csx q1_2005

CSX CorporationFi t Q t E iCSX CorporationFi t Q t E iFirst-Quarter EarningsFirst-Quarter Earnings

April 28, 2005April 28, 2005

ForwardForward--looking Disclosure Statementlooking Disclosure StatementThis presentation and other statements by the Company contain forwardThis presentation and other statements by the Company contain forward--looking statements within the looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, costestimates of earnings, revenues, cost--savings, expenses, or other financial items; statements of savings, expenses, or other financial items; statements of management’s plans strategies and objectives for future operation and management’s expectations as to management’s plans strategies and objectives for future operation and management’s expectations as to management s plans, strategies and objectives for future operation, and management s expectations as to management s plans, strategies and objectives for future operation, and management s expectations as to future performance and operations and the time by which objectives will be achieved; statements concerning future performance and operations and the time by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry or market proposed new products and services; and statements regarding future economic, industry or market conditions or performance. Forwardconditions or performance. Forward--looking statements are typically identified by words or phrases such as looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward“believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward--looking statements speak only looking statements speak only , p , p , p j , p, p , p , p j , p g p yg p yas of the date they are made, and the Company undertakes no obligation to update or revise any forwardas of the date they are made, and the Company undertakes no obligation to update or revise any forward--looking statement. If the Company does update any forwardlooking statement. If the Company does update any forward--looking statement, no inference should be drawn looking statement, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forwardthat the Company will make additional updates with respect to that statement or any other forward--looking looking statements.statements.

ForwardForward--looking statements are subject to a number of risks and uncertainties, and actual performance or looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by these forwardresults could differ materially from that anticipated by these forward--looking statements. Factors that may looking statements. Factors that may cause actual results to differ materially from those contemplated by these forwardcause actual results to differ materially from those contemplated by these forward--looking statements include, looking statements include, among others: (among others: (ii)) the Company’s success in implementing its financial and operational initiatives (ii)the Company’s success in implementing its financial and operational initiatives (ii) changes changes among others: (among others: (ii)) the Company’s success in implementing its financial and operational initiatives, (ii)the Company’s success in implementing its financial and operational initiatives, (ii) changes changes in domestic or international economic or business conditions, including those affecting the rail industry (such in domestic or international economic or business conditions, including those affecting the rail industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; and (v) the outcome regulatory changes; (iv) the inherent business risks associated with safety and security; and (v) the outcome of claims and litigation involving or affecting the Company. Other important assumptions and factors that of claims and litigation involving or affecting the Company. Other important assumptions and factors that of claims and litigation involving or affecting the Company. Other important assumptions and factors that of claims and litigation involving or affecting the Company. Other important assumptions and factors that could cause actual results to differ materially from those in the forwardcould cause actual results to differ materially from those in the forward--looking statements are specified in the looking statements are specified in the Company’s SEC reports, accessible on the SEC’s website at Company’s SEC reports, accessible on the SEC’s website at www.sec.govwww.sec.gov and the Company’s website at and the Company’s website at www.csx.comwww.csx.com..


Michael WardChairman, President and

Michael WardChairman, President and Chief Executive OfficerChief Executive Officer


Clarence GoodenExecutive Vice President

Clarence GoodenExecutive Vice PresidentChief Commercial OfficerChief Commercial Officer

Surface Transportation revenuesf $2 1 billi i d b $188 illi

Surface Transportation revenuesf $2 1 billi i d b $188 illiof $2.1 billion increased by $188 millionof $2.1 billion increased by $188 million

First QuarterFirst QuarterYear-Over-Year Change

(Dollars in millions)

$2,108$1,920

First Quarter 2004 First Quarter 2005First Quarter 2004 First Quarter 2005

O ll i d b 8 6%O ll i d b 8 6%Overall revenue-per-car improved by 8.6%Overall revenue-per-car improved by 8.6%

First Quarter• Price momentum continues

• Fuel surcharge continues to

• Price momentum continues

• Fuel surcharge continues to

First QuarterYear-Over-Year Change

9.8%Fuel surcharge continues to partially offset rising oil prices

• Volume was slightly favorable

Fuel surcharge continues to partially offset rising oil prices

• Volume was slightly favorable

8.6%

Volume was slightly favorable driven primarily by coalVolume was slightly favorable driven primarily by coal

1.1%

Revenue Volume RPC

Coal revenues of $506 million increased $84 illi t i ld d lCoal revenues of $506 million increased $84 illi t i ld d l$84 million on strong yield and volume$84 million on strong yield and volume

First Quarter• Yield improvement continues in all

lines of business• Yield improvement continues in all

lines of business


19.9%

• Volume strength in many markets including export, northern utilities, industrial and coke

• Volume strength in many markets including export, northern utilities, industrial and coke

9 0% 10.0%

• Utility stockpiles remain below normal

• Utility stockpiles remain below normal

9.0% 10.0%

Revenue Volume RPC

Automotive revenues of $208 million i d $6 illi i ld i tAutomotive revenues of $208 million i d $6 illi i ld i tincreased $6 million on yield improvementsincreased $6 million on yield improvements

First Quarter• Yield improvement

• Production decline

• Yield improvement

• Production decline


• Sales favorable; inventories down, yet still at high levels

• Sales favorable; inventories down, yet still at high levels

3 0% 3 0%3.0% 3.0%

0.0%

Revenue Volume RPC

Intermodal revenues of $329 million i d b $14 illiIntermodal revenues of $329 million i d b $14 illiincreased by $14 million increased by $14 million

First Quarter• Domestic volume weakness;

Network Simplification impact• Domestic volume weakness;

Network Simplification impact


8.6%

• Domestic yield strength

• International volume strength

• Domestic yield strength

• International volume strength4.4%

(3.8%)

Revenue Volume RPC

Intermodal operating income improved $33 illi

Intermodal operating income improved $33 illimillion year-over-yearmillion year-over-year

First QuarterFirst Quarter

Dollars in millionsDollars in millions 20052005 20042004 VarianceVariance

Linehaul RevenueLinehaul Revenue $ 291 $ 309 $ ( 18)Other Revenue 38 6 32

Operating Revenue 329 315 14

Operating Expenses 277 296 19

Operating Income $ 52 $ 19 $ 33

Operating Ratio 84.2% 94.0% 9.8 pts

Merchandise revenues of $1.0 billion i d $80 illi t i ldMerchandise revenues of $1.0 billion i d $80 illi t i ldincreased $80 million on stronger yieldincreased $80 million on stronger yield

First Quarter•• Strong yield across marketsStrong yield across markets

•• Food and Consumer volume Food and Consumer volume

•• Strong yield across marketsStrong yield across markets

•• Food and Consumer volume Food and Consumer volume


strengthstrength

•• Metals yield improvementsMetals yield improvements

strengthstrength

•• Metals yield improvementsMetals yield improvements

8.4% 7.9%

•• Military volume weaknessMilitary volume weakness•• Military volume weaknessMilitary volume weakness

0 4%0.4%

Revenue Volume RPC

CSX’s outlook continues to be favorable t k t

CSX’s outlook continues to be favorable t k tacross most marketsacross most markets

UnfavorableUnfavorable FlatFlat FavorableFavorable

AutomotiveAutomotive Emerging MarketsEmerging Markets

IntermodalIntermodal

Agricultural ProductsAgricultural Products

ChemicalsChemicals

Phosphate & FertilizerPhosphate & Fertilizer CoalCoal

Food & ConsumerFood & Consumer

Forest ProductsForest Products

Metals Metals


Tony IngramExecutive Vice President

Tony IngramExecutive Vice PresidentChief Operating OfficerChief Operating Officer

C i t t f k d i i 2005C i t t f k d i i 2005Consistent focus on key drivers in 2005Consistent focus on key drivers in 2005

SafetySafetySafetySafety ServiceServiceServiceService ProductivityProductivityProductivityProductivity

• Process enhancements• Process enhancements • Resources• Resources • Plan execution• Plan execution

• Employee training

• Labor partnerships

• Employee training

• Labor partnerships

• Terminal focus

• Plan execution

• Terminal focus

• Plan execution

• Asset utilization

• Process improvement

• Asset utilization

• Process improvement

Safety processes produced positive results i th fi t tSafety processes produced positive results i th fi t tin the first quarterin the first quarter

FRA Personal Injury F I d

FRA Personal Injury F I d

FRA Train Accident RateFRA Train Accident Rate

2.18 2 042.25 2.24

4 97

Frequency IndexFrequency Index

2.041.67

4.97 4.644.03

4.61 4.41

Q12004

Q22004

Q32004

Q42004

Q12005

Q12004

Q22004

Q32004

Q42004

Q12005

Train velocity declined in first quarter after i i i ti tTrain velocity declined in first quarter after i i i ti tincreasing in consecutive quartersincreasing in consecutive quarters

Average Overall Train Velocity(miles per hour)

20 920.9

19.520.1

20.5

19.519.5 19.5

Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005

Efforts to improve network performance and i i t i

Efforts to improve network performance and i i t iservice consistency are ongoing service consistency are ongoing

• ONE Plan• ONE Plan• ONE Plan– Plan adjustment– Resource planning

• ONE Plan– Plan adjustment– Resource planning– Phase II implementation

• Terminal Focus

– Phase II implementation

• Terminal FocusTerminal Focus– System terminals– Process approach

Terminal Focus– System terminals– Process approach

• Plan Execution– Increasing discipline

• Plan Execution– Increasing discipline


Oscar MunozExecutive Vice President

Oscar MunozExecutive Vice President

Chief Financial OfficerChief Financial Officer

CSX earnings from continuing operations i d $0 55 h f th tCSX earnings from continuing operations i d $0 55 h f th tincreased $0.55 per share for the quarterincreased $0.55 per share for the quarter


D ll i illi t E i P ShD ll i illi t E i P Sh 200200 20042004 V iV iDollars in millions, except Earnings Per ShareDollars in millions, except Earnings Per Share 20052005 20042004 VarianceVariance

Surface Transportation Operating IncomeSurface Transportation Operating Income $ 351$ 351 $ 151$ 151 $ 200$ 200Other Operating IncomeOther Operating Income 33 11 22p gp g

Consolidated Operating IncomeConsolidated Operating Income $ 354$ 354 $ 152$ 152 $ 202$ 202Other IncomeOther Income ( 2)( 2) ( 4)( 4) 22Interest ExpenseInterest Expense 114114 108108 ( 6)( 6)Income TaxesIncome Taxes 8484 1313 ( 71) ( 71) Earnings from Continuing OperationsEarnings from Continuing Operations $ 154$ 154 $ 27$ 27 $ 127$ 127EPS from Continuing OperationsEPS from Continuing Operations $ 0.68$ 0.68 $ 0.13$ 0.13 $ 0.55$ 0.55

Net EarningsNet Earnings $ 579$ 579 $ 30$ 30 $ 549$ 549EPSEPS $ 2.56$ 2.56 $ 0.14$ 0.14 $ 2.42$ 2.42

CSX W ld T i l S lCSX W ld T i l S lCSX World Terminals SaleCSX World Terminals Sale

• Gross proceeds $1 14 billion• Gross proceeds $1 14 billion• Gross proceeds $1.14 billion

• Net earnings from discontinued operations $425 million

• Gross proceeds $1.14 billion

• Net earnings from discontinued operations $425 million

• Earnings per share from discontinued operations of $1.88• Earnings per share from discontinued operations of $1.88

Surface Transportation operating income t d t EPS th i th t

Surface Transportation operating income t d t EPS th i th tgenerated strong EPS growth in the quartergenerated strong EPS growth in the quarter


Dollars in millionsDollars in millions 20052005 20042004 VarianceVarianceSurface Transportation Operating IncomeSurface Transportation Operating Income $ 351 $ 151 $ 200Restructuring Charge - 53 ( 53)Surface Transportation Operating Income

before Restructuring Charge $ 351 $ 204 $ 147


Dollars in millionsDollars in millions 20052005 20042004 VarianceVarianceEPS from Continuing OperationsEPS from Continuing Operations $ 0.68 $ 0.13 $ 0.55Restructuring Charge - 0.14 ( 0.14)EPS from Continuing Operations

before Restructuring Charge $ 0.68 $ 0.27 $ 0.41

Surface transportation operating income i d i ifi tlSurface transportation operating income i d i ifi tlimproved significantlyimproved significantly

FirstFirst--Quarter Variance versus 2004*Quarter Variance versus 2004*

Dollars in millionsDollars in millions 20052005 VarianceVariance PercentPercent

RevenueRevenue $ 2,108$ 2,108 $ 188$ 188 10%10%Operating ExpenseOperating ExpenseOperating ExpenseOperating Expense

Labor and FringeLabor and Fringe 702702 ( 17)( 17) ( 2%)( 2%)Materials, Supplies and OtherMaterials, Supplies and Other 462462 ( 46)( 46) ( 11%)( 11%)DepreciationDepreciation 203203 ( 43)( 43) ( 27%)( 27%)FuelFuel 179179 ( 25)( 25) ( 16%)( 16%)Building and Equipment RentBuilding and Equipment Rent 135135 55 4%4%Inland TransportationInland Transportation 5656 1818 24%24%C il R t F d S iC il R t F d S i 2020 6767 77%77%Conrail Rents, Fees and ServicesConrail Rents, Fees and Services 2020 6767 77%77%

Operating ExpenseOperating Expense 1,7571,757 ( 41)( 41) ( 2%)( 2%)Operating IncomeOperating Income 351351 147147 72%72%Operating RatioOperating Ratio 83.3%83.3% 6.1 pts6.1 pts

* 2004 excludes $53 million in restructuring charges* 2004 excludes $53 million in restructuring charges

Expense increase limited to 2% through ti d t d ti it

Expense increase limited to 2% through ti d t d ti itoperations and management productivityoperations and management productivity

Surface Transportation Operating ExpensesFirst Quarter Year-Over-Year Variance*

(Dollars in millions)

$19

$10

$19

($19)($14) ($11)

($19)($26)

Fuel Price Volume andInflation

TrainOperations

OperationsProductivity

ManagementReductions

Other

* 2004 excludes $53 million in restructuring charges* 2004 excludes $53 million in restructuring charges

Surface transportation operating income d 152% i i EPSSurface transportation operating income d 152% i i EPSdrove a 152% increase in EPSdrove a 152% increase in EPS

FirstFirst--Quarter Variance versus 2004*Quarter Variance versus 2004*

Dollars in millionsDollars in millions 20052005 VarianceVariance PercentPercent

RevenueRevenue $ 2 108$ 2 108 $ 188$ 188 10%10%RevenueRevenue $ 2,108$ 2,108 $ 188$ 188 10%10%

Operating ExpenseOperating Expense 1,7571,757 ( 41)( 41) ( 2%)( 2%)

Operating IncomeOperating Income 351351 147147 72%72%

O ti R tiO ti R ti 83 3%83 3% 6 1 t6 1 tOperating RatioOperating Ratio

EPS from Continuing Operations

83.3%83.3%

$ 0.68$ 0.68

6.1 pts6.1 pts

$ 0.41$ 0.41 152%152%

* 2004 excludes restructuring charges of $53 million pre* 2004 excludes restructuring charges of $53 million pre--tax, $0.14 per sharetax, $0.14 per share

L ki f dL ki f dLooking forwardLooking forward

• Tougher comparables ahead• Tougher comparables ahead• Tougher comparables ahead

– Cycling progressively stronger 2004 results

• Tougher comparables ahead

– Cycling progressively stronger 2004 results

• Strong foundation is in place

Core strategies are taking hold

• Strong foundation is in place

Core strategies are taking hold– Core strategies are taking hold

– Financial results are improving

– Core strategies are taking hold

– Financial results are improving

• Focused on consistent, continuous improvement• Focused on consistent, continuous improvement


April 28, 2005April 28, 2005

csx q1_2005

Economy & Finance

looking statements

future performance

future operation

p g p yg p yas

actual performance

managements expectations

management s plans

management s expectations