CSX (CSX) 8-K CSX Reports First Quarter Earnings Surface Transportation Revenue Sets First Quarter Record

CSX Corporation and Subsidiaries QuarterlyFlash

CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

	(Unaudited)
	Quarters Ended
	Mar. 26,			Mar. 28,
	2004			2003
Revenue and Expense
Operating Revenue	$	1,963		$	2,016
Operating Expense		1,802			1,839
Operating Income		161			177
Other (Expense) Income		(10	)		(10	)
Interest Expense		108			103
Earnings
Earnings Before Income Taxes and Cumulative Effect of Accounting Change		43			64
Income Tax Expense		13			22
Earnings Before Cumulative Effect of Accounting Change		30			42
Cumulative Effect of Accounting Change — Net of Tax		—			57
Net Earnings	$	30		$	99
Per Common Share
Earnings Per Share, Assuming Dilution:
Before Cumulative Effect of Accounting Change	$	0.14		$	0.20
Cumulative Effect of Accounting Change		—			0.26
Net Earnings	$	0.14		$	0.46
Average Diluted Common Shares Outstanding(Thousands)		215,152			214,164
Cash Dividends Paid Per Common Share	$	0.10		$	0.10

CSX Corporation and Subsidiaries QuarterlyFlash

CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)

	(Unaudited)
	Mar. 26,			Dec. 26,
	2004			2003
Assets
Current Assets
Cash, Cash Equivalents and Short-term Investments	$	447		$	368
Accounts Receivable — Net		1,170			1,163
Materials and Supplies		179			170
Deferred Income Taxes		128			136
Other Current Assets		108			66
Total Current Assets		2,032			1,903
Properties		19,546			19,267
Accumulated Depreciation		5,700			5,537
Properties – Net		13,846			13,730
Investment in Conrail		4,683			4,678
Affiliates and Other Companies		494			515
Other Long-term Assets		1,018			934
Total Assets	$	22,073		$	21,760
Liabilities
Current Liabilities
Accounts Payable	$	864		$	827
Labor and Fringe Benefits Payable		377			397
Casualty, Environmental and Other Reserves		313			280
Current Maturities of Long-term Debt		425			426
Short-term Debt		154			2
Income and Other Taxes Payable		109			123
Other Current Liabilities		124			155
Total Current Liabilities		2,366			2,210
Casualty, Environmental and Other Reserves		822			836
Long-term Debt		6,970			6,886
Deferred Income Taxes		3,780			3,752
Other Long-term Liabilities		1,651			1,623
Total Liabilities		15,589			15,307
Shareholders’ Equity
Common Stock, $1 Par Value		215			215
Other Capital		1,585			1,579
Retained Earnings		4,968			4,957
Accumulated Other Comprehensive Loss		(284	)		(298	)
Total Shareholders’ Equity		6,484			6,453
Total Liabilities and Shareholders’ Equity	$	22,073		$	21,760

CSX Corporation and Subsidiaries QuarterlyFlash

CONSOLIDATED CASH FLOW STATEMENTS
(Dollars in Millions)

	(Unaudited)
	Quarters Ended
	Mar. 26,			Mar. 28,
	2004			2003
Operating Activities
Net Earnings	$	30		$	99
Adjustments to Reconcile Net Earnings to Net Cash Provided:
Depreciation		167			160
Deferred Income Taxes		(11	)		18
Cumulative Effect of Accounting Change — Net of Tax		—			(57	)
Restructuring Charge		59			—
Other Operating Activities		28			22
Changes in Operating Assets and Liabilities:
Accounts Receivable		4			(73	)
Other Current Assets		(51	)		(31	)
Accounts Payable		27			51
Other Current Liabilities		(49	)		(145	)
Net Cash Provided by Operating Activities		204			44
Investing Activities
Property Additions		(264	)		(150	)
Net Proceeds from Divestitures		—			214
Short-term Investments — Net		(132	)		(1	)
Other Investing Activities		(25	)		(32	)
Net Cash Provided (Used) by Investing Activities		(421	)		31
Financing Activities
Short-term Debt — Net		152			12
Long-term Debt Issued		50			67
Long-term Debt Repaid		(32	)		(95	)
Dividends Paid		(21	)		(21	)
Other Financing Activities		2			(6	)
Net Cash Provided (Used) by Financing Activities		151			(43	)
Cash, Cash Equivalents and Short-term Investments
Net Increase (Decrease) in Cash and Cash Equivalents		(66	)		32
Cash and Cash Equivalents at Beginning of Period		296			127
Cash and Cash Equivalents at End of Period		230			159
Short-term Investments at End of Period		217			135
Cash, Cash Equivalents and Short-term Investments at End of Period	$	447		$	294

Notes to Consolidated Financial Statements

(a)	Statement of Financial Accounting Standard (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” was issued in 2001. In conjunction with the group-life method of accounting for asset costs, the Company historically accrued crosstie removal costs as a component of depreciation, which is not permitted under SFAS 143. With the adoption of SFAS 143 in fiscal year 2003, CSX recorded pretax income of $93 million, $57 million after tax, or 26 cents per share, as a cumulative effect of an accounting change in the first quarter, representing the reversal of the accrued liability for crosstie removal costs. The adoption of SFAS 143 did not have a material effect on prior reporting periods, and the Company does not believe it will have a material effect on future earnings.
(b)	In February 2003, CSX conveyed most of its interest in its domestic container-shipping subsidiary, CSX Lines LLC (“CSX Lines”), to a new venture formed with the Carlyle Group for approximately $300 million (gross cash proceeds of approximately $240 million, $214 million net of transaction costs and $60 million of securities). CSX Lines was subsequently renamed Horizon Lines LLC (“Horizon”). A deferred pretax gain of approximately $127 million as a result of the transaction will be recognized over the 12-year sub-lease term. Horizon has subleased equipment from certain affiliates of CSX covering the primary financial obligations related to $300 million of vessel and equipment leases under which CSX or one of its affiliates will remain a lessee or guarantor.
(c)	In the first quarter of 2004, the Company recorded $59 million pretax, $37 million after tax, 17 cents per share, for (1) separation expenses related to the management restructuring announced in November 2003 at Surface Transportation and for (2) International Terminals restructuring initiatives in an effort to maintain and improve productivity standards in light of current business conditions.
(d)	In the first quarter of 2004, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities.” Therefore, the Company consolidated Four Rivers Transportation (“FRT”), a short-line railroad, which was previously accounted for under the equity method. The first quarter of 2004 includes revenues, operating expenses and after-tax income of approximately $14 million, $10 million and $1 million for FRT, respectively. The quarter ended March 28, 2003, includes net equity earnings of FRT of approximately $1 million (included in other income).

Exhibit 99.2

CSX REPORTS FIRST QUARTER EARNINGS
Surface Transportation Revenue Sets First Quarter Record

     JACKSONVILLE, Fla., April 28, 2004 - CSX Corporation (NYSE: CSX) today reported first quarter net earnings of $30 million, or 14 cents per share, versus $99 million, or 46 cents per share, a year ago, including the favorable cumulative effect of a 2003 accounting change of $57 million after tax or 26 cents per share. First quarter 2004 included an after-tax charge of $37 million, or 17 cents per share, related to the Company’s management restructuring initiatives. Excluding the restructuring charge, first quarter 2004 net earnings would have been $67 million, or 31 cents per share. Surface Transportation operating income, comprising the rail and intermodal units, was $151 million.

     Excluding the pre-tax restructuring charge of $53 million, first quarter 2004 Surface Transportation operating income was $204 million, compared to $169 million last year – a $35 million increase. The 21% increase in operating income was driven by record first quarter Surface Transportation revenue of $1.92 billion. Revenue gains were led by strong growth in most CSX markets, including a 10% rise in coal, coke and iron ore.

     “We are pleased by the record revenue growth in the first quarter delivered by our Surface Transportation units,” said Michael J. Ward, CSX chairman and chief executive officer. “This effort reflects our success in both value pricing and business growth through modal conversions, new product offerings and the creation of new markets for rail service.”

     Ward said that while he is pleased with the continued revenue growth, operating improvement and cost reductions must accelerate. “We plan to exceed historical-best operating levels through short-term efforts and, over the long term, the redesign of our network. The new operating initiatives and the leadership of our new chief operating officer, Tony Ingram, will drive significant improvement in our cost structure, service reliability and shareholder value.”

     On a consolidated basis, revenues were $1.96 billion versus $2.02 billion a year ago. This comparison to prior year includes a $127 million revenue decrease, resulting from the conveyance of CSX Lines in February 2003, offset by Surface Transportation revenue growth of $82 million in the quarter.

     Looking forward, Ward said, “Combined with our own growth strategies, I see the strengthening economy and improved industrial production levels as terrific opportunities to continue our record of revenue increases. At the same time, we’ll be working to overcome continued service challenges and deliver consistent, continuous improvement in our operating and financial measures. Over time, this will allow CSX to better leverage the value of our system.”

     CSX Corporation, based in Jacksonville, Fla., operates one of the largest rail networks in the United States and also provides intermodal and international terminal management services.More information about the company is available at its Internet address: www.csx.com.

     This press release 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,” 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; and (iv) 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.

500 Water Street
15th Floor, C900
Jacksonville, FL 32202
http://www. csx.com

Contact:

David Baggs
(904) 359-4812

Table of Contents

	Page
Consolidated Financial Statements		2
Business Segments		5
Surface Transportation Results		6
International Terminals Results		10
Consolidated Highlights		10

The accompanying unaudited financial information should be read in conjunction with the Company’s 2003 Annual Report on Form 10-K, 2003 Quarterly Reports on Form 10-Q, and any Current Reports on Form 8-K.

1

CSX Corporation and Subsidiaries QuarterlyFlash

CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions,Except Per Share Amounts)

	(Unaudited)
	Quarters Ended
	Mar. 26,			Mar. 28,
	2004			2003
Revenue and Expense
Operating Revenue	$	1,963		$	2,016
Operating Expense		1,802			1,839
Operating Income		161			177
Other (Expense) Income		(10	)		(10	)
Interest Expense		108			103
Earnings
Earnings Before Income Taxes and Cumulative Effect of Accounting Change		43			64
Income Tax Expense		13			22
Earnings Before Cumulative Effect of Accounting Change		30			42
Cumulative Effect of Accounting Change - Net of Tax		—			57
Net Earnings	$	30		$	99
Per Common Share
Earnings Per Share, Assuming Dilution:
Before Cumulative Effect of Accounting Change	$	0.14		$	0.20
Cumulative Effect of Accounting Change		—			0.26
Net Earnings	$	0.14		$	0.46
Average Diluted Common Shares Outstanding (Thousands)		215,152			214,164
Cash Dividends Paid Per Common Share	$	0.10		$	0.10

Notes to Consolidated Financial Statements

(a)	Statement of Financial Accounting Standard (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” was issued in 2001. In conjunction with the group-life method of accounting for asset costs, the Company historically accrued crosstie removal costs as a component of depreciation, which is not permitted under SFAS 143. With the adoption of SFAS 143 in fiscal year 2003, CSX recorded pretax income of $93 million, $57 million after tax, or 26 cents per share, as a cumulative effect of an accounting change in the first quarter, representing the reversal of the accrued liability for crosstie removal costs. The adoption of SFAS 143 did not have a material effect on prior reporting periods, and the Company does not believe it will have a material effect on future earnings.
(b)	In February 2003, CSX conveyed most of its interest in its domestic container-shipping subsidiary, CSX Lines LLC (“CSX Lines”), to a new venture formed with the Carlyle Group for approximately $300 million (gross cash proceeds of approximately $240 million, $214 million net of transaction costs and $60 million of securities). CSX Lines was subsequently renamed Horizon Lines LLC (“Horizon”). A deferred pretax gain of approximately $127 million as a result of the transaction will be recognized over the 12-year sub-lease term. Horizon has subleased equipment from certain affiliates of CSX covering the primary financial obligations related to $300 million of vessel and equipment leases under which CSX or one of its affiliates will remain a lessee or guarantor.
(c)	In the first quarter of 2004, the Company recorded $59 million pretax, $37 million after tax, 17 cents per share, for (1) separation expenses related to the management restructuring announced in November 2003 at Surface Transportation and for (2) International Terminals restructuring initiatives in an effort to maintain and improve productivity standards in light of current business conditions.
(d)	In the first quarter of 2004, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities.” Therefore, the Company consolidated Four Rivers Transportation (“FRT”), a short-line railroad, which was previously accounted for under the equity method. The first quarter of 2004 includes revenues, operating expenses and after-tax income of approximately $14 million, $10 million and $1 million for FRT, respectively. The quarter ended March 28, 2003, includes net equity earnings of FRT of approximately $1 million (included in other income).

2

CSX Corporation and Subsidiaries QuarterlyFlash

CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)

	(Unaudited)
	Mar. 26,			Dec. 26,
	2004			2003
Assets
Current Assets
Cash, Cash Equivalents and Short-term Investments	$	447		$	368
Accounts Receivable — Net		1,170			1,163
Materials and Supplies		179			170
Deferred Income Taxes		128			136
Other Current Assets		108			66
Total Current Assets		2,032			1,903
Properties		19,546			19,267
Accumulated Depreciation		5,700			5,537
Properties — Net		13,846			13,730
Investment in Conrail		4,683			4,678
Affiliates and Other Companies		494			515
Other Long-term Assets		1,018			934
Total Assets	$	22,073		$	21,760
Liabilities
Current Liabilities
Accounts Payable	$	864		$	827
Labor and Fringe Benefits Payable		377			397
Casualty, Environmental and Other Reserves		313			280
Current Maturities of Long-term Debt		425			426
Short-term Debt		154			2
Income and Other Taxes Payable		109			123
Other Current Liabilities		124			155
Total Current Liabilities		2,366			2,210
Casualty, Environmental and Other Reserves		822			836
Long-term Debt		6,970			6,886
Deferred Income Taxes		3,780			3,752
Other Long-term Liabilities		1,651			1,623
Total Liabilities		15,589			15,307
Shareholders’ Equity
Common Stock, $1 Par Value		215			215
Other Capital		1,585			1,579
Retained Earnings		4,968			4,957
Accumulated Other Comprehensive Loss		(284	)		(298	)
Total Shareholders’ Equity		6,484			6,453
Total Liabilities and Shareholders’ Equity	$	22,073		$	21,760

3

CSX Corporation and Subsidiaries QuarterlyFlash

CONSOLIDATED CASH FLOW STATEMENTS
(Dollars in Millions)

	(Unaudited)
	Quarters Ended
	Mar. 26,			Mar. 28,
	2004			2003
Operating Activities
Net Earnings	$	30		$	99
Adjustments to Reconcile Net Earnings to Net Cash Provided:
Depreciation		167			160
Deferred Income Taxes		(11	)		18
Cumulative Effect of Accounting Change — Net of Tax		—			(57	)
Restructuring Charge		59			—
Other Operating Activities		28			22
Changes in Operating Assets and Liabilities:
Accounts Receivable		4			(73	)
Other Current Assets		(51	)		(31	)
Accounts Payable		27			51
Other Current Liabilities		(49	)		(145	)
Net Cash Provided by Operating Activities		204			44
Investing Activities
Property Additions		(264	)		(150	)
Net Proceeds from Divestitures		—			214
Short-term Investments — Net		(132	)		(1	)
Other Investing Activities		(25	)		(32	)
Net Cash Provided (Used) by Investing Activities		(421	)		31
Financing Activities
Short-term Debt — Net		152			12
Long-term Debt Issued		50			67
Long-term Debt Repaid		(32	)		(95	)
Dividends Paid		(21	)		(21	)
Other Financing Activities		2			(6	)
Net Cash Provided (Used) by Financing Activities		151			(43	)
Cash, Cash Equivalents and Short-term Investments
Net Increase (Decrease) in Cash and Cash Equivalents		(66	)		32
Cash and Cash Equivalents at Beginning of Period		296			127
Cash and Cash Equivalents at End of Period		230			159
Short-term Investments at End of Period		217			135
Cash, Cash Equivalents and Short-term Investments at End of Period	$	447		$	294

4

CSX Corporation and Subsidiaries QuarterlyFlash

BUSINESS SEGMENTS (Unaudited)^(a)
(Dollars in Millions)
Quarters Ended Mar. 26, 2004 and Mar. 28, 2003

													Surface
	Rail						Intermodal						Transportation
	2004			2003			2004			2003			2004			2003
Operating Revenue	$	1,605		$	1,531		$	310		$	302		$	1,915		$	1,833
Operating Expense
Labor and Fringe		666			648			19			19			685			667
Materials, Supplies and Other		365			339			50			49			415			388
Conrail Rents, Fees and Services		87			86			—			—			87			86
Building and Equipment Rent		102			107			34			31			136			138
Inland Transportation		(101	)		(99	)		175			173			74			74
Depreciation		150			145			10			8			160			153
Fuel		154			158			—			—			154			158
Miscellaneous		—			—			—			—			—			—
Restructuring Charge(c)		50			—			3			—			53			—
Total Operating Expense		1,473			1,384			291			280			1,764			1,664
Operating Income (Loss)	$	132		$	147		$	19		$	22		$	151		$	169
Operating Ratio		91.8	%		90.4	%		93.9	%		92.7	%		92.1	%		90.8	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	International						Eliminations/
	Terminals						Other(b)						Total
	2004			2003			2004			2003			2004			2003
Operating Revenue	$	48		$	56		$	—		$	127		$	1,963		$	2,016
Operating Expense
Labor and Fringe		13			13			1			59			699			739
Materials, Supplies and Other		20			19			—			47			435			454
Conrail Rents, Fees and Services		—			—			—			—			87			86
Building and Equipment Rent		2			2			(3	)		6			135			146
Inland Transportation		—			2			—			16			74			92
Depreciation		3			2			2			2			165			157
Fuel		—			—			—			15			154			173
Miscellaneous		2			3			(8	)		(11	)		(6	)		(8	)
Restructuring Charge(c)		6			—			—			—			59			—
Total Operating Expense		46			41			(8	)		134			1,802			1,839
Operating Income (Loss)	$	2		$	15		$	8		$	(7	)	$	161		$	177
Operating Ratio		95.8	%		73.2	%

(a)	Prior periods have been reclassified to conform to the current presentation.
(b)	Eliminations/Other consists of the following:

(1)	Reclassification of International Terminals minority interest expense
(2)	Operations of CSX Lines for 2003 and gain amortization in both years
(3)	In 2003, expenses related to the retirement of the Company’s former Chairman and Chief Executive Officer
(4)	Other items

(c) Restructuring charge is for (1) separation expenses related to the management restructuring announced in November 2003 at Surface Transportation and for (2) International Terminals restructuring initiatives in an effort to maintain and improve productivity standards in light of current business conditions.

5

CSX Corporation and Subsidiaries QuarterlyFlash

SURFACE TRANSPORTATION TRAFFIC AND REVENUE^(a)
Loads (Thousands); Revenue (Dollars in Millions)

	First Quarter Loads							First Quarter Revenue
	2004		2003		% Change			2004		2003		% Change
Merchandise
Phosphates and Fertilizers		120		117		3	%	$	89	$	87		2	%
Metals		94		88		7			119		110		8
Forest and Industrial Products		150		148		1			205		195		5
Agricultural and Food		115		115		—			172		168		2
Chemicals		139		137		1			256		250		2
Emerging Markets		112		101		11			117		112		4
		730		706		3			958		922		4
Automotive		125		131		(5	)		202		208		(3	)
Coal, Coke and Iron Ore
Coal		403		373		8			405		370		9
Coke and Iron Ore		17		12		42			17		13		31
		420		385		9			422		383		10
Other		—		—		—			23		18		28
Total Rail		1,275		1,222		4			1,605		1,531		5
Intermodal
Domestic		254		247		3			192		183		5
International		295		279		6			117		113		4
Other		—		—		—			1		6		(83	)
Total Intermodal		549		526		4			310		302		3
Total Surface Transportation		1,824		1,748		4	%	$	1,915	$	1,833		4	%

(a) Prior periods have been reclassified to conform to the current presentation.

6

CSX Corporation and Subsidiaries QuarterlyFlash

SURFACE TRANSPORTATION OPERATING RESULTS

REVENUE

Merchandise

Merchandise again showed strong growth in the first quarter with revenue up 4 percent on volume growth of 3 percent. All markets showed year-over-year improvements in revenue.

• Phosphates and Fertilizers– Quarterly volume and revenue were favorable versus 2003. Growth was driven by strength in nitrogen, ammonia, potash and sulphur markets. Strength in domestic phosphate rock shipments offset weakness in export phosphates.

• Metals– Quarterly revenue and volume were favorable 8 percent and 7 percent, respectively, year over year. Continued growth was largely driven by strong global steel demand, particularly from China. The scrap, sheet steel and plate markets have been key growth drivers.

• Forest and Industrial Products– Construction demand during the first quarter drove continued growth in building products. General economic strength, as well as strength in paper exports, also contributed to both favorable revenue and volume for the quarter.

• Agricultural and Food– Strong gains in wheat, feed grain, feed ingredients and flour offset weaknesses in exports, alcoholic beverages, sweeteners, and soybeans. The short U.S. soybean crop limited the quantity of beans available for rail moves. Sweeteners continue to be negatively impacted by source shifts and a plant closure.

• Chemical– Quarterly volume and revenue were favorable versus 2003. Sulfuric acid enjoyed a 9 percent increase, due in large part to a plant closure and related source shifts favorable to rail. The chlor-alkali market was up 4 percent versus 2003 on account of a rebounding pulp and paper market, as well as continuing strong demand in the PVC resin market. Liquid petroleum gas weakness reflects a slightly warmer winter versus 2003 and domestic supply problems that prompted increased use of offshore product.

• Emerging Markets– First quarter revenues were up 4 percent on 11 percent volume growth. Double-digit growth was achieved in aggregates, cement, fly ash, municipal solid waste, and automotive shredder residue markets. Military and machinery traffic showed year-over-year weakness during the first quarter, which impacted revenue per carload.

Automotive

Revenue and volume results were unfavorable year over year. Despite a 4 percent increase in vehicle sales year over year, inventories remain high with production flat. Several CSXT-served assembly plants were down for inventory adjustments. Plant closure and industry strikes also negatively impacted performance. Aggressive new vehicle incentives weakened the remarketed vehicle market.

Coal, Coke and Iron Ore

Coal, coke and iron ore experienced 10 percent revenue growth on 9 percent volume growth, primarily due to strength in export, river and southern utilities markets. Strength in export resulted from continued high European steam coal demand and increased demand from Asia. Pricing and modal conversions also contributed to gains. All lines of business experienced favorable year-over-year gains except northern utilities.

Other

Other revenue for 2004 includes $14 million for Four Rivers Transportation (“FRT”), a short-line railroad consolidated in 2004 pursuant to FASB Interpretation No. 46. Prior to 2004, FRT was accounted for under the equity method.

Intermodal

• Domestic– Revenue growth of 5 percent and volume growth of 3 percent were supported by transloading and new container programs. Strength in the trucking brokerage initiative continued.

• International– Volumes remained high due to strength of import markets partially offset by loss of transcontinental volume to western carriers.

7

CSX Corporation and Subsidiaries QuarterlyFlash

SURFACE TRANSPORTATION OPERATING RESULTS(continued)

EXPENSE

Labor and Fringeexpenses increased $18 million in the first quarter of 2004 versus the prior year. The effects of inflation continue to drive labor and fringe expense increases, along with increases in pension and incentive compensation expense of $10 million and a $4 million increase resulting from the consolidation of FRT. These costs were partially offset by benefits realized from reduced staffing levels.

Materials, Supplies and Otherexpenses increased $27 million period over period, primarily due to volume and inflation related expenses as well as an increase in expenses related to derailments, property and sales taxes of $6 million and consolidation of FRT of $5 million.

Building and Equipment Rentdecreased $2 million primarily due to $6 million in recoveries and settlements offset by unfavorable mix, volume and utilization.

Depreciationexpenses increased $7 million due to an increase in depreciable base partially offset by revised depreciation rates resulting from the Company’s life study completed in the third quarter of 2003.

Fuelexpenses decreased $4 million in the first quarter of 2004 as compared to 2003. Favorable developments in fuel prices during the three-month period ended March 26, 2004, versus the comparable period in 2003, were offset by an $11 million increase due to volume and efficiency issues. Additionally, fuel expenses were favorably affected by $8 million of recoveries associated with foreign line fuel billing disputes.

Restructuring Chargeof $53 million represents the current charge for separation expenses related to the management restructuring announced in November 2003 at Surface Transportation.

8

CSX Corporation and Subsidiaries QuarterlyFlash

RAIL OPERATING STATISTICS^(a)

	First Quarter
	2004			2003			% Change
Coal (Millions of Tons)
Domestic:
Utility		33.6			32.4			4	%
Other		5.8			4.9			18
Total Domestic		39.4			37.3			6
Export		3.3			2.2			50
Total		42.7			39.5			8
Revenue Ton-Miles (Billions)
Merchandise		33.9			32.8			3
Automotive		2.1			2.2			(5	)
Coal		18.7			16.9			11
Intermodal		5.4			5.1			6
Total		60.1			57.0			5
Gross Ton-Miles(b) (Billions)
Total Gross Ton-Miles		115.0			108.8			6	%
Service Measurements
Personal Injury Frequency Index (Per 100 Employees)		2.27			2.27			—	%
FRA Train Accidents Frequency (Per Million Train Miles)		4.85			3.99			(22	)
Average, All Trains (Miles Per Hour)		20.9			21.3			(2	)
Average System Dwell Time (Hours)		27.2			25.0			(9	)
Average Total Cars-On-Line		230,746			231,531			—
On -Time Originations		52.8	%		63.4	%		(17	)
On -Time Arrivals		47.4	%		60.5	%		(22	)
Average Recrews (Per Day)		60.0			46.0			(30	)%

(a)	Amounts for 2004 are estimated.
(b)	Amounts exclude locomotive gross ton-miles.

SURFACE TRANSPORTATION FUEL STATISTICS

	First Quarter
	2004		2003
Diesel No. 2:
Estimated Fuel Consumption (Millions of Gallons)		158.7		148.5
Price Per Gallon (Dollars)	$	1.0171	$	1.0618
Impact of Year-to-Year Price Variance on Operating Expense (Dollars in Millions)	$	7.1

9

CSX Corporation and Subsidiaries QuarterlyFlash

INTERNATIONAL TERMINALS

OPERATING RESULTS

Revenue decreased $8 million to $48 million for the first quarter of 2004, compared to $56 million in the prior quarter, primarily due to the loss of a significant customer at its Hong Kong operations.

Expense increased $5 million to $46 million for the first quarter of 2004, compared to $41 million in the prior quarter, primarily attributable to $6 million restructuring charges recorded related to initiatives to maintain and improve productivity standards in light of current business conditions.

Operating income decreased $13 million for the first quarter of 2004, as compared to the prior quarter.

OPERATING STATISTICS^(a)

	(Unaudited)
	First Quarter
	2004		2003
Gross Revenue (Dollars in Millions)	$	95	$	98
Gross Lifts		823,722		726,676
Average Port Productivity (Port Moves Per Crane Per Hour)		29.8		31.2

(a) Includes all consolidated and unconsolidated subsidiaries of CSX World Terminals.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)

(Dollars in Millions, Except Per Share Amounts) (All Per Share Amounts Assume Dilution)

	Revenue						Operating Income							Earnings Per Share
	2004(g)		2003		2002(c)		2004(g)		2003(d)(e)(f)			2002(c)		2004(g)		2003(a)(d)(e)(f)			2002(b)
First Quarter	$	1,963	$	2,016	$	1,964	$	161	$	177		$	212	$	.14	$	.46		$	.12
Second Quarter				1,942		2,073				285			321				.59			.63
Third Quarter				1,882		2,055				(98	)		276				(.48	)		.60
Fourth Quarter				1,953		2,060				262			318				.57			.64
Year	$	1,963	$	7,793	$	8,152	$	161	$	626		$	1,127	$	.14	$	1.14		$	1.99

(a) First quarter 2003 includes a credit of $57 million after tax, 26 cents per share, as a result of a cumulative effect of an accounting change for asset retirement obligations.

(b)	First quarter 2002 includes a charge of $43 million after tax, 20 cents per share, as a result of the cumulative effect of an accounting change for indefinite lived intangible assets.
(c)	In the first quarter of 2003, CSX conveyed its interest in CSX Lines. Revenue from CSX Lines is included in previous quarters of $127 million in the first quarter of 2003, $161 million, $189 million, $215 million and $189 million for the first, second, third and fourth quarters of 2002, respectively. CSX Lines’ operating income is included in previous quarters of $1 million in the first quarter of 2003, $1 million, $9 million, $22 million and $6 million for the first, second, third and fourth quarters of 2002, respectively.
(d)	In the third quarter of 2003, the Company changed its estimate of casualty reserves to include an estimate of incurred but not reported claims for asbestos and other occupational injuries. In conjunction with the change in estimate, the Company recorded a charge of $232 million, $145 million after tax, 68 cents per share, in the third quarter of 2003 to increase its provision for casualty claims.
(e)	In the third quarter of 2003, CSX entered into two settlement agreements with Maersk which resolved all material disputes pending between the companies arising out of the 1999 sale of the international container-shipping assets. The effect is to reduce the Company’s earnings by $108 million pretax, $67 million after tax, or 31 cents per share.
(f)	In the fourth quarter of 2003, the Company recorded $34 million pretax, $21 million after tax, and 10 cents per share, as the initial charge for separation expenses related to the management restructuring announced in November 2003 at Surface Transportation. In addition, the Company recorded a $22 million pretax, $14 million after tax, 6 cents per share, credit related to revised estimates for railroad retirement taxes and the amounts of benefits to be paid to individuals under the $1.3 billion charges for separation plans initially recorded in 1991 and 1992.
(g)	In the first quarter of 2004, the Company recorded $59 million pretax, $37 million after tax, 17 cents per share, for (1) separation expenses related to the management restructuring announced in November 2003 at Surface Transportation and for (2) International Terminals restructuring initiatives in an effort to maintain and improve productivity standards in light of current business conditions.

10

CSX Corporation and Subsidiaries QuarterlyFlash

FINANCIAL MEASURES (Unaudited)

	Quarters Ended
	Mar. 26,			Mar. 28,
	2004			2003
Working Capital Deficit (Dollars in Millions)	$	(334	)	$	(620	)
Current Ratio		0.9			0.7
Short-term Debt (Dollars in Millions)	$	154		$	155
Debt Ratio(a)		51	%		51	%
All-in Debt Ratio(b)		54	%		55	%
12-Month Rolling Return on Assets		0.8	%		2.1	%
12-Month Rolling Return on Equity		2.8	%		7.0	%

(a)	Adjusted to include 42 percent of Conrail obligations.
(b)	Adjusted to include off-balance sheet financing, leases, and 42 percent of Conrail obligations.

OTHER INCOME (EXPENSE) (Unaudited)

(Dollars in Millions)

	Quarters Ended
	Mar. 26,			Mar. 28
	2004			2003
Interest Income	$	3		$	4
Income (Loss) from Real Estate and Resort Operations		(7	)		1
Discounts on Sales of Accounts Receivable		—			(6	)
Minority Interest		(9	)		(11	)
Equity in Losses of Other Affiliates		(1	)		—
Miscellaneous		4			2
Total	$	(10	)	$	(10	)
Gross Revenue from Real Estate and Resort Operations Included in Other Income	$	27		$	35

EMPLOYEE COUNTS BY SEGMENT — ESTIMATED^(a)

	2004		2003
	Feb.		Nov.		Aug.		May		Feb.
Surface Transportation
Rail		31,863		32,160		33,245		33,533		32,547
Intermodal		1,126		1,114		1,115		1,115		1,122
Technology and Corporate		697		810		839		858		887
Total Surface Transportation		33,686		34,084		35,199		35,506		34,556
International Terminals		874		1,001		1,006		1,013		1,035
Other		1,095		1,623		1,851		1,752		1,129
Total		35,655		36,708		38,056		38,271		36,720

(a) Prior periods have been reclassified to conform to current presentation.

11