Slide 1: Third Quarter 2009 Earnings Conference Call
Third Quarter 2009 Earnings Conference Call 11 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 earnin
Slide 2: Executive Summary
Executive Summary Michael Ward Chairman, President and Chief Executive Officer Third quarter performance . . . Third Quarter EPS from Revenue declines 23% Continuing Operations — Lower volume and FSC more than offset core price increases $0.93 Operating ratio at 73.9% — Safety and service perfor
Slide 3: Sales and Marketing Review
Sales and Marketing Review Clarence Gooden Executive Vice President Sales and Marketing Revenue declines 23% to $2.3 billion Revenue $2,289M Volume 1,465K RPU $1,562 Revenue in Millions $76 ($292) $2,961 ($456) $2,289 Q3 2008 Rate/Mix Fuel Price Volume Q3 2009 Note: See Fuel Surcharge Reconciliation
Slide 4: Economic environment drives 15% volume decline
Economic environment drives 15% volume decline Revenue $2,289M Volume 1,465K RPU $1,562 Year-Over-Year Volume Change First Quarter Second Quarter Third Quarter (7%) (13%) (14%) (10%) (17%) (21%) (18%) (23%) (22%) (28%) (41%) (53%) Percent of Total Volume Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 30% 26% 36% 37% 31% 3
Slide 5: Coal revenue declines 20%
Coal revenue declines 20% Revenue $680M Volume 382K RPU $1,780 Third Quarter Third quarter summary Year-Over-Year Change — Utility coal shipments down on low demand and high stockpiles RPU (2%) — Domestic metallurgical demand Volume (18%) lower on weak steel production Revenue (20%) — Export coal
Slide 6: Merchandise revenue declines 23%
Merchandise revenue declines 23% Revenue $1,116M Volume 545K RPU $2,048 Third Quarter Third quarter summary Year-Over-Year Change — Metals weakness continues on reduced steel production RPU (8%) — Housing starts and overall Volume (17%) construction remain slow Revenue (23%) — Phosphates decline c
Slide 7: Intermodal revenue declines 24%
Intermodal revenue declines 24% Revenue $303M Volume 481K RPU $630 Third Quarter Third quarter summary Year-Over-Year Change — International weakness continues despite modest sequential gains RPU (16%) — Domestic up as over the road Volume (10%) conversion offsets soft demand Revenue (24%) — RPU l
Slide 8: Operations Review
Operations Review Tony Ingram Executive Vice President Chief Operating Officer Delivering under challenging business conditions Culture of leadership, discipline and execution continues to produce strong results — Leadership: Safety performance remained strong in the third quarter — Discipline: Co
Slide 9: Helping to lead one of the Nation's safest industries
Helping to lead one of the Nation’s safest industries FRA Personal Injury Rate FRA Train Accident Rate 1.56 3.27 3.28 3.14 1.27 1.17 2.47 1.09 Q3 2006 Q3 2007 Q3 2008 Q3 2009 Q3 2006 Q3 2007 Q3 2008 Q3 2009 17 17 Train network continues to track lower volume . . . Year-Over-Year Change in Volume and
Slide 10: ... with key resources stable at lower levels
. . . with key resources stable at lower levels Active T&E Employees Active Locomotives Q1 2009 Q2 2009 Q3 2009 Q1 2009 Q2 2009 Q3 2009 13,500 4,100 12,800 3,900 12,100 3,700 11,400 3,500 10,700 3,300 Down Down Down Down Down Down Down Down Down Down Down Down 10,000 3,100 10% 10% YOY YOY 17% 17% YO
Slide 11: CSX is well prepared as volume builds
CSX is well prepared as volume builds Furloughed employees Resources Available — Generally available within a few weeks T&E Employees furloughed 1,643 Newly-hired employees Percent of total 13% — Training of new employees takes four to six months Locomotives stored 640 Percent of total 17% Sto
Slide 12: Financial Review
Financial Review Oscar Munoz Executive Vice President Chief Financial Officer Third quarter earnings summary . . . Third Quarter Results Dollars in millions, except EPS 2009 2008 Variance Revenue $ 2,289 $ 2,961 (23%) Expense 1,691 2,228 24% Operating Income $ 598 $ 733 (18%) Interest Expense (140)
Slide 13: Fuel surcharge lag impacts quarter by $19 million
Fuel surcharge lag impacts quarter by $19 million Fuel Surcharge Lag Impact Positive Impact Negative Impact $39 $150 Million Million $38 Million ($33) ($19) Million Million Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Weekly Highway Diesel Fuel Monthly Highway Diesel Fuel (two-month lag)
Slide 14: MS&O expense declines 25%
MS&O expense declines 25% MS&O Expense Third Quarter Dollars in Millions MS&O Analysis in Millions $568 $471 2008 MS&O Expense $ 568 $455 $428 Volume (51) Cycling Storm Impact (30) Cycling Proxy-related Costs (16) Safety Improvement (9) Other (34) Subtotal (140) 2009 MS&O Expense $ 428 Q3 2006 Q3 20
Slide 15: Other expenses collectively decrease 3%
Other expenses collectively decrease 3% Other Costs in Millions Rent expense declines on lower volume Depreciation Rents Inland Transportation $409 $394 $398 $387 Higher capital base offset by $63 $60 $65 life study favorability $67 $133 $114 $106 $92 Inland Transportation up on off-core volum
Slide 16: Sustained cost focus yields sequential improvement
Sustained cost focus yields sequential improvement 2009 Quarterly Cost Structure Year-Over-Year Variance (6%) (8%) (11%) (14%) (17%) (17%) (16%) (16%) (16%) (16%) (24%) (26%) (27%) (30%) (35%) First Quarter Second Quarter Third Quarter Volume Adjusted Variable Costs Fixed Costs Adjusted Total Costs
Slide 17: Financial wrap-up
Financial wrap-up . . . Fuel environment will continue to act as a headwind — Cycling significant fuel lag benefits in fourth quarter of 2008 Continue driving cost structure to lower business levels — Cost control and productivity efforts produce across-the-board results Balance sheet strength
Slide 18: Appendix
Relentless pursuit of excellence . . . 35 35 Appendix
Slide 19: Fuel Surcharge Reconciliation
Fuel Surcharge Reconciliation Third Quarter Dollars in millions 2009 2008 Variance Total Rail and Intermodal Fuel Surcharge Recovery $ 107 $ 472 $ (365) Portion of year-over-year variance that is volume-related $ (73) Portion of year-over-year variance that is fuel price-related $ (292) Since total