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CSX REPORTS FOURTH-QUARTER EPS OF $1.03 AND RECORD SURFACE TRANSPORTATION OPERATING INCOME
JACKSONVILLE, Fla., January 24, 2006 – CSX Corporation (NYSE: CSX) today reported fourth quarter 2005 net earnings of $237 million, or $1.03 per share, a 45 percent increase in earnings per share from continuing operations versus the same quarter in 2004.
“CSX delivered another quarter of strong performance in our Surface Transportation businesses,” said Michael J. Ward, CSX Corporation chairman and chief executive officer. “Our operations team is gaining traction in executing the ONE Plan, even while re-constructing our storm-damaged infrastructure on the Gulf Coast.”
The company’s net earnings were driven by stronger Surface Transportation operating income, higher real estate sales and lower interest expense. Surface Transportation, which includes rail and intermodal operations, achieved:
• | the eighth consecutive quarter of both revenue and operating income growth; | ||
• | revenue of $2.2 billion, which represents a quarterly record for the company; | ||
• | record fourth-quarter operating income of $415 million, up 32 percent from the same period last year; and | ||
• | an operating ratio of 81.3 percent, an improvement of 4.3 points from the same quarter last year. |
“We enter 2006 with a strong foundation, an economic environment that favors rail transportation, and momentum behind our key strategies,” Ward said. “In addition, we are on schedule with our capacity expansion plans to further drive value for our customers and shareholders.”
CSX executives will provide additional perspective on the quarterly results in its earnings conference call, beginning at 11 a.m. Eastern Time today. Those interested in participating may dial 866-248-8494 and ask for the CSX earnings call. Participants should dial in 10 minutes prior to the call. A live webcast and presentation materials will also be available on the company’s website atwww.csx.com in the Investors section.
In addition, detailed financial information is contained in the CSX Quarterly Flash document, which is also posted on the website and furnished on Form 8-K with the Securities and Exchange Commission (“SEC”).
CSX Corporation, based in Jacksonville, Fla., is one of the leading transportation companies, providing rail, intermodal and rail-to-truck transload services. The company’s transportation network spans 22,000 miles, with service to 23 eastern states and the District of Columbia, and connects to more than 70 ocean, river and lake ports. More information about CSX Corporation and its subsidiaries is available at the company’s website,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; (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 atwww.sec.gov and the Company’s website atwww.csx.com.
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500 Water Street
15th Floor, C900
Jacksonville, FL 32202
http://www. csx .com
15th Floor, C900
Jacksonville, FL 32202
http://www. csx .com
Contact:
Investor Relations
David Baggs
(904) 359-4812
David Baggs
(904) 359-4812
Media
Vance Meyer (904) 366-2949
Vance Meyer (904) 366-2949
Table of Contents
Page | ||||
Consolidated Financial Statements | 2 | |||
Business Segments | 5 | |||
Surface Transportation Operating Results | 6 | |||
Other Information | 11 |
The accompanying unaudited financial information should be read in conjunction with the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and any Current Reports on Form 8-K.
1
Table of Contents
CSX Corporation and Subsidiaries | QuarterlyFlash | |
CONSOLIDATED STATEMENT OF EARNINGS | ||
(Millions of Dollars, Except Per Share Amounts) |
Quarters Ended | Years Ended | |||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||
Dec. 30, | Dec. 31, | Dec. 30, | Dec. 31, | |||||||||||||||||||||||
2005 | 2004 | $ Change | 2005 | 2004 | $ Change | |||||||||||||||||||||
Revenue and Expense | Surface Transportation Revenue | $ | 2,219 | $ | 2,180 | $ | 39 | $ | 8,618 | $ | 8,040 | $ | 578 | |||||||||||||
Surface Transportation Expense | ||||||||||||||||||||||||||
Labor and Fringe | 731 | 729 | 2 | 2,856 | 2,741 | 115 | ||||||||||||||||||||
Materials, Supplies and Other | 421 | 484 | (63 | ) | 1,784 | 1,759 | 25 | |||||||||||||||||||
Depreciation | 208 | 215 | (7 | ) | 818 | 702 | 116 | |||||||||||||||||||
Fuel | 240 | 189 | 51 | 783 | 656 | 127 | ||||||||||||||||||||
Building and Equipment Rent | 132 | 152 | (20 | ) | 533 | 582 | (49 | ) | ||||||||||||||||||
Inland Transportation | 55 | 72 | (17 | ) | 230 | 280 | (50 | ) | ||||||||||||||||||
Conrail Rents, Fees and Services | 17 | 24 | (7 | ) | 65 | 256 | (191 | ) | ||||||||||||||||||
Restructuring Charge (Note d) | — | — | — | — | 71 | (71 | ) | |||||||||||||||||||
Total Surface Transportation Expense | 1,804 | 1,865 | (61 | ) | 7,069 | 7,047 | 22 | |||||||||||||||||||
Surface Transportation Operating Income | 415 | 315 | 100 | 1,549 | 993 | 556 | ||||||||||||||||||||
Other Operating Income (Expense) | (3 | ) | 2 | (5 | ) | 1 | 7 | (6 | ) | |||||||||||||||||
Consolidated Operating Income | 412 | 317 | 95 | 1,550 | 1,000 | 550 | ||||||||||||||||||||
Other Income | 62 | 38 | 24 | 101 | 72 | 29 | ||||||||||||||||||||
Debt Repurchase Expense (Note a) | — | — | — | (192 | ) | — | (192 | ) | ||||||||||||||||||
Interest Expense | (99 | ) | (112 | ) | 13 | (423 | ) | (435 | ) | 12 | ||||||||||||||||
Earnings From Continuing Operations Before Income Taxes | 375 | 243 | 132 | 1,036 | 637 | 399 | ||||||||||||||||||||
Income Tax Expense (Note b) | (138 | ) | (84 | ) | (54 | ) | (316 | ) | (219 | ) | (97 | ) | ||||||||||||||
Earnings From Continuing Operations | 237 | 159 | 78 | 720 | 418 | 302 | ||||||||||||||||||||
Discontinued Operations — Net of Tax (Note c) | — | (93 | ) | 93 | 425 | (79 | ) | 504 | ||||||||||||||||||
Net Earnings | $ | 237 | $ | 66 | $ | 171 | $ | 1,145 | $ | 339 | $ | 806 | ||||||||||||||
Per Common Share | Earnings Per Share, Assuming Dilution: Earnings From Continuing Operations | $ | 1.03 | $ | 0.71 | $ | 0.32 | $ | 3.17 | $ | 1.87 | $ | 1.30 | |||||||||||||
Discontinued Operations | — | (0.41 | ) | 0.41 | 1.87 | (0.35 | ) | 2.22 | ||||||||||||||||||
Net Earnings Per Share | $ | 1.03 | $ | 0.30 | $ | 0.73 | $ | 5.04 | $ | 1.52 | $ | 3.52 | ||||||||||||||
Average Diluted Common Shares Outstanding(Thousands) | 229,972 | 225,373 | 228,024 | 225,030 | ||||||||||||||||||||||
Cash Dividends Paid Per Common Share | $ | 0.13 | $ | 0.10 | $ | 0.43 | $ | 0.40 | ||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements on page 4.
2
Table of Contents
CSX Corporation and Subsidiaries | QuarterlyFlash | |
CONSOLIDATED BALANCE SHEETS | ||
(Dollars in Millions) |
(Unaudited) | ||||||||||
Dec. 30, | Dec. 31, | |||||||||
2005 | 2004 | |||||||||
Assets | Cash, Cash Equivalents and Short-term Investments | $ | 602 | $ | 859 | |||||
Current Assets — Net | 1,769 | 1,501 | ||||||||
International Terminals Assets Held for Sale | — | 643 | ||||||||
Properties — Net | 20,163 | 19,945 | ||||||||
Affiliates and Other Companies | 908 | 855 | ||||||||
Other Long-term Assets | 474 | 802 | ||||||||
Total Assets | $ | 23,916 | $ | 24,605 | ||||||
Liabilities and Shareholders’ Equity | Current Maturities of Long-term Debt | 936 | $ | 983 | ||||||
Other Current Liabilities | 2,042 | 1,948 | ||||||||
International Terminals Liabilities Held for Sale | — | 386 | ||||||||
Long-term Debt | 5,101 | 6,248 | ||||||||
Deferred Income Taxes | 6,083 | 5,979 | ||||||||
Other Long-term Liabilities | 1,800 | 2,250 | ||||||||
Shareholders’ Equity | 7,954 | 6,811 | ||||||||
Total Liabilities and Shareholders’ Equity | $ | 23,916 | $ | 24,605 | ||||||
CONSOLIDATED CASH FLOW STATEMENTS
(Dollars in Millions)
Years Ended | ||||||||||
(Unaudited) | ||||||||||
Dec. 30, | Dec. 31, | |||||||||
2005 | 2004 | |||||||||
Operating Activities | Net Earnings | $ | 1,145 | $ | 339 | |||||
Adjustments to Reconcile Net Earnings to Net Cash Provided: | ||||||||||
Depreciation | 833 | 730 | ||||||||
Deferred Income Taxes | (46 | ) | 240 | |||||||
Net Gain on Conrail spin-off — Net of Tax | — | (16 | ) | |||||||
Gain on Sale of International Terminals — Net of Tax (Note c) | (428 | ) | — | |||||||
Restructuring Charge | — | 71 | ||||||||
Working Capital and Other Operating Activities | (353 | ) | 82 | |||||||
Net Cash Provided by Operating Activities | 1,151 | 1,446 | ||||||||
Investing Activities | Property Additions | (1,136 | ) | ( | 1,030 | ) | ||||
Net Proceeds from Sale of International Terminals | 1,108 | — | ||||||||
Purchase of Minority Interest in an International Terminals’ Subsidiary | (110 | ) | — | |||||||
Net Proceeds from Other Divestitures | — | 55 | ||||||||
Short-term Investments — Net | 33 | (247 | ) | |||||||
Other Investing Activities | 28 | (18 | ) | |||||||
Net Cash Used by Investing Activities | (77 | ) | ( | 1,240 | ) | |||||
Financing Activities | Debt — Net | (1,277 | ) | 66 | ||||||
Dividends Paid | (93 | ) | (86 | ) | ||||||
Other Financing Activities | 83 | 40 | ||||||||
Net Cash (Used by) Provided by Financing Activities | (1,287 | ) | 20 | |||||||
Cash, Cash Equivalents and Short-term Investments | Net (Decrease) Increase in Cash and Cash Equivalents | (213 | ) | 226 | ||||||
Cash and Cash Equivalents at Beginning of Period | 522 | 296 | ||||||||
Cash and Cash Equivalents at End of Period | 309 | 522 | ||||||||
Short-term Investments at End of Period | 293 | 337 | ||||||||
Cash, Cash Equivalents and Short-term | ||||||||||
Investments at End of Period | $ | 602 | $ | 859 | ||||||
See accompanying Notes to Consolidated Financial Statements on page 4.
3
Table of Contents
CSX Corporation and Subsidiaries | QuarterlyFlash | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Prior periods have been reclassified to conform to the current presentation.
The Consolidated Balance Sheets and Cash Flow Statements have been summarized for this presentation. All statements should be read in conjunction with the Company’s Annual Report to be filed on Form 10-K.
CSX follows a 52/53 week fiscal reporting calendar and 2004 included 53 weeks, with the additional week in the 2004 fourth quarter. On pages 7 -9 non-GAAP information is presented as additional tables so that the two periods are compared as if they were of equal duration.
(a) | In the second quarter of 2005, CSX repurchased $1 billion of outstanding debt. CSX recognized $192 million of pretax costs to repurchase the debt, which primarily reflects the increase in current market value above original issue value. |
(b) | In the second quarter of 2005, Ohio enacted legislation to gradually eliminate its corporate franchise tax. This legislative change resulted in an income tax benefit of $71 million. |
(c) | In the first quarter of 2005, CSX sold its International Terminals business. As a result, amounts related to this business are reported as discontinued operations for all periods presented. Additional information is as follows (in millions): |
Quarters Ended | Years Ended | |||||||||||||||
Dec. 30, | Dec. 31, | Dec. 30, | Dec. 31, | |||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Undistributed Foreign Earnings — additional tax expense | $ | — | $ | (97 | ) | $ | — | $ | (97 | ) | ||||||
Net Earnings (Loss) | — | 4 | (3 | ) | 18 | |||||||||||
Gain on Sale — net of tax | — | — | 428 | — | ||||||||||||
Net (Loss) Earnings from Discontinued Operations | $ | — | $ | (93 | ) | $ | 425 | $ | (79 | ) | ||||||
(d) | For the fiscal year ended December 31, 2004, CSX recorded $71 million pretax for separation expenses related to the management restructuring announced in November 2003 at the Company’s Surface Transportation units. |
4
Table of Contents
CSX Corporation and Subsidiaries | QuarterlyFlash |
BUSINESS SEGMENTS (Unaudited)
(Dollars in Millions)
Quarters Ended December 30, 2005, and December 31, 2004
Surface | ||||||||||||||||||||||||||||||||||||||||||
Rail | Intermodal | Transportation | Other(a) | Total | ||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||||||||||||||||||
Operating Revenue | $ | 1,853 | $ | 1,801 | $ | 366 | $ | 379 | $ | 2,219 | $ | 2,180 | $ | — | $ | — | $ | 2,219 | $ | 2,180 | ||||||||||||||||||||||
Operating Expense | ||||||||||||||||||||||||||||||||||||||||||
Labor and Fringe | 711 | 707 | 20 | 22 | 731 | 729 | 3 | 1 | 734 | 730 | ||||||||||||||||||||||||||||||||
Materials, Supplies and Other | 364 | 429 | 57 | 55 | 421 | 484 | 4 | (2 | ) | 425 | 482 | |||||||||||||||||||||||||||||||
Depreciation | 198 | 205 | 10 | 10 | 208 | 215 | 1 | 2 | 209 | 217 | ||||||||||||||||||||||||||||||||
Fuel | 240 | 189 | — | — | 240 | 189 | — | — | 240 | 189 | ||||||||||||||||||||||||||||||||
Building and Equipment Rent | 96 | 116 | 36 | 36 | 132 | 152 | (5 | ) | (3 | ) | 127 | 149 | ||||||||||||||||||||||||||||||
Inland Transportation | (115 | ) | (113 | ) | 170 | 185 | 55 | 72 | — | — | 55 | 72 | ||||||||||||||||||||||||||||||
Conrail Rents, Fees and Services | 17 | 24 | — | — | 17 | 24 | — | — | 17 | 24 | ||||||||||||||||||||||||||||||||
Total Operating Expense | 1,511 | 1,557 | 293 | 308 | 1,804 | 1,865 | 3 | (2 | ) | 1,807 | 1,863 | |||||||||||||||||||||||||||||||
Operating Income | $ | 342 | $ | 244 | $ | 73 | $ | 71 | $ | 415 | $ | 315 | $ | (3 | ) | $ | 2 | $ | 412 | $ | 317 | |||||||||||||||||||||
Operating Ratio | 81.5 | % | 86.5 | % | 80.1 | % | 81.3 | % | 81.3 | % | 85.6 | % | ||||||||||||||||||||||||||||||
Years Ended December 30, 2005, and December 31, 2004
Surface | ||||||||||||||||||||||||||||||||||||||||||||
Rail | Intermodal | Transportation | Other(a) | Total | ||||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||||||||||||||||||||
Operating Revenue | $ | 7,256 | $ | 6,694 | $ | 1,362 | $ | 1,346 | $ | 8,618 | $ | 8,040 | $ | — | $ | — | $ | 8,618 | $ | 8,040 | ||||||||||||||||||||||||
Operating Expense | ||||||||||||||||||||||||||||||||||||||||||||
Labor and Fringe | 2,777 | 2,663 | 79 | 78 | 2,856 | 2,741 | 8 | 3 | 2,864 | 2,744 | ||||||||||||||||||||||||||||||||||
Materials, Supplies and Other | 1,584 | 1,540 | 200 | 219 | 1,784 | 1,759 | 6 | (6 | ) | 1,790 | 1,753 | |||||||||||||||||||||||||||||||||
Depreciation | 779 | 664 | 39 | 38 | 818 | 702 | 8 | 9 | 826 | 711 | ||||||||||||||||||||||||||||||||||
Fuel | 783 | 656 | — | — | 783 | 656 | — | — | 783 | 656 | ||||||||||||||||||||||||||||||||||
Building and Equipment Rent | 400 | 428 | 133 | 154 | 533 | 582 | (23 | ) | (13 | ) | 510 | 569 | ||||||||||||||||||||||||||||||||
Inland Transportation | (433 | ) | (421 | ) | 663 | 701 | 230 | 280 | — | — | 230 | 280 | ||||||||||||||||||||||||||||||||
Conrail Rents, Fees and Services | 65 | 256 | — | — | 65 | 256 | — | — | 65 | 256 | ||||||||||||||||||||||||||||||||||
Restructuring Charge | — | 67 | — | 4 | — | 71 | — | — | — | 71 | ||||||||||||||||||||||||||||||||||
Total Operating Expense | 5,955 | 5,853 | 1,114 | 1,194 | 7,069 | 7,047 | (1 | ) | (7 | ) | 7,068 | 7,040 | ||||||||||||||||||||||||||||||||
Operating Income | $ | 1,301 | $ | 841 | $ | 248 | $ | 152 | $ | 1,549 | $ | 993 | $ | 1 | $ | 7 | $ | 1,550 | $ | 1,000 | ||||||||||||||||||||||||
Operating Ratio | 82.1 | % | 87.4 | % | 81.8 | % | 88.7 | % | 82.0 | % | 87.6 | % | ||||||||||||||||||||||||||||||||
(a) | Other includes the gain amortization on the CSX Lines conveyance, net sub-lease income from assets formerly included in the Marine Services segment, and other items. |
5
Table of Contents
CSX Corporation and Subsidiaries | QuarterlyFlash |
SURFACE TRANSPORTATION TRAFFIC AND REVENUE
Volume (Thousands); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
Volume | Revenue | Revenue Per Unit | ||||||||||||||||||||||||||||||||||
13 Weeks | 14 Weeks | 13 Weeks | 14 Weeks | 13 Weeks | 14 Weeks | |||||||||||||||||||||||||||||||
Fourth Quarter | 2005 | 2004 | % Change | 2005 | 2004 | % Change | 2005 | 2004 | % Change | |||||||||||||||||||||||||||
Merchandise | ||||||||||||||||||||||||||||||||||||
Phosphates and Fertilizers | 99 | 123 | (20 | )% | $ | 87 | $ | 89 | (2 | )% | $ | 879 | $ | 724 | 21 | % | ||||||||||||||||||||
Metals | 88 | 96 | (8 | ) | 150 | 138 | 9 | 1,705 | 1,438 | 19 | ||||||||||||||||||||||||||
Forest Products | 106 | 121 | (12 | ) | 183 | 185 | (1 | ) | 1,726 | 1,529 | 13 | |||||||||||||||||||||||||
Food and Consumer | 61 | 66 | (8 | ) | 115 | 105 | 10 | 1,885 | 1,591 | 18 | ||||||||||||||||||||||||||
Agricultural Products | 90 | 93 | (3 | ) | 147 | 137 | 7 | 1,633 | 1,473 | 11 | ||||||||||||||||||||||||||
Chemicals | 127 | 146 | (13 | ) | 274 | 283 | (3 | ) | 2,157 | 1,938 | 11 | |||||||||||||||||||||||||
Emerging Markets | 122 | 134 | (9 | ) | 124 | 138 | (10 | ) | 1,016 | 1,030 | (1 | ) | ||||||||||||||||||||||||
Total Merchandise | 693 | 779 | (11 | ) | 1,080 | 1,075 | 0 | 1,558 | 1,380 | 13 | ||||||||||||||||||||||||||
Automotive | 125 | 135 | (7 | ) | 225 | 228 | (1 | ) | 1,800 | 1,689 | 7 | |||||||||||||||||||||||||
Coal, Coke and Iron Ore | ||||||||||||||||||||||||||||||||||||
Coal | 429 | 440 | (3 | ) | 500 | 460 | 9 | 1,166 | 1,045 | 12 | ||||||||||||||||||||||||||
Coke and Iron Ore | 21 | 20 | 5 | 21 | 18 | 17 | 1,000 | 900 | 11 | |||||||||||||||||||||||||||
Total Coal, Coke and Iron Ore | 450 | 460 | (2 | ) | 521 | 478 | 9 | 1,158 | 1,039 | 11 | ||||||||||||||||||||||||||
Other | — | — | — | 27 | 20 | 35 | — | — | — | |||||||||||||||||||||||||||
Total Rail | 1,268 | 1,374 | (8 | ) | 1,853 | 1,801 | 3 | 1,461 | 1,311 | 11 | ||||||||||||||||||||||||||
Intermodal | ||||||||||||||||||||||||||||||||||||
Domestic | 240 | 268 | (10 | ) | 206 | 220 | (6 | ) | 858 | 821 | 5 | |||||||||||||||||||||||||
International | 310 | 341 | (9 | ) | 122 | 133 | (8 | ) | 394 | 390 | 1 | |||||||||||||||||||||||||
Other | — | — | — | 38 | 26 | 46 | — | — | — | |||||||||||||||||||||||||||
Total Intermodal | 550 | 609 | (10 | ) | 366 | 379 | (3 | ) | 665 | 622 | 7 | |||||||||||||||||||||||||
Total Surface Transportation | 1,818 | 1,983 | (8) | % | $ | 2,219 | $ | 2,180 | 2 | % | $ | 1,221 | $ | 1,099 | 11 | % | ||||||||||||||||||||
Volume | Revenue | Revenue Per Unit | ||||||||||||||||||||||||||||||||||
52 Weeks | 53 Weeks | 52 Weeks | 53 Weeks | 52 Weeks | 53 Weeks | |||||||||||||||||||||||||||||||
Year | 2005 | 2004 | % Change | 2005 | 2004 | % Change | 2005 | 2004 | % Change | |||||||||||||||||||||||||||
Merchandise | ||||||||||||||||||||||||||||||||||||
Phosphates and Fertilizers | 444 | 471 | (6 | )% | $ | 351 | $ | 341 | 3 | % | $ | 791 | $ | 724 | 9 | % | ||||||||||||||||||||
Metals | 361 | 380 | (5 | ) | 570 | 511 | 12 | 1,579 | 1,345 | 17 | ||||||||||||||||||||||||||
Forest Products | 439 | 465 | (6 | ) | 717 | 681 | 5 | 1,633 | 1,465 | 11 | ||||||||||||||||||||||||||
Food and Consumer | 249 | 245 | 2 | 438 | 377 | 16 | 1,759 | 1,539 | 14 | |||||||||||||||||||||||||||
Agricultural Products | 357 | 356 | — | 550 | 512 | 7 | 1,541 | 1,438 | 7 | |||||||||||||||||||||||||||
Chemicals | 533 | 564 | (5 | ) | 1,089 | 1,069 | 2 | 2,043 | 1,895 | 8 | ||||||||||||||||||||||||||
Emerging Markets | 505 | 506 | — | 513 | 504 | 2 | 1,016 | 996 | 2 | |||||||||||||||||||||||||||
Total Merchandise | 2,888 | 2,987 | (3 | ) | 4,228 | 3,995 | 6 | 1,464 | 1,337 | 9 | ||||||||||||||||||||||||||
Automotive | 488 | 507 | (4 | ) | 844 | 835 | 1 | 1,730 | 1,647 | 5 | ||||||||||||||||||||||||||
Coal, Coke and Iron Ore | ||||||||||||||||||||||||||||||||||||
Coal | 1,726 | 1,659 | 4 | 1,992 | 1,714 | 16 | 1,154 | 1,033 | 12 | |||||||||||||||||||||||||||
Coke and Iron Ore | 83 | 71 | 17 | 88 | 66 | 33 | 1,060 | 930 | 14 | |||||||||||||||||||||||||||
Total Coal, Coke and Iron Ore | 1,809 | 1,730 | 5 | 2,080 | 1,780 | 17 | 1,150 | 1,029 | 12 | |||||||||||||||||||||||||||
Other | — | — | — | 104 | 84 | 24 | — | — | — | |||||||||||||||||||||||||||
Total Rail | 5,185 | 5,224 | (1 | ) | 7,256 | 6,694 | 8 | 1,399 | 1,281 | 9 | ||||||||||||||||||||||||||
Intermodal | ||||||||||||||||||||||||||||||||||||
Domestic | 891 | 1,028 | (13 | ) | 738 | 795 | (7 | ) | 828 | 773 | 7 | |||||||||||||||||||||||||
International | 1,274 | 1,278 | — | 499 | 501 | — | 392 | 392 | — | |||||||||||||||||||||||||||
Other | — | — | — | 125 | 50 | 150 | — | — | — | |||||||||||||||||||||||||||
Total Intermodal | 2,165 | 2,306 | (6 | ) | 1,362 | 1,346 | 1 | 629 | 584 | 8 | ||||||||||||||||||||||||||
Total Surface Transportation | 7,350 | 7,530 | (2 | )% | $ | 8,618 | $ | 8,040 | 7 | % | $ | 1,173 | $ | 1,068 | 10 | % | ||||||||||||||||||||
6
Table of Contents
CSX Corporation and Subsidiaries | QuarterlyFlash | |
SURFACE TRANSPORTATION TRAFFIC AND REVENUE |
Volume (Thousands); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
CSX follows a 52/53 week fiscal reporting calendar and 2004 included 53 weeks, with the additional week in the 2004 fourth quarter. In the following discussion, the two periods are compared as if they were of equal duration.
13 Weeks | ||||||||||||||||||||||||||||||||||||||
Fourth Quarter Volume | Fourth Quarter Revenue | Fourth Quarter Revenue Per Unit | ||||||||||||||||||||||||||||||||||||
2005 | 2004 | % Change | 2005 | 2004 | % Change | 2005 | 2004 | % Change | ||||||||||||||||||||||||||||||
Merchandise | ||||||||||||||||||||||||||||||||||||||
Phosphates and Fertilizers | 99 | 115 | (14 | )% | $ | 87 | $ | 83 | 5 | % | $ | 879 | $ | 722 | 22 | % | ||||||||||||||||||||||
Metals | 88 | 90 | (2 | ) | 150 | 129 | 16 | 1,705 | 1,433 | 19 | ||||||||||||||||||||||||||||
Forest Products | 106 | 112 | (5 | ) | 183 | 173 | 6 | 1,726 | 1,545 | 12 | ||||||||||||||||||||||||||||
Food and Consumer | 61 | 62 | (2 | ) | 115 | 99 | 16 | 1,885 | 1,597 | 18 | ||||||||||||||||||||||||||||
Agricultural Products | 90 | 88 | 2 | 147 | 129 | 14 | 1,633 | 1,466 | 11 | |||||||||||||||||||||||||||||
Chemicals | 127 | 137 | (7 | ) | 274 | 266 | 3 | 2,157 | 1,942 | 11 | ||||||||||||||||||||||||||||
Emerging Markets | 122 | 128 | (5 | ) | 124 | 131 | (5 | ) | 1,016 | 1,023 | (1 | ) | ||||||||||||||||||||||||||
693 | 732 | (5 | ) | 1,080 | 1,010 | 7 | 1,558 | 1,380 | 13 | |||||||||||||||||||||||||||||
Automotive | 125 | 130 | (4 | ) | 225 | 218 | 3 | 1,800 | 1,677 | 7 | ||||||||||||||||||||||||||||
Coal, Coke and Iron Ore | ||||||||||||||||||||||||||||||||||||||
Coal | 429 | 417 | 3 | 500 | 438 | 14 | 1,166 | 1,050 | 11 | |||||||||||||||||||||||||||||
Coke and Iron Ore | 21 | 19 | 11 | 21 | 17 | 24 | 1,000 | 895 | 12 | |||||||||||||||||||||||||||||
450 | 436 | 3 | 521 | 455 | 15 | 1,158 | 1,044 | 11 | ||||||||||||||||||||||||||||||
Other | — | — | — | 27 | 20 | 35 | — | — | — | |||||||||||||||||||||||||||||
Total Rail | 1,268 | 1,298 | (2 | ) | 1,853 | 1,703 | 9 | 1,461 | 1,312 | 11 | ||||||||||||||||||||||||||||
Intermodal | ||||||||||||||||||||||||||||||||||||||
Domestic | 240 | 255 | (6 | ) | 206 | 208 | (1 | ) | 858 | 816 | 5 | |||||||||||||||||||||||||||
International | 310 | 323 | (4 | ) | 122 | 126 | (3 | ) | 394 | 390 | 1 | |||||||||||||||||||||||||||
Other | — | — | — | 38 | 26 | 46 | — | — | — | |||||||||||||||||||||||||||||
Total Intermodal | 550 | 578 | (5 | ) | 366 | 360 | 2 | 665 | 623 | 7 | ||||||||||||||||||||||||||||
Total Surface Transportation | 1,818 | 1,876 | (3 | )% | $ | 2,219 | $ | 2,063 | 8 | % | $ | 1,221 | $ | 1,100 | 11 | % | ||||||||||||||||||||||
52 Weeks | ||||||||||||||||||||||||||||||||||||||
Year Volume | Year Revenue | Year Revenue Per Unit | ||||||||||||||||||||||||||||||||||||
2005 | 2004 | % Change | 2005 | 2004 | % Change | 2005 | 2004 | % Change | ||||||||||||||||||||||||||||||
Merchandise | ||||||||||||||||||||||||||||||||||||||
Phosphates and Fertilizers | 444 | 463 | (4 | )% | $ | 351 | $ | 335 | 5 | % | $ | 791 | $ | 724 | 9 | % | ||||||||||||||||||||||
Metals | 361 | 374 | (3 | ) | 570 | 502 | 14 | 1,579 | 1,342 | 18 | ||||||||||||||||||||||||||||
Forest Products | 439 | 456 | (4 | ) | 717 | 669 | 7 | 1,633 | 1,467 | 11 | ||||||||||||||||||||||||||||
Food and Consumer | 249 | 241 | 3 | 438 | 371 | 18 | 1,759 | 1,539 | 14 | |||||||||||||||||||||||||||||
Agricultural Products | 357 | 351 | 2 | 550 | 504 | 9 | 1,541 | 1,436 | 7 | |||||||||||||||||||||||||||||
Chemicals | 533 | 555 | (4 | ) | 1,089 | 1,052 | 4 | 2,043 | 1,895 | 8 | ||||||||||||||||||||||||||||
Emerging Markets | 505 | 500 | 1 | 513 | 497 | 3 | 1,016 | 994 | 2 | |||||||||||||||||||||||||||||
2,888 | 2,940 | (2 | ) | 4,228 | 3,930 | 8 | 1,464 | 1,337 | 9 | |||||||||||||||||||||||||||||
Automotive | 488 | 502 | (3 | ) | 844 | 825 | 2 | 1,730 | 1,643 | 5 | ||||||||||||||||||||||||||||
Coal, Coke and Iron Ore | ||||||||||||||||||||||||||||||||||||||
Coal | 1,726 | 1,636 | 6 | 1,992 | 1,692 | 18 | 1,154 | 1,034 | 12 | |||||||||||||||||||||||||||||
Coke and Iron Ore | 83 | 70 | 19 | 88 | 65 | 35 | 1,060 | 929 | 14 | |||||||||||||||||||||||||||||
1,809 | 1,706 | 6 | 2,080 | 1,757 | 18 | 1,150 | 1,030 | 12 | ||||||||||||||||||||||||||||||
Other | — | — | — | 104 | 84 | 24 | — | — | — | |||||||||||||||||||||||||||||
Total Rail | 5,185 | 5,148 | 1 | 7,256 | 6,596 | 10 | 1,399 | 1,281 | 9 | |||||||||||||||||||||||||||||
Intermodal | ||||||||||||||||||||||||||||||||||||||
Domestic | 891 | 1,014 | (12 | ) | 738 | 783 | (6 | ) | 828 | 772 | 7 | |||||||||||||||||||||||||||
International | 1,274 | 1,261 | 1 | 499 | 494 | 1 | 392 | 392 | — | |||||||||||||||||||||||||||||
Other | — | — | — | 125 | 50 | 150 | — | — | — | |||||||||||||||||||||||||||||
Total Intermodal | 2,165 | 2,275 | (5 | ) | 1,362 | 1,327 | 3 | 629 | 583 | 8 | ||||||||||||||||||||||||||||
Total Surface Transportation | 7,350 | 7,423 | (1 | )% | $ | 8,618 | $ | 7,923 | 9 | % | $ | 1,173 | $ | 1,067 | 10 | % | ||||||||||||||||||||||
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CSX Corporation and Subsidiaries | QuarterlyFlash | |
SURFACE TRANSPORTATION OPERATING RESULTS |
CSX follows a 52/53 week fiscal reporting calendar and 2004 included 53 weeks, with the additional week in the 2004 fourth quarter. In the following discussion of quarterly comparisons, the two periods are compared as if they were of equal duration.
REVENUE
Rail Operating Revenue
Fourth quarter 2005 results represent the 15th consecutive quarter of year-over-year revenue growth as well as record revenue-per-unit results. All four major markets experienced revenue and revenue-per-unit gains as a result of continued traffic re-pricing and the fuel surcharge program.
Merchandise
Phosphate and Fertilizer — Volume declined as a result of plant closures or curtailments during the quarter that reduced shipments. The absence of lower yield shipments combined with an increase in long-haul traffic led to a 22% improvement in revenue per unit.
Metals — Overall domestic and international demand for steel transportation remained strong throughout the quarter. Pricing increases coupled with asset allocation towards higher margin and longer haul traffic limited volume growth but resulted in revenue-per-unit increases of 19%.
Forest Products — Volume was unfavorable due to reduced demand in both lumber and panel products as the housing outlook continues to weaken and housing starts are expected to decline. Sustained conversion to electronic media and the use of lighter papers continues to reduce the demand for newsprint paper. Efforts to increase price and fuel surcharge coverage continue across all lines of business, impacting volume in some markets.
Food and Consumer — Volume in this segment, which includes the transportation of refrigerated products, canned goods, and building products, was unfavorable due to the cyclical nature of hurricane recovery efforts, particularly for bricks, wallboard and roofing shingle building materials, compared to the prior year.
Agricultural Products — Volume during the fourth quarter was up 2% based on strength of the soybean harvest. Ethanol shipments also experienced strong growth in the quarter due to a continued shift by several states to use ethanol as a fuel additive. Volumes in other markets such as feed grain, wheat, sweeteners, oils and flour were flat.
Chemicals — Volume was unfavorable due to continued high raw materials inventories and energy prices. Several chemical plants along the Mississippi coast continued to be negatively impacted by Hurricane Katrina.
Emerging Markets — Volume and revenue were unfavorable primarily due to the impact of Hurricane Katrina and lower military shipments. Lower volumes in auto shredder residue, due to increased prices and truck competition, were offset by growth in shipments of municipal and construction waste.
Automotive
Volume was down 4% as assembly plant closures and diversions to truck more than offset increases in North American light vehicle production. Revenue per unit increased by 7% due to both price and fuel surcharge increases.
Coal, Coke and Iron Ore
Revenue was up 15% and volume was up 3% on strong demand across all markets. Growth was strongest in the utility market where electricity generation was up 4% in CSX-served markets. Additionally, utility inventories remain below target levels, continuing the increased demand for coal transportation. Smaller markets such as integrated steel and industrial markets also experienced growth.
Intermodal
Domestic— Domestic shipments representing approximately 44% of Intermodal volumes were down primarily due to continued focus on longer hauls in higher density lanes and sustained strength in pricing. Strong demand in the parcel section offset volume declines in other markets and drove revenue increases.
International —Both volumes and revenue decreased due to a reduction in long-haul shipments from the west coast. The shift of traffic to east coast ports caused an increase in shorter-haul moves, which negatively impacted revenue per unit. Favorable pricing conditions offset the loss of long-haul revenue, and resulted in a modest increase in revenue per unit. A continued focus on network operations designed to increase efficiencies and reduce indirect routing unfavorably impacted volume.
Other —Higher fuel surcharge rates and continued emphasis on ancillary revenues, including terminal storage charges and container reservation fees drove increases of 46%.
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Table of Contents
CSX Corporation and Subsidiaries | QuarterlyFlash | |
SURFACE TRANSPORTATION OPERATING RESULTS, Continued |
CSX follows a 52/53 week fiscal reporting calendar and 2004 included 53 weeks, with the additional week in the 2004 fourth quarter. In the following discussion, the two periods are compared as if they were of equal duration.
EXPENSE
13 Weeks | ||||||||||||
Fourth Quarter Expense | ||||||||||||
2005 | 2004 | $ Change | ||||||||||
Operating Expense | ||||||||||||
Labor and Fringe | $ | 731 | $ | 676 | $ | 55 | ||||||
Materials, Supplies and Other | 421 | 459 | (38 | ) | ||||||||
Depreciation | 208 | 205 | 3 | |||||||||
Fuel | 240 | 181 | 59 | |||||||||
Building and Equipment Rent | 132 | 144 | (12 | ) | ||||||||
Inland Transportation | 55 | 66 | (11 | ) | ||||||||
Conrail Rents, Fees and Services | 17 | 24 | (7 | ) | ||||||||
Total Operating Expense | $ | 1,804 | $ | 1,755 | $ | 49 |
Labor and Fringeexpenses increased $55 million. Higher incentive compensation costs, inflation and increased staffing are the primary drivers of the change in labor and fringe expense.
Materials, Supplies and Otherexpenses decreased $38 million. The primary drivers are net favorable casualty reserve adjustments related to decreasing claim trends and less derailment related costs. These decreases were partially offset by higher expense resulting from environmental remediation costs and other items.
Depreciationincreased $3 million, which is attributable to an increase in the asset base.
Fuelincreased $59 million due to higher fuel costs, net of hedging benefits.
Building and Equipment Rentdecreased $12 million due to a reduction in railcar lease expense, which is associated with volume, and lower locomotive lease expense.
Inland Transportationdecreased $11 million primarily due to lower Intermodal volume related to purchased transportation services from other railroads.
Conrail Rents, Fees and Servicesdecreased $7 million due to lower fees charged by Conrail and other items related to CSX’s ownership in Conrail.
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CSX Corporation and Subsidiaries | QuarterlyFlash | |
RAIL OPERATING STATISTICS(a) |
Fourth Quarter | Year | |||||||||||||||||||||||||||
13 Weeks | 14 Weeks | 52 Weeks | 53 Weeks | |||||||||||||||||||||||||
2005 | 2004 | % Change | 2005 | 2004 | % Change | |||||||||||||||||||||||
Coal | Domestic: | |||||||||||||||||||||||||||
(Millions of Tons) | Utility | 38.1 | 38.0 | — | % | 149.8 | 141.0 | 6 | % | |||||||||||||||||||
Other | 5.2 | 5.7 | (9 | ) | 21.1 | 21.7 | (3 | ) | ||||||||||||||||||||
Total Domestic | 43.3 | 43.7 | (1 | ) | 170.9 | 162.7 | 5 | |||||||||||||||||||||
Export | 2.4 | 3.2 | (25 | ) | 12.4 | 13.5 | (8 | ) | ||||||||||||||||||||
Total | 45.7 | 46.9 | (3 | ) | 183.3 | 176.2 | 4 | |||||||||||||||||||||
Revenue Ton-Miles | Merchandise | 33.7 | 36.7 | (8 | ) | 136.4 | 139.4 | (2 | ) | |||||||||||||||||||
(Billions) | Automotive | 2.3 | 2.5 | (9 | ) | 8.6 | 8.8 | (2 | ) | |||||||||||||||||||
Coal | 20.0 | 21.4 | (7 | ) | 81.1 | 77.9 | 4 | |||||||||||||||||||||
Intermodal | 5.4 | 6.0 | (10 | ) | 20.7 | 22.4 | (8 | ) | ||||||||||||||||||||
Total | 61.3 | 66.6 | (8 | ) | 246.8 | 248.5 | (1 | ) | ||||||||||||||||||||
Gross Ton-Miles(b) | Total Gross Ton-Miles | 115.8 | 122.9 | (6 | ) | 463.2 | 467.8 | — | ||||||||||||||||||||
(Billions) | ||||||||||||||||||||||||||||
Service Measurements | ||||||||||||||||||||||||||||
FRA Personal Injury Frequency Index (Per 200,000 Man Hours) | 1.41 | 2.20 | 36 | 1.71 | 2.29 | 25 | ||||||||||||||||||||||
FRA Train Accidents Frequency (Per Million Train Miles) | 3.68 | 4.99 | 26 | 3.99 | 4.79 | 17 | ||||||||||||||||||||||
Average Velocity, All Trains (Miles Per Hour) | 18.8 | 20.5 | (8 | ) | 19.2 | 20.3 | (5 | ) | ||||||||||||||||||||
Average System Dwell Time (Hours)(c) | 29.6 | 29.3 | (1 | ) | 29.7 | 28.7 | (3 | ) | ||||||||||||||||||||
Average Total Cars-On-Line | 230,172 | 233,181 | 1 | 233,118 | 233,271 | — | ||||||||||||||||||||||
On -Time Originations | 55.9 | % | 52.7 | % | 6 | 51.1 | % | 49.0 | % | 4 | ||||||||||||||||||
On -Time Arrivals | 43.5 | % | 41.2 | % | 6 | 40.1 | % | 40.9 | % | (2 | ) | |||||||||||||||||
Average Recrews (Per Day) | 78 | 56 | (39 | ) | 68 | 63 | (8 | )% | ||||||||||||||||||||
Resources | Route Miles | 21,357 | 22,153 | (4 | ) | |||||||||||||||||||||||
Locomotives(d) | 3,788 | 3,708 | 2 | |||||||||||||||||||||||||
Freight Cars(d) | 103,544 | 104,714 | (1 | )% | ||||||||||||||||||||||||
(a) | Amounts are estimated. | |
(b) | Amounts exclude locomotive gross ton-miles. | |
(c) | Beginning October 2005, the American Association of Railroads adopted a new dwell calculation in an effort to standardize reporting across U.S. railroads. Beginning in 2006 and forward, CSX will adopt this new method. If CSX had used this new method in the fourth quarter of 2005, average system dwell time would have been 29.0 hours for that period versus 29.6 hours as shown above. | |
(d) | Represents a total of owned and long-term leased locomotives and railcars. |
SURFACE TRANSPORTATION FUEL STATISTICS
Fourth Quarter | Year | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Diesel No. 2: | ||||||||||||||||
Estimated Fuel Consumption (Millions of Gallons) | 149.7 | 161.7 | 595.5 | 614.5 | ||||||||||||
Price Per Gallon (Dollars) | $ | 1.5959 | $ | 1.1853 | $ | 1.3132 | $ | 1.0950 | ||||||||
Impact of Year-to-Year Price Variance on Operating Expense (Dollars in Millions) | $ | (61.5 | ) | $ | (129.9 | ) | ||||||||||
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CSX Corporation and Subsidiaries | QuarterlyFlash | |
OTHER INCOME (EXPENSE) (Unaudited)
Quarters Ended | Years Ended | |||||||||||||||
Dec. 30, | Dec. 31, | Dec. 30, | Dec. 31, | |||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Interest Income | $ | 8 | $ | 8 | $ | 38 | $ | 21 | ||||||||
Income from Real Estate and Resort Operations | 59 | 29 | 85 | 47 | ||||||||||||
Minority Interest Expense | (5 | ) | (5 | ) | (19 | ) | (16 | ) | ||||||||
Net Gain on Conrail Spin—off — Net of Tax | — | — | — | 16 | ||||||||||||
Miscellaneous | — | 6 | (3 | ) | 4 | |||||||||||
Total | $ | 62 | $ | 38 | $ | 101 | $ | 72 | ||||||||
EMPLOYEE COUNTS BY SEGMENT — ESTIMATED
2005 | 2004 | |||||||||||||||||||||||||||||||
Nov | Aug | May | Feb | Nov | Aug | May | Feb | |||||||||||||||||||||||||
Surface Transportation | ||||||||||||||||||||||||||||||||
Rail | 32,537 | 32,347 | 32,005 | 31,243 | 31,967 | 32,123 | 32,184 | 32,022 | ||||||||||||||||||||||||
Intermodal | 1,054 | 1,082 | 1,076 | 1,061 | 1,077 | 1,079 | 1,087 | 1,126 | ||||||||||||||||||||||||
Technology and Corporate | 562 | 562 | 549 | 555 | 547 | 547 | 550 | 697 | ||||||||||||||||||||||||
Total Surface Transportation | 34,153 | 33,991 | 33,630 | 32,859 | 33,591 | 33,749 | 33,821 | 33,845 | ||||||||||||||||||||||||
International Terminals | — | — | — | — | 631 | 643 | 778 | 874 | ||||||||||||||||||||||||
Other | 1,473 | 1,724 | 1,546 | 1,060 | 1,452 | 1,730 | 1,417 | 1,095 | ||||||||||||||||||||||||
Total | 35,626 | 35,715 | 35,176 | 33,919 | 35,674 | 36,122 | 36,016 | 35,814 | ||||||||||||||||||||||||
11