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Late last year, several Wall Street analysts predicted CSX Corp. was the most likely Class I to report soft fourth-quarter earnings because of higher capital spending and lower-than-expected traffic volume. So much for prognostications.

Yesterday, CSX reported fourth-quarter earnings of 57 cents per share, excluding Hurricane Katrina insurance recoveries, a Conrail property gain and tax issue resolutions, a 10 percent increase compared with fourth-quarter 2005 earnings. Surface transportation operating income of $478 million, excluding $27 million from insurance recoveries, represented a 15 percent increase.

In addition, CSX set a fourth-quarter surface transportation revenue record at $2.4 billion, up 8 percent year over year. A more than 8 percent increase in yields, growing agricultural market, burgeoning demand for export coal and rising international intermodal traffic spurred revenue growth.

“Strong pricing and reliable customer service delivered record fourth-quarter financial results in our surface transportation businesses,” said CSX Chairman, President and Chief Executive Officer Michael Ward in a prepared statement.

CSX also improved its quarterly surface transportation operating ratio, which dropped 2.9 points to 78.6 compared with fourth-quarter 2005’s ratio. However, quarterly expenses rose 7 percent to $1.6 billion.

The company reported banner full-year results, too. CSX’s operating ratio improved 4.9 points to 77.2 compared with 2005’s ratio — the first time in nearly a decade the full-year ratio dipped below 80.

In addition, earnings per share of $2.82, including insurance recoveries, jumped 31 percent; surface transportation operating income of $1.96 billion, excluding gains and insurance recoveries, rose 26 percent; and surface transportation revenue of $9.6 billion increased 11 percent compared with 2005 data.

For 2007, CSX officials expect traffic demand to remain strong.

“We remain confident in our previous guidance of double-digit growth in operating income [and] earnings,” said Ward.