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csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
csx  2007_BB&T_Conference-REF23583
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csx 2007_BB&T_Conference-REF23583

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  • 1. BB&T Transportation Conference February 2007 1 1
  • 2. Forward 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,” 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. 2 2
  • 3. CSX registered another breakout year in 2006 Generated record financial results Produced step-function service improvements Delivered significant value for shareholders Driving towards 2010 targets Positioned for long-term profitable growth 3 3
  • 4. CSX produced record financial results in 2006 Dollars in millions, except EPS Year-Over-Year Improvement Surface Transportation 11% Revenue $ 9,566 Expense 7,608 Operating Income $ 1,958 26% Operating Ratio 79.5% Consolidated EPS $ 2.22 31% Note: Excludes insurance recoveries and income tax benefits 4 4
  • 5. Earnings improving; momentum to mid-70’s Surface Transportation Surface Transportation Operating Income Operating Ratio 87.9% $1,958M $1,549M 84.6% 82.0% $1,064M $902M 79.5% 2003 2004 2005 2006 2003 2004 2005 2006 Notes: Excludes provision for casualty claims, management restructuring and insurance recoveries 5 5
  • 6. Over $1 billion deployed for investors in 2006 Growing Cash Generation & Improving ROIC Debt Equity Debt Equity Company Company Holders Holders Holders Holders Maintain target Focused, strategic Competitive debt levels investment dividend yield for growth Share buyback program 6 6
  • 7. Recent actions reinforce shareholder focus Increased Annual Initiated $2.0 Billion Dividend 20% Share Repurchase $0.48 Represents over 10% of $0.40 outstanding shares 20% 20% Increase $0.26 Increase Consistent with capital $0.20 structure objectives Targeting year-end 2008 completion Q3 Q4 Q3 Q1 2005 2005 2006 2007 7 7
  • 8. Double-digit growth targeted through 2010 Set goals Set goals 2006–2010 CAGR Surface Transport 10%–12% Consistent Execute Execute Operating Income continuous and and Monitor Monitor improvement Progress Progress Earnings Per Share 12%–14% Create Create plans plans Free Cash Flow 10%–12% 8 8
  • 9. Surface Transportation above target growth Operating Income in Millions Five-year Target: 10%-12% CAGR $2.5–$2.7 $2.5–$2.7 Billion Billion $1,958 $1,549 26% 26% Increase Increase 2005 2006 2007 2008 2009 2010 Note: 2006 excludes benefits from insurance recoveries 9 9
  • 10. Earnings per share above target growth Earnings Per Share Five-year Target: 12%-14% CAGR $3.00–$3.30 $3.00–$3.30 $2.22 $1.70 31% 31% Increase Increase 2005 2006 2007 2008 2009 2010 Note: 2005 and 2006 excludes debt repurchase expenses, insurance recoveries and income tax benefits 10 10
  • 11. Rail earnings growth among leading sectors Long-term Earnings Growth Expectations Energy 18.2% Railroads 15.4% IT 15.3% Health Care 14.9% Industrials 12.9% S&P 500 12.8% Financials 10.9% Utilities 7.7% Telecom 5.6% Source: Standard & Poor’s as of February 13, 2007 11 11
  • 12. However, rail PE’s continue to lag S&P 500 NTM Price-to-Earnings Ratio Health Care 22.5 IT 21.6 S&P 500 18.3 Telecom 17.7 Financials 17.1 Industrials 16.6 Utilities 16.5 Railroads 13.9 Energy 11.2 Source: Standard & Poor’s as of February 13, 2007 12 12
  • 13. Rail Renaissance environment remains strong 2006 2007 Strong Moderating Economy Economy Tight Transportation Tight Transportation Capacity Capacity Pricing Pricing Strength Strength Extending Extending Supply Chains Supply Chains 13 13
  • 14. Moderating economy continues to grow GDP and Industrial Production Year-Over-Year Change 4.1% 4.1% 3.2% 2.2% 3.9% 3.3% 3.2% 2.7% 2.5% 0.8% 1.6% 0.0% (0.3%) (3.6%) 2001 2002 2003 2004 2005 2006 2007 Gross Domestic Product Industrial Production Source: Global Insight 14 14
  • 15. Demand remains high and increasing further Transport Forecast Ton-Miles in Trillions 7 6 5 4 3 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: AASHTO 15 15
  • 16. Highways are constrained and getting worse Today 2020 CSX Territory Source: USDOT FHWA Freight Analysis Framework 16 16
  • 17. Rail Renaissance is driving improving yields Year-Over-Year Change 2 12.6% R = P +V 11.8% 11.7% 11.0% 9.6% 9.0% 8.6% 8.4% 6.8% 6.7% 6.6% 6.3% 6.2% 6.0% 5.6% 4.8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2005 2005 2005 2006 2006 2006 2006 Price Increase on 'Same Store Sales' Total Revenue per Unit Note: Price increases on a ‘Same Store Sales’ basis exclude fuel surcharge and mix impacts 17 17
  • 18. Imports showing strong long-term growth . . . United States Imports 2000 Dollars in Trillions $2.3 $2.2 $2.1 $2.0 $1.9 $1.8 $1.7 $1.6 $1.5 $1.5 $1.4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Global Insight 18 18
  • 19. . . . with volume focused at the major ports 15.8 7.0 3.6 4.5 CSX Intermodal Network CSX Intermodal Network Seattle/Tacoma 59.4 NY/NJ 3.4 5.6 2.0 1.8 Oakland Virginia 6.6 1.9 Charleston 9.4 13.1 TEU in Millions 1.7 6.2 2004 1.4 Savannah 2020 Houston LA/LB Source: Containerization International and TranSystems. 19 19
  • 20. Increasing port volumes will drive rail volumes Today 2020 CSX Territory Source: TranSystems and USDOT Federal Railroad Administration Office of Policy 20 20
  • 21. New CSX/BNSF service leverages that trend BNSF BNSF–Memphis CSX Charlotte BNSF Atlanta BNSF–Memphis CSX Florida February 26th start-up February 26th start-up Enhanced PSW-SE service Enhanced PSW-SE service Seamless connectivity Seamless connectivity 21 21
  • 22. Broader industrial development is growing Merchandise • Ethanol Facilities • Feed Mills • Aggregate Facilities Boston • Plastics Plants Chicago New York Philadelphia Coal Baltimore St Louis • New Projects Portsmouth Intermodal Memphis • Port Development Charleston • Logistics Centers Mobile Jacksonville Automotive New Orleans • Assembly Plant • Supplier Facility Miami Income Growth 5-5.5% LT 5% 5.6-6.0% GT 6% 22 22
  • 23. Access to new fertilizer receiving warehouses Unit-train service New Warehouses — McLeansboro, IL — Templeton, IA — Mitchell, SD — W Millbank SD — Hutchinson, KS — Yuma, CO — Loomis, NE — Oakland, NE — Tamora, NE — Ross, ND 23 23
  • 24. CSX creating industry-leading ethanol network CSX Ethanol Terminals Albany, NY Albany RI Sewaren, NJ Philadelphia NJ Baltimore Linden, NJ (new) Providence, RI (new) Philadelphia, PA (2 new) Baltimore, MD, (2 new) 24 24
  • 25. CSX well positioned in Rail Renaissance Serves every major market in the east Boston Syracuse Buffalo Detroit Direct access to all New York Cleveland Chicago Atlantic and Gulf ports Philadelphia Indianapolis Columbus Baltimore Cincinnati St Louis Access to Pacific ports Evansville Portsmouth Charlotte with BNI/UNP alliances Nashville Memphis Atlanta Charleston Population in Major Metropolitan Areas Savannah Mobile Jacksonville GT 10,000,000 New Orleans 5,000,000 – 10,000,000 Tampa 2,500,000 – 5,000,000 1,500,000 – 2,500,000 Miami 1,000,000 – 1,500,000 25 25
  • 26. Looking forward . . . Rail renaissance environment remains strong Financial and operational momentum continues In our 180th year, targeting record results again Capitalizing on long-term growth trends Delivering value for shareholders 26 26
  • 27. BB&T Transportation Conference February 2007 27 27

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