csx Q2_2006

11

Second Quarter 2006Earnings PresentationSecond Quarter 2006Earnings Presentation

22

Forward Looking DisclosureThis 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.

33

Executive Summary

Michael WardChairman, President andChief Executive Officer

44

Second quarter overview . . .

Second QuarterEarnings Per Share

$0.73$0.96

$1.16

$1.66

Reported Comparable

2005 2006

Surface Transportation produces record results

Pricing environment remains strong

ONE Plan sustains strong momentum

Equity actions support shareholder value focus

Note: Comparable earnings per share excludes Katrina insurance recoveries and income tax benefits in2006 and debt repurchase expenses and a state income tax benefit in 2005.

55

Operations Review

Tony IngramExecutive Vice PresidentChief Operating Officer

66

Leadership, discipline and execution

Safety performance continues to improve

Operating momentum sustained

Capacity projects on schedule

SafetySafety

ProductivityProductivity

ServiceService

LeadershipLeadership

DisciplineDiscipline

ExecutionExecution

ReliablePerformance

ReliablePerformance

77

Safety performance remains strong

Rolling 12-month Averages

FRA Personal Injury

2.04 1.921.71 1.64 1.51

Q22005

Q32005

Q42005

Q12006

Q22006

FRA Train Accident

4.54 4.49 4.183.82 3.73

Q22005

Q32005

Q42005

Q12006

Q22006

13 WeekAverage

1.37

13 WeekAverage

3.29

88

On-time performance is improving


On-Time Originations

50% 50% 51%57%

65%

Q22005

Q32005

Q42005

Q12006

Q22006

On-Time Arrivals

39% 40% 40%46%

52%

Q22005

Q32005

Q42005

Q12006

Q22006

13 WeekAverage

77%

13 WeekAverage

60%

99

Asset utilization is improving


Cars-On-Line (000)

234.2 233.9 233.1230.7

227.6

Q22005

Q32005

Q42005

Q12006

Q22006

Dwell Time (hours)

29.6 29.7 29.728.9

27.7

Q22005

Q32005

Q42005

Q12006

Q22006

13 WeekAverage25.5 hrs

13 WeekAverage

223K

1010

Velocity stable through second quarter

Consistent plan execution

Improved recoverability

Increased asset utilization

Improving overall service reliability


Velocity (mph)

19.8 19.719.2 19.4 19.5

Q22005

Q32005

Q42005

Q12006

Q22006

13 WeekAverage

19.5 mph

1111

Looking forward . . .

Safety momentum will continue

Continue to build on ONE Plan success

Capacity build stays on schedule

SafetySafety

ProductivityProductivity

ServiceService

LeadershipLeadership

DisciplineDiscipline

ExecutionExecution

ReliablePerformance

ReliablePerformance

1212

Sales and Marketing Review

Clarence GoodenExecutive Vice PresidentSales and Marketing

1313

Revenues increased 12%

Record revenues of $2.4 billion, up $255 million

Revenue growth across all markets

Overall volumes were flat

Yield environment remains strong

Second QuarterRevenue in Millions

2005 2006

$2,166

$2,421

1414

Revenue per unit increased 12%

Second Quarter Revenue Per Unit2006 versus 2005

6%

7%

7%

16%

12%

Automotive

Intermodal

Coal

Merchandise

Surface Transportation

1515

Pricing remains strong

Impact of prior Phosphate plant closures continue

Agricultural Products growth strong

Outlook favorable

Second Quarter2006 versus 2005

14%

(2%)

16%

Revenue Volume RPU

Merchandise revenue increased 14%

1616

Merchandise volume growth was mixed

Second Quarter Volume2006 versus 2005

10%

6%

3%

0%

(1%)

(9%)

(20%)

Agriculture

Emerging Markets

Metals

Food and Consumer

Chemicals

Forest Products

Phosphates & Fertilizers

1717

Coal revenue increased 10%

Utility demand strong

Inventories are at target levels

Pricing strength continues

Outlook favorable


10%

2%

7%

Revenue Volume RPU

1818

Automotive revenue increased 6%

Volume was stable

‘New Domestics’ continue to gain market share

Increasing price and fuel surcharge coverage

Outlook unfavorable


6%

0%

6%

Revenue Volume RPU

1919

Intermodal revenue increased 8%

Volume slightly favorable— Core business grows— Off-core declines

Pricing strength continues

Income improvement for nine quarters

Outlook favorable


8%

1%

7%

Revenue Volume RPU

2020

Foundation for Intermodal growth in place

On-Time performance continues to improve

Train capacity supports growth in key lanes

Attracting new business

Expect strong second half volume growth

Trucking capacity expected to remain tight

Intermodal Terminals

Priority Intermodal Corridors

Miami

New Orleans

New YorkChicago

Portsmouth

Savannah

Charleston

BaltimorePhiladelphia

St Louis

MemphisCharlotte

Mobile

Nashville

Atlanta

Detroit

Jacksonville

Tampa

BuffaloSyracuse

Cleveland

ColumbiaCincinnati

Evansville

Boston

2121


Manufacturing, imports and exports drive demand

Service improvements will support growth

Favorable pricing environment continues

We remain focused on improving profitability

Economic Forecast2006-2008

2.8%2.6%

3.1%

2.1%2.3%2.4%

2nd Half2006

2007 2008

GDP IDP

Source: Global Insight

2222

Financial Results

Oscar MunozExecutive Vice PresidentChief Financial Officer

2323

CSX reports strong second quarter results

$ 225$ 165$ 390Net Earnings

$ 0.93$ 0.73$ 1.66Earnings Per Share

)

)

(1919212

(175

))

30(192(110

6))

11-

(98(169

Other Income (net)Debt repurchase ExpenseInterest ExpenseIncome Taxes

$ 215$ 431$ 646Consolidated Operating Income

)(891Other Operating Income

$ 223$ 422$ 645Surface Transportation Operating Income

Variance20052006Dollars in millions, except EPS

Second Quarter Results

2424

Comparable EPS increased 21%

))

(0.33(0.540.14)

-0.54

(0.31

)

)

(0.33-

(0.17

Less Gain on Insurance RecoveriesPlus Debt Repurchase ExpenseLess Income Tax Benefit

$ 0.20$ 0.96$ 1.16Comparable Earnings Per Share

$ 0.93$ 0.73$ 1.66Earnings Per Share

$ 97$ 422$ 519Comparable Operating Income

)(126-)(126Less Gain on Insurance Recoveries

$ 223$ 422$ 645Surface Transportation Operating Income

Variance20052006Dollars in millions, except EPS


2525

Surface Transportation increased 23%

23%$ 422 $ 519Operating Income

1.9 pts80.5%78.6%Operating Ratio

)(9%1,7441,902Operating Expenses

))))

)

12%

(1%(6%(6%

(64%4%0%

(11%

$ 2,166

7064412031761376219

$ 2,421

7154682162881326221

RevenueExpenses

Labor and FringeMaterials, Supplies and OtherDepreciationFuelBuilding and Equipment RentInland TransportationConrail Rents, Fees and Services

Variance20052006Dollars in millions


Note: 2006 results exclude Katrina-related gain on insurance recoveries

2626

Labor and fringe increased 1%

Second QuarterDollars in Millions

$715$706

$9

2005 Variance 2006

Primarily driven by wage and benefit inflation

Includes almost 800 new T&E employees

Partially offset by lower incentive compensation and productivity

2727

MS&O increased 6%


$468

$441

$27

2005 Variance 2006

Increase primarily driven by inflation

Cycling a prior year supplier credit

Productivity gains from improved operations partially offset increase:— Increased locomotive

utilization— Reduced train accidents

and related costs

2828

Fuel increased 64%


$288

$176

$112

2005 Variance 2006

Primarily driven by higher fuel prices

Impact of lower hedge position was $44 million

Slightly higher volume-related costs offset by focus on fuel economy

2929

Fuel hedges continue to decline

Hedge BenefitDollars in Millions

$51

$63

$77

$58

$35

$19

$1

Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006

* Estimates based on $75 per barrel WTI

*

3030

Rents declined 4%


$132$137 $5

2005 Variance 2006

Asset utilization continues to improve

Lower equipment costs are driven by:— Improved cycle time— Fewer cars-on-line

3131

All other expenses increased 5%


$203 $216

$62$62

$19$21

$15

2005 Variance 2006

$284 $299

Depreciation Inland Transportation Conrail Fees

3232


Record first half operating income included:— $126 million gain on insurance recoveries— $54 million fuel hedge benefit— $25 million favorable impact of mild winter

On track to deliver $300+ million Free Cash Flow with $1.4 billion in capital spending

Momentum will continue; poised for growth

3333

Equity actions reflect strong fundamentals

Stock splits two for one— Record date and effective date in August

Dividend increases 54% to $0.10 per share — Effective with the September distribution

Share repurchase program of $500 million— Targeting a 12-month completion timeline

3434

Concluding Remarks

Michael WardChairman, President andChief Executive Officer

3535


Momentum on core strategies continues

Team delivering consistent, strong results

Foundation in place for the long-term

Transportation environment remains strong

RevenueRevenueImpactImpact

OperationalOperationalDisciplineDiscipline

PerformancePerformanceCultureCulture

3636

Second Quarter 2006Earnings PresentationSecond Quarter 2006Earnings Presentation

Economy & Finance

csx Q2_2006