Delivering Superior Value For All Shareholders
June 2008
Exhibit 99.1
Presentation Outline
IV.
Appendix and GAAP Reconciliation
III.
Corporate Governance
II.
Financial Policies
I.
CSX Overview and Plan for Continued
Shareholder Value Creation
2
CSX Overview and Plan for Continued
Shareholder Value Creation
CSX provides a nation-critical service
CSX is an integral part of the
nation’s infrastructure
CSX operates approximately
21,000 route miles of track
Serves every major market in the
eastern U.S., with direct access to
all Atlantic and Gulf Coast ports
CSX is an economic driver
$10 billion of annual revenue
Over 35,000 employees
Ships life-essential goods and
serves national interest
2007 Population in Major Metropolitan Areas
GT 10 Million
5 – 10 Million
3 – 5 Million
1 – 2 Million
2 – 3 Million
New Orleans
Chicago
St Louis
Memphis
Source: Global Insight
Miami
New York
Jacksonville
Tampa
Orlando
Atlanta
Baltimore
Philadelphia
Washington
Boston
4
Based on all criteria, the CSX Board should be re-elected
Strong governance standards
Engaged board with diverse skill sets
Aggressive capital structure
Concrete plan for future performance enhancement
Superior performance relative to competitors
Significant return of capital to shareholders
Superior stock price performance
5
Note: Stock price performance as of May 30, 2008; adjusted for splits; Rail industry includes BNI, CNI, CP, NSC and UNP.
Outperformed 95% of the
S&P 500 since 2005
Outperformed all other Class I
rails over a one, two, three, four
and five year period
Corporate governance ranks in
top 1% of transportation companies
Operating margin tied for best
of U.S. railroads during
first quarter 2008
Industry-leading guidance and
aggressive capital structure to
maximize investment returns
CSX has delivered superior shareholder value
Total Shareholder Return
34%
221%
357%
4 Years
59%
245%
347%
5 Years
24%
123%
244%
3 Years
15%
50%
114%
2 Years
(7%)
19%
56%
1 Year
S&P
500
Rail
Industry
CSX
6
Strong Foundation + Operational Excellence =
Shareholder Value Creation
CSX has a strong foundation and is committed to
operational excellence
CSX Strong Foundation
Safety First Culture
Clear Vision and Strategy
Pay for Performance
Consistent Leadership
CSX Operational Excellence
Productivity through
Discipline & Process Excellence
Value Pricing
Investment in Core Assets
Scheduled Network & Resources
One Plan
7
CSX has nearly doubled margins by building a
strong foundation and driving operational excellence
Assembling the Team &
Management Restructuring
“Safety First” Culture of Accountability
Pay for Performance
Note: See GAAP Reconciliation for details on Comparable Operating Margin.
2003
2004
2005
2006
2007
Operational Excellence
Strong Foundation
Network Realignment and
Disciplined Investment in Core Assets
Process Excellence Teams and Value Pricing
One Plan Implementation
One Plan — Resource Alignment
8
Current management began laying the groundwork for
excellence in 2003
Created a highly focused railroad company
with industry-leading results
Sold CSX World Terminals and CSX Lines
for $1.4B
Downsized management by almost 20%
with annual savings of $100M
Streamlined the organization to drive
greater accountability
Industry leading nearly 50% improvement
in safety; closing in on #1 (currently #2)
Embodiment of “safety is a way of life”
culture
60+% improvement in on-time originations
and arrivals; industry leading service
Implemented the One Plan to establish a
defined schedule for assets and people
Focused organization created industry
leading improvements in performance
Implemented pay for performance across
organization to drive improved execution
The most talented leadership team in
the industry
Assembled the right leadership team
Results
Foundational Initiatives
9
Current management began laying the groundwork for
excellence in 2003 (continued)
Productivity cost savings of $500M+ with
an established pipeline of additional 400M+
in productivity initiatives through 2010
Established cross functional Process
Improvements Teams (PIT) to drive
productivity across organization
Improved contribution margins; capital
avoidance by smoothing demand and
improved asset utilization
Introduced capacity based pricing to
balance traffic flows and eliminate network
capacity constraints
Industry leading price gains of 6%
annually on same store sales since 2004
Introduced “Same Store Sales” pricing –
price measure by individual customer
and location
Service quality at record levels; customer
ease of doing business has improved and
costs reduced through automation
Established 3rd party customer service
survey; introduced new e-business tools to
further enhance customer experience
CSX Intermodal operating margin more
than doubled and operating income
improved almost 150%
Restructured CSX Intermodal network to
only focus on profitable services
Results
Foundational Initiatives
10
CSX has delivered superior financial performance
39%
CAGR
8%
7
S&P 500
20%
6
NSC
22%
5
BNI
24%
4
CNI
32%
3
CP
34%
2
UNP
39%
1
CSX
2004-2007
CAGR
Rank/Company
Note: See GAAP Reconciliation for CSX data; peer comparisons based on First Call data.
11
CSX leads the industry across critical performance measures
NSC
CP
CP
NSC
CNI
NSC
CP
CNI
CNI
CP
CP
CNI
CNI
NSC
BNI
BNI
BNI
CP
BNI
UNP
NSC
CNI
UNP
BNI
UNP
BNI
UNP
UNP
CSX
UNP
CSX
CSX
CSX
CSX
NSC
CSX
Projected
Analyst EPS
Growth
through 2010
EPS
Growth
Margin
Expansion
Expense
Control
per RTM
Employee
Safety
Shareholder
Value
Creation
Shareholder Value Creation based on Total Shareholder Return from Q1 2007 - Q1 2008. Safety based on 2007 FRA
Personal Injury statistics. Expense Control per Revenue Ton Mile, Margin Expansion and EPS Growth based on Q1 2007
vs. Q1 2008 results. CN and CP expenses have been adjusted for the impact from translation of U.S. dollar-denominated
expenses into Canadian dollars. Projected Analyst EPS Growth is 2007 through 2010 and is based on First Call data.
Worst
Best
12
First quarter results confirm industry-leading momentum
420
760
410
1,240
270
(30)
Note: See GAAP Reconciliation for CSX data; peer comparisons based on First Call data.
13
How Tomorrow Moves…
Exceed $1B
in 2010
Free Cash Flow
Before Dividends
Near 30%
By 2010
Operating Margin
18%–21%
CAGR
Earnings Per Share
13%–15%
CAGR
Operating Income
2008–2010
Targets
Note: Compound annual growth rates are off comparable 2007 results; EPS targets are stated before share buybacks.
Guidance is based on:
$400M+ of Productivity through 2010
6+% Pricing guidance in 2008
CSX creates value for
shareholders through
balanced capital deployment
Strategic volume growth in key markets
14
Technology –
Building the railroad
of the future
Capture
strategic
growth
How tomorrow moves…
Key CSX initiatives to help us achieve our vision
Executing on key initiatives requires continued
strong leadership, empowered to drive results
Development of leaders & new labor agreements
with incentives aligned with shareholders
Macro outlook favors CSX, and we are uniquely
positioned to capture strategic growth
Port infrastructure, National Gateway and
Intermodal investments all attract growth to CSX
CSX will invest in high-return projects that
capitalize on advanced technology
New projects deliver labor & asset productivity,
service reliability, and enhanced safety
Strategy aligns customer needs with
operating capabilities
Key driver towards productivity targets, creating
capacity for future growth
Proven leaders
to meet future
business goals
Total Service
Integration
15
How tomorrow moves…
Strategic initiatives to drive record margins
Strong Foundation: “Safety First,” Accountability, Pay for Performance
Note: See GAAP Reconciliation for details. 2010 target based on low-70’s CSX Operating Ratio guidance.
2007
1Q 2008
2008
2009
2010
Total Service Integration
Operational Excellence: Process Excellence & Value Pricing
Operational Excellence: One Plan, Resource Alignment, Core Asset Investment
CSX leveraging a foundation
of excellence to achieve
targeted 30% margins
Capture strategic growth
Technology – Building the railroad of the future
Proven leaders to meet future business goals
16
How tomorrow moves…
CSX to deliver $400M+ of productivity through 2010
Implementing on-board fuel saving systems
Effective deployment of fuel-efficient processes
Fuel Efficiency
Utilization gains through reduced dwell
Improved reclaim and settlement reduces cost
Car Fleet Utilization
Utilization gains with advanced planning tools,
distributed power and Total Service Integration
Driving maintenance efficiency and reliability
Locomotive Fleet
Management
Technology drives terminal and customer efficiency
Driving infrastructure maintenance productivity with
process and technology
Labor Productivity
Continuous focus on plan design efficiency
TSI building reliable and productive service products
Network Efficiency/
Total Service Integration
Strategies for achieving targets
Key focus area
Disciplined process excellence teams have continuously delivered on
clear productivity targets and have a pipeline of specific initiatives
Operational
Excellence
17
How tomorrow moves…
CSX to continue delivering inflation-plus price gains
Increasingly reliable service
product drives value
External factors continue to
favor rail
Globalization, shifting
supply chains, higher
trucking costs, increasing
commodity prices
Test price ceilings
Internal targets and rewards are
based on bottom-line impact
Operational
Excellence
CSX has the highest price guidance
in the rail industry for 2008
Drivers of continued
inflation-plus pricing
Note: Peer railroad price guidance given by rail executives on analyst calls.
18
How tomorrow moves…
CSX to deliver 90% on-time performance by 2010
CSX is raising the bar on execution
Dynamic planning model adjusts to
changing resource and capacity
needs
Cross-functional integration
between operations, service design
and marketing aids in advance,
precise resource planning over
short-term and long-term horizon
The One Plan is the foundation
Governed by a clear strategy and
defined schedule
Driving accountability and
execution
Operational
Excellence
Exceptional service supports
inflation-plus pricing
19
CSX’s workforce of tomorrow will be lean and focused
Leadership development is key to success
Strong leaders, along with new labor agreements will achieve:
Simplified pay system, increasingly performance-based
Flexible work rules
CSX’s union workforce will benefit from increased flexibility and
more predictable operations
How tomorrow moves…
Collaborative, engaged workforce to drive results
Proven
Leaders
Engaged and proven leaders will execute on
key initiatives to drive continued shareholder value
20
How tomorrow moves…
TSI takes service execution to the next level
Total Service Integration
initiative aims to achieve:
Longer trains
Faster loading/unloading
More unit trains
Fewer handlings
As a result, customers will
experience:
Increased reliability
Superior service
Quicker turn times
Total Service Integration aligns
customer needs with operational capabilities
Execution of Total Service
Integration will deliver:
1)
Increased capacity to serve
more customers
2)
Ability to capture volume
growth through superior
service and flexibility
3)
Sustained pricing gains and
improved return on capital
Total Service
Integration
21
How tomorrow moves…
TSI is being implemented across Unit Train network
TSI is currently driving value in
Unit Train network
Unit trains represent over
two-thirds of CSX revenue
Implementation began in
fall 2007
Current goals focus on:
Extending train length from
65 to 90 cars, on average
Reducing time required to
load/unload cars by 50+%
Increasing loading tons by
converting to larger cars
Total Service
Integration
22
How tomorrow moves…
TSI Carload revolutionizes customer alignment
1)
Increased Density
Increase in customer storage tracks
Locate customers at industrial
parks, off the main line
2)
New Customer Policies
Reduce work at customer facilities
Days of service guidelines
Reduce car dwell
3)
Design and Execution
Lower handlings
Improve empty to load ratios
Conversion for current customers
Enhance One Plan design to reflect
improved traffic patterns
Successful implementation of
Carload Total Service Integration:
Total Service
Integration
Enhances customer reliability
Improves asset utilization
Reduces car handlings
Increases cars per train
Reduces yard and
customer dwell time
Key Drivers of TSI Service Execution
on the Carload Network:
23
“Smart” Cars
Safety & Asset Utilization
Electronically Controlled Pneumatic (ECP)
Brakes Safety & Fuel Efficiency
How tomorrow moves…
Technology drives productivity, reliability, safety
Positive Train Control and
Locomotive Optimization
Ensures optimum safety and plan
compliance
Proactively adjusts speed to optimize
fuel economy
Drives increased velocity and asset
reliability
Yard Automation
Proactive labor and material planning
Robotics perform routine maintenance
Benefits include labor and asset
productivity, as well as improved
service reliability
Asset Tracking
Enhanced fuel efficiency, labor
productivity and safety through
precise tracking of assets and people
Technologies in the pipeline will
also drive benefits:
Wayside Detection Technologies
Safety & Reliability
Optical Joint Bar Detection
Technologies Safety & Reliability
Vehicle Mounted Track Inspection
Devices Safety & Asset Utilization
Advanced
Technology
Emerging Advanced Technologies
24
Today
CSX
Territory
2020
How tomorrow moves…
Macro trends create an opportunity for CSX
1)
Trucking industry is challenged
Highway congestion is bad and getting
worse; higher fuel costs and
environmental advantage favor rail
2)
Global consumption is rising
Population growth and globalization drive
rising demand for energy, food and other
commodities
3)
East Coast ports are growing
Panama Canal expansion & West Coast
port congestion create an opportunity
4)
Rail is valued by the public
Increase in public funding facilitates
development of expanded, improved
service products
Capture
Strategic
Growth
Key trends favor CSX
Source: USDOT FHWA Freight Analysis Framework
CSX is in an excellent position
to capitalize on key macro trends
25
How tomorrow moves…
Investments and alliances target long-term growth
Strategic investments encompass all
areas of our business
CSX launched the National Gateway
Initiative to connect ports, gateways and
markets through a world-class
double-stack network
Provides meaningful connections and
enables expedited traffic flows across
the CSX network
CSX is building long-term network
solutions with trucking companies
Partnerships are cost-efficient for mid-
and long-haul moves
Addresses truck driver shortage
To fund growth, CSX is also exploring:
Public Partnerships and Grants
Asset-based business alliances
to enable growth
Capture
Strategic
Growth
New York
Wilmington
Key CSX Port
Jacksonville
Savannah
Charleston
Virginia
Ports
Baltimore
New Orleans
Expansion
Clearances
New Construction
26
Continued focus on excellence is expected to achieve
industry-leading operating margins
2003
2005
2007
2010
Target
CSX
Vision
Strong Foundation: Remains the same—safety leadership
and a culture that empowers leaders to perform
New Initiatives: Drive sustained strategic
long-term volume growth across markets
Operational Excellence: Discipline and excellence drive
continued long-term productivity and inflation-plus pricing
1)
Strong Foundation remains in place
2)
Operational Excellence delivers results
3)
New Initiatives take CSX to the next level
CSX can achieve industry-leading margins
through consistent, continuous improvement.
Note: See GAAP Reconciliation for CSX historical data
27
Financial Policies
CSX has an aggressive approach to leverage and
return of capital
CSX has the most aggressive capital structure of any major
Class I railroad
Only BBB- rated railroad
CSX has a history of returning significant capital
to shareholders
Repurchased nearly $3 billion of stock since 2006; targeting
another $3 billion by 2009
Nearly tripled quarterly dividends since 2005
CSX balance sheet policy is efficient and prudent
Lowest long-term cost of capital
Provides financial flexibility and continued access to
capital markets
CSX's capital structure achieves
lowest cost of capital and supports business strategy
29
TCI Group "proposals " have a consistent theme of increased
leverage for CSX
Leveraged buyout
Leveraged recapitalization to junk credit rating
TCI Group wrongly suggests that taking CSX below investment
grade would create significant shareholder value
EPS accretion would be only 2% in exchange for loss of investment
grade credit rating
Costs of implementing TCI's leverage agenda would be lasting
for CSX
Increases cost of capital
Increases risk of financial distress
Destroys prudent flexibility and capital markets access
TCI Group' s agenda would take CSX to "Junk " status
30
CSX’s balanced approach is well known and well executed
Capital
Investment
Investing $5B through
2010 to support
long-term growth
Share
Buybacks
Repurchased nearly
$3B since 2006
Targeting another $3B
by year-end 2009
Dividends
Nearly tripled the
quarterly dividend
since 2005
. . . While maintaining an investment grade profile
Growing Free Cash Flow and
Improving Return on Invested Capital . . .
31
CSX’s capital structure targets lowest long-term cost
Access
Costs
Distress
Costs
Equity
Risk
Risk-Free
Rate
AAA
High Yield
BBB-
Cost of Capital
Debt Tax
Shield
32
Key investments will support long-term growth
Note: Excludes Katrina-related capital. 2007 includes $200M of locomotive refinancing.
CSX’s disciplined capital
spending is consistent with
strategic objectives
Economics, scientific
modeling and safety
drive investment
Level of capital investment is
in line with industry peers
Disciplined capital analysis aims to
maximize investment returns on replacement cost basis
33
CSX actions to return capital to shareholders
$3.0 Billion
Share Buyback Program
Builds on nearly $3 billion
repurchased since 2006
Consistent with BBB-/Baa3
capital structure objectives
Targeting completion by
year-end 2009
20%
Increase
Quarterly Dividend
Nearly Tripled Since 2005
Proven record of delivering value to shareholders
Superior stock performance, investing for long-term growth, nearly tripled
dividends, targeting nearly $6 billion of buybacks between 2006 and 2009
34
Shareholders have open-door access to management
CSX is committed to working for its shareholders and promotes
transparency and interaction with its owners
CSX management has an active and ongoing dialogue with CSX
investor base
Consistent, in-depth investor presentations to apprise public of strategic
directives
Full transparency between public filings and regular investor outreach
Earnings calls with quality question and answer periods
CSX organized or attended over 220 individual investor meetings in 2007
CSX also held a 2007 Investor Conference attended by over 160 investors
CSX reviews value-enhancing suggestions from shareholders, clients,
and business partners
Board of Directors and management review and discuss feedback regularly
Feedback includes analyst reports and other significant Wall Street analysis
Suggestions are considered, debated, and implemented if in the best interest
of our shareholders
35
Corporate Governance
More than 100 years of Board experience in rail, financial, energy and
industrial companies
CSX, Honeywell, Altria, Hartford, Dominion Resources,
Southern Company, Ashland, PNC, Bank of New York Mellon,
SunTrust, Smithfield, Constellation, Exelon and HCA
Need for diverse experience reflects regulated history and attributes
of railroads
Seven current and former CEOs; including Michael Ward
CEO and COO experience spans rail, financial and industrial
companies
CSX, Illinois Central, Florida East Coast, Southern Company,
Haskell, PHH, Citi Alternative Investments, Mercantile
Bankshares, AEGON, Cendant
Michael Ward and nominee John McPherson each have at least 30
years of railroad experience
Elizabeth Bailey was a key leader in airline deregulation and is
nationally recognized as a transportation and economics policy expert
John Breaux is a transportation policy expert with strong U.S. Senate
experience
CSX Board expert, diverse and performance driven
Compelling
Transportation
Experience
Blue Chip
Business
Experience
Governance and
Policy Expertise
37
Finance, Governance
Infrastructure and
commerce expertise
Steven T. Halverson
Audit, Compensation
Diverse business expertise
Robert D. Kunisch
Governance, Public Affairs
Tremendous public policy
knowledge
John B. Breaux
Audit, Executive, Public
Affairs
Transportation and
economics expertise
Elizabeth E. Bailey
Audit, Finance
Human resource and
leadership expert
Donna M. Alvarado
Finance, Executive,
Governance
Financial markets
expertise
Edward J. Kelly, III
Audit, Compensation,
Executive
Compensation,
Governance
Audit, Compensation,
Executive
Executive, Finance, Public
Affairs
Executive
Committees
Economic
Expertise
Financial
Expertise
Public
Policy
Expertise
CEO Level
Experience
Rail /
Transport
Expertise
Business, regulatory &
public policy expertise
David M. Ratcliffe
Extensive railroad
operating experience
John D. McPherson
Industry leading results
Michael J. Ward
Diverse leadership and
board experience
William C. Richardson
Blue chip board and public
policy experience
Frank S. Royal
Risk management &
commerce expertise
Donald J. Shepard
Overarching Strength
Customer
Knowledge
Director
Highly experienced, qualified and independent CSX Board
A proficient and effective board requires that its directors have a broad skill set
38
CSX's current Board is a leader in governance
CSX has a strong independent board
CEO is the only management director, with eleven outside directors
Best practices already in place at CSX
Election of entire Board is conducted annually
Majority election of Board in uncontested elections is required
No supermajority vote required
Ability of 15% of shareholders to call a special meeting
No poison pill; opted out of anti-takeover statutes
Executive severance payments capped at 2.99 times annual compensation
All incentive compensation is performance-earned
CSX has presiding independent director with delineated duties
Consistent with prevailing practice in the United States
CSX shareholders rejected split Chairman and CEO proposal in 2006
39
Board process is robust and members are engaged
Board and Committee meetings are numerous and rigorous
Analysis and materials are sent to Directors in advance of discussion
Advance meetings to review materials are held with Committee Chairmen
Key Committees are comprised entirely of independent Directors
Board members question and challenge management constantly
Board and Committee meetings reflect active participation by all members
Multiple Board and Committee meetings held in executive session without
management
Board holds management team accountable
All incentive compensation plans are performance-earned
Board members' diverse experience adds significant value
Current Board members represent expertise across all relevant disciplines,
which is key to driving superior shareholder value
40
Board-driven strategy has created outstanding
shareholder returns
Created a streamlined transportation
company
Selected the right management team
Sets aggressive performance and
operational targets
Manages comprehensive pay for
performance system
Monitors on-going operational and
financial performance
Authorizes disciplined capital
expenditures for future growth
Maintains targeted capital structure
optimizing cost of capital
CSX Board Strategy
Note: Stock price performance as of May 30, 2008; adjusted for splits; Rail industry includes BNI, CNI, CP, NSC and UNP.
Total Shareholder Return
34%
221%
357%
4 Years
59%
245%
347%
5 Years
24%
123%
244%
3 Years
15%
50%
114%
2 Years
(7%)
19%
56%
1 Year
S&P
500
Rail
Industry
CSX
41
TCI Group' s demands would impair value
Current Board has presided
over industry-leading
performance
Replace current
Board of Directors
Investing for long-term growth
and value creation
Freeze expansion
capital spending
Managing regulatory concerns;
pricing to the market reflecting
value of service
Increase customer
prices 7% annually
Repurchased nearly $3B since
2006; further $3B targeted by
year-end 2009
Annual stock
buyback of 20%
for five years
CSX stock price has significantly
exceeded proposed LBO price
Leveraged Buyout
CSX Status
Negative
Credit Impacts
Ignores
Risk Impacts
Flawed
Assumptions
Sacrifices
LT Potential
Proposal
Statements made by Chris Hohn and TCI have fueled support in
Congress for re-regulation, which would destroy shareholder value
42
CSX believes dissidents would not add value to the Board
TCI Group nominees fail to represent the best interests of all shareholders
TCI Group’s desire to leverage CSX’s balance sheet to create a fast exit opportunity is
not in the best interest of the company or its shareholders
TCI Group has misrepresented its nominees
TCI Group nominees represent a track record of abysmal safety, bankruptcy and poor
operational performance; three nominees have no U.S. Board experience
TCI Group has overstated its nominees’ rail operating experience
TCI Group’s slate has provided no business plan or strategic insights
Proposals to date have been constantly changing, reflecting a lack of consistent vision
Proposals to date do not reflect significant understanding of U.S. railroad industry, its
regulatory environment or CSX’s business
Election of TCI Group slate will interrupt the value creation from CSX's
strategic plan
CSX Board has a deep understanding of CSX with a proven performance track record
and clear strategic plan
The TCI Group could disrupt CSX's momentum and success
43
Stark difference between TCI's public statements and
private agenda
Alexandre Behring admitted publicly in May that the TCI Group has
“no detailed operating plan for CSX.”
In private, TCI Group has said there are “no limits” to what it will do to
have CSX dramatically increase its debt for share repurchases.
In proxy materials, TGI Group says it has a
plan to make CSX America’s premier
railroad.
Chris Hohn said that the only alternative to a full proxy fight was for
the TCI Group (a) to have appointed all five of its nominees and (b) to
have the right to “interview” CSX’s current Board members to
determine who would remain.
TCI Founding Partner Amin has said it was “very” unfortunate that TCI
Group’s demands had been put in writing.
In proxy materials, TCI Group said it “made
many concessions with the hope of being
able to reach an amicable resolution with
CSX that would avoid a proxy contest.”
In April 2007, the month it purchased its first share of CSX stock, TCI
was recruiting a replacement CEO for CSX.
In March 2007, TCI declined to meet with the CSX CEO, and in the
summer failed to respond to two CSX Board requests for information
as a first step to dialogue.
Throughout 2007, repeatedly threatened to replace the entire Board.
In proxy materials, TCI Group said it sought
“to engage the management or the Board
in a constructive dialogue.”
TCI Founding Partner Snehal Amin said that a majority slate for the
CSX Board was not proposed in part because TCI did not believe
RiskMetrics (ISS) would be supportive.
TCI Group privately refers to its five-member slate as a unified “team.”
TCI Group has threatened to make things “unpleasant” for certain
current CSX directors and to “disrupt” Board processes.
In sworn Congressional testimony, TCI
Founding Partner assured members: “if
[TCI is] successful, only 1 person, 1 voice
out of 12 voices will be from TCI.”
TCI Group has said it has never sought
control of CSX.
Private Agenda
Public Statements
44
TCI Group brings poor track record, minimal experience
Chaired a publicly traded company sold
through a distressed sale, and has a career
characterized by buyouts and leverage
Gilbert Lamphere
Led Northwest Airlines into bankruptcy and
sold more than 75% of his shares in the
months immediately leading up to the
bankruptcy filing
Gary Wilson
No U.S. public
board experience
Transitional CEO as Conrail was converted to
a switching operator
As Managing Director of London Underground,
performance is down sharply and need for
government funding is up 600%
CSX Board did not include O’Toole in CEO
succession plans
Timothy O’Toole
No U.S. public
board experience
Led Brazilian railroad a fraction of CSX’s size
with an abysmal safety record
Alexandre Behring
No U.S. public
board experience
Demands for CSX, if implemented, could have
impaired shareholder value
Resigned from a UK board amid allegations of
conflict of interest
Christopher Hohn
TCI Group nominees have a poor track record
TCI Group
Slate
CSX Targeted
Directors
36
65
25
Gilbert
Lamphere
1
Steven T.
Halverson
0
Gary
Wilson
14
Frank S.
Royal
0
Timothy
O’Toole
15
William C.
Richardson
11
Alexandre
Behring
17
Robert D.
Kunisch
0
Christopher
Hohn
18
Elizabeth E.
Bailey
Rail board experience (years)
45
Based on all criteria, the CSX Board should be re-elected
Strong governance standards
Engaged board with diverse skill sets
Aggressive capital structure
Concrete plan for future performance enhancement
Superior performance relative to competitors
Significant return of capital to shareholders
Superior stock price performance
Vote the White Proxy Card
46
Appendix and GAAP Reconciliation
Recognized leader in transportation policy in the US
Served as a commissioner of the Civil Aeronautics Board, where she oversaw
the deregulation of the airline industry
During her tenure with Altria oversaw many consolidating acquisitions as well
as the shareholder value creating spin-offs of Kraft Foods ($49 billion) and
Philip Morris International ($107 billion)
During her almost 20 year tenure on the Altria board, the company has
generated annualized returns of over 19% for shareholders
Altria: Director
Brookings Institution: Trustee
National Bureau of Economic Research: Board of
Trustees
Teachers Insurance and Annuity Association: Director
Elizabeth E. Bailey
Founder and president of Aguila International, a business-consulting firm
specializing in human resources and leadership development
Appointed by President Reagan to serve as chief national spokesperson and
administrator for federal volunteerism programs during the second Reagan
administration
During her tenure at CCA, Forbes named it the “Best Managed Company” in
Business Services and Supplies
During her almost 5 year tenure as a director of CCA, the company has
generated annualized returns of over 25%
Aguila International: President
Quest International: President & CEO
Park National Bank: Director (Chair, Audit Committee)
Corrections Corporation of America: Director
Donna M. Alvarado
Sold Mercantile Bankshares to PNC Financial Services for $5.9 billion after
successfully reorganizing the firm and growing the company from $11 billion in
assets in 2002 to $18 billion in assets in 2006
Director at Hartford Financial Services during decisions to repurchase $1.8
billion in stock
Citi Alternative Investments: President & CEO
The Carlyle Group: Managing Director
PNC Financial Services Group: Vice Chairman
Mercantile Bankshares: Chairman, CEO & President
Edward J. Kelly, III
Presiding Director
Drove superior stock performance, nearly tripled dividends, targeting nearly $6
billion of buybacks between 2006 and 2009
Presiding over fastest growing company in an attractive industry
CSX: Chairman, President & CEO
Association of American Railroads: Director
Center for Energy and Economic Development:
Director
Ashland, Inc.: Director
Michael J. Ward
Chairman
Until retiring from public service in 2005, Senator Breaux represented Louisiana
in Congress for three consecutive terms, beginning in 1987. Prior to his tenure
as Senator, he served in the U.S. House of Representatives from 1972 to 1987
Recognized as a non-partisan consensus builder while serving as a member of
the Senate committees on Finance and Commerce
U.S. Senate: Member
U.S. House of Representatives: Member
President’s Advisory Panel on Federal Tax Reform:
Co-Chair
John B. Breaux
Director
Company / Position Experience
Key Accomplishments
Highly experienced, qualified and independent CSX Board
48
Assisted in the sale of Cendant’s vehicle leasing and fleet management unit
to Avis Rent A Car. Process included returning significant capital to
shareholders through a "Dutch Auction" self-tender offer to repurchase up to
50 million shares of Cendant stock
After leaving the Board of Cendant, Mr. Kunisch continued as a senior
advisor to the Cendant management team through July 2006 when Cendant
refocused its portfolio by spinning off Wyndham Worldwide ($7 billion) and
Realogy Corporation ($7 billion) and selling Travelport to Blackstone ($4
billion)
ABS Capital Partners: Special Partner & Senior
Advisor
Cendant Corporation: Vice Chairman & Director
PHH Corporation: Chairman & CEO
Johns Hopkins Medical: Trustee
Robert D. Kunisch
Focused on five principles at FEC: customer service, managing expenses
carefully, investing capital wisely, utilizing assets productively, and safety
Increased customer satisfaction ratings, revenue per employee, intermodal
volume, net income, and earned Gold Harriman Awards for safety
Florida East Coast Railway: President & COO
Illinois Central Railroad: President & CEO
Santa Fe Railroad: Regional VP & Assistant VP for
Safety
John D. McPherson
Grew Southern Company’s reputation for excellent customer service, high
reliability, and retail electric prices significantly below the national average;
Listed the top ranking U.S. electric service provider in customer satisfaction
for eight consecutive years
Maintained seven straight years of common stock dividend increases
Successfully sold non-core natural gas business in 2005 to focus on core
business lines
Southern Company: Chairman, President, CEO
Georgia Power: President & CEO
Federal Reserve Bank of Atlanta: Chairman
David M. Ratcliffe
Member of Board integration committee overseeing Bank of New York’s
acquisition of Mellon Financial Corporation ($17 Billion)
Director at Exelon during decisions to repurchase $1.75 billion in stock
President of Johns Hopkins University before leading Kellogg Foundation,
one of the world’s largest philanthropic foundations ($7 billion endowment
and nearly $300 million in annual grants)
Kellogg Company: Director
Bank of New York Mellon: Director
Exelon Corporation: Director
William C. Richardson
Nearly doubled revenues since becoming CEO of the design-build company,
positioning the award-winning firm not only as an infrastructure leader in the
Southeast U.S. but also an emerging leader in North America
The Haskell Company: President & CEO
Construction Industry Roundtable: Director
National Center for Construction Education and
Research: Chairman
Steven T. Halverson
Director
Company / Position Experience
Key Accomplishments
Highly experienced, qualified and independent CSX Board
49
Led AEGON to a nearly 39% increase in net income and 10% increase in
revenue in 2003, his first full year as chairman
Oversaw AEGON’s acquisition of Transamerica Corporation ($21 billion) in
1999 as well as the recent sale of Getronics ($1.8 billion on 10/12/07), the
acquisition of Merrill Lynch Insurance ($1.3 billion on 12/31/07) and a share
buyback ($1.5 billion on 11/19/07)
AEGON: Chairman & CEO
PNC Financial Services Group: Director
U.S. Chamber of Commerce: Vice-Chairman
Donald J. Shepard
As an active member of the compensation committees of corporate boards,
has been a major advocate of tying management pay to operating
improvements and aligning management with long-term shareholder
interests
Oversaw SunTrust’s acquisition of National Commerce Financial ($7 billion)
and Crestar Financial ($9 billion)
Oversaw over $13 billion in asset divestitures at Dominion Resources over
the course of 2007 and a subsequent $5.3 billion Dutch Auction share
repurchase in August 2007 as well as a $4 billion share buyback in 2005
SunTrust Bank: Director
Dominion Resources: Director
Smithfield Foods: Director
Hospital Corporation of America: Director
Chesapeake Corp: Director
Frank S. Royal
Director
Company / Position Experience
Key Accomplishments
Highly experienced, qualified and independent CSX Board
50
Proxy Statement Disclosure
Important Information
In connection with the 2008 annual meeting of shareholders, CSX Corporation ("CSX") has filed with the SEC and mailed to shareholders a definitive Proxy Statement dated April 25, 2008. Security holders are strongly advised to read the definitive Proxy Statement because it contains important information. Security holders may obtain a free copy of the definitive Proxy Statement and any other documents filed by CSX with the SEC at the SEC’s website at www.sec.gov. The definitive Proxy Statement and these other documents may also be obtained for free from CSX by directing a request to CSX Corporation, Attn: Investor Relations, David Baggs, 500 Water Street C110, Jacksonville,FL 32202. CSX, its directors, director nominee and certain named executive officers and employees may be deemed to be participants in the solicitation of CSX’s security holders in connection with its 2008 Annual Meeting. Security holders may obtain information regarding the names, affiliations and interests of such individuals in CSX’s definitive Proxy Statement and its May 15, 2008 letter to shareholders filed with the SEC as definitive additional soliciting materials.
51
Forward-Looking Disclosure
This presentation and other statements by the company contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of management’s plans, strategies and objectives for future operation, and management’s expectations as to future performance and operations and the time by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” “estimate,” and similar expressions. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking statement. If the company does update any forward-looking statement, no inference should be drawn that the company will make additional updates with respect to that statement or any other forward-looking statements.
Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others: (i) the company’s success in implementing its financial and operational initiatives; (ii) changes in domestic or international economic or business conditions, including those affecting the rail industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; and (v) the outcome of claims and litigation involving or affecting the company. Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the company’s SEC reports, accessible on the SEC’s website at www.sec.gov and the company’s website at www.csx.com.
52
GAAP Reconciliation Disclosure
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.
CSX has provided operating income, margin and earnings per share 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. These non-GAAP measures should not be considered a substitute for GAAP measures.
53
GAAP Reconciliation to comparable results
23.0%
22.3%
20.7%
18.1%
13.3%
11.6%
Comparable Operating Margin
$ 624
$ 2,233
$ 1,981
$ 1,556
$ 1,068
$ 877
Comparable Operating Income
-
-
-
-
-
108
Plus Additional Loss on Sale
-
-
-
-
-
232
Plus Provision for Casualty
Claims
-
-
-
-
71
22
Plus Restructuring Charge
(2)
(27)
(168)
-
-
-
Less Pretax Gain on Insurance
Recoveries
2,087
7,770
7,417
7,062
7,043
7,058
Operating Expense
$ 2,713
$ 10,030
$ 9,566
$ 8,618
$ 8,040
$ 7,573
Operating Revenue
Q108
2007
2006
2005
2004
2003
Dollars in millions
54
GAAP Reconciliation to comparable results
$ 2.70
$ 2.22
$ 1.70
$ 1.00
Comparable Diluted EPS From
Continuing Operations
)
$ 2.74
(0.04
-
-
-
-
)
)
)
$ 2.82
(0.22
(0.06
(0.32
-
-
)
$ 1.59
-
-
(0.16
0.27
-
)
$ 0.94
-
(0.04
-
-
0.10
Diluted EPS From Continuing Operations
Less Gain on Insurance Recoveries
Less Gain on Conrail Property
Less Income Tax Benefits
Plus Debt Repurchase Expense
Plus Restructuring Charge
2007
2006
2005
2004
55