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Rail News Home CSX Transportation

7/27/2005



Rail News: CSX Transportation

CSX records sixth-straight quarter of earnings growth


It’s an even half-dozen: A strong second quarter has given CSX Corp. its sixth-consecutive quarter of core earnings growth.

“It was also the second-consecutive quarter of record operating income in Surface Transportation, reflecting overall strength in our markets and an increased focus on productivity,” said CSX Corp. Chairman, President and Chief Executive Officer Michael Ward in a prepared statement.

For the quarter, CSX recorded surface transportation revenue of $2.2 billion, an 8 percent increase compared with the same 2004 period and the 13th-consecutive quarter of year-over-year growth. Strength in the coal and merchandise markets -- which produced 22 percent and 7 percent year-over-year revenue gains, respectively – set the revenue pace, CSX says. Revenue also included $17 million from a rate case settlement.

CSX also reported record surface transportation operating income of $422 million, a 50.7 percent increase compared with second-quarter 2004, a period that also included a $15 million management restructuring charge. On a comparable basis, surface transportation operating income increased by $127 million, up 43 percent.

“In the foreseeable future, we expect a continuation of favorable economic conditions, industry growth and a strong pricing environment,” Ward said.

Other 2Q highlights: To strengthen the company’s balance sheet, reduce its interest expense going forward and improve its credit profile, CSX repurchased $1 billion of its debt. The result: a $123 million after-tax expense, primarily reflecting the increase in current market value of the repurchased debt above the original issue value.

Meanwhile, the state of Ohio enacted legislation to repeal its corporate franchise tax, which had been based on federal taxable income. For CSX, this meant a second-quarter income tax benefit of $71 million. In addition, higher real estate sales and interest income helped CSX post “other income” that represented a $25 million increase compared with the same 2004 period.


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