(CSX issued the following on May 15.)
JACKSONVILLE, Fla. — CSX Corporation (NYSE: CSX) today announced that it has sent a letter to all CSX shareholders and filed an investor presentation with the Securities and Exchange Commission (the “SEC”) in connection with the company’s 2008 annual meeting of shareholders scheduled for Wednesday, June 25, 2008.
“We have released today’s letter and presentation because our shareholders are entitled to accurate information when deciding the future of CSX and their investment. We are obligated to set the record straight,” said Michael J. Ward, CSX chairman, president and chief executive officer. “CSX has delivered outstanding financial and operational results, and the Board of Directors has concrete plans to continue creating shareholder value.”
The CSX Board of Directors recommends that shareholders re-elect its experienced and highly qualified directors and support the Board’s efforts to create additional value by promptly voting the WHITE proxy card by telephone, Internet or mail. CSX also strongly urges shareholders to disregard any blue proxy card sent by The Children’s Investment Fund (“TCI”) or other members of TCI’s group, including 3G Capital Partners.
CSX shareholders who have any questions or need assistance voting their WHITE proxy card should contact Innisfree M&A Incorporated, which is assisting the company in this matter, toll-free at 877-750-9497.
The investor presentation and letter to shareholders are available on the company’s annual meeting website at http://2008annualmeeting.csx.com or at the
SEC’s website at www.sec.gov. In addition, the full text of the letter is below:
May 15, 2008
PROTECT YOUR INVESTMENT IN CSX!
RE-ELECT YOUR BOARD OF DIRECTORS
VOTE THE WHITE PROXY CARD
Dear Fellow Shareholder,
CSX has delivered stock price returns of 38%, 208%, and 299% over the past one, three and five years,* respectively. CSX strongly urges you to examine the TCI Group’s “analysis” of our company.
A close look reveals a concerning mix of bad math, flawed assumptions and half truths. Given that this group is attempting to replace five members of the CSX Board with its own block of nominees and has made numerous suggestions to reduce CSX’s investment-grade debt rating to “junk” status, it is important to set the record straight.
[To view charts visit http://2008annualmeeting.csx.com in the “Announcements” section]
As the chart above shows, CSX is an industry leader across well-recognized critical performance measures. What’s more, the company is improving faster than its rail peers, has presented the most aggressive financial guidance in the industry and has a proven plan to achieve that guidance.
On the other hand, the TCI Group has offered ideas that would either destroy value or are already under way at CSX. It is no wonder that they have tried to keep you focused on loosely knit and flawed comparisons to other railroads.
— For example, the TCI Group wants you to believe that there is a widening gap between expense per ton mile at CSX and Canadian National (CN). This is simply not true. When CN’s expenses are properly adjusted for foreign currency translation, the gap has not increased to 28% as the TCI Group might have you believe – it has narrowed from 11% to 8%.
— Next, they offer a flawed and misleading “mathematical model,” which purports to show that CN’s operating income improved C$1.6 billion through operational improvements over a nine-year period. What they don’t tell you is that more than a third of CN’s improvement was due to acquisitions and just keeping up with inflation. Consistent with our EPS guidance, CSX’s operating income is expected to have improved $1.7 billion over only four years by the end of 2008.
— We also think you should know that CSX’s operating ratio – the most important measure of operational efficiency – has improved by more than 1,200 basis points over the past four years, while the operating ratio at Canadian National has been essentially flat (see chart below).
[To view charts visit http://2008annualmeeting.csx.com in the “Announcements” section]
— The flawed comparisons don’t stop with Canadian National. For
example, the TCI Group has alleged that CSX prices its services at a
discount to Norfolk Southern’s pricing. What they fail to disclose is
that after making the necessary adjustments for length of haul and
CSX’s equipment privatization strategy, CSX prices are at parity with
Norfolk Southern. What’s more, CSX has the strongest 2008 pricing
guidance in the industry.
In addition to its bad comparisons to other railroads, the TCI Group has also gone out of its way to minimize CSX’s well-documented success by wrongly attributing recent financial improvements almost entirely to pricing. The correct math actually shows CSX’s industry-leading improvement in operating income is derived from not only pricing but also from productivity and a strategic shift to higher margin business. Contrary to the TCI Group’s portrayal of CSX’s productivity improvements, productivity gains at CSX have exceeded $500 million since 2003, with at least an additional $400 million in productivity targeted through 2010.
In making your decision about your CSX investment, it is essential that you have a true picture of the company’s performance and future potential. A more detailed analysis of the TCI Group’s many misleading claims is available on CSX’s website: http://2008annualmeeting.csx.com.
CSX is a great company. It has made its shareholders a lot of money. Its record and its guidance show that the company is progressing toward excellence in every category of operating and financial performance.
WHO WOULD YOU RATHER HAVE OVERSEEING YOUR INVESTMENT IN CSX?
THE CSX BOARD, WHICH HAS DELIVERED:
— Stock price returns that have ranked ahead of the top 93%, 95%, and 87% of all S&P 500 companies over the past one, three and five years,* respectively.
— Record revenues, operating income and earnings per share in the first quarter of 2008, with operating income more than doubling since 2004.
— Industry-leading capital returns to shareholders, including $6 billion in authorized share repurchases from 2006 to 2009 and a near tripling of the quarterly dividend over the past two years.
— The most aggressive guidance in the industry through 2010.
— Disciplined capital management and a philosophy that favors the creation of lasting value for shareholders from financial flexibility and improvements in operations, not leverage – particularly in today’s economic climate!
OR…
THE TCI GROUP, WHICH HAS DELIVERED:
— Damaging demands that threaten your investment and have alarmed regulators.
— Consistent demands to saddle CSX with “junk” rated debt and for the company to pursue a short-sighted strategy that we believe would impair the value of your investment.
— Bad math, flawed assumptions and half truths, which we believe are intended to distract you from the facts behind CSX’s leading performance.
RE-ELECT THE BOARD THAT DELIVERS VALUE, NOT ARTIFICIAL CLAIMS. VOTE THE WHITE PROXY CARD TODAY!
We urge all shareholders to vote for the election of all nominees proposed by the CSX Board, on the WHITE proxy card. Your Board is unanimous in its opposition to the TCI Group’s agenda and requests that you discard any blue proxy cards you may receive.
As the 2008 CSX annual meeting of shareholders approaches, please remember that your vote is extremely important no matter how many shares of CSX stock you own. Please sign, date and return your WHITE proxy card today. We also encourage you to vote by Internet or phone by following the instructions on the WHITE proxy card.
Sincerely,
/Michael J. Ward/
On behalf of the CSX Corporation Board of Directors,
Michael J. Ward, Chairman, President and Chief Executive Officer
* All stock price performance as of April 25, 2008
Please Vote the WHITE Proxy Card TODAY!
Instructions for voting your shares by telephone, Internet or mail are enclosed, along with your WHITE proxy card and postage-paid return envelope.
If you’ve already signed and returned a blue proxy card, you can revoke that vote and cast a new vote by signing, dating and returning the enclosed WHITE proxy card today.
If you need assistance in voting your shares by telephone, Internet or mail, please contact Innisfree M&A Incorporated, which is assisting the company in this matter, toll-free at 877-750-9497.
About CSX
CSX Corporation, based in Jacksonville, Fla., is one of the nation’s leading transportation companies, providing rail, intermodal and rail-to-truck trainload services. The company’s transportation network spans approximately 21,000 miles, with service to 23 eastern states and the District of Columbia, and connects to more than 70 ocean, river and lake ports. More information about CSX Corporation and its subsidiaries is available at the company’s web site,www.csx.com.