csx Q4_2005
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Transcript of csx Q4_2005
CSX CorporationCSX CorporationCSX Corporation
Fourth-Quarter 2005 Earnings
CSX Corporation
Fourth-Quarter 2005 EarningsgJanuary 24, 2006
gJanuary 24, 2006
F d L ki Di l St t tF d L ki Di l St t tForward Looking Disclosure StatementForward Looking Disclosure StatementThis presentation and other statements by the Company contain forward-looking statements within themeaning of the Private Securities Litigation Reform Act with respect to, among other items: projectionsand estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of
This presentation and other statements by the Company contain forward-looking statements within themeaning of the Private Securities Litigation Reform Act with respect to, among other items: projectionsand estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements ofand estimates of earnings, revenues, cost savings, expenses, or other financial items; statements ofmanagement’s plans, strategies and objectives for future operation, and management’s expectations asto future performance and operations and the time by which objectives will be achieved; statementsconcerning proposed new products and services; and statements regarding future economic, industry ormarket conditions or performance. Forward-looking statements are typically identified by words or
h h “b li ” “ t ” “ ti i t ” “ j t ” d i il i F d l ki
and estimates of earnings, revenues, cost savings, expenses, or other financial items; statements ofmanagement’s plans, strategies and objectives for future operation, and management’s expectations asto future performance and operations and the time by which objectives will be achieved; statementsconcerning proposed new products and services; and statements regarding future economic, industry ormarket conditions or performance. Forward-looking statements are typically identified by words or
h h “b li ” “ t ” “ ti i t ” “ j t ” d i il i F d l kiphrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward-lookingstatements speak only as of the date they are made, and the Company undertakes no obligation toupdate or revise any forward-looking statement. If the Company does update any forward-lookingstatement, no inference should be drawn that the Company will make additional updates with respect tothat statement or any other forward-looking statements
phrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward-lookingstatements speak only as of the date they are made, and the Company undertakes no obligation toupdate or revise any forward-looking statement. If the Company does update any forward-lookingstatement, no inference should be drawn that the Company will make additional updates with respect tothat statement or any other forward-looking statementsthat statement or any other forward looking statements.Forward-looking statements are subject to a number of risks and uncertainties, and actual performanceor results could differ materially from that anticipated by these forward-looking statements. Factors thatmay cause actual results to differ materially from those contemplated by these forward-lookingstatements include among others: (i) the Company’s success in implementing its financial and
that statement or any other forward looking statements.Forward-looking statements are subject to a number of risks and uncertainties, and actual performanceor results could differ materially from that anticipated by these forward-looking statements. Factors thatmay cause actual results to differ materially from those contemplated by these forward-lookingstatements include among others: (i) the Company’s success in implementing its financial andstatements include, among others: (i) the Company s success in implementing its financial andoperational 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 risksassociated with safety and security; and (v) the outcome of claims and litigation involving or affecting the
statements include, among others: (i) the Company s success in implementing its financial andoperational 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 risksassociated with safety and security; and (v) the outcome of claims and litigation involving or affecting the
2222
Company. Other important assumptions and factors that could cause actual results to differ materiallyfrom those in the forward-looking statements are specified in the Company’s SEC reports, accessible onthe SEC’s website at www.sec.gov and the Company’s website at www.csx.com.
Company. Other important assumptions and factors that could cause actual results to differ materiallyfrom those in the forward-looking statements are specified in the Company’s SEC reports, accessible onthe SEC’s website at www.sec.gov and the Company’s website at www.csx.com.
Michael WardMichael WardMichael WardMichael WardMichael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer
Michael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer
F th t iF th t iFourth quarter overview . . .Fourth quarter overview . . .Fourth Quarter
Earnings Per Share•• New Orleans line reopenedNew Orleans line reopened•• New Orleans line reopenedNew Orleans line reopened
Earnings Per Share
$1.03•• Expansion plans on targetExpansion plans on target•• Expansion plans on targetExpansion plans on target
$0.71 •• Surface Transportation recordSurface Transportation record•• Surface Transportation recordSurface Transportation record45%45%45%45%
•• Pricing environment is strongPricing environment is strong
O ti i iO ti i i
•• Pricing environment is strongPricing environment is strong
O ti i iO ti i i
2004 2005
•• Operations are improvingOperations are improving•• Operations are improvingOperations are improving
4444
Tony IngramTony IngramTony IngramTony IngramTony IngramTony IngramExecutive Vice PresidentExecutive Vice PresidentChief Operating OfficerChief Operating Officer
Tony IngramTony IngramExecutive Vice PresidentExecutive Vice PresidentChief Operating OfficerChief Operating Officer
Performance reflects progress ll j i iti ti
Performance reflects progress ll j i iti tion all major initiativeson all major initiatives
•• Safety momentum is strongSafety momentum is strong•• Safety momentum is strongSafety momentum is strong
•• ONE Plan is gaining tractionONE Plan is gaining traction•• ONE Plan is gaining tractionONE Plan is gaining traction ReliablePerformance
•• New Orleans line restoredNew Orleans line restored•• New Orleans line restoredNew Orleans line restoredProductivityProductivity
ServiceService
DisciplineDiscipline
ExecutionExecution
•• Capacity projects are underwayCapacity projects are underway•• Capacity projects are underwayCapacity projects are underway SafetySafety
yy
LeadershipLeadership
sc p esc p e
6666
M t i f t f tiM t i f t f tiMomentum in safety performance continuesMomentum in safety performance continuesFRA Train Accident
Rolling 12 Month AverageFRA Personal Injury
Rolling 12 Month Average Rolling 12-Month AverageAccidents / MM Train Miles
Rolling 12-Month AverageInjuries / 200,000 Man Hours
4.79 4.724.43 4.32
3 99
2.292.13 2.04
1.911.71 3.99
Q42004
Q12005
Q22005
Q32005
Q42005
Q42004
Q12005
Q22005
Q32005
Q42005
7777
ONE Plan is gaining traction; ti f i i
ONE Plan is gaining traction; ti f i ion-time performance improvingon-time performance improving
On-Time OriginationsRolling 12 Month Average
On-Time ArrivalsRolling 12 Month AverageRolling 12-Month Average
51 1%
Rolling 12-Month Average
40 9%
49.0%48.2%
50.3% 50.3%51.1% 40.9%
38.4% 38.9% 39.6% 40.1%
Q42004
Q12005
Q22005
Q32005
Q42005
Q42004
Q12005
Q22005
Q32005
Q42005
8888
D ll ti d li i t blD ll ti d li i t blDwell time and cars-on-line remain stableDwell time and cars-on-line remain stableDwell Time (Hours)
Rolling 12 Month AverageCars-On-Line
Rolling 12 Month AverageRolling 12-Month Average Rolling 12-Month Average
28.7 29.3 29.6 29.7 29.7
233,271 233 118
233,876
234,165
234,132
233,271 233,118
Q42004
Q12005
Q22005
Q32005
Q42005
Q42004
Q12005
Q22005
Q32005
Q42005
9999
System velocity expected to improve ith N O l li t d
System velocity expected to improve ith N O l li t dwith New Orleans line restoredwith New Orleans line restored
Velocity (MPH)Rolling 12 Month AverageRolling 12-Month Average
New YorkNew YorkNew YorkNew YorkChicagoChicagoChicagoChicago
19.9 19.8 19.719.2
20.3New YorkNew YorkNew YorkNew York
NashvilleNashvilleNashvilleNashville
JacksonvilleJacksonvilleJacksonvilleJacksonville
AtlantaAtlantaAtlantaAtlantaMemphisMemphisMemphisMemphis
BirminghamBirminghamBirminghamBirminghamMontgomeryMontgomeryMontgomeryMontgomery
NashvilleNashvilleNashvilleNashville
Q42004
Q12005
Q22005
Q32005
Q42005
JacksonvilleJacksonvilleJacksonvilleJacksonville
MiamiMiamiMiamiMiami
New OrleansNew OrleansNew OrleansNew Orleans
10101010YearYear--OverOver--Year Decline in VelocityYear Decline in VelocityYearYear--OverOver--Year Decline in VelocityYear Decline in Velocity 5% 5% -- 10%10%5% 5% -- 10%10% 10% 10% -- 20%20%10% 10% -- 20%20% GT 20%GT 20%GT 20%GT 20%
E i l t tE i l t tExpansion plans are on targetExpansion plans are on target•• TwoTwo--year investment year investment •• TwoTwo--year investment year investment
program is underwayprogram is underway
•• HighHigh--impact projects are impact projects are
program is underwayprogram is underway
•• HighHigh--impact projects are impact projects are New YorkNew YorkNew YorkNew YorkChicagoChicagoChicagoChicago HighHigh--impact projects are impact projects are targeted for 2006targeted for 2006
C t ti b i C t ti b i
HighHigh--impact projects are impact projects are targeted for 2006targeted for 2006
C t ti b i C t ti b i
New YorkNew YorkNew YorkNew York
NashvilleNashvilleNashvilleNashville •• Construction began in Construction began in fourth quarter 2005fourth quarter 2005
•• Construction began in Construction began in fourth quarter 2005fourth quarter 2005
JacksonvilleJacksonvilleJacksonvilleJacksonville
MemphisMemphisMemphisMemphisBirminghamBirminghamBirminghamBirmingham
NashvilleNashvilleNashvilleNashvilleAtlantaAtlantaAtlantaAtlanta
•• Progressing on scheduleProgressing on schedule•• Progressing on scheduleProgressing on scheduleJacksonvilleJacksonvilleJacksonvilleJacksonville
MiamiMiamiMiamiMiami
New OrleansNew OrleansNew OrleansNew Orleans
11111111
L ki f dL ki f dLooking forward . . .Looking forward . . .•• Safety momentum will continueSafety momentum will continue•• Safety momentum will continueSafety momentum will continue
•• ONE Plan is gaining tractionONE Plan is gaining traction•• ONE Plan is gaining tractionONE Plan is gaining traction ReliablePerformance
•• Staffing will stay ahead of attritionStaffing will stay ahead of attrition•• Staffing will stay ahead of attritionStaffing will stay ahead of attritionProductivityProductivity
ServiceService
DisciplineDiscipline
ExecutionExecution
•• Capacity projects on scheduleCapacity projects on schedule•• Capacity projects on scheduleCapacity projects on schedule SafetySafety
yy
LeadershipLeadership
sc p esc p e
12121212
Clarence GoodenClarence GoodenClarence GoodenClarence GoodenClarence GoodenClarence GoodenExecutive Vice PresidentExecutive Vice PresidentChief Commercial OfficerChief Commercial Officer
Clarence GoodenClarence GoodenExecutive Vice PresidentExecutive Vice PresidentChief Commercial OfficerChief Commercial Officer
Economic outlook remains strongEconomic outlook remains strongEconomic outlook remains strongEconomic outlook remains strong•• GDP and IDP remain strongGDP and IDP remain strong•• GDP and IDP remain strongGDP and IDP remain strong Transportation Services Index
•• Manufacturing still growingManufacturing still growing•• Manufacturing still growingManufacturing still growingIndexed: 2000 = 100
110
120
•• Continued strength in imports Continued strength in imports and exportsand exports
•• Continued strength in imports Continued strength in imports and exportsand exports 90
100
110
•• Transportation demand still Transportation demand still near record levelsnear record levels
•• Transportation demand still Transportation demand still near record levelsnear record levels 70
80
90
near record levelsnear record levelsnear record levelsnear record levels60
1990 1993 1996 1999 2002 2005
14141414
Source: Bureau of Transportation StatisticsSource: Bureau of Transportation Statistics
Revenues increased $156 million inth f th t bl b iRevenues increased $156 million inth f th t bl b ithe fourth quarter on a comparable basisthe fourth quarter on a comparable basis
Fourth QuarterR 13 W k B iRevenue on 13-Week Basis
Dollars in Millions$2,219$66 $20
$2,063
$2,219$70
$66 $20
2004 Merchandise Coal All Other 2005
15151515Note: 2004 Revenue excludes $117 million from the 14Note: 2004 Revenue excludes $117 million from the 14thth accounting weekaccounting weekNote: 2004 Revenue excludes $117 million from the 14Note: 2004 Revenue excludes $117 million from the 14thth accounting weekaccounting week
Average revenue per unit increased11% i th f th t
Average revenue per unit increased11% i th f th tover 11% in the fourth quarterover 11% in the fourth quarter
Fourth Quarter Revenue Per UnitY O Y ChYear-Over-Year Change
13-Week Basis
12.9%
11.0%
Merchandise
Surface Transportation
7 3%
10.9%
Automotive
Coal
6.7%
7.3%
Intermodal
Automotive
16161616
Fuel surcharge program continuest h l ff t hi h f l iFuel surcharge program continuest h l ff t hi h f l ito help offset higher fuel pricesto help offset higher fuel prices
Fuel Surcharge Program
20%
24%
$60
$70
12%
16%
$40
$50
4%
8%
$20
$30
4%Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05
$20
Surcharge (% of Revenue) Average West Texas Intermediate
17171717
Merchandise revenues increased$70 illi t i ldMerchandise revenues increased$70 illi t i ld$70 million on stronger yield$70 million on stronger yield•• Revenue and yield gains Revenue and yield gains •• Revenue and yield gains Revenue and yield gains Fourth Quarter
Year Over Year Changein nearly all marketsin nearly all markets
•• Volume affected by Volume affected by
in nearly all marketsin nearly all markets
•• Volume affected by Volume affected by
Year-Over-Year Change13-Week Basis
12.9%Volume affected by Volume affected by hurricane impacthurricane impact
E i M k t ff t d E i M k t ff t d
Volume affected by Volume affected by hurricane impacthurricane impact
E i M k t ff t d E i M k t ff t d
6.9%
•• Emerging Markets affected Emerging Markets affected by mix changesby mix changes
•• Emerging Markets affected Emerging Markets affected by mix changesby mix changes
•• Overall 2006 outlook Overall 2006 outlook is favorableis favorable
•• Overall 2006 outlook Overall 2006 outlook is favorableis favorable
(5.3%)Revenue Volume RPU
18181818
Merchandise markets recorded strongeri ld i l ll k t
Merchandise markets recorded strongeri ld i l ll k tyields in nearly all marketsyields in nearly all markets
Fourth Quarter Revenue Per UnitY O Y ChYear-Over-Year Change
13-Week Basis
19.0%
21.7%
Metals
Phosphates & Fertilizers
11.7%
18.0%
Forest Products
Food and Consumer
11.1%
11.4%
Chemicals
Agricultural Products
19191919
(0.7%)Emerging Markets
Coal revenues increased $66 million t i ld d l
Coal revenues increased $66 million t i ld d lon stronger yield and volumeon stronger yield and volume
•• Strong demand across Strong demand across •• Strong demand across Strong demand across Fourth QuarterYear Over Year Changeall marketsall markets
•• Favorable pricing Favorable pricing
all marketsall markets
•• Favorable pricing Favorable pricing
Year-Over-Year Change13-Week Basis
Favorable pricing Favorable pricing environment continuesenvironment continues
St k il i b l St k il i b l
Favorable pricing Favorable pricing environment continuesenvironment continues
St k il i b l St k il i b l
14.5%
10.9%
•• Stockpiles remain below Stockpiles remain below target levelstarget levels
•• Stockpiles remain below Stockpiles remain below target levelstarget levels 3.2%
•• 2006 outlook is favorable2006 outlook is favorable•• 2006 outlook is favorable2006 outlook is favorableRevenue Volume RPU
20202020
Automotive revenues increased $7 illi t i ldAutomotive revenues increased $7 illi t i ld$7 million on stronger yield$7 million on stronger yield•• Price and fuel surcharge Price and fuel surcharge •• Price and fuel surcharge Price and fuel surcharge Fourth Quarter
Year Over Year Changeincreasesincreases
•• Production impacted by Production impacted by
increasesincreases
•• Production impacted by Production impacted by
Year-Over-Year Change13-Week Basis
7.3%Production impacted by Production impacted by plant closuresplant closures
O ll i t O ll i t
Production impacted by Production impacted by plant closuresplant closures
O ll i t O ll i t
3.2%
•• Overall inventory near Overall inventory near target levelstarget levels
•• Overall inventory near Overall inventory near target levelstarget levels
•• Overall 2006 outlook is neutralOverall 2006 outlook is neutral•• Overall 2006 outlook is neutralOverall 2006 outlook is neutral (3.8%)
Revenue Volume RPU
21212121
Intermodal revenues increased$6 illi t i ldIntermodal revenues increased$6 illi t i ld$6 million on stronger yield$6 million on stronger yield•• Yield management Yield management •• Yield management Yield management Fourth Quarter
Year Over Year Changesuccess continuessuccess continues
•• Reduction in offReduction in off--core and core and
success continuessuccess continues
•• Reduction in offReduction in off--core and core and
Year-Over-Year Change13-Week Basis
6.7%Reduction in offReduction in off--core and core and low margin trafficlow margin traffic
2006 tl k i f bl2006 tl k i f bl
Reduction in offReduction in off--core and core and low margin trafficlow margin traffic
2006 tl k i f bl2006 tl k i f bl1.7%
•• 2006 outlook is favorable2006 outlook is favorable•• 2006 outlook is favorable2006 outlook is favorable
(4.8%)Revenue Volume RPU
22222222
Full year Intermodal income increased 63%, d th ti ti i d 690 b
Full year Intermodal income increased 63%, d th ti ti i d 690 band the operating ratio improved 690 bpsand the operating ratio improved 690 bps
2003-2005 Intermodal ProfitabilityD ll i MilliDollars in Millions
$24891.2%
88 7%
$152$110
88.7%
81 8%81.8%
2003 2004 2005
Operating Income Operating Ratio
23232323
L ki f dL ki f dLooking forward . . .Looking forward . . .•• Demand and growth remain strongDemand and growth remain strong•• Demand and growth remain strongDemand and growth remain strong
•• Favorable pricing environment continuesFavorable pricing environment continues•• Favorable pricing environment continuesFavorable pricing environment continues
•• Increased emphasis on fuel surcharge coverageIncreased emphasis on fuel surcharge coverage•• Increased emphasis on fuel surcharge coverageIncreased emphasis on fuel surcharge coverage
•• Service improvements will drive volume growthService improvements will drive volume growth•• Service improvements will drive volume growthService improvements will drive volume growth
24242424
Oscar MunozOscar MunozOscar MunozOscar MunozOscar MunozOscar MunozExecutive Vice PresidentExecutive Vice President
Chief Financial OfficerChief Financial Officer
Oscar MunozOscar MunozExecutive Vice PresidentExecutive Vice President
Chief Financial OfficerChief Financial Officer
Reported Fourth quarter earnings per share of $1 03 i d 45%Reported Fourth quarter earnings per share of $1 03 i d 45%$1.03 increased 45% year-over-year$1.03 increased 45% year-over-year
Fourth Quarter ResultsFourth Quarter Results
Dollars in Millions, except Earnings per ShareDollars in Millions, except Earnings per Share 20052005 20042004 VarianceVariance
Surface Transportation Operating IncomeSurface Transportation Operating Income $ 415 $ 415 $ 315$ 315 $ 100$ 100Other Operating IncomeOther Operating Income (3(3)) 22 (5(5))Other Operating IncomeOther Operating Income (3(3)) 22 (5(5))
Consolidated Operating IncomeConsolidated Operating Income 412 412 317317 9595
Other IncomeOther Income 6262 3838 2424Other IncomeOther Income 6262 3838 2424Interest ExpenseInterest Expense (99(99)) (112(112)) 1313Income TaxesIncome Taxes (138(138)) (84(84)) (54(54))
Net Earnings from Continuing OperationsNet Earnings from Continuing Operations $ 237$ 237 $ 159$ 159 $ 78$ 78
Earnings per Share from Continuing OperationsEarnings per Share from Continuing Operations $ 1.03$ 1.03 $ 0.71$ 0.71 $ 0.32$ 0.32
26262626
S f T t ti hi hli htS f T t ti hi hli htSurface Transportation highlights . . .Surface Transportation highlights . . .
Fourth Quarter •• Revenue growth of 8%Revenue growth of 8%
Strong yield emphasisStrong yield emphasis•• Revenue growth of 8%Revenue growth of 8%
Strong yield emphasisStrong yield emphasisFourth Quarter Surface TransportationOp Income in Millions
–– Strong yield emphasisStrong yield emphasis–– Expanded fuel surcharge coverageExpanded fuel surcharge coverage–– Slightly lower volumesSlightly lower volumes
–– Strong yield emphasisStrong yield emphasis–– Expanded fuel surcharge coverageExpanded fuel surcharge coverage–– Slightly lower volumesSlightly lower volumes
$315
$415
32%32%32%32%•• Expenses contained to 3% increaseExpenses contained to 3% increase
–– Increased labor costs from hiring, Increased labor costs from hiring, compensation inflationcompensation inflation
•• Expenses contained to 3% increaseExpenses contained to 3% increase–– Increased labor costs from hiring, Increased labor costs from hiring,
compensation inflationcompensation inflationcompensation, inflationcompensation, inflation–– Higher fuel costs, partially offset Higher fuel costs, partially offset
by productivity and lower volumesby productivity and lower volumesNet favorable experience in Net favorable experience in
compensation, inflationcompensation, inflation–– Higher fuel costs, partially offset Higher fuel costs, partially offset
by productivity and lower volumesby productivity and lower volumesNet favorable experience in Net favorable experience in
2004 2005
–– Net favorable experience in Net favorable experience in casualty and other related reservescasualty and other related reserves
•• Katrina reduced income by approximately Katrina reduced income by approximately
–– Net favorable experience in Net favorable experience in casualty and other related reservescasualty and other related reserves
•• Katrina reduced income by approximately Katrina reduced income by approximately
27272727
Katrina reduced income by approximately Katrina reduced income by approximately $20 million in the quarter$20 million in the quarterKatrina reduced income by approximately Katrina reduced income by approximately $20 million in the quarter$20 million in the quarter
Surface Transportation operating income i d 35% bl b iSurface Transportation operating income i d 35% bl b iimproved 35% on a comparable basisimproved 35% on a comparable basis
Fourth Quarter Results Fourth Quarter Results Dollars in MillionsDollars in Millions 20052005 Vs. 2004*Vs. 2004* % Change% Changegg
RevenueRevenue $ 2,219 $ 2,219 $ 156$ 156 8%8%ExpenseExpense
Labor and FringeLabor and Fringe $ 731 $ 731 ($ 55($ 55)) (8%(8%))Labor and FringeLabor and Fringe $ 731 $ 731 ($ 55($ 55)) (8%(8%))Materials, Supplies and OtherMaterials, Supplies and Other 421421 3838 8%8%FuelFuel 240240 (59(59)) (33%(33%))DepreciationDepreciation 208208 (3(3)) (2%(2%))DepreciationDepreciation 208208 (3(3)) (2%(2%))Building and Equipment rentsBuilding and Equipment rents 132132 1212 8%8%Inland TransportationInland Transportation 5555 1111 17%17%C SC S %%Conrail Rents, Fees and ServicesConrail Rents, Fees and Services 1717 77 29%29%Total ExpenseTotal Expense $ 1,804$ 1,804 ($ 49($ 49)) (3%(3%))
Operating IncomeOperating Income $ 415 $ 415 $ 107$ 107 35%35%
28282828* Note: 2004 excludes the 14* Note: 2004 excludes the 14thth accounting weekaccounting week* Note: 2004 excludes the 14* Note: 2004 excludes the 14thth accounting weekaccounting week
Operating RatioOperating Ratio 81.381.3%% 3.83.8 ptspts
Fuel surcharges will help offsetth d li i h d i 2006Fuel surcharges will help offsetth d li i h d i 2006the declining hedge in 2006the declining hedge in 2006
Percent of Total Fuel Hedged
54%
39%39%
25%
11%
1%
Q4 2004 Q4 2005 Q1 2006 Q2 2006 Q3 2006
Hedge Settlement PricesHedge Settlement PricesHedge Settlement PricesHedge Settlement Prices
29292929
$0.94$0.94$0.94$0.94 $0.97$0.97$0.97$0.97 $0.97$0.97$0.97$0.97 $1.04$1.04$1.04$1.04$0.89$0.89$0.89$0.89
Reported full year earnings per share of $3.17 i d 70%Reported full year earnings per share of $3.17 i d 70%increased 70% year-over-yearincreased 70% year-over-year
Full Year ResultsFull Year Results
Dollars in Millions, except Earnings per ShareDollars in Millions, except Earnings per Share 20052005 20042004 VarianceVariance
Surface Transportation Operating IncomeSurface Transportation Operating Income $ 1,549 $ 1,549 $ 993$ 993 $ 556$ 556Other Operating IncomeOther Operating Income 11 77 (6(6))Other Operating IncomeOther Operating Income 11 77 (6(6))
Consolidated Operating IncomeConsolidated Operating Income 1,550 1,550 1,0001,000 550550
Other IncomeOther Income 101101 7272 2929Debt Repurchase ExpenseDebt Repurchase Expense (192(192)) -- (192(192))Interest ExpenseInterest Expense (423(423)) (435(435)) 1212Income TaxesIncome Taxes (316(316)) (219(219)) (97(97))co e a esco e a es (3 6(3 6)) ( 9( 9)) (9(9 ))
Net Earnings from Continuing OperationsNet Earnings from Continuing Operations $ 720 $ 720 $ 418$ 418 $ 302$ 302
30303030
Earnings per Share from Continuing OperationsEarnings per Share from Continuing Operations $ 3.17$ 3.17 $ 1.87$ 1.87 $ 1.30$ 1.30
On an adjusted basis, CSX achieved full year i h f $3 40
On an adjusted basis, CSX achieved full year i h f $3 40earnings per share of $3.40earnings per share of $3.40
Earnings Per Share F C ti i O tiFrom Continuing Operations
$0 54
$3.17$3.40
$0.54
($0.31)($0.31)($0.31)($0.31)
Reported EPS Debt Repurchase Ohio Tax Legislation Adjusted EPS
31313131
Reported EPS Debt Repurchase Ohio Tax Legislation Adjusted EPS
Full year Surface Transportationti i i d 46%
Full year Surface Transportationti i i d 46%operating income increased 46%operating income increased 46%
Surface TransportationSurface TransportationD ll i MilliD ll i Milli
Surface TransportationSurface TransportationD ll i MilliD ll i Milli
Full Year ResultsFull Year Results20052005 2004 *2004 * V iV i
Dollars in MillionsDollars in MillionsDollars in MillionsDollars in Millions
20052005 2004 *2004 * VarianceVariance
RevenueRevenue $ 8,618 $ 8,618 $ 8,040$ 8,040 $ 578$ 578ExpenseExpense 7 0697 069 6 9766 976 (93(93))ExpenseExpense 7,0697,069 6,9766,976 (93(93))
Operating IncomeOperating Income $ 1,549 $ 1,549 1,0641,064 $ 485$ 485
Operating RatioOperating Ratio 82.0% 82.0% 86.8%86.8% 4.84.8 ptspts
32323232* Note: 2004 excludes $71 million in restructuring charges * Note: 2004 excludes $71 million in restructuring charges * Note: 2004 excludes $71 million in restructuring charges * Note: 2004 excludes $71 million in restructuring charges
E d d f h fl lE d d f h fl lExceeded free cash flow goalsExceeded free cash flow goalsFree Cash Flow
Dollars in MillionsDollars in Millions
$1,030$1,030Dollars in MillionsDollars in Millions 20052005
Total Free Cash FlowTotal Free Cash Flow
Net Proceeds from DivestitureNet Proceeds from Divestiture
$ 1,030$ 1,030
(640(640))
$406$513
$461$461
Net Debt Repurchase ExpenseNet Debt Repurchase Expense
((
123123
))
2004 2005
Adjusted Free Cash FlowAdjusted Free Cash Flow $ 513$ 513
33333333Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004Note: Includes CSX’s share of Conrail free cash flow of $103M in 2005 and $115M in 2004
Total leverage is well below our l t t f 50%Total leverage is well below our l t t f 50%long-range target of 50%long-range target of 50%
All-in Leverage and Debt OutstandingD ll i BilliDollars in Billions
$10.7
$9.3 $9.1 $8 8$8.8$8.1 $8.1
$6.765%
61% 60% 58% 56% 54%
46%
1999 2000 2001 2002 2003 2004 2005
Debt Outstanding Leverage
34343434
Capital spending will increase in 2006 to t i l k id
Capital spending will increase in 2006 to t i l k idsupport expansion along key corridorssupport expansion along key corridors
Surface TransportationCapital Spending in Millions
2006 Capital SpendingCapital Spending in Millions
$1,420 15%
$960$1,055
53%
14%
18%
2004 2005* 2006*
InfrastructureInfrastructureInfrastructureInfrastructure New CapacityNew CapacityNew CapacityNew Capacity
LocomotiveLocomotiveLocomotiveLocomotive Cars & OtherCars & OtherCars & OtherCars & Other
35353535Note: 2005 and 2006 excludes capital spending relating to KatrinaNote: 2005 and 2006 excludes capital spending relating to KatrinaNote: 2005 and 2006 excludes capital spending relating to KatrinaNote: 2005 and 2006 excludes capital spending relating to Katrina
Free Cash Flow will remain strong, ith i d it l di
Free Cash Flow will remain strong, ith i d it l dieven with increased capital spendingeven with increased capital spending
Free Cash FlowD ll i MilliDollars in Millions
$1,030$1,030
$513$406
$300+
$461$461
2004 2005 2006*
36363636Note: 2006 includes estimated $100 million in net insurance recoveries relating to KatrinaNote: 2006 includes estimated $100 million in net insurance recoveries relating to KatrinaNote: 2006 includes estimated $100 million in net insurance recoveries relating to KatrinaNote: 2006 includes estimated $100 million in net insurance recoveries relating to Katrina
Fi i lFi i lFinancial wrap-up . . .Financial wrap-up . . .•• Exceeded full year earnings and free cash flow guidanceExceeded full year earnings and free cash flow guidance•• Exceeded full year earnings and free cash flow guidanceExceeded full year earnings and free cash flow guidance
•• Achieved allAchieved all--in leverage targetsin leverage targets•• Achieved allAchieved all--in leverage targetsin leverage targets
•• Generate solid 2006 cash flows with increased investment Generate solid 2006 cash flows with increased investment and fuel headwindand fuel headwind
•• Generate solid 2006 cash flows with increased investment Generate solid 2006 cash flows with increased investment and fuel headwindand fuel headwindand fuel headwindand fuel headwind
•• Reaffirm 2006 Reaffirm 2006 –– 2010 long2010 long--range financial targetsrange financial targets
and fuel headwindand fuel headwind
•• Reaffirm 2006 Reaffirm 2006 –– 2010 long2010 long--range financial targetsrange financial targets
37373737
Michael WardMichael WardMichael WardMichael WardMichael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer
Michael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer
L ki f dL ki f dLooking forward . . .Looking forward . . .•• CSX enters 2006 stronger as execution and network take holdCSX enters 2006 stronger as execution and network take hold•• CSX enters 2006 stronger as execution and network take holdCSX enters 2006 stronger as execution and network take hold
•• The ONE Plan is beginning to yield better service for customersThe ONE Plan is beginning to yield better service for customers•• The ONE Plan is beginning to yield better service for customersThe ONE Plan is beginning to yield better service for customers
•• The economy remains strong, and CSX is poised for growthThe economy remains strong, and CSX is poised for growth•• The economy remains strong, and CSX is poised for growthThe economy remains strong, and CSX is poised for growth
•• Transportation demand will continue to drive strong yieldsTransportation demand will continue to drive strong yields•• Transportation demand will continue to drive strong yieldsTransportation demand will continue to drive strong yields
•• CSX is building to leverage the environment for rail transportationCSX is building to leverage the environment for rail transportation•• CSX is building to leverage the environment for rail transportationCSX is building to leverage the environment for rail transportation
39393939
CSX CorporationCSX CorporationCSX Corporation
Fourth-Quarter 2005 Earnings
CSX Corporation
Fourth-Quarter 2005 EarningsgJanuary 24, 2006
gJanuary 24, 2006