Conrail…An Evolution of Change

1 Evolution of ChangeThe Evolution of Change at Conrail is segmented into a three part overview Historical Milestones1976 - 2015 Corporate Structure and Significant Statistics Pre/Post Acquisition Significant Statistics Shared Assets Areas Purpose Geographic overview Performance To Date1 During Conrail s 40 year history it has transformed from a Class I line haul carrier to a Switching & Terminal operationHistorical Milestones 3R ActJanuary 1974 4R ActFebruary 1976 Formation of ConrailApril 1, 1976 Staggers Rail ActOctober 1980 NERSAA ugust 1981 Initial Public Offering (IPO)March 1987 Acquisition by CSX and Norfolk Southern CorporationJune 1997 Control DateAugust 1998 Operating Split DateJune 1999 Spin Date of NYC LLC and PRR LLCA ugust 2004 Last Corporate SimplificationDecember 20122 Corporate Structure of Conrail continues after acquisition and control by CSX and Norfolk Southern Corporation with most notable changes taking place through NYC LLC and PRR LLC3 Corporate Structure 100%100%100%51%50%50%100%100%50%100%100% PROJECTS, HARBOR BELT RR DESP.

2 TRA NS . CORP .PENNSYLVANIA LINES LLCPENN CENTRAL COM. LOCKPORT, PARTNERSHIPTTX COM P A NYALBANY PORT RR longer part of Corporate StructureTCV. COMPANYTRIP LE CROW N SVCS. RWY CO. OF CHICAGOPEORIA & PERKIN UN. RWY YORK CENTRAL LINES LAND SERVICES CORPORATIONST. LAWRENCE & ADIRON RWYLAKEFRONT DOCK & RR TERM. RAIL CORPORATION100%GENERAL AMERICAN INS. DIRECT INVESTEMENTS LE CROW NJOINT VENTURE50%100%100% , LAND SERVICES, LOCKPORT, RESOUR. GROUP, AMERICAN INS.. LAWRENCE & ADIRON RWYLMS PARTNERSHIPALBANY PORT RR & PERKIN UN. RWY CENTRAL COM. PROPERTIES, INVESTEMENTS, DOCK & RR TERM. HARBOR BELT RR COM P A NYBELT RWY CO. OF CHICAGOCG PROJECTS, ED RAIL CORPORAT IONCRR INDUSTRIES, DESP. TRANS. DIRECT, made significant reductions during its Class I era thus setting the stage for refinements made beyond split date of June 1, 199919771998 Percent Variance20002015 Percent VarianceRoute M iles19,22210,82644%5855663%Track M iles40,67820,94149%1,2161,2091%Employees 94,60519,61179%1,7311,12235%Locomotives4 ,8771,94460%1428739%Worked & Compensated M an-Hours186,898,323 40,950,14178%3,814,5122,193,98942%4 Shared Assets AreasWhy?

3 Because the arrangements of Shared Assets Areas permits: Customer choice of either NS or CSX routings, price, serviceand equipment in an extensive number of origin-destinationmarkets Simple, direct business transaction contact with the line haul carriers, NS and CSX Train make-up, break-up and terminal switching service bya single efficient entity, minimizing duplication in verycongested geographic areas Hosting run-though train service to and from points withinthe Shared Assets Areas, as highlighted in the Operating PlanSource: Railroad Control Application before STB/Finance Docket #333885 Detroit is a very efficient terminal area with a non-hump linear network reliant on pre-classification of inbound traffic flowsSterlingMound RoadDetroit North YardTOWN LINEWEST DETROITL ivernoisRiver RougeTre n t o nCarletonDELRAYCSAOCSXNSO akwood (NS)WatermanCSX Main LineCR Lincoln SecondaryCR Detroit LineMichigan LineMack YardTerminal WestRougemereCP Lou6 South Jersey area is a hub and spoke operation centered at Pavonia Yard whereas the Philadelphia Metropolitan Area comprises a network of five distinct island yards PalermoAbramsTo WINGM illvilleCoatesvilleTrentonMORRISSHOREWOO DNEWTOWN JCTBELMONTEARNESTISLANDGLENNORRISHATCHWO ODBURYBROWNZOOFIELDPHILEASTWICKHOOKWILSM EREB ristolBurlingtonPavoniaCarney s PointPaulsboroPark JctGreenwichEddystoneStoney CreekWest FallsMidvaleLansdaleFrankford Trenton LineDelairBranchBordentownSecondaryNS Harrisburg LineNS Trenton CutoffDelawareRiverCSX Line to BaltimorePANJPort RichmondMorrisvilleWINSLOW JCTA mtrak Northeast CorridorCSAOCSXNSAMTRAK7 North Jersey is a repetitive hub and spoke operation comprised of Oak Island Hump Yard and nine satellite

4 YardsRidgefield HeightsNAVEMARIONHXGREENLANEALDENEWOODRA HWAYESSAYREDBANKBOUND BROOKPT READING JCTPHILIPSBURGWINGMIDWAYN orth BergenPassaic AveBayonneDocksideBaywayPort TRENTONM anvilleCSX Trenton LineCR Lehigh LineNS Southern TierCSX River LineCR Chemical CoastAmtrak NECNS Lehigh LineCR Port Reading SecondaryTo NYCS tatenIslandCR P&H BranchOak IslandCroxtonSouth KearnyCSAOCSXNSAMTRAK8 Since split date, Conrail s mission has been to administer consistent service levels to plan with the least amount of cost structure The Shared Assets Areas initiated field operations with component levels not in excess of pre-splitConrail An organizational Change Agent mentality delivereda re-engineered structure during the past fifteen years Continual focus for improved operating efficiency hasbred year over year benefits Seizing synergies and maximizing economies of scale were realized by adopting Best Practices from parent company ownership9As our Evolution began to a Switching and Terminal configuration, a profile was developed in 2000for purposes of ongoing comparison Human Resources Infrastructure Equipment and Highway Vehicles Facilities Operating Plan Productivity/Service Performance10( )

5 = Decrease20002015 VariancePercent VarianceHuman Resources OTE Work Force222130(92) (41%) T+E Work Force614429(185) (30%) Total Transportation Work Force836559(277) (33%)Transportation Worked and Compensated Man-Hours129,741 88,893(40,848) (31%)Operating Plan Owner Road Trains Dispatched Daily961037 7% Passenger/Commuter Trains Dispatched Daily6663(3) (5%) Owner Road Trains Made Up Daily21265 24% Owner Road Trains Terminated Daily19256 32% Number of CSX/NS Classifications Made122112(10) (8%) Number of Serving Yards2722(5) (19%) Number of CR Crews operated 13% Route Miles ( ) (8%)Conrail Transportation Profile 2000 - 201511 Conrail Maintenance Profile 2000 - 2015( ) = Decrease20002015 VariancePercent VarianceHuman Resources Maintenance & Inspection Workforce551451 (100)(18%)Maintenance & Inspection Worked & Compensated Man-Hours109,03974,969 (34,070)(31%)Physical Plant Total Track Mileage1, , ( )(4%)Class I ( )(8%)Class II ( )(2%)Class III 9%Class IV 85%Excepted Track ( )(50%)Road Crossings958901 (57)(6%)Route Mile 11%Route Mile ( )(21%)Yard 25%Yard Jointed424374 (50)(12%)Manned Towers82 (6)(75%)Manned Moveable Bridges103 (7)(70%)Buildings6045 (15)(25%)

6 Air Compressors3535 - 0%Switch Heaters169321 152 90%Utility Services848921 73 9%Leased Circuits2,4581,124 (1,334)(54%)Equipment & Highway Vehicles Locomotives14287 (55)(39%) Roadway Vehicles274222 (52)(19%) M/W Equipment3216 (16)(50%)12 Favorable performance results have been achieved during this period from engaging constructive change132000 2015 VariancePercent VariancePerformance IndicatorsAverage Crew ( ) (22%)Average T&E Overtime per ( ) (39%)On-Time Train Departures54%96%42%77%Yard Dwell ( ) (37%)Cycle Time (Days) ( ) (32%)Worked & Compensated Man-Hours Per Cars ( ) (29%)( ) = Decrease Injuries 55% reduction in injuries as of 2015 Derailments 72% reduction in derailment occurrences as of 2015 Operating and maintenance positions 30% reduction Operating and maintenance man-hours 31% reduction Capital Expenditures have been matched to maintain level of utility, provide return on investment and improve efficiency through the application of technology PPP over past 15 years represents 29% of total capital expenditures Operating Performance and Productivity Improvements CSX and NSC have realized the benefits of ongoing Change initiatives at ConrailImplemented Initiatives.

7 Transportation reporting systems On-board customer work order reporting T&E crew management system Technology advancements Adopting parent s material standards and specifications Consolidated track geometry testing Conveyance of property protection services14 Continuing Initiatives: Managing work force attrition while maximizing productivity of man-hours Adopting proven parent company technology to produce Change and efficiency Continuing subscription of best business practices from parent companies Benchmarking analysis of S & T companies owned by CSX and NSCCSX and NSC continue to realize the benefitsof ongoing Change initiatives at Conrail15 Since split date the employees of Conrail have demonstrated unprecedented performance in safety, service and productivityContinuous Safety Improvement Seven Consecutive Harriman Awards (Longest Streak in Conrail History)

8 Employee Injury Reduction by 55% Derailments Reduced by 72%Service Consistency Execute a System Yard Dwell Time of Hours Execute a System On-Time Train Departure Rate of Execute the Dispatching of Inter-City and Passenger Trains at Rates in Excess of of Schedule Execute Industry Switching Compliance in Excess of 93% of Customer ExpectationProductivity Gains Locomotive Asset Base Reduced by 39% Vehicle Asset Base Reduced by 19% Worked & Compensated Man-Hours Reduced by 42% (Delivering 12 Months of Value with Months of Labor)Adaptation of Technology Remote Control Moveable Bridges Real Time GPS Monitoring of Locomotive and Vehicle Fuel Conservation and Utilization Elimination of Manned Interlockers Implementation of Remote Control Locomotives On-Board Industry Work Order Reporting Voice Over Internet Protocol Communications Eliminated Pavonia hump and converted it to an exclusive remote control one man crew operation16 CSX and NSC Fact Based Assessments*.

9 Operations in the Shared Asset Areas A True Success - Mr. Michael J. Ward, Chairman, President & , CSX Corporation* The transaction also brought two carrier competitive services to the Shared Assets that is working smoothly and well. - Mr. David R. Goode, Chairman, President & , Norfolk Southern Corporation The Shared Assets Areas continue to be part of the Conrail success story for NS and - Wick Moorman, Chairman, President & , Norfolk Southern Corporation*Source: STB Testimony, Washington, DC, May 3, 200417