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

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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

SLIDE 1

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

SLIDE 2

Operating Results

Fourth Quarter 2010 vs. 2009 ($ Millions)

Fourth Qtr Fourth Qtr Favorable (Unfavorable) 2010 2009 $ % Railway operating revenues $ 2,392 $ 2,106 $ 286 14%

SLIDE 3

Operating Results

Fourth Quarter 2010 vs. 2009 ($ Millions)

Fourth Qtr Fourth Qtr Favorable (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%

SLIDE 4

Railway Operating Expense Analysis

Fourth Quarter 2010 vs. 2009 ($ Millions)

Net Increase $193 Million / 12%

+ $46 + $87 Depreciation + $29 + $37 Materials and other Purchased services and rents Compensation and benefits Fuel

SLIDE 5

Fuel Expense Analysis

Fourth Quarter 2010 vs. 2009 ($ Millions)

Fourth Qtr 2009 Fourth Qtr 2010 Increased Consumption Higher Prices $308 + $29 + $58 $221

SLIDE 6

Locomotive Diesel Fuel Average Prices

2009-2010 $1.39 $1.55 $1.85 $1.98 $2.13 $2.24 $2.19 $2.46 $0.00 $1.00 $2.00 $3.00

SLIDE 7

Railway Operating Expense Analysis

Fourth Quarter 2010 vs. 2009 ($ Millions)

Net Increase $193 Million / 12%

+ $46 + $87 Depreciation + $29 + $37 Materials and other Purchased services and rents Fuel Compensation and benefits

SLIDE 8

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)

SLIDE 9

Railway Operating Expense Analysis

Fourth Quarter 2010 vs. 2009 ($ Millions)

Net Increase $193 Million / 12%

+ $46 + $87 Depreciation + $29 + $37 Materials and other Purchased services and rents Fuel Compensation and benefits

SLIDE 10

Railway Operating Expense Analysis

Fourth Quarter 2010 vs. 2009 ($ Millions)

Net Increase $193 Million / 12%

+ $46 + $87 Depreciation + $29 + $37 Materials and other Purchased services and rents Fuel Compensation and benefits

SLIDE 11

Income Before Income Taxes

Fourth Quarter ($ Millions)

Change vs. Prior Period: + 20% $467 $562

2009 2010

SLIDE 12

Income Taxes

Fourth Quarter ($ Millions)

Change vs. Prior Period: 0% $160 $160

2009 2010

SLIDE 13

Net Income and Diluted Earnings per Share

Fourth Quarter ($ Millions except per share)

Net Income Diluted Earnings per Share

$307 $402 $1.09 $0.82 Change vs. Prior Period: + 31% Change vs. Prior Period: + 33%

2009 2010 2009 2010

SLIDE 14

Net Income and Diluted Earnings per Share

Year ($ Millions except per share)

Net Income Diluted Earnings per Share

$1,034 $1,496 $4.00 $2.76 Change vs. Prior Period: + 45% Change vs. Prior Period: + 45%

2009 2010 2009 2010

SLIDE 15

Cash Flows

2010 vs. 2009 ($ Millions)

2010 2009 Increase (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 December 31 $ 827 $ 996 $ (169)

*Please see reconciliation to GAAP posted on our web site.