csx 3Q 07

11

Third Quarter 2007Earnings Conference Call


2222

Forward-Looking DisclosureForward-Looking Disclosure

This 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,” “estimate,” 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.

Executive SummaryExecutive Summary

Michael WardChairman, President andChief Executive Officer

44

Third quarter overview . . .Third quarter overview . . .

$0.71

$0.54

$0.67 $0.67

Reported Comparable

2006 2007

Core earning power is strong and continues to improve

Safety and customer service at high levels and improving

Pricing gains supported by strong service levels

Price/productivity continue to drive operating ratio lower

Note: Comparable EPS from continuing operations exclude insurance gains and income tax benefits

24%Increase

Third Quarter EPSFrom Continuing Operations

Operations ReviewOperations Review

Tony IngramExecutive Vice PresidentChief Operating Officer

66

Leadership, discipline and executionLeadership, discipline and execution

Safety at historical best; driving to industry leading levels

Productivity helping drive operating ratio to mid-low 70’s

Network performance and service at all-time highs

SafetySafety

ProductivityProductivity

ServiceService

LeadershipLeadership

DisciplineDiscipline

ExecutionExecution

PerformanceExcellence

77

Helping lead one of the nation’s safest industriesHelping lead one of the nation’s safest industries

Rolling 12-month Averages

FRA Personal Injury

1.46 1.431.39

1.301.24

Q32006

Q42006

Q12007

Q22007

Q32007

FRA Train Accidents

3.673.50

3.293.09 2.98

Q32006

Q42006

Q12007

Q22007

Q32007

13 WeekAverage

1.24

13 WeekAverage

2.79

88

On-time performance at all-time highsOn-time performance at all-time highs


On-Time Originations

71%76% 76% 77% 78%

Q32006

Q42006

Q12007

Q22007

Q32007

On-Time Arrivals

57%63% 63% 66% 69%

Q32006

Q42006

Q12007

Q22007

Q32007

13 WeekAverage

83%

13 WeekAverage

76%

99

Asset utilization approaching all-time best levelsAsset utilization approaching all-time best levels


Cars-On-Line (000)

226225 225 225

224

Q32006

Q42006

Q12007

Q22007

Q32007

13 WeekAverage21.9 hrs

13 WeekAverage

221K

Dwell Time (hours)

25.724.5 24.1 23.7

23.0

Q32006

Q42006

Q12007

Q22007

Q32007

1010

Network operations fluid with increasing velocityNetwork operations fluid with increasing velocity

Velocity (mph)

19.619.9 19.9 20.1

20.4

Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007

13 WeekAverage21.4 mph


1111

Productivity focus helping to drive operating ratioProductivity focus helping to drive operating ratio

ComparableOperating Ratio

87.1%

83.0%

80.4%78.0%

Q3 2004 Q3 2005 Q3 2006 Q3 2007

Adjusting resources to the market environment

Delivering a pipeline of productivity initiatives

Leveraging technology to drive productivity

Driving the Total Service Integration (TSI) initiative

Note: 2004 excludes restructuring charges, and 2006 and 2007 exclude insurance gains

1212

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

Achieving new highs in safety performance

Delivering service reliability for our customers

Driving productivity with process improvement, technology and Total Service Integration

Sales and Marketing ReviewSales and Marketing Review

Clarence GoodenExecutive Vice PresidentSales and Marketing

14141414

Revenues increased 3% to $2.5 billionRevenues increased 3% to $2.5 billion

Third QuarterRevenue in Millions

$2,418$2,501$83

2006 Growth 2007

Pricing gains supported by strong service levels

Yield strength continues to offset softer volumes

Uninterrupted revenue growth for more than five years

15151515

Price continues to drive RPU growthPrice continues to drive RPU growth

Year-Over-Year Change

6.5%6.5%7.1%6.6%6.7%6.8%6.2%6.3%5.6%

9.0%11.0% 11.7% 12.6% 11.8%

8.4% 8.1%6.9%

8.0%

Q32005

Q42005

Q12006

Q22006

Q32006

Q42006

Q12007

Q22007

Q32007

Price Increase on 'Same Store Sales' Total Revenue per Unit

Note: ‘Same Store Sales’ price increases exclude impacts from fuel and mix

16161616

Merchandise revenue increased 3%Merchandise revenue increased 3%

Third Quarter2007 versus 2006

3%

(5%)

9%

Revenue

Volume

RPU

Yields continue to offset the impact of weaker volumes

Continued softness in housing related markets

Phosphates, agriculture and chemicals led revenue gains

2006 Change 2007

RPU $ 1,711 $ 150 $ 1,861

Volume(thousands)

713 (37) 676

Revenue(millions)

$ 1,220 $ 38 $ 1,258

17171717

Coal revenue increased 8%Coal revenue increased 8%


8%

(2%)

10%

Revenue

Volume

RPU

Export market remains strong

Utility inventory levels remain at target levels

Contract repricing to current market levels continues

2006 Change 2007

RPU $ 1,267 $ 129 $ 1,396

Volume(thousands)

475 (10) 465

Revenue(millions)

$ 602 $ 47 $ 649

18181818

Automotive revenue increased 8%Automotive revenue increased 8%


8%

2%

6%

Revenue

Volume

RPU

Light vehicle production more than offset SUV declines

Yields remain strong and are expected to continue

Well positioned in changing automotive landscape

2006 Change 2007

RPU $ 1,830 $ 111 $ 1,941

Volume(thousands)

100 2 102

Revenue(millions)

$ 183 $ 15 $ 198

19191919

Intermodal revenue declined 7%Intermodal revenue declined 7%


(7%)

(6%)

(1%)

Revenue

Volume

RPU

Yields on same store sales increased over 3%; offset by impact of short haul traffic

International traffic declined 17% on customer losses and slowing Asian import growth

Domestic traffic improved 11% on new services

2006 Change 2007

RPU $ 645 ($ 9) $ 636

Volume(thousands)

564 (34) 530

Revenue(millions)

$ 364 ($ 27) $ 337

2020

Fourth quarter revenue outlook is positiveFourth quarter revenue outlook is positive

Automotive

Neutral

Food & Consumer

Forest Products

Intermodal

Agricultural Products

Chemicals

Coal, Coke & Iron Ore

Emerging Markets

Metals

Phosphate & Fertilizer

UnfavorableFavorable

Financial ResultsFinancial Results

Oscar MunozExecutive Vice PresidentChief Financial Officer

22222222

Strong third quarter resultsStrong third quarter results

Third Quarter Results

Dollars in millions, except EPS 2007 2006 Variance

Surface Transportation Operating Income $ 552 $ 489 $ 63

Other Operating Income 3 - 3

Consolidated Operating Income $ 555 $ 489 $ 66

Other Income (net)Interest ExpenseIncome Taxes

17(102(173

))

25(97(89

))

(8(5

(84

)))

Net Earnings from Continuing Operations $ 297 $ 328 $ (31)

EPS from Continuing Operations $ 0.67 $ 0.71 $ (0.04)

23232323

Comparable EPS increased 24%Comparable EPS increased 24%


Dollars in millions, except EPS 2007 2006 Variance

EPS from Continuing Operations $ 0.67 $ 0.71 $ (0.04)

Less Gain on Insurance Recoveries - (0.02) 0.02

Less Income Tax Benefits - (0.15) 0.15

Comparable EPS from Continuing Operations $ 0.67 $ 0.54 $ 0.13

Surface Transportation Operating Income $ 552 $ 489 $ 63

Less Gain on Insurance Recoveries (1) (15) 14

Comparable Operating Income $ 551 $ 474 $ 77

24242424

Surface Transportation operating income up 16%Surface Transportation operating income up 16%


Dollars in millions 2007 2006 Variance

RevenueExpenses

Labor and FringeMaterials, Supplies and OtherFuelDepreciationEquipment and Other RentsInland Transportation

$ 2,501

746503305220116

60

$ 2,418

736497300213135

63

$ 83

(10(6(5(719

3

))))

Operating Expenses 1,950 1,944 (6)

Operating Income $ 551 $ 474 $ 77

Operating Ratio 78.0% 80.4% 2.4 pts

Note: Results exclude insurance gains

25252525

Labor and fringe increased 1%Labor and fringe increased 1%

Third QuarterDollars in Millions

$746$736

$10

2006 Variance 2007

Primarily due to wage and benefit inflation

Partially offset by lower volumes and improved productivity

Surface Transportation headcount declined over 500

26262626

MS&O increased 1%MS&O increased 1%


$503$497 $6

2006 Variance 2007

Increase primarily driven by inflation

Mostly offset by reduced train accidents and related costs

27272727

Fuel increased by 2%Fuel increased by 2%


$305$300 $5

2006 Variance 2007

Driven by a $0.16 increase in fuel price per gallon

Fuel efficiency reduced consumption by nearly five million gallons

Lower volumes also resulted in lower consumption

28282828

Rents decreased 14%Rents decreased 14%

Lower Merchandise and Intermodal volumes

Operations driving better asset utilization


$116

$135 $19

2006 Variance 2007

29292929

All other expenses increased 1%All other expenses increased 1%

Higher capital base increased depreciation expense

Lower intermodal volumes reduced inland transportation

$276 $280

Depreciation Inland Transport


$213 $220

$63 $60

$4

2006 Variance 2007

3030

Share repurchase update . . . Share repurchase update . . .

Cumulative Shares RepurchasedDollars in Millions

$882

$1,192

$1,192

$644$465$422

$149

Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007

Note: Approximately $1.6 billion of the $2.1 billion has been repurchased under the current $3.0 billion program

$2,074

31313131

Double-digit growth targeted on higher 2007 baseDouble-digit growth targeted on higher 2007 base

2007-2010 Capital Spending in Billions

$1.7

$1.6 $1.6

$1.7

2007 2008 2009 2010

Note: Operating income and earnings per share reflect four-year CAGR’s

Mid-low 70’sOperating Ratio

$800M – $1B in 2010

Free Cash Flow Before Dividends

15% – 17%Earnings Per Share*

10% – 12%Operating Income*

2007-2010Guidance

Concluding RemarksConcluding Remarks

Michael WardChairman, President andChief Executive Officer

3333

3434



Economy & Finance

csx 3Q 07