EXHIBIT 99.2
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CSX Reports Record Third Quarter Earnings
from Continuing Operations
Third Quarter Highlights:
· | Earnings Per Share from continuing operations up 40 percent |
· | Revenues up 18 percent; operating income up 31 percent |
· | Operating ratio improves 250 basis points |
JACKSONVILLE, Fla., (Oct. 14, 2008) – CSX Corporation [NYSE: CSX] today reported third quarter 2008 earnings from continuing operations of $382 million, or 94 cents per share. This represents a 40 percent increase from the same period last year. In 2007, CSX reported third quarter earnings of $297 million from continuing operations, or 67 cents per share.
“CSX delivered impressive financial results in a challenging economy,” said Michael J. Ward, chairman, president and CEO. “Our resilient business portfolio and disciplined operations continue to generate substantial earnings growth for shareholders.”
Revenue increased 18 percent to nearly $3 billion, with nine of the company’s 10 market segments producing revenue gains despite ongoing softness in the housing and automotive sectors of the economy. Those gains were led by shipments of export coal, grain, ethanol and metals, as well as strong yields and fuel recovery in all markets.
Revenue growth and moderating fuel costs, combined with the company’s continued focus on productivity and cost control, increased operating income by 31 percent to $733 million, despite the impact of recent storms. In addition, the operating ratio improved 250 basis points to 75.2 percent, which represents a third quarter record.
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 | |
Annual Report on Form 10-K, | 32202 | (904) 359-4812 | |
Quarterly Reports on Form | http://www.csx.com | MEDIA | |
10-Q, and any Current | Garrick Francis | ||
Reports on Form 8-K. | (904) 359-1708 |
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Building on these results and taking into account current economic conditions, CSX is now targeting the low end of its earnings guidance of $3.65 to $3.75 per share. Through 2010, the company continues to target compound annual growth in operating income and EPS of 15 to 20 percent and 20 to 25 percent, respectively, as well as a high-60’s operating ratio by 2010. The company also said it has strong liquidity, access to credit and expects free cash flow of approximately $1 billion in 2008.
“CSX has momentum in our business and confidence in our ability to produce good results, even in periods of economic uncertainty,” said Ward. “In today’s environment, manufacturers and distributors are highly focused on gaining greater efficiency in their supply chains and railroads offer them the best transportation alternative. Combine that with our strong performance in safety, service and productivity, and CSX is well positioned to deliver shareholder value in the near- and long-term.”
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 Oct. 15, 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.
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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.
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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.
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CONSOLIDATED STATEMENT OF EARNINGS (Note a) (Unaudited) | |||||||||
(Dollars in Millions, Except Per Share Amounts) | |||||||||
Quarters Ended | Nine Months Ended | ||||||||
Sept. 26 | Sept. 28, | Sept. 26, | Sept. 28, | ||||||
2008 | 2007 | $ Change | 2008 | 2007 | $ Change | ||||
Revenue | $2,961 | $2,501 | $460 | $8,581 | $7,453 | $1,128 | |||
Expense | |||||||||
Labor and Fringe | 754 | 748 | (6) | 2,232 | 2,225 | (7) | |||
Materials, Supplies and Other | 568 | 471 | (97) | 1,586 | 1,462 | (124) | |||
Fuel (Note b) | 508 | 330 | (178) | 1,486 | 930 | (556) | |||
Depreciation | 227 | 220 | (7) | 676 | 663 | (13) | |||
Equipment and Other Rents | 106 | 114 | 8 | 329 | 341 | 12 | |||
Inland Transportation | 65 | 60 | (5) | 196 | 177 | (19) | |||
Total Expense | 2,228 | 1,943 | (285) | 6,505 | 5,798 | (707) | |||
Operating Income | 733 | 558 | 175 | 2,076 | 1,655 | 421 | |||
Other Income (Expense) - Net | 8 | 14 | (6) | 69 | 9 | 60 | |||
Interest Expense | (131) | (102) | (29) | (383) | (302) | (81) | |||
Earnings From Continuing Operations | |||||||||
Before Income Taxes | 610 | 470 | 140 | 1,762 | 1,362 | 400 | |||
Income Tax Expense | (228) | (173) | (55) | (644) | (501) | (143) | |||
Earnings From Continuing Operations | 382 | 297 | 85 | 1,118 | 861 | 257 | |||
Discontinued Operations (Note c) | - | 110 | (110) | - | 110 | (110) | |||
Net Earnings | $382 | $407 | $(25) | $1,118 | $971 | $147 | |||
Per Share Data: | |||||||||
Net Earnings Per Common Share, | |||||||||
Assuming Dilution: | |||||||||
From Continuing Operations | $0.94 | $0.67 | $0.27 | $2.71 | $1.89 | $0.82 | |||
Discontinued Operations | - | 0.24 | (0.24) | - | 0.24 | (0.24) | |||
Net Earnings | $0.94 | $0.91 | $0.03 | $2.71 | $2.13 | $0.58 | |||
Average Diluted Common Shares | |||||||||
Outstanding (Thousands) | 408,468 | 445,548 | 412,914 | 455,882 | |||||
Cash Dividends Paid Per | |||||||||
Common Share | $0.22 | $0.15 | $0.55 | $0.39 |
See accompanying Notes to Consolidated Financial Statements on Page 7.
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CSX Corporation | |||||
CONSOLIDATED BALANCE SHEET | |||||
(Dollars in Millions) | |||||
(Unaudited) | |||||
Sept. 26, | Dec. 28, | ||||
2008 | 2007 | ||||
Assets | Cash and Cash Equivalents | $895 | $368 | ||
Short-term Investments | 76 | 346 | |||
Accounts Receivable - Net | 1,249 | 1,174 | |||
Materials and Supplies | 251 | 240 | |||
Deferred Income Taxes | 205 | 254 | |||
Other Current Assets | 75 | 109 | |||
Total Current Assets | 2,751 | 2,491 | |||
Properties | 30,163 | 28,999 | |||
Accumulated Depreciation | (7,576) | (7,219) | |||
Properties - Net | 22,587 | 21,780 | |||
Investment in Conrail | 647 | 639 | |||
Affiliates and Other Companies | 401 | 365 | |||
Other Long-term Assets | 251 | 259 | |||
Total Assets | $26,637 | $25,534 | |||
Liabilities and | Accounts Payable | $1,087 | $976 | ||
Shareholders' Equity | Labor and Fringe Benefits Payable | 495 | 461 | ||
Casualty, Environmental and Other Reserves | 248 | 247 | |||
Current Maturities of Long-term Debt | 539 | 783 | |||
Short-term Debt | 4 | 4 | |||
Income and Other Taxes Payable | 133 | 113 | |||
Other Current Liabilities | 323 | 87 | |||
Total Current Liabilities | 2,829 | 2,671 | |||
Casualty, Environmental and Other Reserves | 610 | 624 | |||
Long-term Debt | 7,367 | 6,470 | |||
Deferred Income Taxes | 6,383 | 6,096 | |||
Other Long-term Liabilities | 875 | 988 | |||
Total Liabilities | 18,064 | 16,849 | |||
Shareholders' Equity: | |||||
Common Stock, $1 Par Value | 394 | 408 | |||
Other Capital | - | 37 | |||
Retained Earnings | 8,499 | 8,565 | |||
Accumulated Other Comprehensive Loss | (320) | (325) | |||
Total Shareholders' Equity | 8,573 | 8,685 | |||
Total Liabilities and Shareholders' Equity | $26,637 | $25,534 |
See accompanying Notes to Consolidated Financial Statements on Page 7.
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CSX Corporation | ||||||
CONSOLIDATED CASH FLOW STATEMENT (Unaudited) | ||||||
(Dollars in Millions) | ||||||
Nine Months Ended | ||||||
Sept. 26, | Sept. 28, | |||||
2008 | 2007 | |||||
Operating Activities | Net Earnings | $1,118 | $971 | |||
Adjustments to Reconcile Net Earnings to Net Cash Provided: | ||||||
Depreciation | 686 | 666 | ||||
Deferred Income Taxes | 356 | 154 | ||||
Non-cash Discontinued Operations | - | (110) | ||||
Other Operating Activities | (64) | 6 | ||||
Changes in Operating Assets and Liabilities: | ||||||
Accounts Receivable | (76) | (17) | ||||
Other Current Assets | (4) | (54) | ||||
Accounts Payable | 86 | 64 | ||||
Income and Other Taxes Payable | 54 | 153 | ||||
Other Current Liabilities | 35 | (15) | ||||
Net Cash Provided by Operating Activities | 2,191 | 1,818 | ||||
Investing Activities | Property Additions | (1,308) | (1,195) | |||
Purchase of Short-term Investments | (25) | (2,035) | ||||
Proceeds from Sales of Short-term Investments | 280 | 1,914 | ||||
Other Investing Activities | 27 | 3 | ||||
Net Cash Used In Investing Activities | (1,026) | (1,313) | ||||
Financing Activities | Short-term Debt - Net | - | (1) | |||
Long-term Debt Issued | 1,000 | 2,000 | ||||
Long-term Debt Repaid | (220) | (714) | ||||
Dividends Paid | (222) | (170) | ||||
Stock Options Exercised | 75 | 144 | ||||
Shares Repurchased | (1,307) | (1,609) | ||||
Other Financing Activities | 36 | 44 | ||||
Net Cash Used in Financing Activities | (638) | (306) | ||||
Cash and Cash | Net Increase in Cash and Cash Equivalents | 527 | 199 | |||
Equivalents | ||||||
Cash and Cash Equivalents at Beginning of Period | 368 | 461 | ||||
Cash and Cash Equivalents at End of Period | $895 | $660 |
See accompanying Notes to Consolidated Financial Statements on Page 7.
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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 are now 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 third quarters 2008 and 2007, these amounts were $40 million and $25 million, respectively. |
c) | Discontinued Operations: In the third quarter of 2007, the Internal Revenue Service completed its review of the company’s pre-filing agreement, which is an early review of specific transactions. The company recorded an income tax benefit of $110 million in the third quarter of 2007, primarily associated with the resolution of income tax matters related to former activities of the container shipping and marine service businesses. This third quarter benefit is recorded as discontinued operations as the company no longer is active in these businesses. This benefit is associated with tax basis adjustments, foreign dividends and foreign tax credits from operations over a multi-year period. |
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OPERATING INCOME DETAIL (Unaudited) | ||||||||||
(Dollars in Millions) | ||||||||||
Quarters Ended September 26, 2008 and September 28, 2007 | ||||||||||
CSX | ||||||||||
Rail (a) | Intermodal | Consolidated | ||||||||
2008 | 2007 | 2008 | 2007 | 2008 | 2007 | $ Change | ||||
Revenue | $2,562 | $2,164 | $399 | $337 | $2,961 | $2,501 | $460 | |||
Expense | ||||||||||
Labor and Fringe | 735 | 728 | 19 | 20 | 754 | 748 | (6) | |||
Materials, Supplies and Other | 521 | 424 | 47 | 47 | 568 | 471 | (97) | |||
Fuel | 506 | 329 | 2 | 1 | 508 | 330 | (178) | |||
Depreciation | 221 | 211 | 6 | 9 | 227 | 220 | (7) | |||
Equipment and Other Rents | 78 | 88 | 28 | 26 | 106 | 114 | 8 | |||
Inland Transportation | (135) | (111) | 200 | 171 | 65 | 60 | (5) | |||
Total Expense | 1,926 | 1,669 | 302 | 274 | 2,228 | 1,943 | (285) | |||
Operating Income | $636 | $495 | $97 | $63 | $733 | $558 | $175 | |||
Operating Ratio | 75.2% | 77.1% | 75.7% | 81.3% | 75.2% | 77.7% | ||||
Nine Months Ended September 26, 2008 and September 28, 2007 | ||||||||||
CSX | ||||||||||
Rail (a) | Intermodal | Consolidated | ||||||||
2008 | 2007 | 2008 | 2007 | 2008 | 2007 | $ Change | ||||
Revenue | $7,449 | $6,455 | $1,132 | $998 | $8,581 | $7,453 | $1,128 | |||
Expense | ||||||||||
Labor and Fringe | 2,175 | 2,165 | 57 | 60 | 2,232 | 2,225 | (7) | |||
Materials, Supplies and Other | 1,439 | 1,328 | 147 | 134 | 1,586 | 1,462 | (124) | |||
Fuel | 1,481 | 926 | 5 | 4 | 1,486 | 930 | (556) | |||
Depreciation | 658 | 635 | 18 | 28 | 676 | 663 | (13) | |||
Equipment and Other Rents | 248 | 259 | 81 | 82 | 329 | 341 | 12 | |||
Inland Transportation | (394) | (330) | 590 | 507 | 196 | 177 | (19) | |||
Total Expense | 5,607 | 4,983 | 898 | 815 | 6,505 | 5,798 | (707) | |||
Operating Income | $1,842 | $1,472 | $234 | $183 | $2,076 | $1,655 | $421 | |||
Operating Ratio | 75.3% | 77.2% | 79.3% | 81.7% | 75.8% | 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. |
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CSX Corporation | |||||||||||||||
VOLUME AND REVENUE (Unaudited) | |||||||||||||||
Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars) | |||||||||||||||
Quarters Ended September 26, 2008 and September 28, 2007 | |||||||||||||||
Volume | Revenue | Revenue Per Unit | |||||||||||||
2008 | 2007 | % Change | 2008 | 2007 | % Change | 2008 | 2007 | % Change | |||||||
Chemicals | 124 | 130 | (5) | % | $381 | $336 | 13 | % | $3,073 | $2,585 | 19 | % | |||
Emerging Markets | 112 | 128 | (13) | 171 | 157 | 9 | 1,527 | 1,227 | 24 | ||||||
Forest Products | 82 | 87 | (6) | 196 | 182 | 8 | 2,390 | 2,092 | 14 | ||||||
Agricultural Products | 106 | 101 | 5 | 259 | 190 | 36 | 2,443 | 1,881 | 30 | ||||||
Metals | 92 | 89 | 3 | 215 | 181 | 19 | 2,337 | 2,034 | 15 | ||||||
Phosphates and Fertilizers | 87 | 89 | (2) | 116 | 100 | 16 | 1,333 | 1,124 | 19 | ||||||
Food and Consumer | 50 | 52 | (4) | 119 | 112 | 6 | 2,380 | 2,154 | 10 | ||||||
Total Merchandise | 653 | 676 | (3) | 1,457 | 1,258 | 16 | 2,231 | 1,861 | 20 | ||||||
Coal | 440 | 441 | - | 802 | 619 | 30 | 1,823 | 1,404 | 30 | ||||||
Coke and Iron Ore | 28 | 24 | 17 | 48 | 30 | 60 | 1,714 | 1,250 | 37 | ||||||
Total Coal | 468 | 465 | 1 | 850 | 649 | 31 | 1,816 | 1,396 | 30 | ||||||
Automotive | 79 | 102 | (23) | 195 | 198 | (2) | 2,468 | 1,941 | 27 | ||||||
Other | - | - | - | 60 | 59 | 2 | - | - | - | ||||||
Total Rail | 1,200 | 1,243 | (3) | 2,562 | 2,164 | 18 | 2,135 | 1,741 | 23 | ||||||
International | 258 | 280 | (8) | 137 | 129 | 6 | 531 | 461 | 15 | ||||||
Domestic | 274 | 250 | 10 | 255 | 202 | 26 | 931 | 808 | 15 | ||||||
Other | - | - | - | 7 | 6 | 17 | - | - | - | ||||||
Total Intermodal | 532 | 530 | - | 399 | 337 | 18 | 750 | 636 | 18 | ||||||
Total | 1,732 | 1,773 | (2) | % | $2,961 | $2,501 | 18 | % | $1,710 | $1,411 | 21 | % | |||
Nine Months Ended September 26, 2008 and September 28, 2007 | |||||||||||||||
Volume | Revenue | Revenue Per Unit | |||||||||||||
2008 | 2007 | % Change | 2008 | 2007 | % Change | 2008 | 2007 | % Change | |||||||
Chemicals | 381 | 397 | (4) | % | $1,115 | $980 | 14 | % | $2,927 | $2,469 | 19 | % | |||
Emerging Markets | 330 | 376 | (12) | 479 | 458 | 5 | 1,452 | 1,218 | 19 | ||||||
Forest Products | 245 | 271 | (10) | 558 | 553 | 1 | 2,278 | 2,041 | 12 | ||||||
Agricultural Products | 323 | 301 | 7 | 740 | 560 | 32 | 2,291 | 1,860 | 23 | ||||||
Metals | 280 | 276 | 1 | 622 | 539 | 15 | 2,221 | 1,953 | 14 | ||||||
Phosphates and Fertilizers | 269 | 270 | - | 374 | 310 | 21 | 1,390 | 1,148 | 21 | ||||||
Food and Consumer | 151 | 163 | (7) | 343 | 335 | 2 | 2,272 | 2,055 | 11 | ||||||
Total Merchandise | 1,979 | 2,054 | (4) | 4,231 | 3,735 | 13 | 2,138 | 1,818 | 18 | ||||||
Coal | 1,330 | 1,324 | - | 2,299 | 1,829 | 26 | 1,729 | 1,381 | 25 | ||||||
Coke and Iron Ore | 78 | 69 | 13 | 137 | 91 | 51 | 1,756 | 1,319 | 33 | ||||||
Total Coal | 1,408 | 1,393 | 1 | 2,436 | 1,920 | 27 | 1,730 | 1,378 | 26 | ||||||
Automotive | 267 | 330 | (19) | 602 | 624 | (4) | 2,255 | 1,891 | 19 | ||||||
Other | - | - | - | 180 | 176 | 2 | - | - | - | ||||||
Total Rail | 3,654 | 3,777 | (3) | 7,449 | 6,455 | 15 | 2,039 | 1,709 | 19 | ||||||
International | 773 | 872 | (11) | 397 | 402 | (1) | 514 | 461 | 11 | ||||||
Domestic | 797 | 706 | 13 | 717 | 580 | 24 | 900 | 822 | 9 | ||||||
Other | - | - | - | 18 | 16 | 13 | - | - | - | ||||||
Total Intermodal | 1,570 | 1,578 | (1) | 1,132 | 998 | 13 | 721 | 632 | 14 | ||||||
Total | 5,224 | 5,355 | (2) | % | $8,581 | $7,453 | 15 | % | $1,643 | $1,392 | 18 | % |
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CSX Corporation
REVENUE
The Company was able to achieve continued pricing gains during the third 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 – Improved pricing and increased fuel recovery continued to drive revenue and revenue-per-unit gains. Volume was down due to weakness in plastic shipments and chemicals used in construction and automobile production. Additionally, hurricanes forced a temporary shutdown of many chemical plants and refineries across the Texas and Louisiana Gulf coast late in the quarter.
Emerging Markets, Forest Products, and Food and Consumer – Revenue and revenue-per-unit increases were driven by pricing initiatives and favorable fuel recoveries. Volume declines in lumber, building products, appliances and aggregates, which include crushed stone, sand and gravel, were due to continued softness in residential construction.
Agricultural Products – Volume growth was driven by increased shipments of ethanol and feed grain. Gains in price and fuel surcharge recovery led to increases in revenue and revenue per unit.
Metals – Volume growth was driven by increased shipments of scrap metal, steel used for non-residential construction, pipe and plate shipments. Domestic production was strong, in part, due to declining imports. Revenue and revenue-per-unit increases were driven primarily by improved pricing and increased fuel recovery.
Phosphates and Fertilizers – Revenue and revenue per unit increased due to favorable pricing actions and fuel recovery. Large carryover fertilizer inventories from the first half of the year resulted in a decline in fertilizer moves.
Coal
Sustained growth in yield and improved fuel recovery positively influenced revenue and revenue per unit. Volumes increased in the export market due to continued strong overseas demand. These gains were partially offset by lower shipments to electric utilities.
Automotive
Revenue and volume were down due to declining sales of trucks and SUV’s resulting from high fuel prices, the weak economic environment and tight credit conditions. 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 import softness as well as changes in international shipping patterns.
Domestic – Volume gains were driven by continued strength in truckload, transcontinental and short-haul services. Revenue-per-unit increases were primarily driven by increased fuel recovery as yield and mix impacts were relatively flat year-over-year.
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CSX Corporation
EXPENSE |
Expenses increased $285 million from last year’s quarter. Significant variances are described below.
Labor and Fringe expense increased $6 million. This increase was primarily driven by wage and benefit inflation which was mostly offset by a reduction of train crew headcount due to lower volumes.
Materials, Supplies and Other expenses increased $97 million primarily as a result of the storms during the quarter, mostly the write-off of assets that were damaged, inflation and proxy-related costs. Additionally, there was an increase in overall cost of risk, primarily driven by higher train-accident related expenses and various other items.
Fuel expense increased $178 million due to higher fuel prices which more than offset increased fuel efficiency and volume.
Depreciation expense increased $7 million. A larger asset base related to higher capital spending was partially offset by lower depreciation rates resulting from a previous periodic review of asset useful lives.
Equipment and Other Rents expense decreased $8 million primarily due to the impacts of lower volume and reduced locomotive lease expense.
Inland Transportation increased $5 million driven by transcontinental volumes and inflation.
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RAIL OPERATING STATISTICS (Estimated) | |||||||||||||
Third Quarter | Nine Months Ended | ||||||||||||
Improvement | Improvement | ||||||||||||
2008 | 2007 | (Decline) % | 2008 | 2007 | (Decline) % | ||||||||
Coal | Domestic: | ||||||||||||
(Millions of Tons) | Utility | 37.2 | 38.8 | (4) | % | 110.4 | 117.0 | (6) | % | ||||
Other | 4.4 | 4.8 | (8) | 12.8 | 13.8 | (7) | |||||||
Total Domestic | 41.6 | 43.6 | (5) | 123.2 | 130.8 | (6) | |||||||
Export | 6.9 | 4.7 | 47 | 23.0 | 13.6 | 69 | |||||||
Total Coal | 48.5 | 48.3 | - | 146.2 | 144.4 | 1 | |||||||
Coke and Iron Ore | 2.3 | 2.0 | 15 | 6.5 | 5.7 | 14 | |||||||
Total Coal, Coke and Iron Ore | 50.8 | 50.3 | 1 | 152.7 | 150.1 | 2 | |||||||
Revenue Ton-Miles | Merchandise | 33.8 | 33.5 | 1 | 102.5 | 102.4 | - | ||||||
(Billions) | Automotive | 1.4 | 1.8 | (22) | 4.5 | 5.7 | (21) | ||||||
Coal | 22.5 | 21.2 | 6 | 67.2 | 64.4 | 4 | |||||||
Intermodal | 4.9 | 4.9 | - | 14.4 | 14.8 | (3) | |||||||
Total | 62.6 | 61.4 | 2 | 188.6 | 187.3 | 1 | |||||||
Gross Ton-Miles | Total Gross Ton-Miles | 113.2 | 113.2 | - | 343.0 | 345.5 | (1) | ||||||
(Billions) | (Excludes locomotive gross ton-miles) | ||||||||||||
Safety and Service | FRA Personal Injuries Frequency Index | 1.12 | 1.27 | 12 | 1.16 | 1.21 | 4 | ||||||
Measurements | Number of FRA-reportable injuries per 200,000 man-hours | ||||||||||||
FRA Train Accident Rate | 2.75 | 3.06 | 10 | 2.67 | 2.94 | 9 | |||||||
Number of FRA-reportable train accidents per million train miles | |||||||||||||
On-Time Train Originations | 77% | 83% | (7) | 77% | 79% | (3) | |||||||
On-Time Destination Arrivals | 67% | 76% | (12) | 67% | 70% | (4) | |||||||
Dwell Time (Hours) | 24.1 | 22.7 | (6) | 23.4 | 23.6 | 1 | |||||||
Cars-On-Line | 226,425 | 220,604 | (3) | 224,035 | 222,974 | - | |||||||
System Train Velocity (Miles Per Hour) | 20.1 | 21.4 | (6) | 20.3 | 20.6 | (1) | % | ||||||
Resources | Route Miles | 21,203 | 21,224 | - | |||||||||
Locomotives (Owned and long-term leased) | 4,133 | 3,925 | 5 | ||||||||||
Freight Cars (Owned and long-term leased) | 91,833 | 96,866 | (5) | % |
FUEL STATISTICS | ||||||||
Third Quarter | Nine Months | |||||||
2008 | 2007 | Change | 2008 | 2007 | Change | |||
Estimated Locomotive Fuel Consumption (Millions of Gallons) | 131.2 | 135.4 | 4.2 | 412.4 | 429.3 | 16.9 | ||
Price Per Gallon (Dollars) | $3.57 | $2.25 | (1.32) | $3.33 | $1.99 | $(1.34) | ||
Total Locomotive Fuel Expense (Dollars in Million) | 468 | 305 | (163) | 1,373 | 854 | (519) | ||
Total Non-Locomotive Fuel Expense (Dollars in Million) | 40 | 25 | (15) | 113 | 76 | (37) | ||
Total Fuel Expense (Dollars in Million) | $508 | $330 | $(178) | $1,486 | $930 | $(556) |
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CSX Corporation | ||||||||
OTHER INCOME (EXPENSE) (Unaudited) | ||||||||
(Dollars in Millions) | ||||||||
Quarters Ended | Nine Months Ended | |||||||
Sept. 26, | Sept. 28, | Sept. 26, | Sept. 28, | |||||
2008 | 2007 | $ Change | 2008 | 2007 | $ Change | |||
Interest Income (a) | $10 | $13 | $(3) | $31 | $41 | $(10) | ||
Income (Expense) from Real Estate | ||||||||
and Resort Operations (b) | 6 | 5 | 1 | 11 | (9) | 20 | ||
Miscellaneous (c) | (8) | (4) | (4) | 27 | (23) | 50 | ||
Total | $8 | $14 | $(6) | $69 | $9 | $60 |
(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. Results from resort operations were down in 2008 because of decreased group business resulting from the uncertainty of labor negotiations, and an inability to sufficiently reduce contractual labor costs accordingly. |
(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 nine 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 third quarter 2008 and is expected to be immaterial in future reporting periods. |
EMPLOYEE COUNTS (Estimated) | |||||
August | August | ||||
2008 | 2007 | Change | |||
Transportation Businesses | |||||
Rail | 31,874 | 32,635 | (761) | ||
Intermodal | 958 | 1,004 | (46) | ||
Technology and Corporate | 573 | 574 | (1) | ||
Total Transportation Businesses | 33,405 | 34,213 | (808) | ||
Resort and Real Estate | 1,402 | 1,745 | (343) | ||
Total | 34,807 | 35,958 | (1,151) |
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