RiskMetrics Group Forum Presentation
Delivering Superior Value For All Shareholders
June 2008
Exhibit 99.1
CSX’s Board is
driving shareholder
value creation
CSX’s Board & Mgmt.
have transformed CSX
into an industry leader
CSX Board delivers results; TCI Group puts results at risk
TCI Group could
jeopardize CSX’s
momentum & success
CSX is on target
to become the best
railroad in N. America
Re-elect the CSX Board to ensure maximum shareholder value creation
TCI Group’s nominees bring a poor track record, limited
experience and no operating plan…
TCI Group’s proposals would put CSX’s future at risk
Long-term Board strategy targets industry-leading
operating margins
CSX has achieved unprecedented results with
industry-leading forward guidance
CSX Board and Management deliver superior
performance and leading governance
CSX’s Board and Management have
transformed CSX into an industry leader
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
Note: Stock price performance as of May 30, 2008; adjusted for splits; Rail industry includes BNI, CNI, CP, NSC and UNP.
Outperformed all other Class I
rails over a one, two, three, four
and five year period
Outperformed 95% of the
S&P 500 since 2005
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
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
Operating income nearly tripled since 2003;
Management is driving price, volume and productivity gains
2003
Comparable
Operating
Income
2007
Comparable
Operating
Income
Net
Inflation
Real
Pricing
Volume
Productivity
28%
Real Pricing
16%
Volume
40%
16%
Net Inflation
Productivity
Sources of Income Growth
Sustained, industry leading price above inflation.
Volume is up 7% on RTM basis with favorable mix.
Productivity has exceeded $500M.
Note: Inflation assumed at 3.5% based on AAR’s ALL-LF index. Real pricing based on “same store sales” price
gains less inflation and net impact from fuel price. See GAAP Reconciliation for CSX data.
Management Action
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.
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
Worst
Best
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.
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.
CSX is on target to become the best railroad
in North America
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
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
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
CSX to continue delivering strong 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
CSX has the highest price guidance
in the rail industry for 2008
Drivers of continued
strong pricing
Note: Peer railroad price guidance given by rail executives on analyst calls.
Operational
Excellence
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
“Smart” Cars
Safety & Asset Utilization
Electronically Controlled Pneumatic (ECP)
Brakes Safety & Fuel Efficiency
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
Today
CSX
Territory
2020
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
Key trends favor CSX
Source: USDOT FHWA Freight Analysis Framework
CSX’s ability to capitalize on key macro
trends depends on appropriate investment
Capture
Strategic
Growth
Investments and alliances target long-term growth
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
New York
Wilmington
Key CSX Port
Jacksonville
Savannah
Charleston
Virginia
Ports
Baltimore
New Orleans
Expansion
Clearances
New Construction
Capture
Strategic
Growth
CSX is capitalizing on real opportunities while the
TCI Group wants to freeze strategic capital spending
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.
Industry-leading operational performance drives ability to
deliver significant value to shareholders
$3B addl. share
buyback by 2010
Raised to $3B
buyback by 2008
$2B share
buyback by 2008
Between 2007 and 2010, CSX plans to return at least $6.5B of value
to shareholders through dividends and share repurchases
Note: See GAAP Reconciliation for Comparable Operating Income.
54%
dividend
increase
20%
dividend
increase
25%
dividend
increase
20% 2Q08
dividend
increase
30%
dividend
increase
$500M share
buyback
$150M share
buyback
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
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 . . .
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
CSX’s Board is driving shareholder
value creation
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
CSX has an exceptional governance foundation
No poison pill
Opted out of anti-takeover statutes
Annual election of entire board by majority vote
No supermajority vote requirements
Presiding independent director with delineated duties
Board comprised entirely of outside directors other than CEO
CSX is a leader in Corporate Governance
Board and management driving proactive changes
Most aggressive capital
structure among its peers
Repurchased nearly $3
billion of stock since 2006
Targeting further $3 billion
buyback through 2009
Nearly tripled quarterly
dividend since 2005
ONE Plan implemented
during 2004
Rebuilt safety and
service culture
Now rank among industry
leaders in safety and
customer service
Initiating Total Service
Integration (TSI) to take
operations to next level
Michael Ward elected
Chairman & CEO in 2003
New executive team put in
place during 2003-2004
Reduced management
positions nearly 20%
Restructured incentive
pay plans to be 100%
performance-earned
Hired new talent to
diversify workforce
Acquired New York
Central assets of Conrail
Divested American
Commercial Lines
Sold Sea-Land
International assets
Sold CTI Logistics
Divested Horizon Lines
Sold CSX World Terminals
Corporate
Restructuring
New
Management
Operational
Improvement
Balance Sheet
Optimization
Over last three years, delivered 244% shareholder return, more than
doubled operating income, and nearly tripled earnings per share
Note: Stock price performance as of May 30, 2008 and adjusted for splits; operating income and EPS data is 2004 – 2007
TCI Group could jeopardize CSX’s
momentum and success
TCI Group’s demands would impair value
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
CSX is investing for future strategic growth; TCI Group
prefers to freeze all investments & take CSX debt to junk
Invested in Southeast
Expressway to support capacity
expansion in key growth markets
Developed a clear strategy to
leverage growing Eastern ports
Unveiled National Gateway
initiative to connect ports with
key population centers and
Western gateways
Targeted investments in
advanced technology to drive
productivity, reliability and safety
TCI Group has advocated that “it
is prudent to freeze expansion
capex.”
TCI Founding Partner
Snehal Amin, 3/5/08
TCI Group has “no detailed
operating plan” and no capital
investment strategy for CSX
TCI Group would take CSX to
junk status, which would inhibit
investment to spur future growth
CSX
TCI Group
TCI Group’s $2.2B “productivity” claim for CSX is flawed
Flawed analysis; relies on theoretical volume growth.
$2,220M
Total TCI Group Value
CSX targets $400M+ productivity in 3 years; lower TCI Group
target is over 5-10 years and is based on flawed assumptions.
$380M
Productivity Value
Analysis flawed; CSX more productive per RTM than NS.
$150M
Labor Productivity
CSX is most fuel efficient RR when adjusted for length of haul.
$130M
Fuel Efficiency
Accurate analysis shows $35M gap to NS; initiatives in place.
$100M
Locomotive
Maintenance
$1.8B refers not to productivity, but entirely to volume growth.
$1,840M
Capacity/Volume Value
Flawed analysis based on anecdotal benchmarks.
$300M
Reduce load/unload time
TCI Group overstates the number of handlings at CSX by 50%.
$400M
Reduce handlings
CSX and CN dwell already identical when correctly adjusted.
$200M
Reduce dwell
Impact overstated. Velocity exceeds NS in nearly all markets.
$40M
Increase velocity
Benefits solely derived from volume growth.
$900M
Increase cars per train
Flaw to TCI Group Analysis
Est.
Value
TCI Group
“Opportunity” Source
TCI Group brings poor track record, minimal
experience
CSX targeted directors have nearly twice
the rail board experience as TCI Group nominees
Gilbert Lamphere
Chaired a publicly traded company sold through a distressed sale, and has a career characterized by
buyouts and leverage.
Gary Wilson
Led Northwest Airlines into bankruptcy and sold more than 75% of his shares in the months immediately
leading up to the bankruptcy filing. Yahoo! board member.
Timothy O’Toole
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%.
Alexandre Behring
No U.S. public board experience. Led Brazilian railroad a fraction of CSX’s size with an abysmal safety
record. Has said the TCI Group has “no detailed operating plan for CSX.”
Christopher Hohn
Demands for CSX, if implemented, could have impaired shareholder value. Made statements raising
significant regulatory concerns in Washington. No U.S. public board experience. Resigned from a UK board
amid allegations of conflict of interest.
Others don’t think TCI Group’s slate is world-class
On Christopher Hohn : “The interlude with Hohn was nerve-wracking, especially
because he would say one thing one day and another the next…His demands
changed quicker than the time of day.���
Former Deutsche Börse CEO Werner Seifert, writing in “Invasion der Heuschrecken” (or
“Invasion of the Locusts”), translated from the original German edition
On Gary Wilson: “Until now I naively believed that self-destructive doomsday
machines were fictional devices found only in James Bond movies. I never believed
that anyone would actually create and activate one in real life. I guess I never knew
about Yang and the Yahoo! Board.”
Carl Icahn, activist investor, writing on the value-destructive actions of Wilson and the
Yahoo! Board
On Timothy O’Toole : “It is widely known that Tim O’Toole’s abrasive manner
played a significant role in the breakdown of relationships between the Treasury
and Transport for London.”
UK Treasury Department Official, speaking of O’Toole’s relationships with other
government officials
Dissidents have a mixed record and fractured relationships
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
Credit default swaps would financially benefit TCI Group at the expense of
CSX 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
It became apparent through negotiations that the TCI Group’s interests were not aligned
with value creation for all shareholders
The TCI Group could disrupt CSX’s momentum and success
Closing Remarks
CSX’s Board is
driving shareholder
value creation
CSX’s Board & Mgmt.
have transformed CSX
into an industry leader
CSX Board delivers results; TCI Group puts results at risk
TCI Group could
jeopardize CSX’s
momentum & success
CSX is on target
to become the best
railroad in N. America
Re-elect the CSX Board to ensure maximum shareholder value creation
TCI Group’s nominees bring a poor track record, limited
experience and no operating plan…
TCI Group’s proposals would put CSX’s future at risk
Long-term Board strategy targets industry-leading
operating margins
CSX has achieved unprecedented results with
industry-leading forward guidance
CSX Board and Management deliver superior
performance and leading governance
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
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
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 & COO
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
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
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.
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.
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.
GAAP Reconciliation to comparable results
23.0%
$ 624
-
-
-
(2)
2,087
$ 2,713
Q108
23.2%
22.3%
20.7%
18.1%
13.3%
11.6%
Comparable Operating Margin
$ 2,390
$ 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
(11)
(27)
(168)
-
-
-
Less Pretax Gain on
Insurance Recoveries
7,920
7,770
7,417
7,062
7,043
7,058
Operating Expense
$ 10,321
$ 10,030
$ 9,566
$ 8,618
$ 8,040
$ 7,573
Operating Revenue
Q108
LTM*
2007
2006
2005
2004
2003
Dollars in millions
* LTM is last twelve months (Q2 07 – Q1 08)
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