2. Forward L ki Disclosure Statement
F d Looking Di l St t t
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
cost savings,
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 “b li
h h “believe,” “
” “expect,” “ ti i t ” “ j t ” and similar expressions. F
t ” “anticipate,” “project,” d i il i Forward-looking
d l ki
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.
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
include, Company s
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
4. Fourth
F th quarter overview . . .
t i
Fourth Quarter • New Orleans line reopened
Earnings Per Share
• Expansion plans on target
$1.03
• Surface Transportation record
45%
$0.71
• Pricing environment is strong
•O
Operations are i
ti improving
i
2004 2005
4
6. Performance reflects progress
on all major i iti ti
ll j initiatives
• Safety momentum is strong
Reliable
• ONE Plan is gaining traction
Performance
Service Execution
• New Orleans line restored
Productivity
y Discipline
sc p e
• Capacity projects are underway Safety Leadership
6
7. Momentum in safety performance continues
M t i ft f ti
FRA Personal Injury FRA Train Accident
Rolling 12-Month Average
12 Month Rolling 12-Month Average
12 Month
Injuries / 200,000 Man Hours Accidents / MM Train Miles
2.29 4.79 4.72
2.13
2.04
4.43
1.91 4.32
1.71
3.99
3 99
Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4
2004 2005 2005 2005 2005 2004 2005 2005 2005 2005
7
8. ONE Plan is gaining traction;
on-time performance improving
ti f i i
On-Time Originations On-Time Arrivals
Rolling 12-Month Average
12 Month Rolling 12-Month Average
12 Month
40.9%
40 9%
51.1%
51 1%
40.1%
50.3% 50.3%
39.6%
38.9%
49.0% 38.4%
48.2%
Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4
2004 2005 2005 2005 2005 2004 2005 2005 2005 2005
8
9. Dwell ti
D ll time and cars-on-line remain stable
d li i t bl
Dwell Time (Hours) Cars-On-Line
Rolling 12-Month Average
12 Month Rolling 12-Month Average
12 Month
234,132 233,876
29.7 29.7
29.6
29.3
28.7
234,165
233,271 233,118
233 118
Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4
2004 2005 2005 2005 2005 2004 2005 2005 2005 2005
9
10. System velocity expected to improve
with New Orleans line restored
ith N O l li td
Velocity (MPH)
Rolling 12-Month Average
12 Month
Chicago
New York
20.3
19.9 19.8 19.7
19.2
Nashville
Memphis
Atlanta
Birmingham
Montgomery
Jacksonville
New Orleans Q4 Q1 Q2 Q3 Q4
2004 2005 2005 2005 2005
Miami
Year-Over-
Year-Over-Year Decline in Velocity 5% - 10% 10% - 20% GT 20%
10
11. Expansion plans are on target
E i l t t
• Two-year investment
Two-
program is underway
Chicago
• High-impact projects are
High-
New York
targeted for 2006
Nashville
• C t ti began in
Construction b i
Memphis
Atlanta
fourth quarter 2005
Birmingham
Jacksonville
• Progressing on schedule
New Orleans
Miami
11
12. L ki f d
Looking forward . . .
• Safety momentum will continue
Reliable
• ONE Plan is gaining traction
Performance
Service Execution
• Staffing will stay ahead of attrition
Productivity
y Discipline
sc p e
• Capacity projects on schedule Safety Leadership
12
14. Economic outlook remains strong
Transportation Services Index
• GDP and IDP remain strong
Indexed: 2000 = 100
• Manufacturing still growing 120
110
• Continued strength in imports 100
and exports
90
80
• Transportation demand still
70
near record levels
60
1990 1993 1996 1999 2002 2005
Source: Bureau of Transportation Statistics
14
15. Revenues increased $156 million in
the f th
th fourth quarter on a comparable basis
t bl b i
Fourth Quarter
Revenue on 13-Week Basis
R 13 W k B i
Dollars in Millions
$20 $2,219
$66
$70
$2,063
2004 Merchandise Coal All Other 2005
Note: 2004 Revenue excludes $117 million from the 14th accounting week
15
16. Average revenue per unit increased
over 11% in the fourth quarter
i th f th t
Fourth Quarter Revenue Per Unit
Year-Over-Year Change
Y O Y Ch
13-Week Basis
Surface Transportation 11.0%
Merchandise 12.9%
Coal 10.9%
Automotive 7.3%
7 3%
Intermodal 6.7%
16
17. Fuel surcharge program continues
to h l ff t hi h f l i
t help offset higher fuel prices
Fuel Surcharge Program
24% $70
20% $60
16% $50
12% $40
8% $30
4% $20
Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05
Surcharge (% of Revenue) Average West Texas Intermediate
17
18. Merchandise revenues increased
$70 million on stronger yield
illi t i ld
Fourth Quarter
• Revenue and yield gains
Year-Over-Year
Year Over Year Change
in nearly all markets
13-Week Basis
12.9%
• Volume affected by
hurricane impact
6.9%
•E
Emerging Markets affected
i M k t ff t d
by mix changes
• Overall 2006 outlook (5.3%)
is favorable Revenue Volume RPU
18
19. Merchandise markets recorded stronger
yields in nearly all markets
i ld i l ll kt
Fourth Quarter Revenue Per Unit
Year-Over-Year Change
Y O Y Ch
13-Week Basis
Phosphates & Fertilizers 21.7%
Metals 19.0%
Food and Consumer 18.0%
Forest Products 11.7%
Agricultural Products 11.4%
Chemicals 11.1%
Emerging Markets (0.7%)
19
20. Coal revenues increased $66 million
on stronger yield and volume
t i ld d l
Fourth Quarter
• Strong demand across
Year-Over-Year
Year Over Year Change
all markets
13-Week Basis
• Favorable pricing
environment continues 14.5%
10.9%
• Stockpiles remain below
St k il i bl
target levels 3.2%
• 2006 outlook is favorable
Revenue Volume RPU
20
21. Automotive revenues increased
$7 million on stronger yield
illi t i ld
Fourth Quarter
• Price and fuel surcharge
Year-Over-Year
Year Over Year Change
increases
13-Week Basis
7.3%
• Production impacted by
plant closures 3.2%
•O
Overall inventory near
ll i t
target levels
(3.8%)
• Overall 2006 outlook is neutral
Revenue Volume RPU
21
22. Intermodal revenues increased
$6 million on stronger yield
illi t i ld
Fourth Quarter
• Yield management
Year-Over-Year
Year Over Year Change
success continues
13-Week Basis
6.7%
• Reduction in off-core and
off-
low margin traffic
1.7%
• 2006 outlook i favorable
tl k is f bl
(4.8%)
Revenue Volume RPU
22
23. Full year Intermodal income increased 63%,
and th operating ratio improved 690 bps
d the ti ti i d b
2003-2005 Intermodal Profitability
Dollars i Milli
D ll in Millions
91.2%
$248
88.7%
88 7%
$152
$110 81.8%
81 8%
2003 2004 2005
Operating Income Operating Ratio
23
24. Looking f
L ki forward . . .
d
• Demand and growth remain strong
• Favorable pricing environment continues
• Increased emphasis on fuel surcharge coverage
• Service improvements will drive volume growth
24
26. Reported Fourth quarter earnings per share of
$1.03 i
$1 03 increased 45% year-over-year
d
Fourth Quarter Results
2005 2004 Variance
Dollars in Millions, except Earnings per Share
Surface Transportation Operating Income $ 415 $ 315 $ 100
Other Operating Income (3)
(3) 2 (5)
(5)
Consolidated Operating Income 412 317 95
Other Income 62 38 24
Interest Expense (99)
(99) (112)
(112) 13
Income Taxes (138)
(138) (84)
(84) (54)
(54)
Net Earnings from Continuing Operations $ 237 $ 159 $ 78
Earnings per Share from Continuing Operations $ 1.03 $ 0.71 $ 0.32
26
27. Surface T
Sf Transportation highlights . . .
t ti hi hli ht
• Revenue growth of 8%
Fourth Quarter – Strong yield emphasis
Surface Transportation – Expanded fuel surcharge coverage
Op Income in Millions
– Slightly lower volumes
$415
• Expenses contained to 3% increase
32%
– Increased labor costs from hiring,
$315
compensation, inflation
compensation
– Higher fuel costs, partially offset
by productivity and lower volumes
– Net favorable experience in
casualty and other related reserves
2004 2005
• Katrina reduced income by approximately
$20 million in the quarter
27
28. Surface Transportation operating income
improved 35% on a comparable basis
i d bl b i
Fourth Quarter Results
2005 Vs. 2004* % Change
g
Dollars in Millions
Revenue $ 2,219 $ 156 8%
Expense
Labor and Fringe $ 731 ($ 55)
55) (8%)
(8%)
Materials, Supplies and Other 421 38 8%
Fuel 240 (59)
(59) (33%)
(33%)
Depreciation 208 (3)
(3) (2%)
(2%)
Building and Equipment rents 132 12 8%
Inland Transportation 55 11 17%
Conrail Rents, Fees and Services
C S 17 7 29%
%
Total Expense $ 1,804 ($ 49)
49) (3%)
(3%)
Operating Income $ 415 $ 107 35%
Operating Ratio 81.3%
81.3% 3.8 pts
28
* Note: 2004 excludes the 14th accounting week
29. Fuel surcharges will help offset
the d li i h d i
th declining hedge in 2006
Percent of Total Fuel Hedged
54%
39%
25%
11%
1%
Q4 2004 Q4 2005 Q1 2006 Q2 2006 Q3 2006
Hedge Settlement Prices
$0.89 $0.94 $0.97 $0.97 $1.04
29
30. Reported full year earnings per share of $3.17
increased 70% year-over-year
i d
Full Year Results
2005 2004 Variance
Dollars in Millions, except Earnings per Share
Surface Transportation Operating Income $ 1,549 $ 993 $ 556
Other Operating Income 1 7 (6)
(6)
Consolidated Operating Income 1,550 1,000 550
Other Income 101 72 29
Debt Repurchase Expense (192)
(192) - (192)
(192)
Interest Expense (423)
(423) (435)
(435) 12
Income Taxes
co e a es (316)
(3 6
(316)
6) (219)
(9
(219)
9) (9
(97)
(97)
Net Earnings from Continuing Operations $ 720 $ 418 $ 302
Earnings per Share from Continuing Operations $ 3.17 $ 1.87 $ 1.30
30
31. On an adjusted basis, CSX achieved full year
earnings per share of $3.40
i h f $3 40
Earnings Per Share
From Continuing Operations
F C ti i O ti
$0.54
$0 54
$3.40
$3.17
($0.31)
Reported EPS Debt Repurchase Ohio Tax Legislation Adjusted EPS
31
32. Full year Surface Transportation
operating income increased 46%
ti i i d
Surface Transportation
Dollars in Milli
D ll i Millions
Full Year Results
2005 2004 * Variance
Vi
Revenue $ 8,618 $ 8,040 $ 578
Expense 7,069
7 069 6,976
6 976 (93)
(93)
Operating Income $ 1,549 1,064 $ 485
Operating Ratio 82.0% 86.8% 4.8 pts
32
* Note: 2004 excludes $71 million in restructuring charges
33. Exceeded free cash flow goals
E d df h fl l
Free Cash Flow
Dollars in Millions
Dollars in Millions 2005
$1,030
Total Free Cash Flow $ 1,030
Net Proceeds from Divestiture (
(640)
(640)
$461
$513
Net Debt Repurchase Expense 123
$406
Adjusted Free Cash Flow $ 513
2004 2005
Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004
33
34. Total leverage is well below our
long-range t
l target of 50%
tf
All-in Leverage and Debt Outstanding
Dollars in Billi
D ll i Billions
$10.7
$9.3 $9.1 $8.8
$8 8
$8.1 $8.1
65%
61% 60% 58% $6.7
56% 54%
46%
1999 2000 2001 2002 2003 2004 2005
Debt Outstanding Leverage
34
35. Capital spending will increase in 2006 to
support expansion along key corridors
t i l k id
Surface Transportation 2006 Capital Spending
Capital Spending in Millions
15%
$1,420
14%
$1,055
$960
53%
18%
Infrastructure New Capacity
2004 2005* 2006* Locomotive Cars & Other
Note: 2005 and 2006 excludes capital spending relating to Katrina
35
36. Free Cash Flow will remain strong,
even with increased capital spending
ith i d it l di
Free Cash Flow
Dollars i Milli
D ll in Millions
$1,030
$461
$513 $300+
$406
2004 2005 2006*
36
Note: 2006 includes estimated $100 million in net insurance recoveries relating to Katrina
37. Financial wrap-up . . .
Fi il
• Exceeded full year earnings and free cash flow guidance
• Achieved all-in leverage targets
all-
• Generate solid 2006 cash flows with increased investment
and fuel headwind
• Reaffirm 2006 – 2010 long-range financial targets
long-
37
39. Looking f
L ki forward . . .
d
• CSX enters 2006 stronger as execution and network take hold
• The ONE Plan is beginning to yield better service for customers
• The economy remains strong, and CSX is poised for growth
• Transportation demand will continue to drive strong yields
• CSX is building to leverage the environment for rail transportation
39
