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CONRAIL INC.
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<PAGE>
[Slides presented by Conrail management to
certain institutional and employee shareholders]
Overview
o Strategic considerations drive the CSX/Conrail combination
- Rationalizes eastern rail networks
- Provides new level of transportation efficiency and service
for customers
- Attacks truck dominance in major markets
- Positions CSX/Conrail for substantial transcontinental
opportunities
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
Summary of Benefits
o Greatest Synergy Potential
- Transportation efficiencies
- Consolidations
- Productivity gains
o Broadest Geographic Scope
- Extensive single-line service
- Direct and efficient routes
<PAGE>
o Financial Strength
- Solid investment grade credit
- Strong cash flow
Cost Savings
o Consolidations $295M
o Facility Coordinations $ 71M
o Transportation Efficiencies $127M
o Productivity Gains $ 72M
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Total Synergies $565M
Revenue Synergies
o Top Line Growth Resulting in $165 Million Additional Operating Income
- 80% from Coal, Automotive and other Carload Business
- 20% from Intermodal
o Margin Improvements from Incremental Traffic
- Optimized train sizing
- Increased length of haul
- Reduced empty movements
<PAGE>
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
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>
Combined Revenue Base
[Pie Chart showing the following:
Food and Agriculture: 10%
Chemicals: 21%
Forest: 9%
Automotive: 12%
Coal: 23%
Intermodal: 18%
Metals: 7%]
Carload Business
o Almost 50% of Combined 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
Coal Business
o 23% of Combined 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
Automotive Business
o Represents 12% of Combined 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
<PAGE>
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
Intermodal Business
o Represents 18% of Combined 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
<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
- CSX/CRR will proactively resolve all competitive and public issues
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
<PAGE>
Why CSX-CR?
o Preferred commercial partner
o Greater synergy and growth potential
o More opportunities for employees
o More public benefits
CSX-CR
o The strongest partnership
- A more complete network
- More customers
- More single line service
- More routes
- More ports
- More truck competitive
Today, Trucks Dominate The Eastern Transportation Market
[Pie chart showing the following:
Trucks 86%
CSX/Conrail 6%
Other Eastern Railroads 5%
Water 3%]
Source: Reebie Associates
<PAGE>
CSX-Conrail
o Ability to better compete along:
- Interstate 75
- Interstate 85
- Interstate 81
- Interstate 95
CSX: Better For Employees
o Less uncertainty for Conrail employees
- Will become part of the second largest US rail network
- Will join an integrated transportation business with a global
presence
- New opportunities in non-rail businesses
- Sea-Land
- CSXI
- American Commercial Lines
CSX-CR: A Merger Of Equals
o Shared leadership
- Equal board of directors representation
- CR management team representation
- Shared responsibility going forward
- Commitment to region
- Corporate headquarters in Philadelphia
<PAGE>
CSX-CR: A Merger Of Equals--Not A Sale Of The Company
o What does that mean for you?
- The new entity will be formed of the best of both Conrail and
CSX
- The Board of Directors will be 50-50
- Dave LeVan will be CEO of the combined railroad and succeed
John Snow as chairman and CEO of the holding company
- Ensures the greatest opportunity for Conrail employees
- CSX plans to invest over $400 million more in the railroad
than does NS
- This translates into commitments to the customers and
communities CR serves and to its employees
CSX-CR Merger
o Existing merger agreement with CSX protects employee interests
- New CSX-CR is bound to honor existing contracts and benefit
plans
- Agreement guarantees that benefits, in the aggregate, will be
no less favorable than similarly situated CSX employees
- For CSX or CR employees displaced by the merger, provides for
severance benefits at levels no less than those offered in
other recent industry consolidations
o Relative operating ratios of Conrail, CSX and NS indicate that
- Synergies from an NS takeover would come largely from the
elimination of CR jobs and facilities
- Synergies from a CSX-CR merger come largely from growth
opportunities and streamlining CSX operations
<PAGE>
The NS Offer
o No commitments
- to Philadelphia
- to Conrail workers
o Heavy debt burden will force NS to save wherever possible
- Purchase will boost NS debt to over 75% of what the company is
worth to shareholders
- According to Henry Wolf, NS' executive vice president -
finance, "We're going to have to be real penny pinchers under
this plan."
CSX-CR Merger Timetable
o January 17
- Special Meeting of CR Shareholders
o January 22
- CSX Tender Offer Closes for Additional 20.1% of CR Stock at
$110 per Share
o March-April
- Consummation of CSX-CR Merger
o March
- File Application for Merger at STB
- 300 Day Proposed Review Period
