global market

Revenue $482 Million (23%)

Volume 278,800 (16%)

RPU $1,726 (8%)

Less Fuel

Revenue $466 Million* (16%)

RPU

$1,666* 0%

* Please see reconciliation to GAAP posted on our website.

0

200

400

600

800

Domestic International

627.7

371.8

Intermodal Market Third Quarter 2015 vs. 2014

(5%) 9%

Units

(000’s)

Domestic headwinds with International growth

5

Revenue $621 Million (7%)

Volume 999,500 (1%)

RPU $622 (6%)

Less Fuel

Revenue $543 Million* 2%

RPU

$544* 2%

* Please see reconciliation to GAAP posted on our website.

0

50

100

150

200

MetCon Ag Chem Auto Paper

183.3

152.9

134.3

109.7

77.8

6

Merchandise Market Third Quarter 2015 vs. 2014

(9%) 5% 2% 5% (2%)

Units

(000’s)

Growth in Automotive, Agriculture, and Chemicals markets

Revenue $1,610 Million (7%)

Volume 658,000 (1%)

RPU $2,447 (6%)

Less Fuel

Revenue $1,591 Million* 1%

RPU

$2,420* 3%

* Please see reconciliation to GAAP posted on our website.

Commodity Pricing and

Strength of Dollar

– Export Coal

– Crude Oil

– Export Soybeans

Domestic Intermodal

Fuel Surcharges

Market Based

– Consumer Products

– International and

Domestic Intermodal

– Housing

Price Improvement

Strategic Changes

Near Term Headwinds Growth Opportunities

Business Outlook

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Third Quarter 2015 Operations Overview

Mark Manion

Executive Vice President

and Chief Operating Officer

1

0.83

1.18 1.22

1.05

0.0

0.5

1.0

1.5

2012 FY 2013 FY 2014 FY 2015 YTD

Reportable Personal Injuries (Per 200,000 Employee-Hours)

3.44 3.59 3.89 3.51

0

2

4

6

2012 FY 2013 FY 2014 FY 2015 YTD

Crossing Accidents (Per Million Train Miles)

2.02 2.02 2.03 1.97

0.0

1.0

2.0

3.0

2012 FY 2013 FY 2014 FY 2015YTD

Train Incidents* (Per Million Train Miles)

Safety Performance

2

Year-to-Date Comparison

Injury rate (1.05) is down compared to

2014ytd (1.19)

Train Incident rate (1.97) is down compared

to 2014ytd (2.15)

Grade Crossing Accident rate (3.51) is down

compared to 2014ytd (3.98)

*Train incident ratio is calculated using FRA methodology

50%

55%

60%

65%

70%

75%

80%

85%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

73%

75%

69%

63% 64%

72%

75%

Composite

Composite Service Performance

3

16

18

20

22

24

26

Jan

-13

Jan

-25

Feb

-06

Feb

-18

Ma

r-02

Ma

r-14

Ma

r-26

Ap

r-07

Ap

r-19

Ma

y-0

1M

ay

-13

Ma

y-2

5J

un

-06

Ju

n-1

8J

un

-30

Ju

l-12

Ju

l-24

Au

g-0

5A

ug

-17

Au

g-2

9S

ep

-10

Sep

-22

Oct-

04

Oct-

16

Speed (mph)

15

20

25

30

35

Jan

-13

Jan

-25

Fe

b-0

6F

eb

-18

Ma

r-02

Ma

r-14

Ma

r-26

Ap

r-07

Ap

r-19

Ma

y-0

1M

ay

-13

Ma

y-2

5J

un

-06

Ju

n-1

8J

un

-30

Ju

l-12

Ju

l-24

Au

g-0

5A

ug

-17

Au

g-2

9S

ep

-10

Sep

-22

Oct-

04

Oct-

16

Dwell (Hrs) Better( ) Better( )

Train Speed & Terminal Dwell 2015

4

Coal Line Rationalization Reductions in Central Appalachian Region

5

Out-of-Service /

Restricted Investment

300 miles within the last 18

months

Includes Oct 1st changes:

− 33 miles (Elmore, WV and

Princeton, WV)

− 31 miles (Dismal, VA to

Richlands, VA)

Not abandoning lines to allow

for participation in a market

return

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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