Reading & Northern Railroad. NEARS PHILADELPHIA MEETING October 15, 2015

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Aileen Mathews
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1 Reading & Northern Railroad NEARS PHILADELPHIA MEETING October 15, 2015

2 Reading & Northern Overview Founded in 1983 The largest privately-owned railroad in PA Locally owned by Andy Muller, Jr., Owner, Chairman and CEO from Hamburg PA Headquartered in Port Clinton, PA 200 full and part time employees

3 Reading and Northern in 2015 Mileage 320 miles Mainline extends from Reading, PA to Dupont, PA Track in nine counties We interchange with Norfolk Southern, and also connect with: Canadian Pacific via haulage Luzerne & Susquehanna Delaware Lackawanna Shamokin Valley Lehigh Railway

4 Reading & Northern Assets Locomotives 35 units both 4 axle and 6 axle Car Fleet over 1000 rail cars Open top hoppers, covered hoppers, gondolas and boxcars Maintenance of Way equipment Tampers, Regulators, Spikers, Ballast cars, brush cutters, Hi rail trucks

5 Reading & Northern Business at a Glance 2014 Originated or terminated car loadings over 24,365 (+3.1%) 2015 YTD Traffic up over 30% Reading & Northern enjoys a diverse traffic base. In 2014 the Top 6 commodities, incorporating over 80% of the business were: 20% Paper 27% Anthracite Coal 19% Food/Wine 13% Plastics 9% Metals/Constr. 7% Sand 5% All other 20% 7% 9% 5% 13% 19% 27% Trackage Rights carloadings from Norfolk Southern and Canadian Pacific trains = over 59,500 cars in 2014

6 Reading & Northern Service We run a Scheduled Railroad Daily service available Each customer has a 2 hr service window 98% on time in 2014 Plenty of additional capacity on our trains Additional daily switches possible Lowest demurrage charges in the industry Additional storage track available

7 Celebrating our success Chosen in 2015 by Railway Age Magazine as Regional Railroad of the Year. The only three time winner of this prestigious national award. ASLRRA national Shortline Marketing Award winner in 2014 for development of our aluminum transloading terminals at Cressona and Penobscot Regional Railroad of the Year in 2011 for our development of a new export facility for Pennsylvania Anthracite at Fairless Hills PA ASLRRA national Shortline Marketing Award winner in 2010 for development of new Marcellus Shale transload facility at Pittston Yard near Scranton PA

8 Business Development Examples at Reading and Northern Sand Terminal in Pittston PA ASLRRA Shortline Marketing Award winner 2010 Coal export terminal at Fairless Hills PA Railway Age Magazine s Regional Railroad of the Year 2011 New PCA facility in Reading PA 2011 Coal unloading expansion at Leetsdale PA 2013 Two New Transload Terminals on RBMN ASLRRA Shortline Marketing Award winner 2014 New Warehouse at Old Forge PA 2015 New Customer siding at Coal Contractors 2015

9 Pittston Yard Sand Transload facility Met D&I Silica Oct 2009 Handshake deal to develop terminal Nov 2009 Completed terminal in aprox 6 weeks First trucks transloaded December carloads delivered in first year Pittston Yard Oct 2009 Pittston Yard Dec 2009

10 New Coal Export Terminal Partnered with Kinder Morgan in Fairless Hills PA RBMN spent over $200,000 on rail car unloading conveyors to create a new option for export anthracite Kinder Morgan added new Ashross car unloading system RBMN bought 248 rapid discharge cars to support this Volumes have exceeded 2000 cars

11 Packaging Corp of America PCA required existing siding to be relocated New siding required grade and curvature to exceed RR specs RBMN reviewed and approved with modified operating procedures RBMN contributed funding and construction First rail cars placed late 2011

12 Coal Unloading Expansion at Leetsdale PA Mol-Dok is an important barge loading terminal on the Ohio River near Pittsburgh Old unloading pit was too small for more efficient Rapid Discharge Cars Reading & Northern helped finance unloading pit expansion Allows rapid and efficient unloading up to one unit train a day Rail volume up 60% in 2015

13 Aluminum Transload Terminals Identified customer need for alternative storage & distribution for aluminum Cleared and repurposed two rail yards in 60 days late 2012 RBMN Provides transportation, transloading, storage and local delivery for aluminum customers Inbound rail and truck capacity Outbound rail 1/2 mile to customer 352 rail cars and 125 trucks in 2014

14 New Warehouse at Old Forge PA Customer advised they lost the use of a warehouse for deliveries to the RBMN and had 30 days to find another Needed rail for both inbound and outbound With no other warehouse suitable on RBMN we faced loss of business We found unused building in need of repair with rail siding buried We committed to bring the building and siding up to high customer standards We got support from shipper and NS RBMN team pulled it off in 30 days

15 New Warehouse at Old Forge PA 1100 siding buried in dirt Doors replaced Ceilings walls and floors repaired Upgraded electrical Corrected drainage Acquired forklifts and trained operators Bought additional boxcars Implemented an inventory control system

16 New Warehouse at Old Forge PA Inventory control system for both Inbound and outbound rail Next day delivery by rail to P&G Mehoopany Also able to handle trucks Controlled, managed and staffed by RBMN employees From start to finish project took less than 4 weeks

17 Coal Contractors Coal Contractors asked if we could help them get a rail siding put into their site We said we could help and if Coal Contractors paid up front RBMN guaranteed siding to be operational in three weeks We met to finalize design details, they paid up front and RBMN delivered on time Switch installed at less than half the class one cost

18 Reading & Northern Business Development Focus on the customer Work with good partners Move fast and be aggressive Invest in what we believe in Be flexible and creative

19 Expansion to Hazleton PA In June 2012 RBMN entered into an agreement to purchase 7.5 miles of track in the Humboldt Industrial Park from CANDO. This location adds 12 customers and 5000 rail cars to RBMN CANDO is one of the premier Industrial Development Organizations in PA and this site has tremendous growth potential RBMN will take over service to the customers in the park on January 1, 2016

20 Reading & Northern Passenger Operations Passenger Excursion Trains Operate trips powered by steam and diesel engines Full-day rides as well as mini trips for community celebrations Added Santa Clause and Easter Bunny trains Normal train consists of nine passenger coaches with capacity for 620 guests Lehigh Gorge Scenic Railway Operates from Jim Thorpe into the Lehigh Gorge Runs weekends and holidays from Memorial Day weekend until the weekend before Christmas, including select weekdays during the summer and October. Four trips per day with expanded schedule for select summer months and October. New bike trains allow customers to ride the train one way and return by bicycle Rides lasts approximately one hour 2014 saw a record 72,295 passengers taking a ride on the Lehigh Gorge Scenic Railway 2015 ridership up 37% year to date

21 Our Employees are our Most Valuable Asset All employees are guaranteed: Their jobs, hours and benefits The best medical plan that money can buy (at no cost to the employee) In 2013 every employee received A free vacation, including an extra week off with pay, to a choice of Disney World, Bermuda cruise, Caribbean cruise, Canadian cruise, Las Vegas, or Niagara Falls. In 2014 every employee received a profit sharing bonus of 3% of their salary. In 2015 every employee is receiving an additional 5% profit sharing bonus.

22 Serving our customers, and the environment

4.0 Inventory of the Existing Rail System

4.0 Inventory of the Existing Rail System Introduction The purpose of this task was to develop a geographic information system (GIS) database inventory of the existing freight rail system within the Sioux