CSX Announces Fourth Quarter Results
Fourth Quarter Highlights:
| · | Revenues grow to $2.7 billion |
| · | Operating income increases to $692 million |
| · | Operating ratio improves to 74.1 percent |
JACKSONVILLE, Fla., (Jan. 20, 2009) – CSX Corporation [NYSE: CSX] today announced fourth quarter earnings per share of 63 cents. These results include a noncash impairment charge of 27 cents per share related to the write-down of its investment in The Greenbrier resort. Excluding this charge and gains from insurance recoveries in the prior year quarter, comparable earnings per share increased to 90 cents, a 6 percent increase on a year-over-year basis. (See table below for reconciliation of quarter items to reported numbers.)
“CSX achieved solid financial results in the fourth quarter,” said Michael J. Ward, chairman, president and CEO. “The company finished 2008 in a strong financial position and began taking aggressive actions in the quarter as the intensifying global recession dramatically impacted our business.”
Revenues in the quarter increased four percent over last year, to $2.7 billion. The gains were driven by higher yields and fuel recovery, which more than offset the impact of significantly lower volumes. Operating income, on a comparable basis, increased 16 percent to $692 million, resulting in an operating ratio of 74.1 percent. Lower fuel costs and the company’s productivity initiatives helped drive the increase in operating income as well as the improvement to a record fourth quarter operating ratio.
“Given the current economic environment, the company is accelerating its focus on driving productivity, changing its cost structure, creating efficiency and right sizing the resource base,” said Ward. “We will achieve this while keeping our intense focus on safety and customer service.”
| Table of Contents | The accompanying unaudited | CSX CORPORATION | CONTACTS: |
| | financial information should be | 500 Water Street, C900 | |
| | read in conjunction with the | Jacksonville, FL | INVESTOR RELATIONS |
| Company’s most recent | 32202 | David Baggs |
| Annual Report on Form 10-K, | http://www.csx.com | (904) 359-4812 |
| Quarterly Reports on Form | | MEDIA |
| | 10-Q, and any Current | | Garrick Francis |
| | Reports on Form 8-K. | | (877) 835-5279 |
GAAP RECONCILIATION 1 (Dollars in millions, except per share amounts) |
| | Fourth Quarter | Full Year |
| | 2008 | 2007 | % | 2008 | 2007 | % |
EPS from Continuing Operations Add Impairment Loss Less Gain on Insurance Recoveries Less Equity Earnings Adjustments Less Income Tax Benefits | $ 0.63 0.27 - - - | $ 0.86 - (0.01) - - | (27)% | $ 3.34 0.27 - (0.05) (0.04) | $ 2.74 - (0.04) - - | 22% |
Comparable EPS from Continuing Operations | $ 0.90 | $ 0.85 | 6% | $ 3.52 | $ 2.70 | 30% |
Operating Income Less Gain on Insurance Recoveries | $ 692 - | $ 605 (8) | 14% | $ 2,768 - | $ 2,260 (27) | 22% |
Comparable Operating Income | $ 692 | $ 597 | 16% | $ 2,768 | $ 2,233 | 24% |
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 Jan. 21, 2009 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.
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,” “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.
|
| CONSOLIDATED STATEMENT OF EARNINGS |
| (Dollars in Millions, Except Per Share Amounts) |
| | | | | | | | | | |
| | | | (Unaudited) | | (Unaudited) | | |
| | | | Quarters Ended | | Years Ended |
| | | | Dec. 26 | Dec. 28, | | | Dec. 26 | Dec. 28, | |
| | | | 2008 | 2007 | $ Change | | 2008 | 2007 | $ Change |
| Revenue | $2,674 | $2,577 | $97 | | $11,255 | $10,030 | $1,225 |
| Expense | | | | | | | |
| | Labor and Fringe | 723 | 761 | 38 | | 2,955 | 2,986 | 31 |
| | Materials, Supplies and Other | 547 | 444 | (103) | | 2,133 | 1,925 | (208) |
| | Fuel | 331 | 382 | 51 | | 1,817 | 1,312 | (505) |
| | Depreciation | 228 | 220 | (8) | | 904 | 883 | (21) |
| | Equipment and Other Rents | 96 | 110 | 14 | | 425 | 451 | 26 |
| | Inland Transportation | 57 | 63 | 6 | | 253 | 240 | (13) |
| | Gain on Insurance Recoveries | - | (8) | (8) | | - | (27) | (27) |
| | | Total Expense | 1,982 | 1,972 | (10) | | 8,487 | 7,770 | (717) |
| Operating Income | 692 | 605 | 87 | | 2,768 | 2,260 | 508 |
| | | | | | | | | | |
Other Income (Expense) - Net (Note a) | (172) | 80 | (252) | | (103) | 89 | (192) |
| Interest Expense | (136) | (115) | (21) | | (519) | (417) | (102) |
| Earnings From Continuing Operations | | | | | | | |
| | Before Income Taxes | 384 | 570 | (186) | | 2,146 | 1,932 | 214 |
| | | | | | | | | | |
Income Tax Expense (Note b) | (137) | (205) | 68 | | (781) | (706) | (75) |
| Earnings From Continuing Operations | 247 | 365 | (118) | | 1,365 | 1,226 | 139 |
| | | | | | | | | | |
Discontinued Operations (Note c) | - | - | - | | - | 110 | (110) |
| Net Earnings | $247 | $365 | $(118) | | $1,365 | $1,336 | $29 |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Per Share Data: | | | | | | | |
| Net Earnings Per Common Share, | | | | | | | |
| | Assuming Dilution: | | | | | | | |
| | | From Continuing Operations | $0.63 | $0.86 | $(0.23) | | $3.34 | $2.74 | $0.60 |
| | | Discontinued Operations | - | - | - | | - | 0.25 | (0.25) |
| | | Net Earnings | $0.63 | $0.86 | $(0.23) | | $3.34 | $2.99 | $0.35 |
| | | | | | | | | | |
| Average Diluted Common Shares | | | | | | | |
| | | Outstanding (Thousands) | 395,665 | 425,475 | | | 408,602 | 448,280 | |
| | | | | | | | | | |
| Cash Dividends Paid Per | | | | | | | |
| | | Common Share | $0.22 | $0.15 | | | $0.77 | $0.54 | |
See accompanying Notes to Consolidated Financial Statements on Page 7.
| CSX Corporation |
| CONSOLIDATED BALANCE SHEET |
| (Dollars in Millions) |
| | | | (Unaudited) | |
| | | | Dec. 26, | Dec. 28, |
| | | | 2008 | 2007 |
| Assets | Cash and Cash Equivalents | $669 | $368 |
| | Short-term Investments | 76 | 346 |
| | Accounts Receivable - Net | 1,107 | 1,174 |
| | Materials and Supplies | 217 | 240 |
| | Deferred Income Taxes | 203 | 254 |
| | Other Current Assets | 119 | 109 |
| | | Total Current Assets | 2,391 | 2,491 |
| | | | | |
| | Properties | 30,208 | 28,999 |
| | Accumulated Depreciation | (7,520) | (7,219) |
| | | Properties - Net | 22,688 | 21,780 |
| | | | | |
| | Investment in Conrail | 609 | 639 |
| | Affiliates and Other Companies | 406 | 365 |
| | Other Long-term Assets | 194 | 259 |
| | | Total Assets | $26,288 | $25,534 |
| | | | | |
| | | | | |
| | | | | |
| Liabilities and | Accounts Payable | $973 | $976 |
| Shareholders' Equity | Labor and Fringe Benefits Payable | 465 | 461 |
| | Casualty, Environmental and Other Reserves | 236 | 247 |
| | Current Maturities of Long-term Debt | 319 | 783 |
| | Short-term Debt | 1 | 4 |
| | Income and Other Taxes Payable | 125 | 113 |
| | Other Current Liabilities | 285 | 87 |
| | | Total Current Liabilities | 2,404 | 2,671 |
| | | | | |
| | Casualty, Environmental and Other Reserves | 643 | 624 |
| | Long-term Debt | 7,512 | 6,470 |
| | Deferred Income Taxes | 6,235 | 6,096 |
| | Other Long-term Liabilities | 1,446 | 988 |
| | | Total Liabilities | 18,240 | 16,849 |
| | | | | |
| | Common Stock, $1 Par Value | 391 | 408 |
| | Other Capital | - | 37 |
| | Retained Earnings | 8,398 | 8,565 |
| | Accumulated Other Comprehensive Loss | (741) | (325) |
| | | Total Shareholders' Equity | 8,048 | 8,685 |
| | | | | |
| | | Total Liabilities and Shareholders' Equity | $26,288 | $25,534 |
See accompanying Notes to Consolidated Financial Statements on Page 7.
| CSX Corporation |
| CONSOLIDATED CASH FLOW STATEMENT |
| (Dollars in Millions) |
| | | | | | (Unaudited) | |
| | | | | | Years Ended |
| | | | | | Dec. 26, | Dec. 28, |
| | | | | | 2008 | 2007 |
| Operating Activities | Net Earnings | $1,365 | $1,336 |
| | | Adjustments to Reconcile Net Earnings to Net Cash Provided: | | |
| | | | Depreciation | 918 | 890 |
| | | | Deferred Income Taxes | 435 | 272 |
| | | | Non-cash Impairment Loss | 166 | - |
| | | | Non-cash Discontinued Operations | - | (110) |
| | | | Contributions to Qualified Pension Plans | (102) | (266) |
| | | | Other Operating Activities | 65 | (91) |
| | | | Changes in Operating Assets and Liabilities: | | |
| | | | | Accounts Receivable | 74 | (50) |
| | | | | Other Current Assets | 37 | (41) |
| | | | | Accounts Payable | (3) | 48 |
| | | | | Income and Other Taxes Payable | (46) | 234 |
| | | | | Other Current Liabilities | 5 | (38) |
| | | | Net Cash Provided by Operating Activities | 2,914 | 2,184 |
| | | | | | | |
| Investing Activities | Property Additions | (1,740) | (1,773) |
| | | Purchase of Short-term Investments | (25) | (2,338) |
| | | Proceeds from Sales of Short-term Investments | 280 | 2,459 |
| | | Other Investing Activities | 36 | (41) |
| | | | Net Cash Used In Investing Activities | (1,449) | (1,693) |
| | | | | | | |
| Financing Activities | Short-term Debt - Net | (3) | (6) |
| | | Long-term Debt Issued | 1,351 | 2,381 |
| | | Long-term Debt Repaid | (642) | (785) |
| | | Dividends Paid | (308) | (231) |
| | | Stock Options Exercised | 83 | 153 |
| | | Shares Repurchased | (1,570) | (2,174) |
| | | Other Financing Activities | (75) | 78 |
| | | | Net Cash Used in Financing Activities | (1,164) | (584) |
| | | | | | | |
| Cash and Cash | Net Increase in Cash and Cash Equivalents | 301 | (93) |
| | Equivalents | | | | | |
| | | Cash and Cash Equivalents at Beginning of Period | 368 | 461 |
| | | | Cash and Cash Equivalents at End of Period | $669 | $368 |
See accompanying Notes to Consolidated Financial Statements on Page 7.
CSX Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
| a) | Other Income: In the fourth quarter of 2008, CSX wrote down its investment in The Greenbrier resort. The impairment loss as well as the loss from resort operations was $179 million. For additional details related to other income, see page 14. |
| b) | Income Tax Expense: In 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. |
| c) | Discontinued Operations: In 2007, the Internal Revenue Service completed its review of the Company’s pre-filing agreement, which is an early review of specific transactions. As a result of this agreement, the Company recorded an income tax benefit of $110 million in 2007, primarily associated with the resolution of income tax matters related to former activities of the container shipping and marine service businesses. This 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. |
|
OPERATING INCOME DETAIL (Unaudited)(a) |
| (Dollars in Millions) |
| | | | | | | | | | | |
| Quarters Ended December 26, 2008 and December 28, 2007 |
| | | | | | | | | | | |
| | | | | | | | CSX | |
| | | | | Rail (b) | Intermodal | Consolidated | |
| | | | | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | $ Change |
| Revenue | $2,340 | $2,219 | $334 | $358 | $2,674 | $2,577 | $97 |
| Expense | | | | | | | |
| | Labor and Fringe | 704 | 740 | 19 | 21 | 723 | 761 | 38 |
| | Materials, Supplies and Other | 494 | 400 | 53 | 44 | 547 | 444 | (103) |
| | Fuel | 329 | 381 | 2 | 1 | 331 | 382 | 51 |
| | Depreciation | 221 | 214 | 7 | 6 | 228 | 220 | (8) |
| | Equipment and Other Rents | 69 | 82 | 27 | 28 | 96 | 110 | 14 |
| | Inland Transportation | (113) | (118) | 170 | 181 | 57 | 63 | 6 |
| | Gain on Insurance Recoveries | - | (8) | - | - | - | (8) | (8) |
| | | Total Expense | 1,704 | 1,691 | 278 | 281 | 1,982 | 1,972 | (10) |
| Operating Income | $636 | $528 | $56 | $77 | $692 | $605 | $87 |
| | | | | | | | | | | |
| Operating Ratio | 72.8% | 76.2% | 83.2% | 78.5% | 74.1% | 76.5% | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Years Ended December 26, 2008 and December 28, 2007 |
| | | | | | | | | | | |
| | | | | | | | CSX | |
| | | | | Rail (b) | Intermodal | Consolidated | |
| | | | | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | $ Change |
| Revenue | $9,789 | $8,674 | $1,466 | $1,356 | $11,255 | $10,030 | $1,225 |
| Expense | | | | | | | |
| | Labor and Fringe | 2,879 | 2,905 | 76 | 81 | 2,955 | 2,986 | 31 |
| | Materials, Supplies and Other | 1,933 | 1,747 | 200 | 178 | 2,133 | 1,925 | (208) |
| | Fuel | 1,810 | 1,307 | 7 | 5 | 1,817 | 1,312 | (505) |
| | Depreciation | 879 | 849 | 25 | 34 | 904 | 883 | (21) |
| | Equipment and Other Rents | 317 | 341 | 108 | 110 | 425 | 451 | 26 |
| | Inland Transportation | (507) | (448) | 760 | 688 | 253 | 240 | (13) |
| | Gain on Insurance Recoveries | - | (27) | - | - | - | (27) | (27) |
| | | Total Expense | 7,311 | 6,674 | 1,176 | 1,096 | 8,487 | 7,770 | (717) |
| Operating Income | $2,478 | $2,000 | $290 | $260 | $2,768 | $2,260 | $508 |
| | | | | | | | | | | |
| Operating Ratio | 74.7% | 76.9% | 80.2% | 80.8% | 75.4% | 77.5% | |
| a) | Beginning in 2008, certain items have been reclassified within the income statement. Certain prior-year data have been reclassified to conform to the 2008 presentation. |
| · | The Company reclassified 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. |
| · | 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 fourth quarters 2008 and 2007, these amounts were $36 million and $25 million, respectively. |
| b) | 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. |
|
VOLUME AND REVENUE (Unaudited) |
| Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars) |
| | | | | | | | | | | | | | | |
| Quarters Ended December 26, 2008 and December 28, 2007 |
| | | | | | | | | | | | | | | |
| | Volume | | Revenue | | Revenue Per Unit |
| | 2008 | 2007 | % Change | | 2008 | 2007 | % Change | | 2008 | 2007 | % Change |
| Chemicals | 107 | 125 | (14) | % | | $322 | $333 | (3) | % | $3,009 | $2,664 | 13 | % |
| Metals | 57 | 79 | (28) | | | 129 | 163 | (21) | | | 2,263 | 2,063 | 10 | |
| Total Industrial | 164 | 204 | (20) | | | 451 | 496 | (9) | | | 2,750 | 2,431 | 13 | |
| Emerging Markets | 99 | 115 | (14) | | | 149 | 147 | 1 | | | 1,505 | 1,278 | 18 | |
| Forest Products | 71 | 81 | (12) | | | 164 | 169 | (3) | | | 2,310 | 2,086 | 11 | |
| Food and Consumer | 48 | 49 | (2) | | | 113 | 106 | 7 | | | 2,354 | 2,163 | 9 | |
| Total Housing | 218 | 245 | (11) | | | 426 | 422 | 1 | | | 1,954 | 1,722 | 13 | |
| Agricultural Products | 109 | 109 | - | | | 271 | 226 | 20 | | | 2,486 | 2,073 | 20 | |
| Phosphates and Fertilizers | 66 | 92 | (28) | | | 86 | 111 | (23) | | | 1,303 | 1,207 | 8 | |
| Total Agriculture | 175 | 201 | (13) | | | 357 | 337 | 6 | | | 2,040 | 1,677 | 22 | |
| Total Merchandise | 557 | 650 | (14) | | | 1,234 | 1,255 | (2) | | | 2,215 | 1,931 | 15 | |
| | | | | | | | | | | | | | | |
| Coal | 449 | 447 | - | | | 811 | 654 | 24 | | | 1,806 | 1,463 | 23 | |
| Coke and Iron Ore | 22 | 22 | - | | | 38 | 29 | 31 | | | 1,727 | 1,318 | 31 | |
| Total Coal | 471 | 469 | - | | | 849 | 683 | 24 | | | 1,803 | 1,456 | 24 | |
| | | | | | | | | | | | | | | |
| Automotive | 76 | 109 | (30) | | | 182 | 215 | (15) | | | 2,395 | 1,972 | 21 | |
| | | | | | | | | | | | | | | |
| Other | - | - | - | | | 75 | 66 | 14 | | | - | - | - | |
| Total Rail | 1,104 | 1,228 | (10) | | | 2,340 | 2,219 | 5 | | | 2,120 | 1,807 | 17 | |
| | | | | | | | | | | | | | | |
| International | 227 | 260 | (13) | | | 112 | 123 | (9) | | | 493 | 473 | 4 | |
| Domestic | 272 | 273 | - | | | 212 | 227 | (7) | | | 779 | 832 | (6) | |
| Other | - | - | - | | | 10 | 8 | 25 | | | - | - | - | |
| Total Intermodal | 499 | 533 | (6) | | | 334 | 358 | (7) | | | 669 | 672 | - | |
| | | | | | | | | | | | | | | |
| Total | 1,603 | 1,761 | (9) | % | | $2,674 | $2,577 | 4 | % | | $1,668 | $1,463 | 14 | % |
| CSX Corporation |
VOLUME AND REVENUE (Unaudited) |
| Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars) |
| | | | | | | | | | | | | | | |
| Years Ended December 26, 2008 and December 28, 2007 |
| | | | | | | | | | | | | | | |
| | Volume | | Revenue | | Revenue Per Unit |
| | 2008 | 2007 | % Change | | 2008 | 2007 | % Change | | 2008 | 2007 | % Change |
| Chemicals | 488 | 522 | (7) | % | | $1,437 | $1,313 | 9 | % | $2,945 | $2,515 | 17 | % |
| Metals | 337 | 355 | (5) | | | 751 | 702 | 7 | | | 2,228 | 1,977 | 13 | |
| Total Industrial | 825 | 877 | (6) | | | 2,188 | 2,015 | 9 | | | 2,652 | 2,298 | 15 | |
| Emerging Markets | 429 | 491 | (13) | | | 628 | 605 | 4 | | | 1,464 | 1,232 | 19 | |
| Forest Products | 316 | 352 | (10) | | | 722 | 722 | - | | | 2,285 | 2,051 | 11 | |
| Food and Consumer | 199 | 212 | (6) | | | 456 | 441 | 3 | | | 2,291 | 2,080 | 10 | |
| Total Housing | 944 | 1,055 | (11) | | | 1,806 | 1,768 | 2 | | | 1,913 | 1,676 | 14 | |
| Agricultural Products | 432 | 410 | 5 | | | 1,011 | 786 | 29 | | | 2,340 | 1,917 | 22 | |
| Phosphates and Fertilizers | 335 | 362 | (7) | | | 460 | 421 | 9 | | | 1,373 | 1,163 | 18 | |
| Total Agriculture | 767 | 772 | (1) | | | 1,471 | 1,207 | 22 | | | 1,918 | 1,563 | 23 | |
| Total Merchandise | 2,536 | 2,704 | (6) | | | 5,465 | 4,990 | 10 | | | 2,155 | 1,845 | 17 | |
| | | | | | | | | | | | | | | |
| Coal | 1,779 | 1,771 | - | | | 3,110 | 2,483 | 25 | | | 1,748 | 1,402 | 25 | |
| Coke and Iron Ore | 100 | 91 | 10 | | | 175 | 120 | 46 | | | 1,750 | 1,319 | 33 | |
| Total Coal | 1,879 | 1,862 | 1 | | | 3,285 | 2,603 | 26 | | | 1,748 | 1,398 | 25 | |
| | | | | | | | | | | | | | | |
| Automotive | 343 | 439 | (22) | | | 784 | 839 | (7) | | | 2,286 | 1,911 | 20 | |
| | | | | | | | | | | | | | | |
| Other | - | - | - | | | 255 | 242 | 5 | | | - | - | - | |
| Total Rail | 4,758 | 5,005 | (5) | | | 9,789 | 8,674 | 13 | | | 2,057 | 1,733 | 19 | |
| | | | | | | | | | | | | | | |
| International | 1,000 | 1,132 | (12) | | | 509 | 525 | (3) | | | 509 | 464 | 10 | |
| Domestic | 1,069 | 979 | 9 | | | 929 | 807 | 15 | | | 869 | 824 | 5 | |
| Other | - | - | - | | | 28 | 24 | 17 | | | - | - | - | |
| Total Intermodal | 2,069 | 2,111 | (2) | | | 1,466 | 1,356 | 8 | | | 709 | 642 | 10 | |
| | | | | | | | | | | | | | | |
| Total | 6,827 | 7,116 | (4) | % | | $11,255 | $10,030 | 12 | % | | $1,649 | $1,409 | 17 | % |
CSX Corporation
REVENUE
The Company was able to achieve continued revenue and pricing gains during the fourth 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, more than offset the volume losses caused by the broad based weakness in the economy.
Merchandise
Chemicals – Improved yield and increased fuel recovery continue to drive revenue-per-unit gains. Chemicals are used in the manufacturing of plastics which play an important role in components used in housing, automotive and consumer goods. Continued weakness in each of these three markets has reduced chemicals demand. The large decline in oil and natural gas prices, a key feedstock in the making of plastics, also weakened demand for the product, as buyers are expecting further reductions in raw materials costs.
Emerging Markets and Food and Consumer – Revenue and revenue-per-unit increases were primarily driven by favorable fuel recoveries. Volume declines in appliances and aggregates, which include crushed stone, sand and gravel, were due to continued softness in residential construction.
Forest Products – A weak housing market and tighter credit conditions have driven the continued decline of lumber and building products. Paper volumes continued to be soft due to electronic media substitution and less packaging being used as a result of slower consumer spending.
Agricultural Products – Volume was flat as increased shipments of ethanol and feed ingredients were offset by declines in feed grains and exports. Gains in yield and fuel surcharge recovery, plus longer hauls of ethanol to the south led to increases in revenue and revenue per unit.
Metals – Volume declines were driven by weak global and domestic steel demand in the automotive and construction industries. This weak demand, combined with the credit crisis, caused steel producers to take capacity out of the market in an attempt to balance supply with demand. Revenue-per-unit increases were driven primarily by pricing gains and increased fuel recovery.
Phosphates and Fertilizers – Phosphate production was down as plant curtailments resulted from weak international and domestic demand. Retailers were reluctant to refill warehouses during the quarter due to falling crop and fertilizer prices. Revenue per unit was up due to improved yield and fuel recoveries.
Coal
Sustained growth in yield and improved fuel recovery positively influenced revenue and revenue per unit. Volume increases in the export and river markets offset weakness in electric utility shipments.
Automotive
Revenue and volume were down due to declining sales resulting from the weak economic environment, tight credit conditions and low consumer confidence. Revenue per unit improved due to yield initiatives and higher fuel recoveries.
Intermodal Operating Revenue
International – Revenue-per-unit was higher on long-term contract price increases and increased fuel recovery. Volumes were down on continued import softness and slowing exports.
Domestic – Revenue-per-unit was lower as increased fuel recovery was offset by mix impacts of incremental short-haul traffic and a competitive over-the-road pricing environment. Volume growth slowed in the fourth quarter from earlier in the year as the weakening economy materially slowed consumer-driven demand.
CSX Corporation
Expenses increased $10 million from last year’s quarter. Significant variances are described below.
Labor and Fringe expense decreased $38 million. This decrease was primarily driven by lower long-term incentive compensation which was slightly offset by wage and labor inflation and other items.
Materials, Supplies and Other expense increased $103 million. This increase was primarily due to the absence of prior year favorable casualty reserve changes, higher inflation and various other items.
Fuel expense decreased $51 million due to lower fuel prices and lower volumes, slightly offset by increased non-locomotive fuel and lower fuel efficiency.
Depreciation expense increased $8 million. A larger asset base related to higher capital spending was partially offset by lower depreciation rates resulting from a periodic review of asset useful lives.
Equipment and Other Rents expense decreased $14 million driven by lower volumes as well as reduced lease expense, partially offset by lower equipment utilization due to a significant decline in automotive business.
Inland Transportation decreased $6 million driven by lower transcontinental volumes.
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| | | | | | | | | | | | | | |
RAIL OPERATING STATISTICS (Estimated) |
| | | | | | | | | | | | | | |
| | | | | | Fourth Quarter | | Years Ended |
| | | | | | | | Improvement | | | | Improvement |
| | | | | | 2008 | 2007 | (Decline) % | | 2008 | 2007 | (Decline) % |
| Coal | Domestic: | | | | | | | | | | |
| (Millions of Tons) | | Utility | | 38.4 | 37.9 | 1 | % | | 148.8 | 154.9 | (4) | % |
| | | Other | | 4.1 | 4.7 | (13) | | | 17.0 | 18.6 | (9) | |
| | | | Total Domestic | | 42.5 | 42.6 | - | | | 165.8 | 173.5 | (4) | |
| | Export | | 7.0 | 6.3 | 11 | | | 30.0 | 19.9 | 51 | |
| | | | Total Coal | | 49.5 | 48.9 | 1 | | | 195.8 | 193.4 | 1 | |
| | | Coke and Iron Ore | | 1.9 | 1.9 | - | | | 8.3 | 7.6 | 9 | |
| | | | Total Coal, Coke and Iron Ore | | 51.4 | 50.8 | 1 | | | 204.1 | 201.0 | 2 | |
| | | | | | | | | | | | | | |
| Revenue Ton-Miles | Merchandise | | 29.6 | 32.9 | (10) | | | 132.0 | 135.3 | (2) | |
| (Billions) | Automotive | | 1.3 | 1.9 | (32) | | | 5.9 | 7.6 | (22) | |
| | Coal | | 22.7 | 21.3 | 7 | | | 89.6 | 85.6 | 5 | |
| | Intermodal | | 4.6 | 4.8 | (4) | | | 18.9 | 19.6 | (4) | |
| | | | Total | | 58.2 | 60.9 | (4) | | | 246.4 | 248.1 | (1) | |
| | | | | | | | | | | | | | |
| Gross Ton-Miles | Total Gross Ton-Miles | | 106.7 | 112.6 | (5) | | | 449.8 | 458.2 | (2) | |
| (Billions) | (Excludes locomotive gross ton-miles) | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Safety and Service | FRA Personal Injuries Frequency Index | | 1.07 | 1.28 | 16 | | | 1.14 | 1.23 | 7 | |
| Measurements | Number of FRA-reportable injuries per 200,000 man-hours | | | | | | | | | |
| | FRA Train Accident Rate | | 2.39 | 2.89 | 17 | | | 2.68 | 3.01 | 11 | |
| | Number of FRA-reportable train accidents per million train miles | | | | | | | | | |
| | | | | | | | | | | | | | |
| | On-Time Train Originations | | 85% | 81% | 5 | | | 79% | 79% | - | |
| | On-Time Destination Arrivals | | 77% | 73% | 5 | | | 70% | 70% | - | |
| | | | | | | | | | | | | | |
| | Dwell Time (Hours) | | 23.2 | 22.2 | (5) | | | 23.3 | 23.2 | - | |
| | Cars-On-Line | | 222,195 | 218,884 | (2) | | | 223,574 | 221,943 | (1) | |
| | | | | | | | | | | | | | |
| | System Train Velocity (Miles Per Hour) | | 21.2 | 21.2 | - | | | 20.5 | 20.8 | (1) | % |
| | | | | | | | | | | | | | |
| | | | | | | | Increase | | | | | |
| | | | | | | | (Decrease) % | | | | | |
| Resources | Route Miles | | 21,204 | 21,227 | - | | | | | | |
| | Locomotives (Owned and long-term leased) | | 4,143 | 4,007 | 3 | | | | | | |
| | Freight Cars (Owned and long-term leased) | | 91,350 | 94,364 | (3) | % | | | | | |
| FUEL STATISTICS |
| | | Fourth Quarter | | Years Ended |
| | | 2008 | 2007 | Change | | 2008 | 2007 | Change |
Estimated Locomotive Fuel Consumption (Millions of Gallons) | 133.0 | 139.5 | 6.5 | | 544.8 | 568.6 | 23.8 |
Price Per Gallon (Dollars) | | $2.22 | $2.56 | $0.34 | | $3.06 | $2.13 | $(0.93) |
Total Locomotive Fuel Expense (Dollars in Million) | | 295 | 357 | 62 | | 1,667 | 1,211 | (456) |
Total Non-Locomotive Fuel Expense (Dollars in Million) | | 36 | 25 | (11) | | 150 | 101 | (49) |
Total Fuel Expense (Dollars in Million) | | $331 | $382 | $51 | | $1,817 | $1,312 | $(505) |
| CSX Corporation |
| | | | | | | | |
OTHER INCOME (EXPENSE) (Unaudited) |
| (Dollars in Millions) |
| | | | | | | | |
| | Quarters Ended | | Years Ended |
| | Dec. 26, | Dec. 28, | | | Dec. 26, | Dec. 28, | |
| | 2008 | 2007 | $ Change | | 2008 | 2007 | $ Change |
Interest Income (a) | $6 | $14 | $(8) | | $37 | $55 | $(18) |
Income from Real Estate Operations (b) | 3 | 51 | (48) | | 39 | 58 | (19) |
Loss from Resort Operations (c) | (179) | (1) | (178) | | (204) | (16) | (188) |
Miscellaneous (d) | (2) | 16 | (18) | | 25 | (8) | 33 |
| | $(172) | $80 | $(252) | | $(103) | $89 | $(192) |
| (a) | Interest income includes amounts earned from CSX’s cash, cash equivalents and investments. |
| (b) | Income from real estate operations includes the results of operations of the Company’s non-operating real estate sales, leasing, acquisition and management and development activities. Income may fluctuate as a function of timing of real estate sales. |
| (c) | Loss from resort operations consists primarily of the $166 million pre-tax write-down of the Company’s investment in The Greenbrier resort located in White Sulphur Springs, West Virginia. Additionally, 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. |
| (d) | Miscellaneous includes a number of items, which can be income or expense. Examples of these items are equity earnings and/or losses, minority interest expense, investment gains and losses and other non-operating activities. |
| · | The fourth quarter of 2007 included $21 million of lower minority interest expense that was the result of an increase in CSX’s economic interest at a consolidated subsidiary. |
| · | For the year 2008, CSX recorded additional income of $30 million for an adjustment to correct equity earnings from a non-consolidated subsidiary. |
| · | For the year 2007, CSX recorded expense of $10 million related to an early redemption premium and the write-off of debt issuance costs. |
EMPLOYEE COUNTS (Estimated) |
| | | | | | |
| | | | November | November | |
| | | | 2008 | 2007 | Change |
| Transportation Businesses | | | |
| | Rail | 31,924 | 31,900 | 24 |
| | Intermodal | 957 | 1,006 | (49) |
| | Technology and Corporate | 571 | 563 | 8 |
| | | Total Transportation Businesses | 33,452 | 33,469 | (17) |
| | | | | | |
| Resort and Real Estate | 1,238 | 1,595 | (357) |
| | | Total | 34,690 | 35,064 | (374) |
