csx q3_2006

11

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Third Quarter 2006Earnings Presentation


22

Forward Looking DisclosureThis presentation and other statements by the company contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of 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 proposed new products and services; and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward-looking statements speak only as 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 forward-looking statement, no inference should be drawn that the company will make additional updates with respect to that statement or any other forward-looking statements.

Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others: (i) the company’s success in implementing its financial and operational initiatives, (ii) changes 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 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 could cause actual results to differ materially from those in the forward-looking statements are specified in the company’s SEC reports, accessible on the SEC’s website at www.sec.gov and the company’s website at www.csx.com.

33

Executive Summary

Michael WardChairman, President andChief Executive Officer

44

Third quarter overview . . .

Third QuarterEarnings Per Share

$0.36 $0.36

$0.54

$0.71

Reported Comparable

2005 2006

Surface Transportation produces record results

Pricing environment remains strong

ONE Plan sustains strong momentum

Economic environment remains positive

Note: Comparable 2006 earnings per share exclude Katrina insurance recoveries and income tax benefits

55

Sales and Marketing Review

Clarence GoodenExecutive Vice PresidentSales and Marketing

66

Revenues increased 14%

Record revenues of $2.4 billion, up $293 million

Overall volumes increased nearly 2%

Renewed growth in Intermodal

Yield environment remains strong

Third QuarterRevenue in Millions

2005 2006

$2,125

$2,418

77

Revenue per unit increased 12%

Third Quarter Revenue Per Unit2006 versus 2005

4%

4%

9%

17%

12%

Intermodal

Automotive

Coal

Merchandise

Surface Transportation

88

Merchandise revenue increased 16%

Third Quarter2006 versus 2005

16%

(1%)

17%

Revenue Volume RPU

Pricing remains strong

Impact of prior phosphate plant closures continues

Housing market softening

Outlook favorable

99

Merchandise volume was mixed

Third Quarter Volume2006 versus 2005

16%

3%

2%

1%

(2%)

(7%)

(16%)

Agriculture

Metals

Chemicals

Emerging Markets

Food and Consumer

Forest Products

Phosphates & Fertilizers

1010

Coal revenue increased 18%


18%

9%7%

Revenue Volume RPU

Utility demand strong

Coal production strong

Pricing strength continues

Outlook favorable

1111

Automotive revenue decreased 9%


(9%)

(12%)

4%

Revenue Volume RPU

“Big 3” volume down on production decline

New Domestics continue to gain market share

Continued contract renewal opportunities

Outlook unfavorable

1212

Intermodal revenue increased 8%


8%

4% 4%

Revenue Volume RPU

Volume favorable

Pricing strength continues

Income improvement for ten quarters

Outlook favorable

1313

Economic forecasts remain positive

Economic Forecast2006-2008

3.4%

2.2%

3.1%

4.3%

2.3% 2.1%

2006 2007 2008

GDP Industrial ProductionSource: Global Insight

1414

Looking forward . . .

Service improvements supporting growth

Favorable pricing environment continues

Remain focused on profitable growth

Surface Transportation 2006 Volume Growth

(1.0%)

0.1%

1.8%

Q1 Q2 Q3 Q4Fcst

2%–3%

1515

Operations Review

Tony IngramExecutive Vice PresidentChief Operating Officer

1616

Leadership, discipline and execution

Safety performance continues to improve

Operating momentum sustained

Capacity projectson schedule

SafetySafety

ProductivityProductivity

ServiceService

LeadershipLeadership

DisciplineDiscipline

ExecutionExecution

ReliablePerformance

ReliablePerformance

1717

Safety performance remains strong

Rolling 12-month Averages

FRA Personal Injury

1.921.71 1.64 1.51

1.37

Q32005

Q42005

Q12006

Q22006

Q32006

FRA Train Accident

4.413.98 3.85

4.65

3.52

Q32005

Q42005

Q12006

Q22006

Q32006

13 WeekAverage

1.37

13 WeekAverage

3.14

1818

On-time performance is improving


On-Time Originations

50% 51%57%

65%71%

Q32005

Q42005

Q12006

Q22006

Q32006

On-Time Arrivals

40% 40%46%

52%57%

Q32005

Q42005

Q12006

Q22006

Q32006

13 WeekAverage

77%

13 WeekAverage

63%

1919

The network is more fluid


Cars-On-Line (000)

233.9 233.1230.7

227.6225.8

Q32005

Q42005

Q12006

Q22006

Q32006

Dwell Time (hours)

29.7 29.728.9

27.726.8

Q32005

Q42005

Q12006

Q22006

Q32006

13 WeekAverage25.5 hrs

13 WeekAverage

225K

2020

Train velocity is stable

Consistent plan execution

Improved recoverability

Increased asset utilization

Improving service reliability


Velocity (mph)

19.719.2 19.4 19.5 19.5

Q32005

Q42005

Q12006

Q22006

Q32006

13 WeekAverage

19.8 mph

2121


Safety momentum will be sustained

Continue to build on operating improvement

Capacity projects will remain on schedule

SafetySafety

ProductivityProductivity

ServiceService

LeadershipLeadership

DisciplineDiscipline

ExecutionExecution

ReliablePerformance

ReliablePerformance

2222

Financial Results

Oscar MunozExecutive Vice PresidentChief Financial Officer

2323

CSX reports strong third quarter results

$ 164$ 164$ 328Net Earnings

$ 0.35$ 0.36$ 0.71Earnings Per Share

143

11))

11(100(100

))

25(97(89

Other Income (net)Interest ExpenseIncome Taxes

$ 136$ 353$ 489Consolidated Operating Income

8)(8-Other Operating Income

$ 128$ 361$ 489Surface Transportation Operating Income

Variance20052006Dollars in millions, except EPS

Third Quarter Results

2424

Comparable EPS increased 50%

))

(0.02(0.15

--

))

(0.02(0.15

Less Gain on Insurance RecoveriesLess Income Tax Benefit

$ 0.18$ 0.36$ 0.54Comparable Earnings Per Share

$ 0.35$ 0.36$ 0.71Earnings Per Share

$ 113$ 361$ 474Comparable Operating Income

)(15-)(15Less Gain on Insurance Recoveries

$ 128$ 361$ 489Surface Transportation Operating Income

Variance20052006Dollars in millions, except EPS


2525

Surface Transportation income up 31%

31%$ 361 $ 474Operating Income

2.6 pts83.0%80.4%Operating Ratio

)(10%1,7641,944Operating Expenses

)))))))

14%

(2%(5%(4%

(60%(5%

(17%(111%

$ 2,125

725455204188129549

$ 2,418

7364782133001356319

RevenueExpenses

Labor and FringeMaterials, Supplies and OtherDepreciationFuelBuilding and Equipment RentInland TransportationConrail Rents, Fees and Services

Variance20052006Dollars in millions


Note: 2006 results exclude Katrina-related gain on insurance recoveries

2626

Labor and fringe increased 2%

Third QuarterDollars in Millions

$736$725

$11

2005 Variance 2006

Primarily due to wage and benefit inflation

T&E employees increased by over 400 primarily due to advanced hiring

Partially offset by lower incentive compensation

2727

MS&O increased 5%


$478

$455

$23

2005 Variance 2006

Primarily driven by inflation and costs related to higher business volumes

Partially offset by continued improvementin locomotive productivity

2828

Fuel increased 60%


$300

$188

$112

2005 Variance 2006

Consumed 144 million gallons at average gross price of $2.09 a gallon

Comparison impacted by $76 million lower hedge

CSX has no hedge positions going forward

2929

Rents increased 5%


$135

$129$6

2005 Variance 2006

Current year expenses moving with volumes

Year-over-year change primarily due to prior year item

3030

All other expenses increased 10%


$204 $213

$54$63

$28

2005 Variance 2006

$267$295

Depreciation Inland Transportation Conrail Fees

$9$19

3131


$500 million share buyback program initiated, with $272 million repurchased

— Shares repurchased year-to-date total$422 million, including prior programs

On track to deliver $300+ million Free Cash Flow in 2006

— Including Katrina insurance recoveries

3232

Concluding Remarks

Michael WardChairman, President andChief Executive Officer

3333


Core strategies sustaining solid momentum

Team delivering consistent, strong results

Rail and intermodal environment remains strong

Volume growth is building further momentum

RevenueRevenueImpactImpact

OperationalOperationalDisciplineDiscipline

PerformancePerformanceCultureCulture

3434



csx q3_2006

Economy & Finance