Fo Four urth th Qua uarter ter 20 2010 10 Re Resul ults ts - PowerPoint PPT Presentation

Fo Four urth th Qua uarter ter 20 2010 10 Re Resul ults ts James A. Squires Executive Vice President Finance and Chief Financial Officer

Operating Results Fourth Quarter 2010 vs. 2009 ($ Millions) Favorable Fourth Qtr Fourth Qtr (Unfavorable) 2010 2009 $ % Railway operating revenues $ 2,392 $ 2,106 $ 286 14%

Operating Results Fourth Quarter 2010 vs. 2009 ($ Millions) Favorable Fourth Qtr Fourth Qtr (Unfavorable) 2010 2009 $ % Railway operating revenues $ 2,392 $ 2,106 $ 286 14% Railway operating expenses 1,750 1,557 (193) (12%) Income from railway operations $ 642 $ 549 $ 93 17% Railway operating ratio 73.2 73.9 0.7 1%

Railway Operating Expense Analysis Fourth Quarter 2010 vs. 2009 ($ Millions) + $87 + $46 + $37 + $29 Depreciation Fuel Compensation Purchased - $6 Materials and benefits services and other and rents Net Increase $193 Million / 12%

Fuel Expense Analysis Fourth Quarter 2010 vs. 2009 ($ Millions) + $29 $308 + $58 $221 Fourth Qtr Higher Increased Fourth Qtr 2009 Prices Consumption 2010

Locomotive Diesel Fuel Average Prices 2009-2010 $3.00 $2.46 $2.24 $2.19 $2.13 $1.98 $1.85 $2.00 $1.39 $1.55 $1.00 $0.00 6

Railway Operating Expense Analysis Fourth Quarter 2010 vs. 2009 ($ Millions) + $87 + $46 + $37 + $29 Depreciation Fuel Compensation Purchased Materials - $6 services and benefits and other and rents Net Increase $193 Million / 12%

Compensation and Benefits Analysis Fourth Quarter 2010 vs. 2009 ($ Millions) Decrease (Increase) Volume-related payroll $ (28) Medical benefits (active and retiree) (19) Pensions (8) Payroll taxes (8) Wage rates (7) Incentive compensation 11 Stock-based compensation 19 Other (6) Total increase $ (46)

Railway Operating Expense Analysis Fourth Quarter 2010 vs. 2009 ($ Millions) + $87 + $46 + $37 + $29 Depreciation Fuel Compensation Purchased Materials - $6 services and benefits and other and rents Net Increase $193 Million / 12%

Railway Operating Expense Analysis Fourth Quarter 2010 vs. 2009 ($ Millions) + $87 + $46 + $37 + $29 Depreciation Fuel Compensation Purchased Materials - $6 services and benefits and other and rents Net Increase $193 Million / 12%

Income Before Income Taxes Fourth Quarter ($ Millions) Change vs. Prior Period: + 20% $562 $467 2009 2010

Income Taxes Fourth Quarter ($ Millions) Change vs. Prior Period: 0% $160 $160 2009 2010

Net Income and Diluted Earnings per Share Fourth Quarter ($ Millions except per share) Net Income Diluted Earnings per Share Change vs. Prior Period: + 31% Change vs. Prior Period: + 33% $402 $307 $1.09 $0.82 2009 2010 2009 2010

Net Income and Diluted Earnings per Share Year ($ Millions except per share) Net Income Diluted Earnings per Share Change vs. Prior Period: + 45% Change vs. Prior Period: + 45% $1,496 $1,034 $4.00 $2.76 2009 2010 2009 2010

Cash Flows 2010 vs. 2009 ($ Millions) Increase 2010 2009 (Decrease) Cash from operating activities $ 2,714 $ 1,860 $ 854 Capital expenditures (1,470) (1,299) 171 *Free cash flow $ 1,244 $ 561 $ 683 Share repurchases $ 863 $ -- $ 863 Dividends $ 514 $ 500 $ 14 Cash and cash equivalents at $ 827 $ 996 $ (169) December 31 *Please see reconciliation to GAAP posted on our web site.