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CONRAIL INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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<PAGE>
[Presentation given by Conrail management to
Institutional Shareholder Services on December 10, 1996]
Overview
o Creates Leading Global Transportation Company
- Annual revenues exceeding $14 billion
- Serves 80 countries worldwide
- Links rail, shipping, barge, intermodal and contract logistics
customers
o Enhances Shareholder Value
- Most revenue growth
- Highest cost savings
- Greatest financial flexibility
o Promotes Competition
- Access to North/South markets
- Truck-dominated markets
- Follows regulatory guidelines
Summary of Benefits
o Broadest Geographic Scope
- Extensive single-line service
- Direct and efficient routes
o Greatest Synergy Potential
- Transportation efficiencies
- Consolidations
- Productivity gains
o Financial Strength
- Solid investment grade credit
- Strong cash flow
<PAGE>
CSX & Conrail
Systems
[Map showing respective rail systems]
CSX & Conrail
Systems
[Map showing respective rail systems and interstate highways]
Broadest Geographic Scope
o Strong Coverage in East, Midwest and Southeast
- 29,645 route miles
- Serves 22 states east of the Mississippi
- Covers major markets from Chicago, Boston and New York to
Miami and New Orleans
- Allows efficient rail service in North/South markets
o Provides Extensive Single-Line Service
- Connects producing points in South/Southeast with consuming
region in Northeast
- Creates faster and more reliable service at lower cost
<PAGE>
Revenue Synergies
o Top Line Growth Resulting in $165 Million Additional Operating
Income
- 80% from Coal, Automotive and Carload Business
- 20% from Intermodal
o Margin Improvements from Incremental Traffic
- Optimized train sizing
- Increased length of haul
- Reduced empty movements
Carload Business
o Almost 50% of Pro-Forma Revenues from Carload Business
o Breadth of Market Coverage is Critical
- CSX has broadest customer access
o Revenue Growth Will Result from:
- Expanded single-line service
- Penetration of North/South truck market
- Improvements in asset utilization
o Single-Line Service Opportunities
- Chemicals from Gulf Origins to Northeast
- Midwest grain producers to users in South
- Recycled Pulp and Paper Products to Southeast
o Penetration of Truck-Dominated North/South Markets
- Forest products from Southern Mills
- Citrus products from Southeast
- Minerals business in the East
<PAGE>
o Improved Asset Utilization
- Reduced empty car movements
- Opportunities for backhauls
- Cycle time improvements
Conrail/CSXT-Served
Coal Mines and Power Plants
[Map showing coal mines and power plants served by respective rail systems]
Coal Business
o 23% of Pro-Forma Revenues from Coal
o CSX Has Most Low Sulfur Coal Reserves in East
- Provides additional long-term compliance choices for Conrail
utility customers
- Adds efficient single-line service opportunities
o Allows More Competitive Access for Export Coal at Bayside and
Curtis Bay Terminals in Baltimore
- CRR "Pittsburgh Seam" coal not competitive at Hampton Roads
Terminal
o Reduces Circuity on Major Movements
- 400 to 450 miles from Charleston, W. Virginia export coal
- 200 miles for W. Virginia coal to Northeast utilities
o Removes 15,000 Annual Carloads from Amtrak
- Reduces transit time by 12 hours in each direction
- Saves $7.0 million in trackage rights payments
<PAGE>
Conrail/CSX Rail Served
Automotive Assembly Plants
[Map showing automotive assembly plants served by respective rail systems]
Conrail/CSX
Auto Terminal Locations
[Map showing respective auto terminal locations]
Automotive Business
o Represents 12% of Pro-Forma Revenues
o Eliminates Rail Inefficiencies in Truck Dominated Markets
- 11,000 annual truckloads between North Jersey and CSX's Twin
Oaks, PA Terminal
- 22,000 annual truckloads in Detroit area
o Provides Access to Seven of Nine Major East Coast Ports for
Export/Import Business
- Customer can select most competitive port
o Offers Unequaled Network Density and Scope
- Serves every major metropolitan market east of the Mississippi
- Opens single-line service to Nashville, Tampa and Miami
<PAGE>
Conrail/CSX Rail Served
Intermodal Terminal Locations
[Map showing respective intermodal terminal locations]
Intermodal Business
o Represents 18% of Pro-Forma Revenues
Enhances Merchandise Flow in the "Eastern Triangle"
o Complementary Infrastructure and Terminals
- Conrail Access to New York, New England and Midwest
- CSX terminal coverage in Orlando and Tampa
o Allows Penetration of Truck Dominated Markets
- East Coast - Atlanta
- East Coast - Atlantic Seaboard, including Savannah, Charleston
and Florida
o Combines "Best Practices" of Each Railroad to Provide Superior
Product for Customers
- Conrail high speed reliable service
- CSX equipment supply and rate quotation programs
Diverse Revenue Base
[Pie Chart showing the following:
Food and Agriculture: 10%
Chemicals: 21%
Forest: 9%
Automotive: 12%
Coal: 23%
Intermodal: 18%
Metals: 7%]
<PAGE>
Cost Savings
o Consolidations $295M
o Facility Coordinations $ 71M
o Transportation Efficiencies $127M
o Productivity Gains $ 72M
Total Synergies $565M
Synergy Timing
Year 1 Year 2 Year 3
Incremental Operating Income
Net Traffic $ 70 $125 $165
Cost Savings 170 396 565
---- ---- ----
Total Synergies $240 $521 $730
Timing 33% 71% 100%
One-Time Cash Flows
Capital Expenditures $ 75 $100 $ 25
Transition Costs 205 130 75
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Total $280 $230 $100
<PAGE>
Regulatory Process
o Public Interest is Served by CSX/CRR Combination
- Broad network reach for customers
- Single-line service
- Operating efficiencies
- Elimination of redundant assets
- Capital investment
- Reduced highway congestion
- Progress in separation of freight and passenger operations
o Preserving Competition
- Competitive overlaps appreciably fewer than UPSP
- STB has long declined to grant access to markets where
traffic and competitive options
are "not harmed by the merger"
- CSX/CRR will preserve competition for customers whose rail
options are reduced from 2 to 1
Summary
o Provides Greatest Opportunity for Long-Term Revenue Growth
and Synergies
- Comprehensive market coverage
- Single-line service
- Transportation efficiencies
- Consolidation and productivity gains
o Financial Strength Provides Further Opportunities for Increased
Shareholder Value
- Solid balance sheet
- Strong cash flows
- Financial management strategy
