1 1 Forward-Looking Statements Forward-Looking Statements This - - PowerPoint PPT Presentation

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Forward-Looking Statements Forward-Looking Statements

This information and other statements by the company may 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, volumes, rates, cost-savings, expenses, or other financial items; statements of management’s plans, strategies and objectives for future operations, and management’s expectations as to future performance and

• perations and the time by which objectives will be achieved; statements concerning proposed new 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,” “estimate,” “preliminary” 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

• r 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 any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any 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, political or business conditions, including those affecting the transportation 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; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with projecting full year 2010 economic and business conditions. 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.

Executive Summary Executive Summary

Michael Ward Chairman, President and Chief Executive Officer

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First quarter performance . . . First quarter performance . . .

• Revenue improves strongly

— Driven by volume growth, core pricing, and fuel surcharge

• Operations remain stable

— Safety levels strong, with service levels solid in difficult weather

• Core earning power increases

— Operating income up 21% to a first quarter record $634 million — Operating ratio improves 230 bps to a first quarter record 74.5%

Earnings Per Share From Continuing Operations

$0.64 $0.78

2009 2010

22% Increase 22% Increase

Sales and Marketing Review Sales and Marketing Review

Clarence Gooden Executive Vice President Sales and Marketing

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Revenue increases 11% to nearly $2.5 billion Revenue increases 11% to nearly $2.5 billion

Revenue in Millions

$2,491 $2,247 $106 $101 $37

Q1 2009 Volume Rate/Mix Fuel Price Impact Q1 2010

RPU $1,676 Volume 1,486K Revenue $2,491M Note: See Fuel Surcharge Reconciliation

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Improving economy drives 5% volume increase Improving economy drives 5% volume increase

Year-Over-Year Volume Growth

5% (13%) 7% 14% 64%

Total Coal Merchandise Intermodal Automotive

100% 25% 36% 34% 5%

% of Total

RPU $1,676 Volume 1,486K Revenue $2,491M

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Core pricing stable; revenue per unit increases Core pricing stable; revenue per unit increases

Note: “Same Store Sales” price increases exclude impacts from fuel surcharge and mix

Year-Over-Year Change

6.7% 6.8% 6.4% 6.2% 6.5% 6.5% 6.6% 6.3% 5.0% 5.3% 10.5% 14.5% 18.3% 21.2% 14.0% 5.9% 0.2% (5.4%) (7.1%) (8.7%)

Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010

Same Store Sales Price Increase Total Revenue per Unit

RPU $1,676 Volume 1,486K Revenue $2,491M

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Coal revenue declines 1% Coal revenue declines 1%

Utility Export Industrial

Coal Categories

First Quarter Year-Over-Year Change

(1%) 14% (13%)

RPU Volume Revenue

• First quarter summary

— Lower utility demand due to above normal stockpiles and weather — Increased export demand driven by the Chinese market — Higher industrial demand driven by strong steel production

• Ongoing drivers

— Utility demand improving, with inventory levels moderating — Natural gas prices remain low — Strength in the export and industrial markets continues

72% 72% 18% 18% 10%

First Quarter Volume RPU $1,973 Volume 373K Revenue $736M

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Automotive revenue increases 79% Automotive revenue increases 79%

Detroit–3 New Domestics

Automotive Categories

First Quarter Year-Over-Year Change

9% 64% 79%

RPU Volume Revenue

RPU $2,297 Volume 74K Revenue $170M

55% 55% 45% 45%

First Quarter Volume

• First quarter summary

— North American Light Vehicle production increases off low base — Sales growth driven by incentives and Improved credit market

• Ongoing drivers

— Full year 2010 NALV production forecasted to grow 28% — New assembly plant will ramp up production during 2010

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Merchandise revenue increases 11% Merchandise revenue increases 11%

Merchandise Categories

Agriculture Housing Industrial 41% 41% 27% 27% 32%

First Quarter Year-Over-Year Change

4% 7% 11%

RPU Volume Revenue

First Quarter Volume RPU $2,223 Volume 539K Revenue $1,198M

• First quarter summary

— Metals and Chemicals favorable

• n increased industrial activity

— Ethanol and Phosphates drive Agriculture-related markets — Housing and construction-related markets continue to be weak

• Ongoing drivers

— Economic recovery driving growth going forward — Growth expected in all markets, excluding housing-related sector

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Intermodal revenue increases 20% Intermodal revenue increases 20%

International Domestic 44% 44% 56% 56%

Intermodal Categories

First Quarter Year-Over-Year Change

5% 14% 20%

RPU Volume Revenue

First Quarter Volume

• First quarter summary

— RPU higher on fuel recovery and improving pricing environment — International growth with inventory replenishments and exports — Domestic up on truck conversions and new service offerings

• Ongoing drivers

— Global trade and consumer demand driving international — Stabilization of truck capacity and demand lessens pricing pressure

RPU $646 Volume 500K Revenue $323M

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New UMAX intermodal service formed by CSX-UNP New UMAX intermodal service formed by CSX-UNP

• New Service started in the

second quarter

— CSX and UNP will now market transcontinental business jointly — Fleet of 20,000+, 53-foot containers dedicated to service

• Initial financial impact for CSX

will be limited

— Revenue loss of $40 million to $50 million on a quarterly basis — Operating income impact neutral near-term and positive long-term

Single Terminal Markets Gateways Multiple Terminal Markets

New England (BOS, SPR, WOR), Ohio (CIN, CLV, COL)

• N. California (LATHROP, OAK), S. California (COI, LATC, LA)

UMAX offers nationwide service on all core freight lanes

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Sales and Marketing wrap-up . . . Sales and Marketing wrap-up . . .

Economic recovery expected to continue

— Industrial economy is projected to grow above 4% throughout 2010

Second quarter volume and revenue outlook favorable

— Revenue growth expected across nearly all markets

Business development leveraging network investments

— Over 70 new start-ups on the CSX network during the last twelve months

CSX standing out as compelling value for customers

— Service offering is both value priced and environmentally sound

Operations Review Operations Review

David Brown Executive Vice President Chief Operating Officer

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Delivering under challenging conditions Delivering under challenging conditions

Culture of leadership, discipline and execution continues to produce strong results

— Leadership: Safety performance was strong

and continued to improve in the first quarter

— Discipline: Cost control and operating

leverage helping to improve margins

— Execution: Network operations

fluid despite weather impacts

Safety Safety Productivity Productivity Service Service Leadership Leadership Discipline Discipline Execution Execution Performance Excellence

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Helping to lead one of the Nation’s safest industries Helping to lead one of the Nation’s safest industries

FRA Personal Injury Rate

1.36 1.13 1.30 0.81

Q1 2007 Q1 2008 Q1 2009 Q1 2010

FRA Train Accident Rate

3.29 2.99 3.62 3.13

Q1 2007 Q1 2008 Q1 2009 Q1 2010

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On-time Arrivals

64% 69% 79% 67%

Q1 2007 Q1 2008 Q1 2009 Q1 2010

Network Performance

On-time Originations

74% 79% 83% 69%

Q1 2007 Q1 2008 Q1 2009 Q1 2010

Train Velocity (mph)

20.1 20.8 21.6 20.9

Q1 2007 Q1 2008 Q1 2009 Q1 2010

Terminal Dwell (hours)

24.5 22.7 24.1 25.8

Q1 2007 Q1 2008 Q1 2009 Q1 2010

Service Reliability

Service levels stable on fluid network operations Service levels stable on fluid network operations

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Crew starts decline 2%, as volume increases 5% Crew starts decline 2%, as volume increases 5%

(2%) (3%) (4%) (1%) 5%

Total Crew Starts Yard Crew Starts Local Crew Starts Road Crew Starts Volume

Year-Over-Year Change in Volume and Crew Starts

119,039 34,535 67,883 221,457 Crew Starts

20 20 20 20 Locomotives Stored

707 272

Peak Current

T&E Employees Furloughed

2,533 1,093

Peak Current

Freight Cars Stored

30,533 12,321

Peak Current

CSX is well prepared as volume continues to build CSX is well prepared as volume continues to build

• Currently recalling furloughed T&E

employees to support growth

• Hiring employees in certain locations

to also support growth and attrition

• Locomotives and freight cars can be

returned to service within a week

• Continue managing resource levels to

changing business environment

Note: T&E Furloughs and Cars as of April 12th, Stored Locomotives as of April 11th

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Operations wrap-up . . . Operations wrap-up . . .

Safety performance continues to be strong

— Helping lead transportation’s safest industry and one of America’s safest

Productivity is driving greater cost efficiency

— Working aggressively to manage resources as volume continues to build

Customer service levels remain stable

— Network operations remain fluid at lower resource levels

Leadership, Discipline and Execution Leadership, Discipline and Execution

Financial Review Financial Review

Oscar Munoz Executive Vice President Chief Financial Officer

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First quarter earnings summary . . . First quarter earnings summary . . .

First Quarter Results Dollars in millions, except EPS 2010 2009 Variance Revenue Expense $ 2,491 1,857 $ 2,247 1,725 11% (8%) Operating Income $ 634 $ 522 21% Interest Expense Other Income (net) Income Taxes (142 11 (197 ) ) (141 3 (130 ) ) Earnings from Continuing Operations $ 306 $ 254 20% Fully Diluted Shares in Millions EPS from Continuing Operations 394.3 $ 0.78 394.1 $ 0.64 22%

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Labor and Fringe expense increases 10% Labor and Fringe expense increases 10%

Employee Headcount

34,037 32,896 31,175 29,310

Q1 2007 Q1 2008 Q1 2009 Q1 2010

First Quarter Labor Analysis in Millions

2009 Labor Expense $ 662 Incentive Compensation Inflation Efficiency Other (48 (40 34 (13 ) ) ) Subtotal (67) 2010 Labor Expense $ 729 Variance

6% Decline 6% Decline

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MS&O expense declines 5% MS&O expense declines 5%

First Quarter MS&O Analysis in Millions

2009 MS&O Expense $ 477 Recoveries Safety Improvement 17 7 Subtotal 24 2010 MS&O Expense $ 453

MS&O Expense Dollars in Millions

$521 $505 $477 $453

Q1 2007 Q1 2008 Q1 2009 Q1 2010 Variance

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Fuel expense increases 48% Fuel expense increases 48%

Gallons Per Thousand Gross Ton Miles

1.31 1.27 1.25 1.21

Q1 2007 Q1 2008 Q1 2009 Q1 2010

First Quarter Fuel Analysis in Millions

2009 Fuel Expense $ 191 Price Volume Efficiency Non-Locomotive (87 (7 5 (3 ) ) ) Subtotal (92) 2010 Fuel Expense $ 283 Variance

3% Improvement 3% Improvement

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Other expenses collectively decrease 1% Other expenses collectively decrease 1%

Other Costs in Millions

$221 $222 $224 $229 $111 $113 $100 $57 $63 $58 $63 $120

Q1 2007 Q1 2008 Q1 2009 Q1 2010

• Inland Transportation up on
• ff-core volume increase
• Rents decline on cycling prior

year foreign road settlements

• Higher capital base drives

Depreciation expense

Inland Transportation Depreciation Rents $398 $396 $395 $392

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Productivity is driving greater cost efficiency Productivity is driving greater cost efficiency

First Quarter Cost Structure

2010 2010 2009 2009 % Change % Change Fuel Fuel-

• adjusted

adjusted Volume 1,486 1,419 5% 5% Short-term Variable Costs

Fuel Car Hire Unit Train Crews Third Party Services

$ 515 $ 423 (22%) (1%) Long-term Variable Costs

Terminal Operations Scheduled Network Crews Yard and Local Crews Locomotives and Freight Cars

506 495 (2%) (2%) Fixed and Indirect Costs

Depreciation Track Maintenance Pension and Property Taxes General and Administrative Technology and Other

836 807 (4%) (4%) Total Operating Expenses $ 1,857 $ 1,725 (8%) (3%)

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Financial wrap-up . . . Financial wrap-up . . .

Economic recovery resulting in overall volume growth

— Most markets rebounding strongly from the lower 2009 levels

Continue investing within balanced regulatory framework

— Expect to invest $1.7 billion in 2010, with $170 million devoted to PTC — Complete implementation of PTC is now estimated to be at least $1.2 billion

Strong double-digit earnings growth expected for 2010

— Reflects strong volume and revenue growth, and strong margin expansion

Concluding Remarks Concluding Remarks

Michael Ward Chairman, President and Chief Executive Officer

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Relentless pursuit of excellence . . . Relentless pursuit of excellence . . .

Appendix Appendix

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Fuel Surcharge Reconciliation Fuel Surcharge Reconciliation

First Quarter Dollars in millions Dollars in millions 2010 2010 2009 2009 Variance Variance Total Rail and Intermodal Fuel Surcharge Recovery $ 147 $ 105 $ 42 Portion of year-over-year variance that is volume-related Portion of year-over-year variance that is fuel price-related $ 5 $ 37 Since total fuel surcharge revenue includes both rail and intermodal, it is different from the report filed with the Surface Transportation Board, which excludes CSX Intermodal fuel surcharge revenue.

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