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Make it six consecutive years of top-line growth for CSX Corp. Yesterday, the Class I reported all-time record revenue of $2.9 billion, up 15 percent compared with second-quarter 2007's total.

Strong demand for export coal, grain, ethanol, metals and phosphates/fertilizers helped drive revenue gains. CSX posted increases in eight of 10 markets. Total merchandise revenue rose 13 percent to $1.4 billion, total coal revenue jumped 29 percent to $824 million and total intermodal revenue increased 12 percent to $385 million. Automotive revenue decreased 8 percent to $205 million.

"Our results show revenue growth is sustainable," said CSX Executive Vice President of Sales and Marketing Clarence Gooden during the Class I's earnings conference this morning, adding that yield improvements helped offset volume declines, especially in the automotive and housing-related sectors.

The railroad expects rate increases to remain in the 6-plus-percent range for the remainder of the year, he said.

CSX also set an all-time-high mark for operating income at $717 million, up 17 percent year over year. In addition, earnings per share from continuing operations jumped 31 percent to $385 million and CSX's consolidated operating ratio improved 0.5 points to 75.3.

"We have high levels of operational productivity," said Chairman, President and Chief Executive Officer Michael Ward, adding that the results show CSX is "strong, resilient and focused."

However, despite cost-control efforts, escalating fuel expenses drove up total operating costs 14 percent year over year to $2.2 billion. Fuel costs ballooned 70 percent to $537 million primarily because the average price per gallon rose $1.62 since second-quarter 2007, said EVP and Chief Financial Officer Oscar Munoz. Fuel expenses added 200 basis points to CSX's operating ratio, he said.

In addition, materials, supplies and other expenses increased 9 percent to $513 million and equipment/other rents rose 5 percent to $112 million, while labor costs dropped 1 percent to $733 million.

For the first half, CSX's revenue increased 13 percent to $5.6 billion, operating income rose 22 percent to $1.3 billion and consolidated operating ratio improved 1.7 points to 76.1 compared with first-half 2007 totals. Total operating expenses increased 11 percent to $4.3 billion.

During the conference, Ward provided an update on the progress of board election tallies between CSX and Children's Investment Fund Management L.L.P. (TCI)/3G Capital Partners Ltd. nominees. An independent proxy examiner expects to release a preliminary report today or tomorrow on election results from the voting held June 25, he said.

However, a little more than one hour later the railroad announced the results of proxy examiner IVS Associates Inc.'s report, which shows CSX nominees Donna Alvarado, John Breaux, Steven Halverson, Edward Kelly III, John McPherson, David Ratcliffe, Donald Shepard and Ward; and TCI/3G nominees Alexandre Behring, Christopher Hohn, Gilbert Lamphere and Timothy O'Toole are the 12 candidates who received the most votes June 25.

"The two sides will get to examine the report to see if there's anything to challenge," said Ward, commenting on a customary review and challenge period.

CSX also has appealed a circuit court's decision that allowed TCI/3G voting rights for all of their ownership interest in the Class I. CSX had asked the court to strip TCI and 3G of voting rights for a portion of their ownership interest.

"We're not sure if this will change the outcome or not," said Ward, adding that the appeal process could take a month or longer.

— Jeff Stagl