EX-99.2 3 qfr_2q08.htm 2Q08 QUARTERLY FINANCIAL REPORT qfr_2q08.htm
 
                                                                                      EXHIBIT 99.2
 
 
 
 
 
Contact:
David Baggs, Investor Relations
904-359-4812

Garrick Francis, Corporate Communications
877-835-5279

CSX Reports Record Second Quarter Earnings


Second Quarter Highlights:
·  
Earnings per share from continuing operations increase 31%
·  
All-time records in revenues and operating income, up 15% and 17% respectively
·  
Safety and service performance remains strong

JACKSONVILLE, Fla., (July 15, 2008) – CSX Corporation [NYSE: CSX] today reported second quarter 2008 earnings of $385 million, or a record 93 cents per share.  Last year CSX reported second quarter earnings of $324 million, or 71 cents per share.

Second quarter 2008 results included 4 cents per share associated with the resolution of certain tax matters.  On a comparable basis, excluding this item, second quarter EPS was up 25 percent from a year ago. (See table below for reconciliation of quarter items to reported numbers.)

“CSX continues to deliver significant value for shareholders and demonstrate the secular strength of our business,” said Michael Ward, chairman, president and CEO. “The strong earnings performance delivered by this team was supported by all–time records in revenue and operating income, despite the effects of a softer economy.”

Sustained strong demand for export coal, grain, ethanol, metals and phosphates and fertilizers, as well as solid yield management, continued to lead significant revenue growth across CSX’s markets. Revenue increased in eight of the company’s ten markets resulting in overall quarterly revenues of $2.9 billion, a 15 percent increase over the same period last year.

CSX produced quarterly operating income of $717 million, up 17 percent over the $612 million reported last year. The company’s continued focus on productivity and cost control helped to offset the significant increase in fuel costs, driving its operating ratio to 75.3 percent for the quarter.

“We are achieving the company’s vision, quickly taking this company’s results to industry leading positions,” said Ward. “This success is propelled by our employees every day delivering exceptional customer service, safety, innovation and a balanced approach to managing capital that drives shareholder value and positions the company to leverage future demand.”

Reflecting the company’s strong second quarter performance and the underlying strength of its business, CSX continues to target the upper end of its previously announced 2008 EPS guidance of $3.40 – $3.60 on a comparable basis.

 

Table of Contents
The accompanying unaudited
CSX CORPORATION
CONTACTS:
 
financial information should be
500 Water Street
  
 
read in conjunction with the
15th Floor, C900
INVESTOR RELATIONS
Company’s most recent
Jacksonville, FL
David Baggs
Operating Income Detail...........................p. 8
Annual Report on Form 10-K,
32202
(904) 359-4812
Rail Operating Statistics..........................p. 12
Quarterly Reports on Form
http://www.csx.com
MEDIA
 
10-Q, and any Current
  
Garrick Francis
 
Reports on Form 8-K
  
(904) 359-1708
 

 
1
 




 
GAAP RECONCILIATION 1
 
 (Dollars in millions, except per share amounts)
 
 
Second Quarter
 
 
2008
  
 
2007
  
 
Improvement
 
 
Earnings Per Share
 
 
$ 0.93
  
 
 
$ 0.71
  
 
 
31%
 
Less Income Tax Benefits
 
(0.04
 
)
 
-
    
 
Comparable Earnings Per Share
 
$ 0.89
  
 
$ 0.71
  
 
25%

CSX Corporation, based in Jacksonville, Fla., is a leading transportation company providing rail, intermodal and rail-to-truck transload services. The company’s transportation network spans approximately 21,000 miles with service to 23 eastern states and the District of Columbia, and connects to more than 70 ocean, river and lake ports.

This earnings announcement, as well as a package of detailed financial information, is contained in the CSX Quarterly Financial Report available on the company's website at http://investors.csx.com in the Investors section and on Form 8-K with the Securities and Exchange Commission (“SEC”).

CSX executives will conduct a quarterly earnings conference call with the investment community on July 16, 2008 at 8:30 a.m. ET.  Investors, media and the public may listen to the conference call by dialing 888-327-6279 (888-EARN-CSX) and asking for the CSX earnings call. (Callers outside the U.S., dial 773-756-0199). Participants should dial in 10 minutes prior to the call.  In conjunction with the call, a live webcast will be accessible and presentation materials will be posted on the company’s website at http://investors.csx.com.  Following the earnings call, an internet replay of the presentation will be archived on the company website.
 



 
###

GAAP Reconciliation1
CSX reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP financial measures used to manage the company’s business that fall within the meaning of Regulation G (Disclosure of Non-GAAP Financial Measures) by the SEC may provide users of the financial information with additional meaningful comparisons to prior reported results.

In press releases and presentation slides for stock analysts, CSX has provided financial information adjusted for certain items, which are non-GAAP financial measures. The company’s management evaluates its business and makes certain operating decisions (e.g., budgeting, forecasting, employee compensation, asset management and resource allocation) using these adjusted numbers.
 
Likewise, this information facilitates comparisons to financial results that are directly associated with ongoing business operations as well as provides comparable historical information. Lastly, earnings forecasts prepared by stock analysts and other third parties generally exclude the effects of items that are difficult to predict or measure in advance and are not directly related to CSX’s ongoing operations. A reconciliation between GAAP and the non-GAAP measure is provided above. These non-GAAP measures should not be considered a substitute for GAAP measures.





 
2
 




 
Forward-looking statements
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.csx.com.






 











 
3
 





CSX Corporation
CONSOLIDATED STATEMENT OF EARNINGS (Note a) (Unaudited)
(Dollars in Millions, Except Per Share Amounts)
                   
     
Quarters Ended
    
Six Months Ended
  
     
June 27,
June 29,
    
June 27,
June 29,
  
     
2008
2007
$ Change
  
2008
2007
$ Change
Revenue
 $2,907
 $2,530
 $377
  
 $5,620
 $4,952
 $668
Expense
              
 
Labor and Fringe
 733
 743
 10
  
 1,478
 1,477
 (1)
 
Materials, Supplies and Other
 513
470
 (43)
  
 1,018
 991
 (27)
 
Fuel (Note b)
 537
316
 (221)
  
 978
 600
 (378)
 
Depreciation
 227
222
 (5)
  
 449
443
 (6)
 
Equipment and Other Rents
 112
107
 (5)
  
 223
227
 4
 
Inland Transportation
 68
60
 (8)
  
 131
117
 (14)
   
Total Expense
 2,190
 1,918
 (272)
  
 4,277
 3,855
 (422)
Operating Income
 717
 612
 105
  
 1,343
 1,097
 246
                   
Other Income (Expense) - Net
 6
 3
 3
  
 61
 (5)
 66
Interest Expense
 (133)
 (101)
 (32)
  
 (252)
 (200)
 (52)
Earnings Before Income Taxes
 590
 514
 76
  
 1,152
 892
 260
                   
Income Tax Expense (Note c)
 (205)
 (190)
 (15)
  
 (416)
 (328)
 (88)
Net Earnings
 $385
 $324
 $61
  
 $736
 $564
 $172
                   
                   
                   
                   
Per Share Data:
              
Net Earnings Per Common Share,
              
   
Assuming Dilution
 $0.93
 $0.71
 $0.22
  
 $1.78
 $1.23
 $0.55
                   
Average Diluted Common Shares
              
   
Outstanding (Thousands)
 415,090
 458,923
    
 415,137
 461,049
  
                   
Cash Dividends Paid Per
              
   
Common Share
 $0.18
 $0.12
    
 $0.33
 $0.24
  

















See accompanying Notes to Consolidated Financial Statements on Page 7.

 
4
 




CSX Corporation
CONSOLIDATED BALANCE SHEET
(Dollars in Millions)
       
(Unaudited)
  
       
June 27,
Dec. 28,
       
2008
2007
Assets
Cash and Cash Equivalents
 $1,398
 $368
 
Short-term Investments
 79
 346
 
Accounts Receivable - Net
 1,218
 1,174
 
Materials and Supplies
 247
 240
 
Deferred Income Taxes
 234
 254
 
Other Current Assets
 113
 109
     
Total Current Assets
 3,289
 2,491
           
 
Properties
 29,652
 28,999
 
Accumulated Depreciation
 (7,454)
 (7,219)
     
Properties - Net
 22,198
 21,780
           
 
Investment in Conrail
 650
 639
 
Affiliates and Other Companies
 393
 365
 
Other Long-term Assets
 258
 259
     
Total Assets
 $26,788
 $25,534
           
           
           
Liabilities and
Accounts Payable
 $1,008
 $976
Shareholders' Equity
Labor and Fringe Benefits Payable
 466
 461
 
Casualty, Environmental and Other Reserves
 242
 247
 
Current Maturities of Long-term Debt
 581
 785
 
Short-term Debt
 3
 2
 
Income and Other Taxes Payable
 111
 113
 
Other Current Liabilities
 79
 87
     
Total Current Liabilities
 2,490
 2,671
           
 
Casualty, Environmental and Other Reserves
 614
 624
 
Long-term Debt
 7,396
 6,470
 
Deferred Income Taxes
 6,263
 6,096
 
Other Long-term Liabilities
 952
 988
     
 Total Liabilities
 17,715
 16,849
           
 
Shareholders' Equity:
    
   
Common Stock, $1 Par Value
 408
 408
   
Other Capital
 13
 37
   
Retained Earnings
 8,973
 8,565
   
Accumulated Other Comprehensive Loss
 (321)
 (325)
     
Total Shareholders' Equity
 9,073
 8,685
           
     
Total Liabilities and Shareholders' Equity
 $26,788
 $25,534




See accompanying Notes to Consolidated Financial Statements on Page 7.

 
5
 



CSX Corporation
CONSOLIDATED CASH FLOW STATEMENT (Unaudited)
 (Dollars in Millions)
         
 Six Months Ended
         
 June 27,
 June 29,
         
2008
2007
Operating Activities
 Net Earnings
 $736
 $564
   
 Adjustments to Reconcile Net Earnings to Net Cash Provided:
    
     
 Depreciation
 456
 448
     
 Deferred Income Taxes
 201
 51
     
 Other Operating Activities
 (30)
 43
     
 Changes in Operating Assets and Liabilities:
    
       
 Accounts Receivable
 (44)
 3
       
 Other Current Assets
 (16)
 (79)
       
 Accounts Payable
 35
 (9)
       
 Income and Other Taxes Payable
 9
 129
       
 Other Current Liabilities
 (4)
 (75)
     
 Net Cash Provided by Operating Activities
 1,343
 1,075
             
Investing Activities
 Property Additions
 (912)
 (824)
   
 Purchase of Short-term Investments
 (25)
 (1,445)
   
 Proceeds from Sales of Short-term Investments
 280
 1,504
   
 Other Investing Activities
 (1)
 (2)
     
 Net Cash Used In Investing Activities
 (658)
 (767)
             
Financing Activities
 Short-term Debt - Net
 1
 -
   
 Long-term Debt Issued
 1,000
 1,000
   
 Long-term Debt Repaid
 (176)
 (675)
   
 Dividends Paid
 (134)
 (106)
   
 Stock Options Exercised
 65
 130
   
 Shares Repurchased
 (453)
 (727)
   
 Other Financing Activities
 42
 37
     
 Net Cash Provided by (Used in) Financing Activities
 345
 (341)
             
Cash and Cash
 Net Increase (Decrease) in Cash and Cash Equivalents
 1,030
 (33)
 
Equivalents
          
   
 Cash and Cash Equivalents at Beginning of Period
 368
 461
     
 Cash and Cash Equivalents at End of Period
 $1,398
 $428













See accompanying Notes to Consolidated Financial Statements on Page 7.


 
6
 

 
CSX Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Prior periods have been reclassified to conform to the current year presentation.

a)  
Income Statement Reclassifications: Beginning in 2008, certain items have been reclassified within the income statement.  These reclassifications include reclassifying all items within other operating income and certain items within other income into the Rail segment. As a result of this change, CSX consolidated operating income and Surface Transportation operating income will now be the same; therefore, the Company will no longer report separate Surface Transportation results. The Rail segment was not materially impacted by these reclassifications. Certain prior-year data have been reclassified to conform to the 2008 presentation.

b)  
Fuel Expense: Beginning in 2008, the Company reclassified all non-locomotive fuel related costs previously included in materials, supplies and other into fuel on the Company’s consolidated income statement so that it now includes all fuel used for operations and maintenance.  For second quarters 2008 and 2007, these amounts were $39 million and $27 million, respectively.

c)  
Income Tax Expense: In the second quarter of 2008, CSX recognized a tax benefit of $18 million, or $0.04 per share, principally related to the settlement of federal income tax audits and certain other tax matters.

 












7



CSX Corporation
OPERATING INCOME DETAIL (Unaudited)
(Dollars in Millions)
                     
Quarters Ended  June 27, 2008 and June 29, 2007
                     
             
CSX
  
       
Rail (a)
Intermodal
Consolidated
  
       
2008
2007
2008
2007
2008
2007
$ Change
Revenue
 $2,522
 $2,187
 $385
 $343
 $2,907
 $2,530
 $377
Expense
              
 
Labor and Fringe
 714
 723
 19
 20
 733
 743
 10
 
Materials, Supplies and Other
 462
 426
 51
 44
 513
 470
 (43)
 
Fuel
 536
 314
 1
 2
 537
 316
 (221)
 
Depreciation
 220
 213
 7
 9
 227
 222
 (5)
 
Equipment and Other Rents
 86
 80
 26
 27
 112
 107
 (5)
 
Inland Transportation
 (137)
 (110)
 205
 170
 68
 60
 (8)
   
Total Expense
 1,881
 1,646
 309
 272
 2,190
 1,918
 (272)
Operating Income
 $641
 $541
 $76
 $71
 $717
 $612
 $105
                     
Operating Ratio
74.6%
75.3%
80.3%
79.3%
75.3%
75.8%
  
                     
                     
Six Months Ended  June 27, 2008 and June 29, 2007
                     
             
CSX
  
       
Rail (a)
Intermodal
Consolidated
  
       
2008
2007
2008
2007
2008
2007
$ Change
Revenue
 $4,887
 $4,291
 $733
 $661
 $5,620
 $4,952
 $668
Expense
              
 
Labor and Fringe
 1,440
 1,437
 38
 40
 1,478
 1,477
 (1)
 
Materials, Supplies and Other
 918
 904
 100
 87
 1,018
 991
 (27)
 
Fuel
 975
 597
 3
 3
 978
 600
 (378)
 
Depreciation
 437
 424
 12
 19
 449
 443
 (6)
 
Equipment and Other Rents
 170
 171
 53
 56
 223
 227
 4
 
Inland Transportation
 (259)
 (219)
 390
 336
 131
 117
 (14)
   
Total Expense
 3,681
 3,314
 596
 541
 4,277
 3,855
 (422)
Operating Income
 $1,206
 $977
 $137
 $120
 $1,343
 $1,097
 $246
                     
Operating Ratio
75.3%
77.2%
81.3%
81.8%
76.1%
77.8%
  


 
a)
 In addition to CSX Transportation, Inc., the Rail segment includes non-railroad subsidiaries such as Total Distribution Services, Inc., Transflo Terminal Services, Inc., CSX Technology, Inc. and other subsidiaries.



 
8
 
 
     
 
VOLUME AND REVENUE (Unaudited)
    
 
Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
    
                                   
 
                              Quarters Ended  June 27, 2008 and  June 29, 2007
    
   
Volume
  
Revenue
  
Revenue Per Unit
  
   
2008
2007
% Change
  
2008
2007
% Change
  
2008
2007
% Change
    
 
Chemicals
 129
 134
 (4)
%
  
 $377
 $327
 15
 %
  
 $2,922
 $2,440
 20
%
    
 
Emerging Markets
 119
 136
 (13)
    
 170
 164
 4
    
 1,429
 1,206
 18
      
 
Forest Products
 83
 92
 (10)
    
 187
 188
 (1)
    
 2,253
 2,043
 10
      
 
Agricultural Products
 108
 103
 5
    
 246
 191
 29
    
 2,278
 1,854
 23
      
 
Metals
 96
 94
 2
    
 210
 182
 15
    
 2,188
 1,936
 13
      
 
Phosphates and Fertilizers
 91
 89
 2
    
 128
 104
 23
    
 1,407
 1,169
 20
      
 
Food and Consumer
 50
 55
 (9)
    
 114
 112
 2
    
 2,280
 2,036
 12
      
Total Merchandise
 676
 703
 (4)
    
 1,432
 1,268
 13
    
 2,118
 1,804
 17
      
                                   
 
Coal
 450
 442
 2
    
 777
 607
 28
    
 1,727
 1,373
 26
      
 
Coke and Iron Ore
 27
 24
 13
    
 47
 31
 52
    
 1,741
 1,292
 35
      
Total Coal
 477
 466
 2
    
 824
 638
 29
    
 1,727
 1,369
 26
      
                                   
Automotive
 92
 119
 (23)
    
 205
 223
 (8)
    
 2,228
 1,874
 19
      
             
 
                    
Other
 -
 -
 -
    
 61
 58
 5
    
 -
 -
 -
      
Total Rail
 1,245
 1,288
 (3)
    
 2,522
 2,187
 15
    
 2,026
 1,698
 19
      
                                   
 
International
 262
 300
 (13)
    
 137
 140
 (2)
    
 523
 467
 12
      
 
Domestic
 268
 239
 12
    
 242
 198
 22
    
 903
 828
 9
      
 
Other
 -
 -
 -
    
 6
 5
 20
    
 -
 -
 -
      
Total Intermodal
 530
 539
 (2)
    
 385
 343
 12
    
 726
 636
 14
      
                                   
Total
 1,775
 1,827
 (3)
%
  
 $2,907
 $2,530
 15
 %
  
 $1,638
 $1,385
 18
 %
    
                                   
                                   
 
                                   Six Months Ended June 27, 2008  and June 29, 2007
    
                                   
   
Volume
  
Revenue
  
Revenue Per Unit
  
   
2008
2007
% Change
  
2008
2007
% Change
  
2008
2007
% Change
    
 
Chemicals
 257
 267
 (4)
%
  
 $734
 $644
 14
 %
  
 $2,856
 $2,412
 18
%
    
 
Emerging Markets
 218
 248
 (12)
    
 308
 301
 2
    
 1,413
 1,214
 16
      
 
Forest Products
 163
 184
 (11)
    
 362
 371
 (2)
    
 2,221
 2,016
 10
      
 
Agricultural Products
 217
 200
 9
    
 481
 370
 30
    
 2,217
 1,850
 20
      
 
Metals
 188
 187
 1
    
 407
 358
 14
    
 2,165
 1,914
 13
      
 
Phosphates and Fertilizers
 182
 181
 1
    
 258
 210
 23
    
 1,418
 1,160
 22
      
 
Food and Consumer
 101
 111
 (9)
    
 224
 223
 -
    
 2,218
 2,009
 10
      
Total Merchandise
 1,326
 1,378
 (4)
    
 2,774
 2,477
 12
    
 2,092
 1,798
 16
      
                                   
 
Coal
 890
 883
 1
    
 1,497
 1,210
 24
    
 1,682
 1,370
 23
      
 
Coke and Iron Ore
 50
 45
 11
    
 89
 61
 46
    
 1,780
 1,356
 31
      
Total Coal
 940
 928
 1
    
 1,586
 1,271
 25
    
 1,687
 1,370
 23
      
                                   
Automotive
 188
 228
 (18)
    
 407
 426
 (4)
    
 2,165
 1,868
 16
      
                                   
Other
 -
 -
 -
    
 120
 117
 3
    
 -
 -
 -
      
Total Rail
 2,454
 2,534
 (3)
    
 4,887
 4,291
 14
    
 1,991
 1,693
 18
      
                                   
 
International
 515
 592
 (13)
    
 260
 273
 (5)
    
 505
 461
 10
      
 
Domestic
 523
 456
 15
    
 462
 378
 22
    
 883
 829
 7
      
 
Other
 -
 -
 -
    
 11
 10
 10
    
 -
 -
 -
      
Total Intermodal
 1,038
 1,048
 (1)
    
 733
 661
 11
    
 706
 631
 12
      
                                   
Total
 3,492
 3,582
 (3)
%
  
 $5,620
 $4,952
 13
 %
  
 $1,609
 $1,382
 16
 %
    




 
9
 
CSX Corporation

REVENUE

The Company was able to achieve continued pricing gains during second quarter 2008 predominantly due to the overall cost advantages that rail-based solutions provide versus other modes of transportation. These pricing gains, and higher fuel recovery due to higher fuel prices, more than offset the continuing volume weakness in housing construction, domestic automobile production and related markets.

Merchandise

Chemicals – Revenue and revenue-per-unit increases were driven primarily by improved pricing and increased fuel recovery.  Volume was down due to weakness in plastic shipments and chemicals used in construction and automobile production.

Emerging Markets, Forest Products, and Food and Consumer – Volume declines in building products, appliances and aggregates, which include crushed stone, sand and gravel, were due to continued softness in residential construction.  Revenue-per-unit increases were driven by yield management initiatives and favorable fuel recoveries.

Agricultural Products – Volume growth was driven by increased shipments of ethanol as a result of expanded use in the eastern United States.  Gains in price and increased fuel recovery led to increases in revenue and revenue per unit.

Metals – Improved pricing and increased fuel recovery continue to drive revenue and revenue-per-unit gains.  Volume gains were driven by increases in scrap metal and pipe shipments.

Phosphates and Fertilizers – Revenue and revenue per unit increased due to favorable pricing actions and a rise in long-haul, high revenue-per-unit shipments. Volume gains were driven by stronger fertilizer shipments, which were due to increased crop plantings as a result of high commodity prices.  These gains were partially offset by declines in short-haul phosphate shipments in Florida.   

Coal

Sustained growth in yield and improved fuel recovery positively influenced revenue and revenue per unit. Volumes increased in the export market due to robust overseas demand.  These gains were partially offset by lower shipments to electric utilities.

Automotive

Volume and revenue were down due to declining sales of trucks and SUVs resulting from high fuel prices as well as the slow economy and the tighter credit environment.  Revenue per unit improved due to price increases and higher fuel recoveries.

Intermodal Operating Revenue
 
International - Revenue-per-unit increases were primarily driven by increased fuel recovery and yield management.  Volumes were down due to continued declines in imports and changes in international shipping patterns.

Domestic – Growth in coast-to-coast shipments resulted in revenue and volume gains. Revenue-per-unit increases were primarily driven by increased fuel recovery as the favorable mix change from this incremental long-haul traffic was offset by the continued strength of lower revenue-per-unit truckload and short-haul train services.


 
10
 
 
CSX Corporation

 
EXPENSE


Expenses increased $272 million from last year’s quarter.  Significant variances are described below.

Labor and Fringe expense decreased $10 million. This decrease was primarily driven by a reduction of train crew headcount due to lower volumes and improved productivity. Largely offsetting this decrease was wage and benefit inflation.

Materials, Supplies and Other expenses increased $43 million. The primary drivers were year-over-year casualty reserve changes, proxy and related litigation costs and inflation.

Fuel expense increased $221 million due to higher fuel prices which more than offset increased fuel efficiency and lower volume.

Depreciation expense increased $5 million. A larger asset base related to higher capital spending was partially offset by lower depreciation rates at rail and intermodal, resulting from the periodic review of asset useful lives.   

Equipment and Other Rents expense increased $5 million as lower volumes were more than offset by equipment utilization due to a significant decline in the automotive business and inflation.

Inland Transportation increased $8 million driven by Intermodal’s increased transcontinental business and inflation.









 
11
 

CSX Corporation
                           
RAIL OPERATING STATISTICS (Estimated)
                           
         
Second Quarter
  
Six Months Ended
             
Improvement
      
Improvement
         
2008
2007
(Decline) %
  
2008
2007
(Decline) %
Coal
Domestic:
                    
(Millions of Tons)
  
Utility
  
 36.5
 39.0
 (6)
%
  
 73.2
 78.2
 (6)
%
   
Other
  
 4.6
 4.9
 (6)
    
 8.5
 9.0
 (6)
  
     
Total Domestic
  
 41.1
 43.9
 (6)
    
 81.7
 87.2
 (6)
  
 
Export
  
 8.4
 4.2
 100
    
 16.0
 8.9
 80
  
     
Total Coal
  
 49.5
 48.1
 3
    
 97.7
 96.1
 2
  
   
Coke and Iron Ore
  
 2.3
 2.0
 15
    
 4.2
 3.7
 14
  
     
Total  Coal, Coke and Iron Ore
  
 51.8
 50.1
 3
    
 101.9
 99.8
 2
  
                           
Revenue Ton-Miles
Merchandise
  
 34.9
 35.0
 -
    
 69.2
 68.8
 1
  
(Billions)
Automotive
  
 1.5
 2.0
 (25)
    
 3.2
 3.9
 (18)
  
 
Coal
  
 22.9
 22.0
 4
    
 45.0
 43.2
 4
  
 
Intermodal
  
 4.9
 5.1
 (4)
    
 9.5
 9.9
 (4)
  
     
Total
  
 64.2
 64.1
 -
    
 126.9
 125.8
 1
  
                           
Gross Ton-Miles
Total Gross Ton-Miles
  
 116.2
 118.6
 (2)
    
 229.8
 232.3
 (1)
  
(Billions)
(Excludes locomotive gross ton-miles)
                    
                           
Safety and Service
FRA Personal Injuries Frequency Index
  
 1.25
 1.02
 (23)
    
 1.17
 1.19
 2
  
Measurements
Number of FRA-reportable injuries per 200,000 man-hours
                  
 
FRA Train Accident Rate
  
 2.36
 2.66
11
    
 2.53
 2.86
12
  
 
Number of FRA-reportable train accidents per million train miles
                  
                           
 
On-Time Train Originations
  
75.2%
79.9%
 (6)
    
76.9%
76.9%
 -
  
 
On-Time Destination Arrivals
  
65.2%
69.0%
 (6)
    
67.2%
66.6%
 1
  
                           
 
Dwell Time (Hours)
  
 23.3
 23.5
 1
    
 23.0
 24.0
 4
  
 
Cars-On-Line
 224,460
 223,052
 (1)
  
 222,826
 224,178
 1
  
                           
 
System Train Velocity (Miles Per Hour)
  
 20.0
 20.4
 (2)
    
 20.4
 20.2
 1
  
                           
                           
Resources
Route Miles
  
 21,224
 21,225
 -
            
 
Locomotives (Owned and long-term leased)
  
 4,098
 3,946
 4
            
 
Freight Cars (Owned and long-term leased)
  
 92,083
 97,487
 (6)
%
          


 


FUEL STATISTICS
   
Second Quarter
  
Six Months
   
2008
2007
Change
  
2008
2007
Change
Estimated Locomotive Fuel Consumption (Millions of Gallons)
 137.6
 144.3
 (7)
  
 281.2
 294.4
 (13)
Price Per Gallon  (Dollars)
  
 $3.62
 $2.00
 $1.62
  
 $3.21
 $1.86
 $1.35
Total Locomotive Fuel Expense (Dollars in Million)
  
 498
 289
 209
  
 903
 548
 355
Total Non-Locomotive Fuel Expense (Dollars in Million)
  
 39
 27
 12
  
 75
 52
 23
Total Fuel Expense (Dollars in Million)
  
 $537
 $316
 $221
  
 $978
 $600
 $378


 
12
 
 
CSX Corporation
                 
OTHER INCOME (EXPENSE) (Unaudited)
 (Dollars in Millions)
                 
   
Quarters Ended
    
Six Months Ended
  
   
June 27,
June 29,
    
June 27,
June 29,
  
   
2008
2007
$ Change
  
2008
2007
$ Change
Interest Income (a)
 $13
 $15
 $(2)
  
 $21
 $28
 $(7)
Income (Expense) from Real Estate
 (8)
 2
 (10)
  
 6
 (14)
 20
 
and Resort Operations (b)
              
Miscellaneous (c)
 1
 (14)
 15
  
 34
 (19)
 53
 
Total
 $6
 $3
 $3
  
 $61
 $(5)
 $66
 
 
(a)  
Interest income includes amounts earned from CSX’s cash, cash equivalents and investments.

(b)  
Income from real estate and resort operations includes the results of operations of the Company’s real estate sales, leasing, acquisition and management and development activities as well as the results of operations from CSX Hotels, Inc., a resort doing business as The Greenbrier, located in White Sulphur Springs, West Virginia.  Income from real estate may fluctuate as a function of timing of real estate sales. Resort operations were down in 2008 due to decreased group business.

(c)  
Miscellaneous income is comprised of equity earnings, minority interest, investment gains and losses and other non-operating activities. In last year’s second quarter, CSX recognized $10 million of expense for an early redemption premium and the write-off of debt issuance costs. For the first six months of 2008, CSX recorded a non-cash adjustment to correct equity earnings from a non-consolidated subsidiary.  This correction resulted in additional income of $30 million.  The impact of this adjustment was immaterial to second quarter 2008 and is expected to be immaterial in future reporting periods.




EMPLOYEE COUNTS (Estimated)
           
     
May
May
  
     
2008
2007
Change
Transportation Businesses
      
 
  Rail
 31,623
 32,807
 (1,184)
 
  Intermodal
 960
 1,044
 (84)
 
  Technology and Corporate
 576
 568
 8
   
Total Transportation Businesses
 33,159
 34,419
 (1,260)
           
Resort and Real Estate
 1,127
 1,536
 (409)
   
Total
 34,286
 35,955
 (1,669)




 
13