Goldman Sachs Goldman Sachs Global Industrials Conference Global Industrials Conference November 2009 November 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,” “preliminary” 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
Current CSX environment . . . Current CSX environment . . . � Worst economic recession in past half century abating — Volumes continue to moderate going into the back half of the fourth quarter � Company emerging from recession stronger — Earning power and margins have been resilient in current environment � Value of rail transportation supports long-term pricing — Expect core price increases above rail inflation for 2010 and beyond � Industry fundamentals are strong long-term — Growing population, congested highways, environmentalism favors railroads 3 3
Economic environment continues to moderate Economic environment continues to moderate Year-Over-Year Volume Change First Quarter Second Quarter Third Quarter Fourth Quarter-to-Date (1%) (7%) (10%) (12%) (13%) (14%) (16%) (17%) (18%) (21%) (22%) (23%) (23%) (28%) (41%) (53%) Percent of Total Volume Q1 Q4 Q1 Q4 Q1 Q4 Q1 Q4 3% 5% 36% 35% 31% 35% 30% 25% Automotive Merchandise Intermodal Coal Note: Fourth quarter year-over-year change in volume reflects data through week 43 4 4
Utility stock piles likely remain high well into 2010 Utility stock piles likely remain high well into 2010 Eastern Power Sector 76 days 76 days 76 days Tons in Millions of inventory of inventory of inventory 67 days 67 days 62 days 62 days 67 days 62 days 100 of inventory of inventory of inventory of inventory of inventory of inventory 90 80 70 60 50 40 30 2001 2002 2003 2004 2005 2006 2007 2008 2009 Coal Consumption Coal Inventory Typical Inventory Level Source: Coal consumption and inventory numbers from PIRA Energy Group 5 5
Core earning power resilient during recession Core earning power resilient during recession Results Through First Three Quarters Comparable Operating Comparable Operating Income and Volume Margin and Volume 25.3% $2,076 24.2% 22.0% $1,702 $1,636 20.8% $1,494 5,548 5,548 5,355 5,224 5,355 5,224 4,295 4,295 2006 2007 2008 2009 2006 2007 2008 2009 Op. Income (millions) Volume (000) Operating Margin Volume (000) Note: See GAAP Reconciliation 6 6
Sustained cost focus yields sequential improvement Sustained cost focus yields sequential improvement 2009 Quarterly Cost Structure 2009 Quarterly Cost Structure Year-Over-Year Variance Year-Over-Year Variance (6%) (8%) (11%) (14%) (16%) (16%) (16%) (16%) (17%) (17%) (24%) (26%) (27%) (30%) (35%) First Quarter First Quarter Second Quarter Second Quarter Third Quarter Third Quarter Volume Adjusted Variable Costs Fixed Costs Adjusted Total Costs Note: Adjusted variable and total costs have been normalized for fuel prices; lighter shaded bars reflect unadjusted costs 7 7
Core pricing has remained firm in this environment Core pricing has remained firm in this environment Year-Over-Year Change Same Store Sales Price Increase Total Revenue per Unit 21.2% 18.3% 14.5% 14.0% 10.5% 8.0% 6.7% 6.8% 6.5% 6.5% 6.5% 6.6% 6.4% 6.2% 6.3% 0.2% (5.4%) (8.7%) Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2007 2008 2008 2008 2008 2009 2009 2009 Note: “Same Store Sales” price increases exclude impacts from fuel surcharge and mix 8 8 8 8
Strong service and market environment driving price Strong service and market environment driving price Strong Evolving Pricing Strong + Evolving Pricing Strong Evolving Pricing Service Service Marketplace Marketplace Opportunity Opportunity Service Marketplace Opportunity On-Time Rail Industry “Same Store Sales” Originations Advantages Price Increase 6.7% 6.6% 6.5% 6.5% 82% � Highway congestion increasing 79% 79% � Supply chains are expanding 76% � Rail service improving � Focus on “green” intensifying � Extreme regulatory change unlikely 2006 2007 2008 2009 2006 2007 2008 2009 YTD 9 9
Inflation-plus price increases expected long-term Inflation-plus price increases expected long-term Inflation-Adjusted Pricing Indexed: 1981 = $100 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 50% of the Staggers Act, rail pricing declined by 50% $100 $51 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 Source: Association of American Railroads 10 10 10 10
Inflation-plus pricing supports other key industries Inflation-plus pricing supports other key industries Compound Annual Rate Increases Between 1990 and 2008 7.5% 4.8% 2.3% 1.2% Rail Electricity Grain Chemical Source: UBS Investment Research 11 11 11 11
Long-term fundamentals drive Rail Renaissance Long-term fundamentals drive Rail Renaissance Over time, Over time, . . . will consume . . . will consume . . . and those things . . . and those things Over time, . . . will consume . . . and those things more people . . . more things . . . need to be moved more people . . . more things . . . need to be moved more people . . . more things . . . need to be moved U.S. Population U.S. Consumption U.S. Transportation in Millions of Goods in Trillions Demand in Trillion Ton-miles $4.2 342 6.6 326 6.0 $3.6 311 5.4 $3.2 4.9 296 $3.1 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 Sources: Global Insight and American Association of State Highway and Transportation Officials 12 12 12 12
Competitive advantages driving market share shift Competitive advantages driving market share shift Surface Transportation Rail Industry Advantages Tonnage Market Share � Highway congestion increasing Barge 8% Rail 15% � Supply chains are expanding � Rail service is improving � Focus on “green” intensifying Truck 77% � Extreme regulatory change unlikely Sources: Transearch and USDOT FHWA Freight Analysis Framework 13 13 13 13 13 13 13 13
CSX’s network leverages long-term fundamentals CSX’s network leverages long-term fundamentals � Serves all major markets in Mega-regions the eastern United States Served by CSX — Markets account for over 65% of population and 75% of consumption Midwest � Links all major industry and Northeast natural resource centers — Strong presence in coal, aggregates, phosphates support key industries Piedmont Atlantic � Provides international access through all major ports Florida — Directly serves Atlantic and Gulf ports; access to Pacific with alliances Gulf Coast 14 14 14 14
Strengthening position for long-term value creation Strengthening position for long-term value creation � CSX emerging from recession as a stronger company — Earning power and margins have been resilient in current environment � Pricing the value of rail transportation is long-term focus — Expect core price increases above rail inflation for 2010 and beyond � Rail renaissance fundamentals remain intact long-term — Organic growth at attractive rates supports shareholder value creation Relentless pursuit of excellence Relentless pursuit of excellence 15 15 15 15
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