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CSX Corporation CSX Corporation CSX Corporation Fourth-Quarter 2005 Earnings CSX Corporation Fourth-Quarter 2005 Earnings January 24, 2006 January 24, 2006

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Page 1: csx  Q4_2005

CSX CorporationCSX CorporationCSX Corporation

Fourth-Quarter 2005 Earnings

CSX Corporation

Fourth-Quarter 2005 EarningsgJanuary 24, 2006

gJanuary 24, 2006

Page 2: csx  Q4_2005

F d L ki Di l St t tF d L ki Di l St t tForward Looking Disclosure StatementForward Looking Disclosure StatementThis presentation and other statements by the Company contain forward-looking statements within themeaning of the Private Securities Litigation Reform Act with respect to, among other items: projectionsand estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of

This presentation and other statements by the Company contain forward-looking statements within themeaning of the Private Securities Litigation Reform Act with respect to, among other items: projectionsand estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements ofand estimates of earnings, revenues, cost savings, expenses, or other financial items; statements ofmanagement’s plans, strategies and objectives for future operation, and management’s expectations asto future performance and operations and the time by which objectives will be achieved; statementsconcerning proposed new products and services; and statements regarding future economic, industry ormarket conditions or performance. Forward-looking statements are typically identified by words or

h h “b li ” “ t ” “ ti i t ” “ j t ” d i il i F d l ki

and estimates of earnings, revenues, cost savings, expenses, or other financial items; statements ofmanagement’s plans, strategies and objectives for future operation, and management’s expectations asto future performance and operations and the time by which objectives will be achieved; statementsconcerning proposed new products and services; and statements regarding future economic, industry ormarket conditions or performance. Forward-looking statements are typically identified by words or

h h “b li ” “ t ” “ ti i t ” “ j t ” d i il i F d l kiphrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward-lookingstatements speak only as of the date they are made, and the Company undertakes no obligation toupdate or revise any forward-looking statement. If the Company does update any forward-lookingstatement, no inference should be drawn that the Company will make additional updates with respect tothat statement or any other forward-looking statements

phrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward-lookingstatements speak only as of the date they are made, and the Company undertakes no obligation toupdate or revise any forward-looking statement. If the Company does update any forward-lookingstatement, no inference should be drawn that the Company will make additional updates with respect tothat statement or any other forward-looking statementsthat statement or any other forward looking statements.Forward-looking statements are subject to a number of risks and uncertainties, and actual performanceor results could differ materially from that anticipated by these forward-looking statements. Factors thatmay cause actual results to differ materially from those contemplated by these forward-lookingstatements include among others: (i) the Company’s success in implementing its financial and

that statement or any other forward looking statements.Forward-looking statements are subject to a number of risks and uncertainties, and actual performanceor results could differ materially from that anticipated by these forward-looking statements. Factors thatmay cause actual results to differ materially from those contemplated by these forward-lookingstatements include among others: (i) the Company’s success in implementing its financial andstatements include, among others: (i) the Company s success in implementing its financial andoperational 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 risksassociated with safety and security; and (v) the outcome of claims and litigation involving or affecting the

statements include, among others: (i) the Company s success in implementing its financial andoperational 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 risksassociated with safety and security; and (v) the outcome of claims and litigation involving or affecting the

2222

Company. Other important assumptions and factors that could cause actual results to differ materiallyfrom those in the forward-looking statements are specified in the Company’s SEC reports, accessible onthe SEC’s website at www.sec.gov and the Company’s website at www.csx.com.

Company. Other important assumptions and factors that could cause actual results to differ materiallyfrom those in the forward-looking statements are specified in the Company’s SEC reports, accessible onthe SEC’s website at www.sec.gov and the Company’s website at www.csx.com.

Page 3: csx  Q4_2005

Michael WardMichael WardMichael WardMichael WardMichael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer

Michael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer

Page 4: csx  Q4_2005

F th t iF th t iFourth quarter overview . . .Fourth quarter overview . . .Fourth Quarter

Earnings Per Share•• New Orleans line reopenedNew Orleans line reopened•• New Orleans line reopenedNew Orleans line reopened

Earnings Per Share

$1.03•• Expansion plans on targetExpansion plans on target•• Expansion plans on targetExpansion plans on target

$0.71 •• Surface Transportation recordSurface Transportation record•• Surface Transportation recordSurface Transportation record45%45%45%45%

•• Pricing environment is strongPricing environment is strong

O ti i iO ti i i

•• Pricing environment is strongPricing environment is strong

O ti i iO ti i i

2004 2005

•• Operations are improvingOperations are improving•• Operations are improvingOperations are improving

4444

Page 5: csx  Q4_2005

Tony IngramTony IngramTony IngramTony IngramTony IngramTony IngramExecutive Vice PresidentExecutive Vice PresidentChief Operating OfficerChief Operating Officer

Tony IngramTony IngramExecutive Vice PresidentExecutive Vice PresidentChief Operating OfficerChief Operating Officer

Page 6: csx  Q4_2005

Performance reflects progress ll j i iti ti

Performance reflects progress ll j i iti tion all major initiativeson all major initiatives

•• Safety momentum is strongSafety momentum is strong•• Safety momentum is strongSafety momentum is strong

•• ONE Plan is gaining tractionONE Plan is gaining traction•• ONE Plan is gaining tractionONE Plan is gaining traction ReliablePerformance

•• New Orleans line restoredNew Orleans line restored•• New Orleans line restoredNew Orleans line restoredProductivityProductivity

ServiceService

DisciplineDiscipline

ExecutionExecution

•• Capacity projects are underwayCapacity projects are underway•• Capacity projects are underwayCapacity projects are underway SafetySafety

yy

LeadershipLeadership

sc p esc p e

6666

Page 7: csx  Q4_2005

M t i f t f tiM t i f t f tiMomentum in safety performance continuesMomentum in safety performance continuesFRA Train Accident

Rolling 12 Month AverageFRA Personal Injury

Rolling 12 Month Average Rolling 12-Month AverageAccidents / MM Train Miles

Rolling 12-Month AverageInjuries / 200,000 Man Hours

4.79 4.724.43 4.32

3 99

2.292.13 2.04

1.911.71 3.99

Q42004

Q12005

Q22005

Q32005

Q42005

Q42004

Q12005

Q22005

Q32005

Q42005

7777

Page 8: csx  Q4_2005

ONE Plan is gaining traction; ti f i i

ONE Plan is gaining traction; ti f i ion-time performance improvingon-time performance improving

On-Time OriginationsRolling 12 Month Average

On-Time ArrivalsRolling 12 Month AverageRolling 12-Month Average

51 1%

Rolling 12-Month Average

40 9%

49.0%48.2%

50.3% 50.3%51.1% 40.9%

38.4% 38.9% 39.6% 40.1%

Q42004

Q12005

Q22005

Q32005

Q42005

Q42004

Q12005

Q22005

Q32005

Q42005

8888

Page 9: csx  Q4_2005

D ll ti d li i t blD ll ti d li i t blDwell time and cars-on-line remain stableDwell time and cars-on-line remain stableDwell Time (Hours)

Rolling 12 Month AverageCars-On-Line

Rolling 12 Month AverageRolling 12-Month Average Rolling 12-Month Average

28.7 29.3 29.6 29.7 29.7

233,271 233 118

233,876

234,165

234,132

233,271 233,118

Q42004

Q12005

Q22005

Q32005

Q42005

Q42004

Q12005

Q22005

Q32005

Q42005

9999

Page 10: csx  Q4_2005

System velocity expected to improve ith N O l li t d

System velocity expected to improve ith N O l li t dwith New Orleans line restoredwith New Orleans line restored

Velocity (MPH)Rolling 12 Month AverageRolling 12-Month Average

New YorkNew YorkNew YorkNew YorkChicagoChicagoChicagoChicago

19.9 19.8 19.719.2

20.3New YorkNew YorkNew YorkNew York

NashvilleNashvilleNashvilleNashville

JacksonvilleJacksonvilleJacksonvilleJacksonville

AtlantaAtlantaAtlantaAtlantaMemphisMemphisMemphisMemphis

BirminghamBirminghamBirminghamBirminghamMontgomeryMontgomeryMontgomeryMontgomery

NashvilleNashvilleNashvilleNashville

Q42004

Q12005

Q22005

Q32005

Q42005

JacksonvilleJacksonvilleJacksonvilleJacksonville

MiamiMiamiMiamiMiami

New OrleansNew OrleansNew OrleansNew Orleans

10101010YearYear--OverOver--Year Decline in VelocityYear Decline in VelocityYearYear--OverOver--Year Decline in VelocityYear Decline in Velocity 5% 5% -- 10%10%5% 5% -- 10%10% 10% 10% -- 20%20%10% 10% -- 20%20% GT 20%GT 20%GT 20%GT 20%

Page 11: csx  Q4_2005

E i l t tE i l t tExpansion plans are on targetExpansion plans are on target•• TwoTwo--year investment year investment •• TwoTwo--year investment year investment

program is underwayprogram is underway

•• HighHigh--impact projects are impact projects are

program is underwayprogram is underway

•• HighHigh--impact projects are impact projects are New YorkNew YorkNew YorkNew YorkChicagoChicagoChicagoChicago HighHigh--impact projects are impact projects are targeted for 2006targeted for 2006

C t ti b i C t ti b i

HighHigh--impact projects are impact projects are targeted for 2006targeted for 2006

C t ti b i C t ti b i

New YorkNew YorkNew YorkNew York

NashvilleNashvilleNashvilleNashville •• Construction began in Construction began in fourth quarter 2005fourth quarter 2005

•• Construction began in Construction began in fourth quarter 2005fourth quarter 2005

JacksonvilleJacksonvilleJacksonvilleJacksonville

MemphisMemphisMemphisMemphisBirminghamBirminghamBirminghamBirmingham

NashvilleNashvilleNashvilleNashvilleAtlantaAtlantaAtlantaAtlanta

•• Progressing on scheduleProgressing on schedule•• Progressing on scheduleProgressing on scheduleJacksonvilleJacksonvilleJacksonvilleJacksonville

MiamiMiamiMiamiMiami

New OrleansNew OrleansNew OrleansNew Orleans

11111111

Page 12: csx  Q4_2005

L ki f dL ki f dLooking forward . . .Looking forward . . .•• Safety momentum will continueSafety momentum will continue•• Safety momentum will continueSafety momentum will continue

•• ONE Plan is gaining tractionONE Plan is gaining traction•• ONE Plan is gaining tractionONE Plan is gaining traction ReliablePerformance

•• Staffing will stay ahead of attritionStaffing will stay ahead of attrition•• Staffing will stay ahead of attritionStaffing will stay ahead of attritionProductivityProductivity

ServiceService

DisciplineDiscipline

ExecutionExecution

•• Capacity projects on scheduleCapacity projects on schedule•• Capacity projects on scheduleCapacity projects on schedule SafetySafety

yy

LeadershipLeadership

sc p esc p e

12121212

Page 13: csx  Q4_2005

Clarence GoodenClarence GoodenClarence GoodenClarence GoodenClarence GoodenClarence GoodenExecutive Vice PresidentExecutive Vice PresidentChief Commercial OfficerChief Commercial Officer

Clarence GoodenClarence GoodenExecutive Vice PresidentExecutive Vice PresidentChief Commercial OfficerChief Commercial Officer

Page 14: csx  Q4_2005

Economic outlook remains strongEconomic outlook remains strongEconomic outlook remains strongEconomic outlook remains strong•• GDP and IDP remain strongGDP and IDP remain strong•• GDP and IDP remain strongGDP and IDP remain strong Transportation Services Index

•• Manufacturing still growingManufacturing still growing•• Manufacturing still growingManufacturing still growingIndexed: 2000 = 100

110

120

•• Continued strength in imports Continued strength in imports and exportsand exports

•• Continued strength in imports Continued strength in imports and exportsand exports 90

100

110

•• Transportation demand still Transportation demand still near record levelsnear record levels

•• Transportation demand still Transportation demand still near record levelsnear record levels 70

80

90

near record levelsnear record levelsnear record levelsnear record levels60

1990 1993 1996 1999 2002 2005

14141414

Source: Bureau of Transportation StatisticsSource: Bureau of Transportation Statistics

Page 15: csx  Q4_2005

Revenues increased $156 million inth f th t bl b iRevenues increased $156 million inth f th t bl b ithe fourth quarter on a comparable basisthe fourth quarter on a comparable basis

Fourth QuarterR 13 W k B iRevenue on 13-Week Basis

Dollars in Millions$2,219$66 $20

$2,063

$2,219$70

$66 $20

2004 Merchandise Coal All Other 2005

15151515Note: 2004 Revenue excludes $117 million from the 14Note: 2004 Revenue excludes $117 million from the 14thth accounting weekaccounting weekNote: 2004 Revenue excludes $117 million from the 14Note: 2004 Revenue excludes $117 million from the 14thth accounting weekaccounting week

Page 16: csx  Q4_2005

Average revenue per unit increased11% i th f th t

Average revenue per unit increased11% i th f th tover 11% in the fourth quarterover 11% in the fourth quarter

Fourth Quarter Revenue Per UnitY O Y ChYear-Over-Year Change

13-Week Basis

12.9%

11.0%

Merchandise

Surface Transportation

7 3%

10.9%

Automotive

Coal

6.7%

7.3%

Intermodal

Automotive

16161616

Page 17: csx  Q4_2005

Fuel surcharge program continuest h l ff t hi h f l iFuel surcharge program continuest h l ff t hi h f l ito help offset higher fuel pricesto help offset higher fuel prices

Fuel Surcharge Program

20%

24%

$60

$70

12%

16%

$40

$50

4%

8%

$20

$30

4%Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05

$20

Surcharge (% of Revenue) Average West Texas Intermediate

17171717

Page 18: csx  Q4_2005

Merchandise revenues increased$70 illi t i ldMerchandise revenues increased$70 illi t i ld$70 million on stronger yield$70 million on stronger yield•• Revenue and yield gains Revenue and yield gains •• Revenue and yield gains Revenue and yield gains Fourth Quarter

Year Over Year Changein nearly all marketsin nearly all markets

•• Volume affected by Volume affected by

in nearly all marketsin nearly all markets

•• Volume affected by Volume affected by

Year-Over-Year Change13-Week Basis

12.9%Volume affected by Volume affected by hurricane impacthurricane impact

E i M k t ff t d E i M k t ff t d

Volume affected by Volume affected by hurricane impacthurricane impact

E i M k t ff t d E i M k t ff t d

6.9%

•• Emerging Markets affected Emerging Markets affected by mix changesby mix changes

•• Emerging Markets affected Emerging Markets affected by mix changesby mix changes

•• Overall 2006 outlook Overall 2006 outlook is favorableis favorable

•• Overall 2006 outlook Overall 2006 outlook is favorableis favorable

(5.3%)Revenue Volume RPU

18181818

Page 19: csx  Q4_2005

Merchandise markets recorded strongeri ld i l ll k t

Merchandise markets recorded strongeri ld i l ll k tyields in nearly all marketsyields in nearly all markets

Fourth Quarter Revenue Per UnitY O Y ChYear-Over-Year Change

13-Week Basis

19.0%

21.7%

Metals

Phosphates & Fertilizers

11.7%

18.0%

Forest Products

Food and Consumer

11.1%

11.4%

Chemicals

Agricultural Products

19191919

(0.7%)Emerging Markets

Page 20: csx  Q4_2005

Coal revenues increased $66 million t i ld d l

Coal revenues increased $66 million t i ld d lon stronger yield and volumeon stronger yield and volume

•• Strong demand across Strong demand across •• Strong demand across Strong demand across Fourth QuarterYear Over Year Changeall marketsall markets

•• Favorable pricing Favorable pricing

all marketsall markets

•• Favorable pricing Favorable pricing

Year-Over-Year Change13-Week Basis

Favorable pricing Favorable pricing environment continuesenvironment continues

St k il i b l St k il i b l

Favorable pricing Favorable pricing environment continuesenvironment continues

St k il i b l St k il i b l

14.5%

10.9%

•• Stockpiles remain below Stockpiles remain below target levelstarget levels

•• Stockpiles remain below Stockpiles remain below target levelstarget levels 3.2%

•• 2006 outlook is favorable2006 outlook is favorable•• 2006 outlook is favorable2006 outlook is favorableRevenue Volume RPU

20202020

Page 21: csx  Q4_2005

Automotive revenues increased $7 illi t i ldAutomotive revenues increased $7 illi t i ld$7 million on stronger yield$7 million on stronger yield•• Price and fuel surcharge Price and fuel surcharge •• Price and fuel surcharge Price and fuel surcharge Fourth Quarter

Year Over Year Changeincreasesincreases

•• Production impacted by Production impacted by

increasesincreases

•• Production impacted by Production impacted by

Year-Over-Year Change13-Week Basis

7.3%Production impacted by Production impacted by plant closuresplant closures

O ll i t O ll i t

Production impacted by Production impacted by plant closuresplant closures

O ll i t O ll i t

3.2%

•• Overall inventory near Overall inventory near target levelstarget levels

•• Overall inventory near Overall inventory near target levelstarget levels

•• Overall 2006 outlook is neutralOverall 2006 outlook is neutral•• Overall 2006 outlook is neutralOverall 2006 outlook is neutral (3.8%)

Revenue Volume RPU

21212121

Page 22: csx  Q4_2005

Intermodal revenues increased$6 illi t i ldIntermodal revenues increased$6 illi t i ld$6 million on stronger yield$6 million on stronger yield•• Yield management Yield management •• Yield management Yield management Fourth Quarter

Year Over Year Changesuccess continuessuccess continues

•• Reduction in offReduction in off--core and core and

success continuessuccess continues

•• Reduction in offReduction in off--core and core and

Year-Over-Year Change13-Week Basis

6.7%Reduction in offReduction in off--core and core and low margin trafficlow margin traffic

2006 tl k i f bl2006 tl k i f bl

Reduction in offReduction in off--core and core and low margin trafficlow margin traffic

2006 tl k i f bl2006 tl k i f bl1.7%

•• 2006 outlook is favorable2006 outlook is favorable•• 2006 outlook is favorable2006 outlook is favorable

(4.8%)Revenue Volume RPU

22222222

Page 23: csx  Q4_2005

Full year Intermodal income increased 63%, d th ti ti i d 690 b

Full year Intermodal income increased 63%, d th ti ti i d 690 band the operating ratio improved 690 bpsand the operating ratio improved 690 bps

2003-2005 Intermodal ProfitabilityD ll i MilliDollars in Millions

$24891.2%

88 7%

$152$110

88.7%

81 8%81.8%

2003 2004 2005

Operating Income Operating Ratio

23232323

Page 24: csx  Q4_2005

L ki f dL ki f dLooking forward . . .Looking forward . . .•• Demand and growth remain strongDemand and growth remain strong•• Demand and growth remain strongDemand and growth remain strong

•• Favorable pricing environment continuesFavorable pricing environment continues•• Favorable pricing environment continuesFavorable pricing environment continues

•• Increased emphasis on fuel surcharge coverageIncreased emphasis on fuel surcharge coverage•• Increased emphasis on fuel surcharge coverageIncreased emphasis on fuel surcharge coverage

•• Service improvements will drive volume growthService improvements will drive volume growth•• Service improvements will drive volume growthService improvements will drive volume growth

24242424

Page 25: csx  Q4_2005

Oscar MunozOscar MunozOscar MunozOscar MunozOscar MunozOscar MunozExecutive Vice PresidentExecutive Vice President

Chief Financial OfficerChief Financial Officer

Oscar MunozOscar MunozExecutive Vice PresidentExecutive Vice President

Chief Financial OfficerChief Financial Officer

Page 26: csx  Q4_2005

Reported Fourth quarter earnings per share of $1 03 i d 45%Reported Fourth quarter earnings per share of $1 03 i d 45%$1.03 increased 45% year-over-year$1.03 increased 45% year-over-year

Fourth Quarter ResultsFourth Quarter Results

Dollars in Millions, except Earnings per ShareDollars in Millions, except Earnings per Share 20052005 20042004 VarianceVariance

Surface Transportation Operating IncomeSurface Transportation Operating Income $ 415 $ 415 $ 315$ 315 $ 100$ 100Other Operating IncomeOther Operating Income (3(3)) 22 (5(5))Other Operating IncomeOther Operating Income (3(3)) 22 (5(5))

Consolidated Operating IncomeConsolidated Operating Income 412 412 317317 9595

Other IncomeOther Income 6262 3838 2424Other IncomeOther Income 6262 3838 2424Interest ExpenseInterest Expense (99(99)) (112(112)) 1313Income TaxesIncome Taxes (138(138)) (84(84)) (54(54))

Net Earnings from Continuing OperationsNet Earnings from Continuing Operations $ 237$ 237 $ 159$ 159 $ 78$ 78

Earnings per Share from Continuing OperationsEarnings per Share from Continuing Operations $ 1.03$ 1.03 $ 0.71$ 0.71 $ 0.32$ 0.32

26262626

Page 27: csx  Q4_2005

S f T t ti hi hli htS f T t ti hi hli htSurface Transportation highlights . . .Surface Transportation highlights . . .

Fourth Quarter •• Revenue growth of 8%Revenue growth of 8%

Strong yield emphasisStrong yield emphasis•• Revenue growth of 8%Revenue growth of 8%

Strong yield emphasisStrong yield emphasisFourth Quarter Surface TransportationOp Income in Millions

–– Strong yield emphasisStrong yield emphasis–– Expanded fuel surcharge coverageExpanded fuel surcharge coverage–– Slightly lower volumesSlightly lower volumes

–– Strong yield emphasisStrong yield emphasis–– Expanded fuel surcharge coverageExpanded fuel surcharge coverage–– Slightly lower volumesSlightly lower volumes

$315

$415

32%32%32%32%•• Expenses contained to 3% increaseExpenses contained to 3% increase

–– Increased labor costs from hiring, Increased labor costs from hiring, compensation inflationcompensation inflation

•• Expenses contained to 3% increaseExpenses contained to 3% increase–– Increased labor costs from hiring, Increased labor costs from hiring,

compensation inflationcompensation inflationcompensation, inflationcompensation, inflation–– Higher fuel costs, partially offset Higher fuel costs, partially offset

by productivity and lower volumesby productivity and lower volumesNet favorable experience in Net favorable experience in

compensation, inflationcompensation, inflation–– Higher fuel costs, partially offset Higher fuel costs, partially offset

by productivity and lower volumesby productivity and lower volumesNet favorable experience in Net favorable experience in

2004 2005

–– Net favorable experience in Net favorable experience in casualty and other related reservescasualty and other related reserves

•• Katrina reduced income by approximately Katrina reduced income by approximately

–– Net favorable experience in Net favorable experience in casualty and other related reservescasualty and other related reserves

•• Katrina reduced income by approximately Katrina reduced income by approximately

27272727

Katrina reduced income by approximately Katrina reduced income by approximately $20 million in the quarter$20 million in the quarterKatrina reduced income by approximately Katrina reduced income by approximately $20 million in the quarter$20 million in the quarter

Page 28: csx  Q4_2005

Surface Transportation operating income i d 35% bl b iSurface Transportation operating income i d 35% bl b iimproved 35% on a comparable basisimproved 35% on a comparable basis

Fourth Quarter Results Fourth Quarter Results Dollars in MillionsDollars in Millions 20052005 Vs. 2004*Vs. 2004* % Change% Changegg

RevenueRevenue $ 2,219 $ 2,219 $ 156$ 156 8%8%ExpenseExpense

Labor and FringeLabor and Fringe $ 731 $ 731 ($ 55($ 55)) (8%(8%))Labor and FringeLabor and Fringe $ 731 $ 731 ($ 55($ 55)) (8%(8%))Materials, Supplies and OtherMaterials, Supplies and Other 421421 3838 8%8%FuelFuel 240240 (59(59)) (33%(33%))DepreciationDepreciation 208208 (3(3)) (2%(2%))DepreciationDepreciation 208208 (3(3)) (2%(2%))Building and Equipment rentsBuilding and Equipment rents 132132 1212 8%8%Inland TransportationInland Transportation 5555 1111 17%17%C SC S %%Conrail Rents, Fees and ServicesConrail Rents, Fees and Services 1717 77 29%29%Total ExpenseTotal Expense $ 1,804$ 1,804 ($ 49($ 49)) (3%(3%))

Operating IncomeOperating Income $ 415 $ 415 $ 107$ 107 35%35%

28282828* Note: 2004 excludes the 14* Note: 2004 excludes the 14thth accounting weekaccounting week* Note: 2004 excludes the 14* Note: 2004 excludes the 14thth accounting weekaccounting week

Operating RatioOperating Ratio 81.381.3%% 3.83.8 ptspts

Page 29: csx  Q4_2005

Fuel surcharges will help offsetth d li i h d i 2006Fuel surcharges will help offsetth d li i h d i 2006the declining hedge in 2006the declining hedge in 2006

Percent of Total Fuel Hedged

54%

39%39%

25%

11%

1%

Q4 2004 Q4 2005 Q1 2006 Q2 2006 Q3 2006

Hedge Settlement PricesHedge Settlement PricesHedge Settlement PricesHedge Settlement Prices

29292929

$0.94$0.94$0.94$0.94 $0.97$0.97$0.97$0.97 $0.97$0.97$0.97$0.97 $1.04$1.04$1.04$1.04$0.89$0.89$0.89$0.89

Page 30: csx  Q4_2005

Reported full year earnings per share of $3.17 i d 70%Reported full year earnings per share of $3.17 i d 70%increased 70% year-over-yearincreased 70% year-over-year

Full Year ResultsFull Year Results

Dollars in Millions, except Earnings per ShareDollars in Millions, except Earnings per Share 20052005 20042004 VarianceVariance

Surface Transportation Operating IncomeSurface Transportation Operating Income $ 1,549 $ 1,549 $ 993$ 993 $ 556$ 556Other Operating IncomeOther Operating Income 11 77 (6(6))Other Operating IncomeOther Operating Income 11 77 (6(6))

Consolidated Operating IncomeConsolidated Operating Income 1,550 1,550 1,0001,000 550550

Other IncomeOther Income 101101 7272 2929Debt Repurchase ExpenseDebt Repurchase Expense (192(192)) -- (192(192))Interest ExpenseInterest Expense (423(423)) (435(435)) 1212Income TaxesIncome Taxes (316(316)) (219(219)) (97(97))co e a esco e a es (3 6(3 6)) ( 9( 9)) (9(9 ))

Net Earnings from Continuing OperationsNet Earnings from Continuing Operations $ 720 $ 720 $ 418$ 418 $ 302$ 302

30303030

Earnings per Share from Continuing OperationsEarnings per Share from Continuing Operations $ 3.17$ 3.17 $ 1.87$ 1.87 $ 1.30$ 1.30

Page 31: csx  Q4_2005

On an adjusted basis, CSX achieved full year i h f $3 40

On an adjusted basis, CSX achieved full year i h f $3 40earnings per share of $3.40earnings per share of $3.40

Earnings Per Share F C ti i O tiFrom Continuing Operations

$0 54

$3.17$3.40

$0.54

($0.31)($0.31)($0.31)($0.31)

Reported EPS Debt Repurchase Ohio Tax Legislation Adjusted EPS

31313131

Reported EPS Debt Repurchase Ohio Tax Legislation Adjusted EPS

Page 32: csx  Q4_2005

Full year Surface Transportationti i i d 46%

Full year Surface Transportationti i i d 46%operating income increased 46%operating income increased 46%

Surface TransportationSurface TransportationD ll i MilliD ll i Milli

Surface TransportationSurface TransportationD ll i MilliD ll i Milli

Full Year ResultsFull Year Results20052005 2004 *2004 * V iV i

Dollars in MillionsDollars in MillionsDollars in MillionsDollars in Millions

20052005 2004 *2004 * VarianceVariance

RevenueRevenue $ 8,618 $ 8,618 $ 8,040$ 8,040 $ 578$ 578ExpenseExpense 7 0697 069 6 9766 976 (93(93))ExpenseExpense 7,0697,069 6,9766,976 (93(93))

Operating IncomeOperating Income $ 1,549 $ 1,549 1,0641,064 $ 485$ 485

Operating RatioOperating Ratio 82.0% 82.0% 86.8%86.8% 4.84.8 ptspts

32323232* Note: 2004 excludes $71 million in restructuring charges * Note: 2004 excludes $71 million in restructuring charges * Note: 2004 excludes $71 million in restructuring charges * Note: 2004 excludes $71 million in restructuring charges

Page 33: csx  Q4_2005

E d d f h fl lE d d f h fl lExceeded free cash flow goalsExceeded free cash flow goalsFree Cash Flow

Dollars in MillionsDollars in Millions

$1,030$1,030Dollars in MillionsDollars in Millions 20052005

Total Free Cash FlowTotal Free Cash Flow

Net Proceeds from DivestitureNet Proceeds from Divestiture

$ 1,030$ 1,030

(640(640))

$406$513

$461$461

Net Debt Repurchase ExpenseNet Debt Repurchase Expense

((

123123

))

2004 2005

Adjusted Free Cash FlowAdjusted Free Cash Flow $ 513$ 513

33333333Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004

Page 34: csx  Q4_2005

Total leverage is well below our l t t f 50%Total leverage is well below our l t t f 50%long-range target of 50%long-range target of 50%

All-in Leverage and Debt OutstandingD ll i BilliDollars in Billions

$10.7

$9.3 $9.1 $8 8$8.8$8.1 $8.1

$6.765%

61% 60% 58% 56% 54%

46%

1999 2000 2001 2002 2003 2004 2005

Debt Outstanding Leverage

34343434

Page 35: csx  Q4_2005

Capital spending will increase in 2006 to t i l k id

Capital spending will increase in 2006 to t i l k idsupport expansion along key corridorssupport expansion along key corridors

Surface TransportationCapital Spending in Millions

2006 Capital SpendingCapital Spending in Millions

$1,420 15%

$960$1,055

53%

14%

18%

2004 2005* 2006*

InfrastructureInfrastructureInfrastructureInfrastructure New CapacityNew CapacityNew CapacityNew Capacity

LocomotiveLocomotiveLocomotiveLocomotive Cars & OtherCars & OtherCars & OtherCars & Other

35353535Note: 2005 and 2006 excludes capital spending relating to KatrinaNote: 2005 and 2006 excludes capital spending relating to KatrinaNote: 2005 and 2006 excludes capital spending relating to KatrinaNote: 2005 and 2006 excludes capital spending relating to Katrina

Page 36: csx  Q4_2005

Free Cash Flow will remain strong, ith i d it l di

Free Cash Flow will remain strong, ith i d it l dieven with increased capital spendingeven with increased capital spending

Free Cash FlowD ll i MilliDollars in Millions

$1,030$1,030

$513$406

$300+

$461$461

2004 2005 2006*

36363636Note: 2006 includes estimated $100 million in net insurance recoveries relating to KatrinaNote: 2006 includes estimated $100 million in net insurance recoveries relating to KatrinaNote: 2006 includes estimated $100 million in net insurance recoveries relating to KatrinaNote: 2006 includes estimated $100 million in net insurance recoveries relating to Katrina

Page 37: csx  Q4_2005

Fi i lFi i lFinancial wrap-up . . .Financial wrap-up . . .•• Exceeded full year earnings and free cash flow guidanceExceeded full year earnings and free cash flow guidance•• Exceeded full year earnings and free cash flow guidanceExceeded full year earnings and free cash flow guidance

•• Achieved allAchieved all--in leverage targetsin leverage targets•• Achieved allAchieved all--in leverage targetsin leverage targets

•• Generate solid 2006 cash flows with increased investment Generate solid 2006 cash flows with increased investment and fuel headwindand fuel headwind

•• Generate solid 2006 cash flows with increased investment Generate solid 2006 cash flows with increased investment and fuel headwindand fuel headwindand fuel headwindand fuel headwind

•• Reaffirm 2006 Reaffirm 2006 –– 2010 long2010 long--range financial targetsrange financial targets

and fuel headwindand fuel headwind

•• Reaffirm 2006 Reaffirm 2006 –– 2010 long2010 long--range financial targetsrange financial targets

37373737

Page 38: csx  Q4_2005

Michael WardMichael WardMichael WardMichael WardMichael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer

Michael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer

Page 39: csx  Q4_2005

L ki f dL ki f dLooking forward . . .Looking forward . . .•• CSX enters 2006 stronger as execution and network take holdCSX enters 2006 stronger as execution and network take hold•• CSX enters 2006 stronger as execution and network take holdCSX enters 2006 stronger as execution and network take hold

•• The ONE Plan is beginning to yield better service for customersThe ONE Plan is beginning to yield better service for customers•• The ONE Plan is beginning to yield better service for customersThe ONE Plan is beginning to yield better service for customers

•• The economy remains strong, and CSX is poised for growthThe economy remains strong, and CSX is poised for growth•• The economy remains strong, and CSX is poised for growthThe economy remains strong, and CSX is poised for growth

•• Transportation demand will continue to drive strong yieldsTransportation demand will continue to drive strong yields•• Transportation demand will continue to drive strong yieldsTransportation demand will continue to drive strong yields

•• CSX is building to leverage the environment for rail transportationCSX is building to leverage the environment for rail transportation•• CSX is building to leverage the environment for rail transportationCSX is building to leverage the environment for rail transportation

39393939

Page 40: csx  Q4_2005

CSX CorporationCSX CorporationCSX Corporation

Fourth-Quarter 2005 Earnings

CSX Corporation

Fourth-Quarter 2005 EarningsgJanuary 24, 2006

gJanuary 24, 2006