Forward-Looking Statements Forward-Looking Statements This - - PDF document

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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, taxes, liquidity, capital expenditures, share repurchases, dividends

• r other financial items, statements of management’s plans, strategies and objectives for future operations, and

management’s expectations as to future performance and operations 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

• nly as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking
• statement. If the company updates 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 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 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.

Current environment moderating; long-term intact Current environment moderating; long-term intact

 Domestic and global economy growing at a slower pace

— Near-term growth still expected, but likely at lower rate than originally expected

 Most CSX markets are holding up well quarter-to-date

— Year-over-year growth in Merchandise in-line with second quarter and declines in Coal are moderating; Intermodal growth softer on international trade

 Long-term environment still remains favorable

— Opportunities provide strong upside for shareholders

 CSX financial performance and guidance top-tier

— Outperformed in recession and recovery, with strong guidance through 2015

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U.S. economic growth projections have moderated U.S. economic growth projections have moderated

Key U.S. Indicators Jul Fcst Current Fcst

GDP IDP NALV Production Imports PMI – Manufacturing Customer Inventories Electricity Generation 2.5% 4.1% 13.0M 4.2% 50.9 44.0 (0.3%) 1.6% 3.6% 12.9M 5.0% 50.6 46.5 0.5%

 Macro and industrial economy is still exhibiting growth  Automotive is recovering from Japanese supply disruptions  While import growth is strong, consumer sentiment is weak  Manufacturing has slowed, but inventories remain low  Trends for coal-fired power generation are favorable

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Source: Global Insight, Institute of Supply Management, EIA

Impact of global economic trends mixed for CSX Impact of global economic trends mixed for CSX

 European GDP forecast is now 1.7% for 2011

— Eurozone debt issues persist

 Global oil demand has declined

— Although crude oil price remains steady above $80

 Emerging economies continue to show solid growth

— However, expectations have moderated

 Exports remain strong year-over-year

— Export of coal and phosphates show significant growth over 2010 levels

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Quarter-to-date, CSX’s volume is up 1% overall Quarter-to-date, CSX’s volume is up 1% overall

 Merchandise continues to grow at solid rates

— Reflects solid industrial growth

 Coal declines are moderating

• n continued export strength

— Domestic electricity generation and stockpiles are improving

 Intermodal growth softer on international trade

— Expecting a later, more contracted fall peak — New customers coming online

6 3% (3%) 8% 3% (1%) 1%

Merchandise Coal Intermodal

Year-Over-Year Growth

Second Quarter Third Quarter-to-Date

Still expecting overall coal growth in second half Still expecting overall coal growth in second half

 Asian demand up significantly

— Growth moderating on higher base

 Australia coming back on-line

— Minimal U.S. impact anticipated

 U.S. resources coming on-line

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Sources: PIRA Energy August 2011 estimates and Energy Information Administration

Domestic Coal

 Utility inventories have declined

— Currently at 55 days in the east — Down over 40% from 2009 peak and down 8% from last year

 Industrial energy demand is likely to remain flat

Export Coal

50-55 Days 50 Days 65-70 Days

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Merchandise markets are generally holding strong Merchandise markets are generally holding strong

Industrial Agricultural Housing & Construction

 Agricultural products and phosphates slowed by Midwest flooding  High corn prices have impacted feed grain  Recent strength in short-haul phosphates 2% 5% Q2 Q3-to-Date 5% 5% Q2 Q3-to-Date  Japanese tsunami impact is reversing; auto showing signs of strength  Increased export and domestic demand for scrap and sheet steel  Increased pulp board and paper shipments for packaging products  Improved shipments

• f cement, aggregates

and waste 2% (1%) Q2 Q3-to-Date Year-Over-Year Change in Volume Year-Over-Year Change in Volume Year-Over-Year Change in Volume

24% 14% Q1 2011 Q2 2011 Q3 2011 TD

Intermodal long-term growth story still intact Intermodal long-term growth story still intact

9 0% 3% 4% Q1 2011 Q2 2011 Q3 2011 TD (3%)

 Steady, profitable growth driven by

• ver-the-road freight conversions

 Customer focus and service reliability drive strong value  Expanding/opening new markets to leverage Northwest Ohio facility  Cycling 2010 customer gains and impacts of current environment  Expecting later and more contracted fall peak shipping season  Capitalizing on terminal network expansions and service product

— Maersk comes online in Jan 2012

Domestic Market

Year-Over-Year Change in Volumes

International Market

Year-Over-Year Change in Volumes

Long-term opportunities remain favorable for rails Long-term opportunities remain favorable for rails

 BRIC economies drive energy and infrastructure demand

— Expect long-term favorable trends for imports and exports

 Over-the-road trucking challenges continue

— Rail-truckload partnerships will drive sustained growth

 Auto demand picking up

— Supply chain disruptions from Japan have eased

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CSX proved it can outperform in a downturn . . . CSX proved it can outperform in a downturn . . .

CSX Peers S&P 500 CSX ranks among top 31% of S&P companies CSX ranks among top 31% of S&P companies CSX Peers S&P 500 (8%) (10%) 15% CSX ranks among top 42% of S&P companies CSX ranks among top 42% of S&P companies CSX Peers S&P 500 CSX ranks among top 18% of S&P companies CSX ranks among top 18% of S&P companies

Operating Income Growth 2006 – 2009 Continuing EPS Growth 2006 – 2009 Operating Margin Improvement (bps) 2006 – 2009

450 (20) (180) 28% (11%) (31%)

Note: See GAAP Reconciliation for 2006. Data source is Morgan Stanley

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. . . and continues to outperform during expansion . . . and continues to outperform during expansion

63% 37% 46% CSX Peers S&P 500 CSX ranks among top 25% of S&P companies CSX ranks among top 25% of S&P companies 48% 41% 30% CSX Peers S&P 500 CSX ranks among top 25% of S&P companies CSX ranks among top 25% of S&P companies CSX ranks among top 27% of S&P companies CSX ranks among top 27% of S&P companies

Operating Income Growth 2009 – LTM Continuing EPS Growth 2009 – LTM Operating Margin Improvement (bps) 2009 – LTM

470 350 200 CSX Peers S&P 500

Source: Morgan Stanley

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CSX is achieving results with financial discipline CSX is achieving results with financial discipline

44% 20%

CSX Peer Average

Incremental Margins First Half 2011

190 (90)

CSX Peer Average

Margin Improvement First Half 2011

Source: Thomson One

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Performance through 2015 reflects strong growth Performance through 2015 reflects strong growth

18% – 20% CAGR 65% by 2015 12% – 14% CAGR $1.35 Earnings Per Share 71.1% Operating Ratio $3.1 billion Operating Income 2011 – 2015 Guidance 2010 Base

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Wrap-up . . . Wrap-up . . .

Capitalizing

• n Moderate

Growth

• While expectations have moderated, still expecting H2 growth
• Most CSX markets performing at or above Q2 growth rates
• Strong and diverse portfolio provides confidence near & long-term

CSX Sectors Keeping Pace

• Strong export coal growth continues; utility inventories declining
• Merchandise driven by auto, metals, paper, emerging markets
• Intermodal growth slowed temporarily; still expecting shorter peak

Growing Shareholder Value

• Outperformed market and peers through recession and recovery
• Projecting further top-tier results through broad-based initiatives
• Providing value through cash deployment strategies

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Appendix Appendix

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GAAP Reconciliation Disclosure GAAP Reconciliation Disclosure

CSX reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP financial measures used to manage the company’s business that fall within the meaning of Regulation G (Disclosure of Non-GAAP Financial Measures) by the SEC may provide users of the financial information with additional meaningful comparisons to prior reported results. In press releases and presentation slides for stock analysts, CSX has provided financial information adjusted for certain items, which are non-GAAP financial measures. The company’s management evaluates its business and makes certain

• perating decisions (e.g., budgeting, forecasting, employee compensation, asset management and resource allocation)

using these adjusted numbers. Likewise, this information facilitates comparisons to financial results that are directly associated with ongoing business

• perations as well as provides comparable historical information. Lastly, earnings forecasts prepared by stock analysts

and other third parties generally exclude the effects of items that are difficult to predict or measure in advance and are not directly related to CSX’s ongoing operations. A reconciliation between GAAP and the non-GAAP measure is

• provided. These non-GAAP measures should not be considered a substitute for GAAP measures.

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GAAP Reconciliation GAAP Reconciliation

Full Year 2006 Results Dollars in millions 2006 Operating Income Insurance Recoveries $ 2,137 (168) Comparable Operating Income $ 1,969 Operating Margin Insurance Recoveries 22.3% (1.7%) Comparable Operating Margin 20.6% EPS from Continuing Operations Insurance Recoveries Income Tax (Benefit) / Charge Gain on Property $0.94 ($0.07 ($0.11 ($0.02 ) ) ) Comparable EPS from Continuing Operations $0.74 Note: Results have been adjusted for the retrospective change in accounting policy for rail grinding

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