10-KPeriod: FY2008

CSX CORP Annual Report, Year Ended Dec 26, 2008

Filed February 19, 2009For Securities:CSX

Summary

CSX Corporation, a leading transportation supplier, reported strong revenue growth of 12% in 2008, reaching $11.3 billion, driven by pricing initiatives and higher fuel recovery. Despite a 4% decline in overall volume due to economic headwinds affecting merchandise and automotive sectors, operating income increased by 22% to $2.8 billion, signaling improved operational efficiency. The company maintained strong service and safety metrics, with notable improvements in personal injury and train accident frequencies. Looking ahead, CSX acknowledged the impact of the intensifying global recession on its business in 2009, anticipating lower rail volumes. In response, the company began implementing cost-management measures, including workforce adjustments and reduced locomotive utilization. CSX also highlighted its commitment to shareholder value through capital expenditures focused on infrastructure maintenance and network expansion, alongside strategic share repurchases and dividend increases. The company's financial position remains solid, supported by a significant revolving credit facility.

Financial Highlights

47 data points
Beta

Revenue

$11.26B

Net Income

$1.35B

12.0% Net Margin

EPS (Diluted)

$0.37

Total Assets

$26.29B

Cash & Equivalents

$669.00M

Free Cash Flow

$1.17B

Financial Statements
Beta
Revenue$11.26B
Operating Expenses$8.50B
Operating Income$2.75B
Interest Expense$519.00M
Net Income$1.35B
EPS (Basic)$0.38
EPS (Diluted)$0.37
Shares Outstanding (Basic)3.61B
Shares Outstanding (Diluted)3.68B

Key Highlights

  • 1Revenue grew by 12% to $11.3 billion in 2008, driven by pricing and fuel recovery, despite a 4% volume decline.
  • 2Operating income increased by 22% to $2.8 billion, indicating improved operational efficiency.
  • 3Safety performance showed improvement, with a 7% decrease in personal injury frequency and an 11% decrease in train accident frequency.
  • 4The company continued to return capital to shareholders, increasing its quarterly dividend and completing $1.25 billion of its $3 billion share repurchase program.
  • 5CSX is anticipating lower rail volumes in 2009 due to the global recession and is implementing cost-saving measures.
  • 6Capital expenditures remained substantial at $1.7 billion, primarily focused on infrastructure maintenance and network expansion.

Frequently Asked Questions

In 2008, CSX reported a 12% increase in revenue to $11.3 billion and a 22% increase in operating income to $2.8 billion compared to 2007. This growth was achieved despite a 4% decrease in freight volume, largely due to effective pricing strategies and higher fuel cost recovery, which offset the volume decline.

CSX faces several risks, including the negative impact of general economic conditions on freight demand, particularly in the automotive and housing sectors. Regulatory changes and compliance risks also pose challenges. Furthermore, the company must manage potential disruptions from fuel price volatility, labor negotiations, competition from other transportation modes, and the significant capital costs associated with implementing Positive Train Control (PTC) systems.

CSX continued its balanced approach to capital deployment in 2008. They invested $1.7 billion in capital expenditures, primarily for infrastructure maintenance and network expansion. The company also increased its quarterly dividend and repurchased $1.25 billion of its own stock, demonstrating a commitment to returning value to shareholders.

CSX anticipates that the intensifying global recession will negatively impact its business in 2009, leading to lower rail volumes. In response, the company is implementing cost-management strategies, including workforce adjustments (furloughs), reduced locomotive utilization, and modifications to its ONE Plan to align resources with demand conditions.