(The Associated Press circulated the following on July 14.)
NEW YORK — CSX Corp. reports earnings for the second quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: The second quarter was a tumultuous one for CSX, as the freight railroad operator geared up for a fight to defend its corporate governance to a group of activist investors demanding change.
The hedge funds — TCI, which manages The Children’s Investment Master Fund, and 3G Capital — have asked CSX to separate the roles of chairman and chief executive and present a plan to improve operations.
In late March, CSX sued TCI and 3G, accusing them of not properly disclosing their holdings in the company. In a countersuit, the hedge funds accused CSX of misleading stockholders and violating its corporate insider trading policy.
In June, a federal judge ruled that dissident shareholders broke the law in their effort to alter CSX’s corporate structure, but did not block them from voting for their nominees to the company’s board.
They jointly nominated a minority board slate of five directors, which shareholders voted on at the company’s annual meeting last month. CSX’s board has 12 seats, all of which are elected annually.
The Children’s Investment Fund said shortly after the vote it appeared the shareholders won at least two of the five seats they were seeking, but CSX Chairman and Chief Executive Michael Ward called that figure an “educated guess.”
The company said that the votes will not be completely tallied until July 25.
BY THE NUMBERS: Analysts expect the company to report a profit of 90 cents per share, according to a poll by Thomson Financial. The railroad earned 71 cents a share in the second quarter of 2007.
CSX did not issue an expectation for the second quarter but alluded that its profit might be hurt slightly by costs related to the proxy fight.
ANALYST TAKE: Morgan Keegan analyst Art Hatfield said CSX will likely meet Wall Street’s estimates, as the impact of high fuel costs is balanced by continuing improvements in operational efficiencies.
The Jacksonville, Fla.-based railroad has come in above analysts’ expectations in each of the last four quarters.
WHATS AHEAD: A decision on the makeup of CSX’s board is expected July 25. Also, analysts say a recent regulatory ruling that said CSX was charging “unreasonably high rail rates” to ship chemicals for DuPont Co. could hurt strong pricing and leave the door open for other similar cases. The reduced rates and fines could reach $3 million over the next five years.
STOCK PERFORMANCE: CSX shares jumped 12 percent in the second quarter. The stock has gained 38 percent so far this year.