Good morning, ladies and gentlemen, and welcome to the CSX Corporation Fourth Quarter 2010 Earnings Call. [Operator Instructions] For opening remarks and introduction, I would like to turn the call over to Mr. David Baggs, Assistant Vice President, Investor Relations for CSX Corporation.

Thank you, Lori, and good morning, everyone. And again, welcome to CSX Corporation's fourth quarter 2010 earnings presentation. The presentation material that we'll be reviewing this morning, along with our quarterly financial report and our safety and service measurements, are available on our website at CSX.com under the Investor section. In addition, following the presentation today, a webcast and podcast replay will be available on the website. Here representing CSX this morning are Michael Ward, the company's Chairman, President and Chief Executive Officer; Clarence Gooden, Chief Sales and Marketing Officer; David Brown, Chief Operating Officer; and Oscar Munoz, Chief Financial Officer. Now before we begin the formal part of our program, let me remind everyone that the presentation and other statements made by the company contain forward-looking statements. You are encouraged to review the company's disclosure and the accompanying presentation on Slide 2. This presentation identifies forward-looking statements and risks and uncertainties that could cause actual performance to differ materially from the results anticipated by these statements. In addition, let me also remind everyone that at the end of the presentation, we will conduct a question-and-answer session with the research analysts. With 32 analysts now covering CSX, I would ask that as a courtesy to everyone to please limit your inquiries to one primary and one follow-up question. And with that, let me turn the presentation over to CSX Corporation's Chairman, President and Chief Executive Officer, Michael Ward. Michael?

Well, thank you, David, and good morning, everyone. Last evening, we were pleased to report another quarter of excellent financial results, with earnings per share of $1.14. These results reflect our continued relentless focus on delivering value to our customers and our shareholders. With a positive economic backdrop, Clarence and the sales and marketing team were able to leverage our strong service product to increase volume and revenue across each of the three major markets we serve: merchandise, intermodal and coal. At the same time, in spite of the winter weather that has impacted volume in the last month of the quarter, David and the operating team kept the network fluid and continued to produce strong results in safety, productivity and service for our customers. As a result, CSX posted record results for the fourth quarter, with operating income increasing 46% to $846 million, and with earnings per share increasing 48% to $1.14. Turning to Slide 5, as we began 2010, we told you that we believe the actions we took during the recession would set the stage for even more business success going forward. As you can see from our results for the full year, that clearly happened. For the year, we set records and operating income up 35%, operating ratio, which improved 380 basis points, and earnings per share, which improved 40%. 2010 was a year of momentum, with volume, revenue, productivity and operating leverage driving strong results. We expect that momentum will continue in 2011. This year, we expect again to produce record financial results, including a high 60s operating ratio, which positions the company well, as we progress toward our goal of a 65% operating ratio within the next five years. We expect to achieve this, all the while continuing to invest in the business and producing a service product that meets the needs of CSX's growing customer base. Now let me turn the presentation over to Clarence to review our top line results. Clarence?

Thank you, Michael, and good morning, everyone. As the economy began its second year of growth, positive trends continued to support growth across the businesses that we serve. According to the Federal Reserve, industrial production finished the year by rising in December by more than it had since July. In addition, the manufacturing sector continued to expand for a 17th consecutive month as reflected in our reading of 57 for their latest Institute for Supply Management's index. These improving trends, combined with the value of our rail transportation product, led to a strong increase in volume experienced during the fourth quarter. As we continue to see growing demand for Rail Service, we remain focused on capturing the value of our services, and we continue to be committed to delivering an even safer and more reliable service product for our customers. Now let's turn to the next slide and review the results. Let me begin my discussion on this slide by reminding everyone that CSX follows a 52, 53 week fiscal year. As a result, CSX had an extra week in 2010. This resulted in 14 reporting weeks for the fourth quarter. As you can see in each of the charts on this slide, we are providing about a 14 week view, which includes the benefit of the extra week and a comparable 13 week view of our fourth quarter. In the chart on the left, after adjusting for the $171 million in revenue associated with the extra week, our fourth quarter revenue grew 14%. Looking at the two charts on the right, volume and revenue per unit both increased 7% after adjusting for the extra week. Let me underscore that these 13-week comparable results are non-GAAP financial measures that may provide you with a more meaningful comparison to future and…

Thank you, Clarence, and good morning, everyone. Since 2005, CSX has improved its safety and service measures by more than 50% and generated nearly $1 billion in total productivity gains. The talented people of CSX enhance performance everyday with rigorous focus on leadership, discipline and execution. The results are encouraging, and we are building upon them with a new initiative called mutual accountability. This initiative is grounded in the idea that all employees are accountable to each other. We recognize that improved customer service is the key to the next level of success. The high-level of customer service that we seek to offer can best be achieved and sustained on a foundation of communication and shared commitment. Now let's look at some of the important outcomes starting with safety on Slide 18. This slide shows both fourth quarter and full year FRA personal injury and train accident rates over the last four years. The left-hand panel shows personal injury results. In the fourth quarter shown on the top half, the personal injury rate was 0.99%. At the same time, you can see on the bottom half our full year 2010 frequency improved 17% to 1.0%. This is a record full-year personal injury performance at CSX. Looking at Train Accidents on the right-hand panel, fourth quarter and full year frequency rates improved 21% and 9%, respectively. These excellent results were achieved through a sustained commitment to safety by all employees. Now let's look at operating performance on Slide 19. Overall, the network ran well during the quarter, despite significant winter weather challenges that impacted volume. On the left side of the chart, On-time Originations and Arrivals both remain at strong levels and continue to support efficient and reliable train operations for customers. On the right side of the chart, train velocity…

Thank you, David. And good morning, everybody. Before I begin my financial review, and as Clarence discussed earlier, CSX's fourth quarter results included an extra week resulting from the company's 52, 53 week fiscal reporting calendar. Now while Clarence reviewed the quarterly volume and revenue results on a comparable 13-week basis, I will present our consolidated financial results on a GAAP basis for the fourth quarter of 2010, which includes the impact of that extra week. So with that as background, let's turn to Slide 28 for a summary of the financial results. Let's start with an overview of the results, starting at the top of the slide. Revenue growth, coupled with the continued strong cost management delivered in the face of increasing fuel prices yielded a 46% increase in operating income to a fourth quarter record $846 million. Looking below the line, interest expense was up $11 million, primarily reflecting the impact of the extra week. In addition, other income was down $11 million, the details of which are in the quarterly financial report. Income taxes were $271 million in the quarter, the result of higher earnings and the cycling of a prior year favorable state tax adjustment. For the quarter, the effective tax rate was 38.7%. As we go forward, we should expect the tax rate to approximately be 38% in 2011. All in, CSX finished the quarter with EPS of $1.14, an improvement of 48% versus last year. Turn to the next Slide, let's review the impact of the lag effect associated with our fuel surcharge program. As we've mentioned in prior quarters, the lag in our fuel surcharge program produces a favorable earnings impact in times of falling fuel prices and a headwind in periods of rising prices. During the first three quarters of this year,…

Well thank you, Oscar. We are gratified that the customers' businesses are showing real signs of recovery and proud the way our employees have stepped up to meet their needs, while delivering the financial results you have seen this morning. This is an important time for CSX and other companies to take stock in what we need to do together to drive growth and increase U.S. competitiveness in the global market while creating jobs. I also want to underscore how important it is for government authorities to support entrepreneurism to install innovation and to propel rather than hinder American businesses. To that end, we are encouraged by the recent set of bipartisan policy compromises and discussions in Washington. The freight railroads allowed to grow, to build, to hire and to contribute can continue to offer even a more valuable set of solutions. We're the safest, most secure, most environmentally friendly and most efficient way to move goods by land. At this pivotal point, I urge the government to lift rather than add strictures on our ability to contribute. For its part, CSX can commit that our employees will continue to safely drive to even better productivity and service and that the investments shareholders have made will continue to improve the quality, flexibility and capacity of this essential transportation network. In doing so, we will continue to satisfy our customers, meet the needs of the nation and deliver excellent results for our shareholders. With that, we will now turn to your questions. Operator?

[Operator Instructions] Our first question comes from Tom Wadewitz with JP Morgan. Thomas Wadewitz - JP Morgan Chase & Co: Wanted to ask you a question on the expense drivers. You presented a pretty strong contrast to what we heard from Union Pacific last week, where they listed quite a few different drivers of stronger expenses or expense inflation. And I was wondering if you could talk about how big of an impact do you expect from pension, training, state taxes, casualty accrual. Is there a significant headwind underlying that? Or are those items just different than what we saw from UP?

I don't know what's driving others, but what I can talk about is obviously ours. I think we are expecting this year is really not much different than what we've expected in past years. You got the issue of growth in volume, of course, our novel [ph] productivity to offset the inflationary cost that are out there, but nothing really significant that I would project at this point. Thomas Wadewitz - JP Morgan Chase & Co: In terms of the export coal. That's obviously a pretty good business for you guys, pretty high margins. What kind of conviction do you have in the $5 million to $10 million of additional tons? It seems that maybe there is some risk that your producers would have difficulty bringing more coal out of the ground. So is that -- do you have strong visibility from the producers and strong conviction in that, or is there some risk in the supply-chain that the coal producers may not be able to meet that?

Tom, this is Clarence. We feel very positive about it. We think our producers have the capability of producing, even with the cold weather that we've been experiencing in the coal field. David and his team has kept the velocity of the coal trains up to over 16.7 miles per hour, and we've checked the port capacity two, three times and worked with our partners in the ports. So we think we have the capacity to handle that on the port. So we're very, very positive on the 35 million to 40 million tons.

Our next question is from Scott Flower with Macquarie.

Just to follow up on the export coal situation. I guess, some of the questions I've had in following on the coal companies is just that with the upper big branch in some of the impacts on safety that are coming out of the industry that they just physically may have problems producing that much more coal. And are you expecting more crossover coals to go export? Help us a little bit. Or is that going to come out of the utility market in the U.S?

Scott, this is Clarence. Some of it will come out of the utility market in the south part of the United States because our stockpiles are slightly above normal in the south. It should not affect the northern utilities. A lot of the demand is coming out of Pittsburgh. They've seen coal over the port of Baltimore. And we feel very comfortable with that. And we also have nearly double the coal going through the Birmingham-Mobile gateways that we've had before. So as a percent of total export coal, that's the fastest growing area that we have.

I know that David talked a little bit about it, but I was just wondering if you could give us some sense. I know it's hard to talk about it in averages, but where are you maybe in terms of capacity in terms of train lengths in some of the different business lines? And I know you broached the topic of terminals, but do you feel good about your terminal capacity as the business has rebounded?

Yes,sure Scott. This is David. We feel very confident in our continued ability to go with a capacity we have available. About 10% additional volume could come into our current general merchandise train network. And we looked at intermodal automotive and believe we can bring on 15% to 20% more volume into the existing trains, given our current operating plan. At the same time, we are always looking at our operating plan and just tweaking it as we go along to make sure it has the high level of service we need to have with the capacity for growth. And terminal wise, the same thing. We're working through some productivity initiatives and automation initiatives. We see the ability to continue to grow there, as well. We're pretty confident now.

Our next question is from Bill Greene with Morgan Stanley.

I just want to talk about the margin trend. You talked about this 65% OR within the next few years. How much of that trajectory is accelerated or decelerated by some of these export coal trends given the profitability there? So in other words, if export coals weaken in '12, does that sort of mean we'll have to struggle to kind of keep the margins where they are? How do we think about the impact?

It's hard to estimate, Bill. It's Oscar. As far as the long-term "Grow to 65" initiative there, we project a lot of different business areas. And there will be cycles within that. And so it will help in some areas and not help in other areas. So I can't give you a specific number.

And while that business is profitable, most of our lines of business are, as well. So I think if that mix thus change a little bit, I think that still doesn't knock us off our trajectory of reaching that goal.

Michael, I'm wondering if you can comment a little bit further on Positive Train Control? So it seems like the freight industry is at least going to spend the amount of capital necessary to hit the goals from the FRA. But obviously the commuter rails have to play ball there. And if they aren't spending the money in achieving this, where does that leave the industry? Do we just pause? How does that move forward with the FRA?

I think the way we deal with that is the law. And we have a strong policy of obeying the law. So we're going full board to have it operational by the end of 2015. We're developing the technology at this point. And you're right, some of the commuters may have some challenges, but I don't think that will impact our ability to put the system in place on our network.

But the burden wouldn't fall to you if they're unable to meet their obligations?

That's correct.

Our next question is from Gary Chase with Barclays Capital.

I wanted to ask a couple of questions on the cost side, if I could. First, as you think about that $130 million to $140 million in productivity that both David and Oscar discussed, is there a way to give us a sense of how much of that you're already realizing in the fourth quarter? And how much of that is sort of left on the table to be achieved as we move through 2011?

The number we're giving you is 2011 number. And so in essence, none of that was achieved in the fourth quarter because that would count towards the $151 million, I think, that David mentioned. So the project plan, the teams associated with that are scaled through the course of the year, different initiatives, different objectives, different timing. So that is a specific 2011 figure.

I guess what I'm thinking though, Oscar, or at least our assessment is the productivity across the network got better as we move through the year. So you didn't -- some of the benefits that you recognized during 2010, at least the way we look at it, you wouldn't have really had the opportunity to get a full year's worth of credit for that?

Yes, obviously, some of the initiatives David put in place do carry over into next year-end and are part of that $130 million to $140 million, as well as the new initiatives he's putting in place.

Is there a way, Michael, to give us a sense of how much of that just even qualitatively is sort of new efficiencies that you need to find?

Gary, I don't think we're going to have a quantification of that, but I think I would -- can say that we have high confidence that the plans in place will deliver the $130 million to $140 million.

On count per head in Q1, you referenced the headcount, Oscar. Just wondering if we're going to run into anything on the incentive comp side or maybe you could just quantify what that dynamic might look like in Q1 for us?

The incentive comp is driven by our results. And of course, as you just heard, we had record results in this past year, 2010. Our estimation for next year, with higher benchmarks and higher plans will be that we'll revert back to a more normal average. So you'll probably see a little bit of reduction in that incentive comp in the first quarter.

Our next question is from Chris Wetherbee with Citi.

Maybe if I could touch on pricing a little bit. When you think about 2011, Clarence, and you look at kind of the order of magnitude, obviously you're looking for pricing increases in advance of inflationary pressures. But is there a reason to believe there should be a significant fluctuation in the level of pricing you've been able to achieve over the last couple of years, particularly with volumes coming back at the pace that we're looking at in 2011?

Well, Chris, I think what we said was we expect to exceed rail inflation. And on an ongoing basis, that rail inflation is around 3%, 3.5% level. And we think we can beat that handily.

There's nothing specific though whether it be legacy, which just seems to be pretty much done that would, I guess, impact fluctuations relative year-to-year. But obviously, you kind of just want to pace above that 3.5%.

That's right.

When I think about capital deployment switching gears, Oscar, obviously, from a cash balance perspective, you saw the number bump up a little bit in the fourth quarter. And I guess we'll probably get more information at the end of the first quarter about what your buyback plans may be. But any kind of thoughts about how you think about that aspect of it, whether it's dividend or buyback in capital deployment?

Well, as you know, and we've said this quite constantly, we remain committed to our balanced approach for deploying capital for shareholders through both investing and the shared dividend and repurchase programs. I think in our May Investor Conference, you'll get a broader view about our capital structure and what we're planning for the future.

Our next question is from Chris Ceraso with Credit Suisse. Christopher Ceraso - Crédit Suisse AG: A couple of questions on regulatory environment, Michael. Absent the change in legislation, how much room do you think the STB has to affect meaningful change in regulation?

Well, I think that, obviously, as you know, there are some hearings that have been scheduled to look at a broad range of economic regulatory issues. I think we're somewhat encouraged by the President's executive order that he signed on January 18, putting out that we thought that we ought to be looking at lessening regulation, certainly not putting new regulations in place. And I think if you look at the freight rail industry, were a perfect sample of a company that needs to be able to continue to contribute without further regulation because we do help with job growth, manufacturing strength, competitiveness of U.S. companies. So we're encouraged and hopeful by that executive order that we're not going to see new regulatory burdens imposed upon the rail industry. Christopher Ceraso - Crédit Suisse AG: Do you think that order opens up the window maybe to dial back PTC or have some change in that mandate?

We would certainly hope so. There are certain aspects of that. We have been having ongoing discussions with the Federal Railway Administration on, particularly what does the map look like? Do we use the 2008 traffic flows or the 2015 traffic flows to define what that network is? And we would hope that as part of that examination asked for by the President, there would be some relief on the expensive and unfunded mandate with its negative return on investment

Our next question is from Ken Hoexter with Bank of America Merrill Lynch.

Just on the export coal jumping up, are there capacity investments that you need to make or can the port handle it right now?

Ken, this is Clarence. In our assessment of our three main exporting facilities, which are Mobile, Newport News and Baltimore, we think we have the capacity in place right now to handle the 35 million to 40 million tons.

Oscar, on the $130 million to $140 million in productivity, you've been using $130 million to $150 million. Am I reading too much into that that you're tightening that range a little bit?

No, you're not reading anything into it. That's the number. Yes, it's a little bit of a tightening. As you know, and David showed it in his chart, we had a great success over the last few years. It's just a little tightening, but the team is terrific and often over-deliver, so we'll keep you posted.

Dave, you noted in your presentation that on-time arrivals have fallen to 70% from 79%, but you didn't mention kind of is it just weather or is there something more going on that's kind of impacting that ratio?

Ken, we really had a strong, we believe, a strong service performance in the quarter. We did have some impact from winter weather, particularly in December. So that did influence that number downward a little bit. But at the same rate, we believe that the overall service performance certainly supported the growth you've heard about today, and we'll continue to really work hard, be driven on improving it and making it the best it can be. But we're pretty satisfied with where we're reporting today.

The next question is from Scott Group with Wolfe Trahan.

Clarence, have you set the export met and thermal tires for it for this year? And what kind of increases are you thinking about for 2010? And then on the capacity side, you've been pretty clear you think you can handle the 40 million tons, what are the mines and ports telling you that actual capacity if demand's even stronger? How much above 40 can you go?

How much above 40 can we go? We think that there is some play above 40. And we think both in the short term and the mid term with some CapEx investments with our partners, in which we have the plans on the drawing board that we can increase said capacity. As it relates to the tariffs, the tariffs, as you know, get revised in April for most of the export coal, particularly on the metallurgical side. And we're going to watch what the marketplace is doing in trying to price that marketplace.

One more for you, Clarence. You talked on the call about some lost short haul phosphate volumes and a lost intermodal customer. Can you quantify those and talk about the timing for when those will grandfather?

I don't want to talk about the intermodal customer because that's up to that customer to make public any of the remarks they want to make, Scott. But on the phosphate side, it was a well-publicized event down at the Bone Valley, which the Sierra Club filed a suit against Mosaic. And one of the would-be phosphate mines was closed down temporarily. And that order was appealed. They were allowed to reopen that mine. It's currently operating right now. That issue will get revisited again in April.

Our next question is from Justin Yagerman with Deutsche Bank.

First question relates back to the met coal, and I know there's been a lot asked about it. In the second quarter of last year, you guys show outsized pricing due to increased volumes in met coal. I just wanted to get a sense of the sensitivity around as we span the range of 35 to 40 and perhaps even slightly above, if you guys are able to do that this year, how is that going to impact pricing depending on those volume levels? And what kind of increases could we see if we see above trend coal in the quarters?

What's happening in this export coal market now in our view is that the incremental tons that are coming in are thermal coal, principally going to northern Europe. And the thermal coal won't attract the same level of rate that the metallurgical coal does, although it will attract a very profitable rate. So does that answer your question?

So if I'm hearing you right, the incrementals are not necessarily as high as if it was all met coal because of all the [ph] cost that they need to come up with for the coal?

That's right.

And the next question is on the share repurchases. You guys alluded to the fact that you're going to be done with your current authorization as of the end of Q1. I was just curious if you had any thoughts on general return of capital to shareholders. And when you think about once you're done with that, how you think about balancing the dividend versus share repurchases? And then I guess the timing from either a board meeting standpoint or just a management thought process standpoint in terms of re-upping that share repurchase once you're through with it?

Just a reminder of how we do think about our sort of deployment of capital back to owners. I think primary is the reinvestment in the business, which you've seen us do quite a bit. Actually the secondary is on the dividend increases, and you've seen a lot of that. And sort of on a tertiary basis, we do the share repurchase, but as I said on the call, we've done quite a bit of that. We'll continue that balanced deployment. We will talk more about the broader deployment at the May Investor Conference. That's probably the right time for that. But in the interim, you will see the finishing off of our current authority on the repurchased aspect. So we think about all of them in that way.

The next question is from Scott Malat with Goldman Sachs.

I just wanted to follow up on the on-time originations. I know that you're still high versus historical standards. Just historically, for all the rails, if you kind of go through it, it's been a good early indicator of maybe some more stress in the system. We haven't seen that here by any means, I totally agree with that. But at what point would it be an issue? And what should we look out for? And if volumes are as strong as you kind of giving us an outlook, why won't it continue to kind of decline from here?

Scott, originations do are a reflection of our service-level. We do focus on maintaining those at the high level. And as you fluctuate up and down, it also is a factor of our operating plans, where our one plan is the control mechanism that we use. So that we schedule traffic through terminals, we schedule traffic over our line of road over at levels that we can move productively and efficiently, given the capacities that we have. So that's sort of how we, in the medium-term, focus on maintaining those at a high level. It's a daily focus that we have. It's not publicly reported, but it is something we talk about quarterly. And of course, we look at it daily and multiple times a day, and it's a key focus.

So I guess, at what point would you be worried if it dip below certain levels? Are there certain targets that you try to stay above?

We don't want to go -- we want to stay in the 70s to 80s range. And also we look at that on a market segment basis. So we look at it segregated by intermodal. We look at it by our merchandise trains and in several priority areas for premium traffic and so forth. So it does mean more in some of those segmented areas than others.

Scott, as David indicated during his presentation, we do have additional assets we can we redeploy, so we will keep that in that 70 plus range as we go forward.

And I'll just finish up with just a general comment that our guidance on our operating ratio improvement not only in 2011 and beyond, obviously, is all predicated on delivering great service to our customers. So that is in the foundation of our numbers, and were pretty confident about it.

And then the other question I have is on maybe a longer-term outlook for coal. We've been hearing about EPA-proposed emission standards, maybe in a report in March or whenever that comes out. Is there any way you can help us think about some of the risks in there for us? Or some of the things you are looking out for, I guess is the better way to put it?

Scott, our numbers and our research indicates that over the next decades, worldwide coal consumption doubles. It's driven mainly on a worldwide basis by the economic growth in India and China. That's also being built by steel in those countries for their infrastructure. So we think the export markets are going to be very positive. In the domestic markets, we've had some plants close on CSX. Those were older, smaller plants. There were 13 of those plants on our network. And they represented less than 5% of our total annual tonnage. And we believe what will happen there is some of the newer plans will have to throttle up to higher production rates in order to make up for that.

These plants are 50- and 60-year-old. Less efficient plants to begin with.

But if you go forward, you think, if there's any more closing on the East Coast because of less coal burning by utilities, given EPA emission standards, you can make that up in export? Is that the way to kind of think about it, to be offset?

I think so, yes.

The next question is from John Larkin with Stifel, Nicolaus. John Larkin - Stifel, Nicolaus & Co., Inc.: On the intermodal side, I think Clarence indicated that you had a strategy in place to try and make sure that you had ample containers available for your customers. David Brown indicated you had 15% to 20% excess capacity on the intermodal side. Looks like there was a lot of leverage there. Could you illuminate us a little bit on this container availability strategy?

Yes, John. This past year, 2010, in the fourth quarter particularly, there was a acute shortage of domestic containers on the West Coast versus what the demand was. And as a result of that, we were able to get some pricing action there. What we have done in our UMAX program as well as the Union Pacific is doing on the UMAX program is adding capacity in that as we speak. So we'll have, somewhere in the neighborhood of 7,000 plus domestic containers more for this year, particularly in the fall peak that we had last year in the fall peak. John Larkin - Stifel, Nicolaus & Co., Inc.: As a follow on in another commodity area. Automotive traffic looked very strong in the fourth quarter. In your outlook, you indicated that you thought that would remain strong. Could you give us a little color on how that breaks out between domestic and foreign transplants? Where the real strength is? Whether there are any new plants about to come onstream? Whether you're seeing people increase production, et cetera?

There's a new Volkswagen plant that's coming onstream in Chattanooga, Tennessee, here this year. We're seeing growth across just about all segments, whether it's the transplants or whether it's the domestics. As you know, both Ford and General Motors have gotten improved sales. It's coming along. At least 1 million more vehicles produced this year than in North American vehicle production that was produced last year. So there's all positive trends in that Automotive business.

The current forecast is like 13 million light vehicle production.

That's right.

Our next question is from Cherilyn Radbourne with TD Newcrest.

With respect to intermodal, just what you're hearing from customers regarding the need to restock, following the Christmas sell through? And how you think the early Chinese New Year may impact the flow of your volumes in the first quarter?

The early Chinese New Year, which I think starts on February 3, has people -- are shipping right now in January to avoid that two-week shutdown in Asia. So the international traffic has been reasonably strong. The domestic intermodal traffic has not been as strong in the first quarter as obviously it was in the fourth quarter. So there's a little excess capacity in there. Truck rates off the West Coast are down slightly as we go through this slump. It will slump down a little bit here during the lunar new year. But we think in the spring, it'll come back fairly strong because inventories are at reasonably low levels.

I'm just wondering, Oscar, maybe you could speak about the medium-term operating ratio target and how your medium-term view of fuel feeds into that? Because, obviously, fuel surcharge revenue has got a 100% operating ratio associated with it, and higher fuel prices tend to degrade everybody's operating ratio.

Cherilyn, you're absolutely correct. The midterm view obviously is a steady progression towards that 65 within the five years. Fuel would be, if you ask me the question, would maybe probably a high significant and consistent fuel spike would cause us a timing impact in a particular quarter or year because of exactly what you mentioned. Having said that, the forward curve today is up a little bit, but not greatly that that would have that impact. I agree math-wise, anything over 100 starts beginning to have some near-term effect on the lag. But again remember, it's just the timing aspect that we're, in essence, catching up over time.

The next question is from Jason Seidl with Dahlman Rose. Jason Seidl - Dahlman Rose & Company, LLC: On the intermodal front, Clarence, maybe you can talk about sort of walking between more volumes and pricing. It seems like you could probably get both this year as truck capacity tightens.

That's the plan. That is exactly the plan. Jason Seidl - Dahlman Rose & Company, LLC: On the export coal, how much of the 35 million to 40 million tons is actually committed capacity for 2011? What percentage is committed?

I don't know of that incremental number. I would tell you that of the total number, in excess of 50% is already signed contracts now. Jason Seidl - Dahlman Rose & Company, LLC: In excess of 50%? Perfect.

Our next question is from Keith Schoonmaker with Morningstar.

You grew comparable period volume by about 7%. Can you share the commensurate increase in crew starts or train starts please?

The question is we're up 7% in volume, what was the percentage of crew starts up? We're looking here. For a second, please, Keith. Why don't you ask your second question while we're searching?

The 13% of CapEx budgeted for regulatory requirements including some unfunded mandates, is this crowding out investments and things like capacity expansion or low emissions locomotives?

You're asking a very good question there because clearly, this mandate is diverting capital from other improvements we might otherwise make, Keith. We think that's rather unfortunate, but it is a law. It is an unfunded mandate that we're going to meet. But clearly, it's inhibiting, to some extent, us making other investments that we would like to make. And I think we now have an answer to your first question.

We had about 9% train starts in the fourth quarter.

So eventually, of course, as more volume comes back, we will have to have additional starts. And sounds like we have approached that point now?

That's correct. We did add some trains in both the automotive and the intermodal networks to support some of the growth.

Our next question is from Walter Spracklin with RBC Capital Markets.

When you look at through the year, is there a period in the year where you expect most of your 2012 pricing to get done? And sort of what quarter you're expecting most of it to get done for 2012?

Third and fourth quarters.

And roughly in terms of order magnitude, is that 50% of them in those quarters?

Both quarters combined will start to approach 75% towards the fourth quarter.

The second question, again, when you look at your pricing target of inflation plus, is there any mix affect that you see in 2011 that is going to help or hinder that? And is there any sort of specific commodity groups that you might have that might be towards lower and that might get some risk to that to hitting that level, or is it fairly even across the board?

Number one, I think that on a same-store sales basis, it's going to be very positive because the mix won't impact that because it will be differed OD pairs that's involved in that. But to answer your question on mix. Mix should be positively impacted this year, driven mainly in our Phosphate business because our projections are or a lot of interior phosphate, long-haul phosphate come in as we anticipate high corn and soybean plantings. So that should be positive. With export coal being up, that'll be a positive mix in our numbers. So it looks very good from a mix standpoint.

Order of magnitude there, is this 100 basis points or is it just 50 or somewhere in between?

Inflation plus pricing.

Next question is from Jeff Kauffman with Sterne Agee.

It's actually Kanchana Pinnapureddy in for Jeff. I just have one follow-up on the export coal side. Of that 35 to 40 million tons that you expect to ship in 2011, could you talk about how much is going to Asia and how much is likely to be more shorter-term replacement going to Australia?

Of all of the coal that we will ship between the 35 and 40, the mix will be 50% to Europe, 25% to Asia and 25% South America.

And then could you also give us the number for 2009, how much met coal was shipped?

2009? Two years ago? 2009 was mostly thermal coal that we shipped that year.

Why don't we get back to you with the answer to that question because we don't have the data.

Our next question is from Matt Troy with Susquehanna.

For Mike or Clarence. One on GDP or IP assumptions. You've referenced volume growth in 2011 of economic growth plus for your traffic, just wondering what your bogey is. I'm guessing it's between 3% and 4% on economic growth, so you're talking about volume growth for you in the mid-single-digit, is that correct?

That's correct.

Clarence, no reason to question your guidance on export coal last February, you said 30 million tons. You did 30 million this year. This period, the 35 to 40, have you seen inquiry as a result of the flooding in Australia? I know it's a fairly recent event, and this guidance that you formulated obviously isn't -- a lot of thought bottoms-up work goes into it. Have you seen a lot of customer inquiry about alternative sourcing due to the flooding in Australia? And how much of that is in this guidance, if at all?

There's two answers to that. First one is we've seen some inquiry, not a lot, some. Because people are still in the assessment mode. And then as the unfortunate incidents in Australia sort themselves out here over the next few days, weeks and months to come, it will give us a clear view to how much of that 35 to 40 is actually going to be impacted by Australia.

So is it fair to assume that there's an upside bias you would move more coal better than last because of that situation?

We won't move less than that 35 to 40. There's a potential to move more, yes, absolutely.

The next question is from Anthony Gallo with Wells Fargo.

Question for Clarence. I wasn't clear if you offered an outlook for agriculture, both domestic and export please.

We did not, but it seems to us to be very positive. As you're aware commodity prices, particularly corn, wheat and soybeans, have skyrocketed. There's drought in South American, flooding in Australia. So we think that the corn crops and the soybeans which obviously have not been planted yet will be very big crops. And given the fact that ethanol now for cars built after 2001 or later can go to a 15% blend, the demand for corn in this country will go up.

What is your export opportunity? What's the rough percentage there?

For the eastern roads, it's very small versus what you're going to see in the western roads.

We'll have more of ours going to feed mills, right?

That's correct.

And then a different question. Back to Scott Flower's earlier question about train lengths and I think distributive power. Are those improvements largely complete? And what role are they going to play in the margin story going forward?

Anthony, we, as far as distributive power is concerned, we're always looking for opportunities to do that. And we do have some areas where we're using distributive power today. I'm sure in the future we'll find other opportunities. But largely, where we're going to be for a while would be distributive power because it is sort of just the function of geography and the types of trains that we run over our different core routes. As far as train lengths are concerned, again, we are looking at our operating plan, our regular base, try to improve our length of trains. But at the same time, make sure we can figure an operating plan that maintains capacity for growth. So incrementally, we're always going to have some capacity in that train plan to add additional traffic. As we've talked about in the fourth quarter, we did reset our train plans somewhat in the fourth quarter by rebuilding our dedicated automobile network. So we put on trains that are automobile-only trains where we had previously with a lower volumes has been using a lot of our merchandise trains to move automotive. At the same time, intermodal has growth occurs there where we add additional train starts on just a basis to maintain some volume of capacity growth within our existing network. So that's been our strategy, so you'll see that we'll continue to do that going forward.

Is that a margin headwind or tailwind? Or does it not have to play out that way?

I guess margin, it helps the better we do that. And it's been part of long-term plan.

The next question is from Donald Broughton with Avondale Partners.

I noticed that, since we're getting down into the minutiae, we returned to the kind of seasonality very, very strong pricing in phosphate. In the fourth quarter, we're up 32% year-over-year up to like 21% sequentially. Is that something we should be looking forward on an ongoing basis or have we risen to a new base load rate per car on phosphates.

Donald, this is Clarence. What we're going to do on our Phosphate business is price to the market what the market demand is. So the more demand, the better we price, and it will see rail inflation.

So is it more seasonal? Have we reached a new base?

I think we've reached a new base.

The next question is from Carter Leake with Davenport & Company. Carter Leake - Davenport & Company, LLC: If you could just break out the 30 million tons in 2010 by Mobile-Hampton roads in Baltimore, just rough percentages?

50% at Newport News, 25% at Baltimore and 25% at Mobile.

Our final question comes from Peter Nesvold with Jefferies.

On weather, you cited weather in 4Q, but you didn't really quantify the impact. I'm just curious how is January trending relative to 4Q overall?

January started very strongly from a service standpoint as we came through the new year. And the early two weeks were a couple of our better weeks going back for a pretty good long period of time. And I'm sure you'll see that in the measurements. We have over about the last week or so seen quite a significant impact from weather again. Very frigid cold in the Northeast, especially up in our Albany division. With snow across the southeast and a number of places. I mean, that's what we do every year. It's an outdoor sport, as we say. We weather the storms. So we know over time, we're going to return to the high-level that we started the year with. And consistently across the first quarter, we'll see good levels of service performance. And we're focused on that. We have the resources it takes to make sure that happens. But most of all, we've got the most committed people to serve our customers safely, and they're out there right now doing everything they need to do to keep the service of the highest levels they could be at.

Obviously it's only three weeks into the year. But so far, despite that weather, we're seeing strong demand pretty much across all markets.

It looks like the velocity was holding up pretty well in the first two weeks, so I guess I can read across from that.

Correctly. I mean Clarence mentioned coal velocity still in our higher range. And we're really working hard and maintain it there. And even despite the weather, our teams out in the coal field areas are pretty good just keeping things running at a high-capacity, high rates, so we can meet that additional volume that needs to go to export.

I think you said you're down to 11,000 cars in storage. What's the mix of that car storage looking like in -- for instance, if you do get 25% type growth in export coal, do you have enough coal cars within your current network in order to handle that type of growth?

Some of those cars, about 600 are coal cars that are in storage that we can bring out, plus we're out in the open market now looking at some. And we've got new cars in the coal side of the business that are coming in June. We have some order racks still in storage. We have some 52-foot scrap cars still in storage. Lots of center being lumber cars in storage, and a few bulkhead flats in storage. What we don't have is covered hoppers. What we don't have is covered coals.

Thank you, Peter. And thanks, everyone, for joining in for our call today. We appreciate your interest.

And this concludes today's teleconference. Thank you for your participation in today's call. You may disconnect your lines.