Dahlman Rose Dahlman Rose Global Transportation Conference Global Transportation Conference September 2009 September 2009 1 1
Forward-Looking Disclosure Forward-Looking Disclosure This information 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.investors.csx.com. 2 2
CSX Network is vital to America's economy CSX Network is vital to America's economy � CSX Network Network serves every major eastern metropolitan area Boston � Links key industry and natural Chicago New York resource centers St. Louis � Provides international access through all major ports Memphis � Diverse business portfolio provides greater stability Florida New Orleans 3 3
Economic recession impacting volume levels Economic recession impacting volume levels Year-Over-Year Volume Change First Half Third Quarter-to-Date % of CSX Commodity Groups CSX Volume � Chemicals (32%) Industrial 11% � Metals Segment (26%) � Forest Products (23%) Housing 12% � Emerging Markets Products (20%) � Automotive (19%) Consumer 35% � Intermodal Products (14%) � Agricultural Products (12%) Agriculture � Phosphates & Fertilizers 14% Segment (8%) � Food & Consumer (14%) � Coal Energy 28% (19%) Note: Third quarter data for 2009 is through week 34 4 4
Productivity/rightsizing helping offset volume decline Productivity/rightsizing helping offset volume decline First Half 2009 First Half 2009 CSX Cost Structure Year-Over-Year Change 46% Fixed and Fixed and (10%) Indirect Indirect (14%) (19%) Long-term Short-term Short-term Variable Variable Variable (43%) 29% Volume ST LT Fixed 25% Variable Variable Cost structure improvement delivered in culture of safety leadership Cost structure improvement delivered in culture of safety leadership 5 5
Economy expected to remain weak through 2009 Economy expected to remain weak through 2009 Year-Over-Year Change Year-Over-Year Change in CSX Volume in GDP and IDP Q4-08 Q1-09 Q2-09 Q3-09 Industrial Production GDP 5% 5% 0% 0% (5%) (5%) (10%) (10%) (15%) (15%) (20%) (20%) (25%) (25%) Oct Dec Feb Apr Jun Aug Q3 Q4 Q1 Q2 Q3 Q4 2009 2009 2010 2010 2010 2010 Source: Global Insight – August 2009 Forecast 6 6
CSX is preparing for changes in the economy CSX is preparing for changes in the economy � US Population Centers Operating strategy leverages ONE Plan and technology Northeast Midwest Boston � Long-term fundamentals Chicago continue to favor railroads New York — Most efficient transportation — Most environmentally friendly Piedmont — Most sustainable infrastructure Atlantic � Investments drive long-term Population strategic/economic benefits Florida GT 6M LT 1M Gulf Coast 3-6M 1-3M � Pricing momentum is in the New Orleans early stages of recovery Miami Source: World Trade Service 7 7
ONE Plan is the operational foundation ONE Plan is the operational foundation � ONE Plan is the platform for the scheduled train network � Focus remains on optimizing service and efficiency � Advanced technology applied to operations planning � Network evaluation and optimization is continuous Merchandise Traffic Automotive Traffic 8 8
CSX network structure adjusts to demand changes CSX network structure adjusts to demand changes � Downgrading Buffalo terminal creates operating efficiencies Buffalo — Reduces operating expenses Willard — Allows for better use of capital � Strategically positions the network for the long-term — Accesses new supply chains — Provides incremental capacity Traffic Increase Traffic Decrease 9 9
Network investments build on strategic advantage Network investments build on strategic advantage � CSX Network Reach Single-line reach into Florida, Key Strategic Advantage New England and Illinois Basin NW Ohio � National Gateway will link ports Transfer Yard to producers and consumers � Leveraging public-private partnerships for future growth NWOH Connectivity SE Expressway Single-line Advantage 10 10 10 10
Rail remains America’s long-term freight solution Rail remains America’s long-term freight solution � Infrastructure needs have Investment Required gained national attention Through 2035 in Billions $5,000 � Recovery and Reinvestment Act provides funding for rails � Freight rails need to earn adequate returns $198 $148 Freight Rail Passenger Highways Rail Source: 2007 AAR/Cambridge Study and 2007 DOT Surface Transportation Study 11 11 11 11
Freight railroads deliver significant public benefits Freight railroads deliver significant public benefits Railroads are one of the safest and most Safe and Secure Safe and Secure Safe and Secure secure modes of surface transportation One intermodal train can carry the load of Efficient Efficient Efficient 280 trucks, reducing highway congestion A locomotive can haul a ton of freight more “Green Green” ” “ “Green” than 436 miles on one gallon of fuel Railroad capital investment relies principally Sustainable Sustainable Sustainable on private funds 12 12 12 12
Competitive environment shifting in favor of rails Competitive environment shifting in favor of rails Trucking Industry Railroad Industry � � Highway congestion increasing Service quality improving � � Structural changes occurring Supply chains are expanding � � Regulatory restrictions continue Focus on “green” is increasing � � Overall capacity declining Balanced regulations are likely 13 13 13 13
CSX continues to create value for customers CSX continues to create value for customers � Service Reliability ONE Plan and customer focus driving strong service 81% 79% 51% 40% � Supporting customers as they reformulate their supply chains On-time Departures On-time Arrivals Network Performance � Driving solutions that reduce carbon footprint and costs 29.0 23.9 21.7 19.2 � Relentless in selling the value of rail transportation Velociy (mph) Dwell (hours) 2005 3QTD 2009 14 14 14 14
Pricing remains in early stages of recovery Pricing remains in early stages of recovery Inflation-Adjusted Pricing Indexed: 1981 = $100 2 R 2 R Pre-deregulation, rail pricing During the first 23 years after the passage During the first 23 years after the passage kept pace with inflation of the Staggers Act, rail pricing declined by 60% of the Staggers Act, rail pricing declined by 60% $100 $51 $40 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 Source: Association of American Railroads 15 15 15 15
Strengthening position for long-term value creation Strengthening position for long-term value creation � Core earning power is resilient in current economy — First half results represent second highest earnings in company history � Margins remain stable despite volume decline — Positions CSX to emerge stronger when the economy returns to growth � Maintaining strong investment levels in the network — Leverages current environment to strengthen network for recovery Relentless pursuit of excellence Relentless pursuit of excellence 16 16 16 16
Dahlman Rose Dahlman Rose Global Transportation Conference Global Transportation Conference September 2009 September 2009 17 17 17 17
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