CSX Corporation reported its financial results for the second quarter of 2005.
- Net earnings were $165 million, or $.73 per share, a 38 percent increase in per-share earnings from the quarter a year ago. The 2005 results included after-tax debt repurchase expenses of $123 million, or $.54 per share, partially offset by a state income tax benefit of $71 million, or $.31 per share, for a net decrease of $.23 per share in the quarter.
- Surface Transportation revenue increased more than 8 percent to $2.2 billion, producing the 13th consecutive quarter of year-over-year growth.
- Surface Transportation produced record operating income of $422 million, an increase of $142 million over last year's quarter.
"This was our sixth consecutive quarter of core earnings growth," said Michael J. Ward, CSX Corporation chairman, president and chief executive officer. "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.
"In the foreseeable future, we expect a continuation of favorable economic conditions, industry growth and a strong pricing environment. At the same time, CSX is taking the necessary steps to improve service for our customers and drive long-term growth for our shareholders."
Surface Transportation revenue was $2.2 billion, increasing $169 million from the same quarter last year. This improvement was led by strength in the coal and merchandise markets, which produced 22 percent and 7 percent year- over-year revenue gains, respectively. Revenue also included $17 million from a rate case settlement.
Surface Transportation operating income of $422 million compares to $280 million in the second quarter of 2004, a period that included a $15 million management restructuring charge. On a comparable basis, Surface Transportation operating income increased by $127 million, up 43 percent.
Also in the quarter, CSX repurchased $1 billion of its debt, which strengthened the company's balance sheet, reduced its interest expense going forward, and improved its credit profile. This resulted in a $123 million after-tax expense, primarily reflecting the increase in current market value of the repurchased debt above the original issue value.
The State of Ohio enacted legislation to repeal its Corporate Franchise Tax, which was based on federal taxable income. This resulted in an income tax benefit of $71 million in the quarter. In addition, other income was up $25 million versus the prior year due to higher real estate sales and interest income.