Good morning, ladies and gentlemen, and welcome to the CSX Corporation Third Quarter 2011 Earnings Call. As a reminder, today's call is being recorded. [Operator Instructions] For opening remarks and introduction, I would like to turn the call over to Mr. David Baggs, Vice President of Capital Markets and Investor Relations for CSX Corporation. Sir, you may begin.

Thank you, Lawrie, and good morning, everyone. And again, welcome to CSX Corporation's third quarter earnings presentation. The presentation material that we'll review this morning, along with our quarterly financial report, our safety and service measurements, are all available on our website at csx.com under the Investors section. In addition, following the presentation, a webcast and podcast replay will be available on the same 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. These disclosures 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 nearly 30 analysts covering CSX, I would ask 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, CSX reported record third quarter earnings per share of $0.43, up 19% in a moderating economy. Revenues were up 11% from the prior year to nearly $3 billion, with increases across all major markets. These results reflect a compelling value of freight rail transportation and recoveries associated with higher fuel costs. At the same time, we invested in additional resources to enhance customer service. As a result, by the end of the quarter, service reached the higher levels achieved in 2010 and we have positioned ourselves better for the future. From a financial perspective, CSX delivered third quarter operating income of $878 million and a strong operating ratio of 70.4%. The underlying fundamentals of our business continue to support our aspirations for the future. In the near-term, that means the continuation of steady volume growth and financial performance. We remain highly committed to a 65% operating ratio by no later than 2015 and we fully expect that this will be achieved. Longer term, the outlook for freight rail transportation remains attractive, as the population grows and the need for cost-effective and environmentally friendly transportation solutions becomes even greater. With that, let me turn it over to Clarence to discuss our top line results in more detail. Clarence?

Thank you, Michael, and good morning, everyone. Positive trends continue in the economy, although at a more moderate pace amid the uncertainty associated with the current environment discussions with CSX customers and key leading indicators continue to point to growth in most of the markets that we serve. Looking at the charts on the slide, the Purchasing Managers Index registered a reading of 51.6 in September indicating a continued expansion of the U.S. manufacturing. Please recall that a reading above 50 indicates expansion. At the same time, the Customer Inventories Index registered a reading of 49, indicating that respondents believe that the inventories are still low. Overall, transportation demand in the markets we serve continues to support profitable growth, and CSX remains committed to delivering the value of rail transportation for our customers through a safer, more efficient, more reliable service product. Now let's turn to the next slide to review the results. CSX revenue increased 11% to nearly $3 billion. As you can see on the chart, volume increases drove $20 million of the year-over-year growth in revenue. Also, the combined effect of rate and mix accounted $153 million of the increase, reflecting yield gains across all markets as we continue to sell the compelling value of rail transportation. Finally, as you look further to the right, increased fuel recovery of $125 million in the quarter is helping to offset the impact of higher fuel costs. Let's turn now to the next slide and take a closer look at the volume growth. Total volume increased to 1% versus the same period last year. Merchandise, which accounts to 40% of the total volume, grew 2% reflecting gains in a majority of the markets that CSX serves. Intermodal, which accounts for 36% of the volume, was flat as domestic growth was…

Thank you, Clarence, and good morning, everyone. Over the past several quarters, we've talked about CSX employees being mutually accountable to each other for achieving superior results in safety, productivity, reliability and customer service. Looking at safety, CSX once again delivered strong performance, reflecting the shared commitment of all employees. At the same time, CSX continue to strategically add employees in locomotives across critical lanes of the network. These resources further increased the reliability of operations and network fluidity. As a result, overall service improved sequentially again this quarter and key measures are returning to 2010 levels. Our recent performance demonstrates that we are now providing a service product that meets our performance expectations and the expectations of our customers, and we expect this to continue. Now let's review the results in more detail, starting with safety on Slide 16. This slide shows third quarter FRA personal injury and train accident rates over the last 4 years. The left chart shows personal injury results. For the quarter, the personal injury rate increased slightly compared to the prior year coming in at 1.08. Also, we were deeply saddened by the loss of 2 employees. These tragic accidents underscore why safety is always CSX's first priority in a constant focus. Looking at train accidents on the right side of the slide, the frequency rate improved 26% to 1.81, significantly better than previous years. Now let's turn to the next slide and review operating performance. On the left side of the chart, on-time originations were down versus 2010 and arrivals were also lower. On the right side of the chart, overall train velocity fell slightly and dwell increased modestly, both contributing to the decline in on-time performance. While quarterly measures were below the levels of recent years, the network remains fluid and we…

Thank you, David. As we reflect on the record third quarter results, CSX continues to achieve strong top line growth and is following a disciplined approach to adding resources in support of customer service and growth. Looking at the top of the slide, revenue improved 11% to nearly $3 billion on strong core pricing, modest volume growth and the impact of higher fuel recovery which was a slight tailwind in the quarter. These top line gains increased operating income to $878 million. Looking below the line, interest expense was up $7 million, driven by higher average debt balances, while other income was similar to last year. In addition, income taxes were $282 million for the quarter [ph] for an effective tax rate of 37.8%. Finally, EPS was $0.43, an improvement of 19%. Turning to the next slide, let's discuss expenses in more detail. Total expense was up 13% versus last year's third quarter, driven primarily by the impact of higher fuel. Excluding fuel, total expense was up 7%. Now I'll talk about the top 3 expense line items in more detail on the next few charts, but let me briefly speak to the last 2 expense item on this slide. Depreciation was up 8% to $251 million, primarily due to the increase in the net asset base. This is in line with our previous estimate and should continue to increase slightly on a sequential basis. Equipment rents were up 6% to $95 million, with increased volume in merchandise being the primary drivers. Turning to Slide 25. Labor and fringe expense increased 5% or $34 million from last year. The impact of wage and healthcare inflation in this quarter was $29 million or about 4%. You can expect this level of inflation to continue in the fourth quarter. Now turning to…

Well, thank you, Oscar. When we step back and look broadly at the third quarter, we see 2 important attributes. First is a persistent commitment to customer service throughout our workforce. We were pleased with the progress in the third quarter and remained committed to providing excellent service to our customers, both now and in the future. The second is our track record and ability to deliver strong financial results across an array of economic conditions, that will continue. Our business is working as it should, delivering strong results, investing back into the business and having thousands of employees in excellent union and management jobs. Negotiations of the 3 bargaining groups representing railroad employees began in January of 2010 and in the third quarter of this year, the industry was pleased to reach an agreement with United Transportation Union, which is the largest. That industry agreement maintains a considerable compensation premium compared to other industries and includes very competitive benefits package for our employees. As you probably know, agreements with the remaining unions have not been reached and as part of the prescribed process, a Presidential Emergency Board has been established to offer recommendations for a settlement. The railroads believe we have competitive offers on the table and the settlements can be reached. In the meantime, the company and its employees are working cooperatively as expected. It is important to note that during the last 20 years, there have been only 2 days of strike activity at the major freight railroads. Railroad employees are exceptional, proud people who come to work everyday knowing that what they do is essential to the economy. They also recognize that we continue to offer some of the best jobs available in America. We look forward to continuing to work together with them to achieve great results for our customers and our shareholders, and on their behalf, I'd like to thank you again for joining us this morning. With that, we look forward to answering any questions you may have.

[Operator Instructions] Our first question comes from Scott Group with Wolfe Trahan. Scott H. Group - Wolfe Trahan & Co.: So Clarence, wanted to follow up on your comments in utility coal for 2012. If we assume kind of normal weather and continued low gas prices, are you expecting similar kinds of volume declines next year or in easy comps do you think utility coal can be more flattish or up slightly, I just want to understand your commentary?

What we're seeing happening in the utility area for us and the areas that we serve is that the stockpiles in the North are near normal. The stockpiles in the South, even though they're down, are slightly above what the normal target range could be. Gas prices, as you know this morning, were $3.50. They're staying low. We see no reason for that not to remain low. We think we've seen all of the impacts from casper [ph], possibly a little downside coming in the next -- in 2012. So we expect them to be either about where they are or slightly down. Scott H. Group - Wolfe Trahan & Co.: Thanks, that's good color. And then one for Oscar. So based on Clarence's expectations for modest volume growth next year, do you have any preliminary thoughts on where headcount should be up next year? And just generally, do you think it's tough to see margin improvement in the near-term before this big spread between volume growth and headcount flattens out?

Scott, yes, we will continue to hire to offset attrition and meet our peak demand. The levels of that headcount have not yet been determined. And with regards to improving margins, yes, that's absolutely very much a part of our Grow to 65 initiative and we do have all those plans in place. Scott H. Group - Wolfe Trahan & Co.: I guess in the near -- yes, I guess in the near-term, Oscar, so we've got 5% headcount growth or 4% headcount growth and flattish volumes. Is that -- can you improve margins in that kind of scenario or do we need to wait a couple of quarters before that spread flattens out before margins can start improving again?

I think we will see margins improved. The volume aspect projections that we have over the next few quarters help in that regard.

We do see modest growth.

And we do see modest growth, right. Scott H. Group - Wolfe Trahan & Co.: So starting in fourth quarter again, you think?

Yes, Scott. We will see improvement in operating margins in the fourth quarter.

Our next question is from Kent Hoexter with Merrill Lynch.

If I could jump back to Dave for a second. It seemed like the service levels kind of bottomed up before the storms. And just wondering what structurally occurred to bring the service levels down to such a low level, and then what you shifted to get it back on track following the storms to get these on-time performance levels back up.

Sure, Ken. We did experience early on in the year, some, in which we talked about in prior quarters, as you know, issues that impacted our overall service levels and we outlined, after the second quarter, our plan too, in a very deliberate way, continue to make improvements throughout the third quarter. And we were on that track and we were accomplishing that. We were set back somewhat by the storms that occurred, Irene and Lee, but they're temporary setbacks and sort of marginal declines in services during those periods that were recovered quickly and now we're right where we wanted to be at the end of the third quarter as we go into the fourth quarter. We added some resources, we've improved our headcount somewhat in our T&E ranks and also as well brought on some locomotives. As we said, we were going to bring on a total for 250 additional and we're in the process of doing that. So all those are factors and we feel very confident as we go into the fourth quarter about continuing that improvement.

Okay. And then, Oscar, just to clarify that last remark, if you talk about the operating margin or operating ratio, you have talked about it not reaching your 70 target for the quarter. And it seemed to be because of the volumes being weaker than anticipated. Do you need those volumes or am I hearing you that with some of these service and other things that you've put in place, that's a bigger focus for getting that back on track?

I guess a combination of both. Certainly, that volume they were projecting, that modest growth that we talked about, is clearly part of that conversation. And at the same time, obviously, as you can imagine, we are very thoughtful in adding -- how we're adding this. And now again, important, we're talking about incremental margin here. So it's a combination of volume and continued cost management, while investing for the service that we want to have for our customers.

Our next question is from Tom Wadewitz with JPMC. Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division: Wanted to ask a question on Export Coal. I think that you were -- Clarence, you gave some comments on 2012 Export Coal, that you expect it to be strong. How much visibility do you think you really have on that looking forward? And I guess within that strong view, does that assume that Australia comes back in a pretty meaningful way in terms of volume? It seems like that's a market that's particularly difficult to have visibility and conviction, so want to know what's behind your commentary there.

First, I do agree with you it's a difficult market to have convictions in because of the volatility in it. But Australia is back and in terms of their production, but they're still facing the rainy season that's going to occur between December and February. So you know, that's Mother Nature's call as to what happens there. Number two is that if you look at what the forecast is for global steel production over the next 8 years, it's estimated to be up 60%, primarily driven by East Asia, South East Asia and Indian subcontinent, all of which we're exporting coal to and serving. Number three is the last we have talked about our producers and to our receivers. They are looking very robust for the Export Coal market going forward. And I guess my final point would be to quote the chairman of Peabody who say, we were entering a global supercycle of coal and that's our fundamental belief, based on that. Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division: Okay. Well then, perhaps one day, we can enter a supercycle for coal back in the U.S. again. I don't know. But...

I'd love that, Thomas.

I'm pulling for it.

Be good public property. Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division: Yes, indeed, indeed. On a different topic, you were pretty aggressive in buying back shares, which is a good thing to see, good, opportunistic in third quarter. Your cash balance has come down a fair bit and I think that's something you referred to when you say how much you might buy looking forward. What's the kind of minimum comfortable cash balance level that you would look at? Is it $200 million or $400 million or how would you look at that with respect to your willingness to be aggressive in share buyback in, say, fourth quarter?

The company has strong cash generating powers. So the absolute balance is not something we sort of fixed. But I think if you look back in history, we've kept roughly $0.5 billion on the balance sheet, and that's probably what we like to go forward with.

Our next question is from Bill Greene with Morgan Stanley.

A quick just clarification, either Michael or Oscar, when we look at the commentary that you made just now in the buybacks and how much will likely occur in the next few years, it kind of suggests, given the current authorization, that you could see a deceleration in 2012. Are you willing to go back to board and ask for a re-up or no, it's really kind of $1 billion a year beyond. We just accelerated this year, so next year should see a deceleration?

Yes, Bill, I think we'll just stick with what we said on the presentation. We expect to finish that $700 million by the end of 2012, primarily through the use of free cash.

Okay. And then when we look at the pricing for the rest of this year, one of the big driver, I think most of us assumed has been export coal and you got a re-acceleration implied by the guidance in the volumes there for the fourth quarter. So given the strength of pricing in that market, is it realistic to think that pricing could accelerate here in the fourth quarter?

I think I got it. Bill, it's -- unless it's -- I'm wrong here, it's going to exceed rail inflation. That's the plan.

Yes, and it has been. And since it's a pretty important commodity for you, I was just wondering if that means things can in fact get better from a pricing standpoint even in the fourth versus third?

I think we probably expect it to be similar on the export market. As you know, a lot of those have been contracted for the year, so there's probably not big differences on the fourth quarter, Bill.

Our next question is from Justin Yagerman with Deutsche Bank.

I wanted to try to pin you down a little bit harder on this Export Coal outlook. Strong could mean a lot of things. This year was strong and a flat year could be construed as strong in the general context of how you guys look at this, especially, if you're talking about an 8-year supercycle for steel. Is strong in your mind an up year next year for Export Coal?

I think, in my mind, Justin, is equal to or above.

Okay. So the outlook should be read as flat to up in terms of Export Coal for 2012?

Yes.

And Justin, you're aware, a lot of the metallurgical noise contracted on the fiscal April, so we're 5 to 6 months away from those being contracted. But as Clarence said, based on mining investments being made in new mining capacity and our conversations with them, we feel pretty good about the export for next year.

Okay, good. On the Intermodal side, you have the Maersk contract starting on Jan. 1, would love to get some color on how we should expect to see that contract rolling on as the year progresses? And then on the domestic side, curious to hear -- obviously, that's been better than international this year for you guys, but you've been lagging behind your other eastern competitor. Maybe some thoughts on what you're going to be doing to attract higher level of growth to the domestic side as you got a nice piece of business coming on in the international side?

All right. Well, first on the international side, on the Maersk. We're very pleased that Maersk has awarded us that business and we intend to serve Maersk extremely well over the long-term period of the contract. As you're aware, we don't give out what the volume numbers of Maersk are because it's confidential information for Maersk. But we expect to start on-boarding Maersk in the first of the year. Our operating department has a very extensive operating plan in place already about how they will on board it. We have the crews, the locomotives, the cars already in place to be able to handle the volume that's coming on, so we feel very positive about that. In regard to the domestic growth, first, we think it's a positive thing when all railroads grow, so we congratulate Norfolk Southern's in their intermodal product. What's good for our neighbors is good for us. We, and ourselves, have been growing both our volume and our profitability on our top line, that's exactly what we intend to keep doing. We're making sound financial investments in both new terminals, terminal expansions and our National Gateway projects. So our intermodal strategy is on track to continue to grow. We've added new containers, both our sales and the Union Pacific for the UMAX fleet. That fleet has been under great utilization here during both the third quarter and going into the fourth quarter. So I just think everything is very positive in it, Justin.

Sounds good, Clarence. In terms of the role on of that Maersk contract, is January going to be an even month in terms of how we think about those volumes coming on through the year? Or is there a point in the year where all of a sudden, the volumes should start to ramp to a greater extent?

Well, obviously, it starts coming on in January, but it will ramp very quickly.

But just normal seasonal pattern.

Normal seasonal pattern, yes.

The next question is from Gary Chase with Barclays Capital.

Just a couple of quick ones. I wanted to see, Clarence, if you could give us a sense of where you think capacity on the export side would be in '12? I mean, what's a reasonable upside boundary on what that volume might look like? You've, obviously -- $12 million is a number you think is feasible this quarter, what might that look like next year?

Well, I think, previously, we've said that our export capacity is in the neighborhood, the range of 45 million tons. We have plans on the drawing board that we could implement very quickly that could take that capacity up. And we have certain commercial triggers that we're going to look at along with our coal partners as when, where, what time we have to do that. I think Michael mentioned a point earlier that was very important. We have 3 announced mine openings on our territory by companies that have made public announcements that they are committed to the metallurgical and the export market. And that's another reason why we feel very positive about having growth in our export business next year.

Okay. So 45 plus. And then in...

In terms of capacity.

Right, right. And for David, just wondering, again, looking at back to a question somebody asked earlier about the contrast between the weeks before the storm and the weeks after, there, at least as we read it, was a pretty significant change in volume dynamic as well. Wondering if you feel as though you've missed volume in some of those periods. If we should be thinking that would be operations back at the levels that they're currently at, we should expect a stronger volume dynamic regardless of sort of the macro picture.

Gary, there might be just be a little bit as a result. But really we're current with our volumes today, very current in terms of volumes that are on the network and we know that we're going to continue the improvements we talked about and that we'll be prepared for any incremental changes that come in terms of volume.

Our next question is from Chris Wetherbee with Citigroup.

Maybe if I get a little bit of your outlook for the remainder of peak season and then for the fourth quarter specifically on the grain market, we've seen some weakness here. Kind of curious, your thoughts, about how that should look as we move in the fourth quarter whether there's been some timing issues there.

Chris, this is Clarence, good morning. On the peak season, as you're aware, we're in the peak season, volumes are up. I wouldn't say that peak season is the true peak that you and I have traditionally seen, it remains to be a bump. Container capacity on the West Coast has been very tight for the last 3 weeks, but it's not to the level that it was in a couple of earlier years where there was severe box shortages. But peak is -- it's nothing to write home to mom about, it's just a bump. The Ag business has been very interesting this year. As you know, the crops got in to the ground late. They're running about 2 to 3 weeks late coming out. It's still going to be the third largest crop according to the USDA that we've had on record. The yield per acre is down to 147 bushels per acre, which is the lowest in the last 10 years. So it's still going to be a tough season here in grain. Corn prices have stayed up. Exports both in soybeans and in corn won't be at the levels that they were in previous years. We think that forbids well for our Phosphate & Fertilizer business because in order to get those yields up, then you get those crop improvements up. We're going to have to fertilize and apply nitrogen units to the field. So that is going to be a very positive thing for us, both in the fourth quarter and in 2012.

Okay. And from the Pure Grain business, it looks like it may be is a little bit more of a push as opposed to the strength you're seeing on the fertilizer side.

That's right.

Okay, fair enough. And then maybe if you have any kind of comments about weather. I know you kind of talked about right after the storms that you maybe saw a $10 million to $15 million of impact there. Just kind curious if there was anything further to that, that kind of came right after some of those big storms that rolled up the East Coast. Just trying to get a sense if there was any other impacts in the quarter.

This is Oscar, and David can jump in on the actual operational impacts. We did see a little bit here and there. But again, our teams recovered greatly. Lee actually was a bigger impact to some degree with the flooding that was -- the residue after that. But again, we said $10 million to $15 million, probably coming in overall $10 million both between revenue loss and expense items.

The next question is from Chris Ceraso with Credit Suisse. Allison Landry - Crédit Suisse AG, Research Division: It's Allison Landry in for Chris. I was wondering on the Utility Coal side, if you could talk a little bit about some of the natural gas switching capacity that is left on the network? Is there a lot further room for the utilities that you've served to switch?

Allison, this is Clarence. There's always some room, but most of the switches that could possibly been made were already made on the economics of the dispatch when gas got so low. The older coal-fired plants were idled, so we don't expect to see much impact on that at all. Allison Landry - Crédit Suisse AG, Research Division: Okay. And then for a follow-up on the export side, did you see any of the volume delays because of some of the repair and maintenance at the port facilities in the quarter? And will any of that be made up in the Q4?

There was some activity around one particular port, but the bigger impact for the third quarter was the miners' holiday and vacation in which occurs every year and happens. Having said that, we expect the run rate in our fourth quarter will be what it was pretty much in our first and second quarters. Allison Landry - Crédit Suisse AG, Research Division: Okay. So you'd expect a sequential uptick then?

Absolutely. Last year, we had a 24% sequential uptick between the third and fourth quarter and we expect to have a very robust one this quarter.

The next question is from David Vernon with Bernstein. David Vernon - Sanford C. Bernstein & Co., LLC., Research Division: Just a quick question on the Intermodal business. I've seen somewhere in an article that, that was going to be routed up to Baltimore under the single stack services, is that the case? And if that's so, how long do you think it will be kind of running single stack versus double stack?

David, this is Clarence. That's the business, obviously, the Maersk you're referring to coming out of A.P. Møller terminal in Portsmouth and it will be routed up through Baltimore. It will be single stack. Our operating people have the clearances going on now in the National Gateway, and our law and public affairs people are working on the Virginia Avenue Tunnel to get it cleared in Washington D.C. So I think the time frame is -- for that tunnel is probably in the 2- to 3-year or longer range. That answer your question? David Vernon - Sanford C. Bernstein & Co., LLC., Research Division: Yes, it does. And then just as a follow-up. Maybe you could -- Michael, could you maybe talk a little about the 65% OR target and whether or not that's starting to kind of working its way into the management incentive programs and then how that kind of gels with the reduction in the incentive accruals?

Well, clearly, we feel very good about our 65% operating ratio, no later than 2015. Obviously, the Board sets up our compensation schemes to match those public targets. So in our longer-term incentive plans, they are geared toward making and exceeding those targets. On the incentive compensation changes you saw this quarter, obviously, a little bit of the softness we saw here in the third quarter in volumes is impacting our annual incentive. So obviously, we very much -- the Board very much ties our rewards to the performance for our shareholders and with the earnings slowing down just a bit here in this quarter, obviously, the compensation is going to be lower for the management team.

The next question is from John Larkin with Stifel, Nicolaus. John G. Larkin - Stifel, Nicolaus & Co., Inc., Research Division: Could you give us a little more color on why the other unions, aside from UTU, are unwilling to sort of go with the template that was included in the UTU agreement [ph]? Was it work role-related, base pay, benefits, what were the sticking points?

Really, it was not work role-related. It was more dealing with the absolute level of wage increases, as well as some adjustments that we're seeking on the health and welfare side with some co-pays. I think they're view is that they think we should be sharing more of the profitability we've seen. We are making clear to them, we need that monies to reinvest in the infrastructure. And I guess with all due respect, 17% raise in health and welfare twice as good as federal workers, to me, it's a little bit difficult to believe we won't be able to reach agreements with them. As you know, we had the Presidential Emergency Board in place, which is doing its work now and will make a recommendation early November, probably the 6th or 7th of November. Hopefully that 5-member panel will look at what we've offered the UTU, which we think is a very generous package and compare that to what they're asking for and be able to show something that both parties can live with. John G. Larkin - Stifel, Nicolaus & Co., Inc., Research Division: Thank you. And just one quick one on the NIT League's proposal for reciprocal switching, which I believe is sitting down to your STB. How do you think that's going to play out here over the next month or so?

Well, it's a little hard to tell what actions the STB might take, but I think they're very cognizant of our need to earn adequate monies to be able to continue to invest in the infrastructure. I guess, think when we look at that proposal, John, to us, it just looks like an open-access recommendation that wrongly tries to tie placement of a public and interest standard investing in the infrastructure with formulas. And it's, in our view, a clear attempt to change the rules to gain an unfair advantage. It's really nothing new. As with the other open-access proposals, there's no reliable evidence to support this, no mention of the impact on rail operations or infrastructure investments. So we really, ultimately, believe any final resolution beyond the scope of this matter [ph] that should come from Congress, not from STB.

The next question is from Ben Hartford with Baird. Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division: I think this is directed to David. David, I just wanted to get your sense on productivity. Good job getting service metrics largely back to 2010 levels. But in terms of employee productivity, if you look at revenue per ton mile -- revenue ton miles per employee, gross ton miles per employee, we're still below 2010 levels and below peak levels, effectively. So I'm interested in your perspective in terms of what's going to get productivities back to 2010 levels, back to peak levels, whether it is volume alone, whether it'll be largely on the headcount side. Can you talk a little bit about that?

Sure, Ben. We have actually seen, and we look at productivity in terms of employees per gross ton miles differentiated between our T&E employees and our overall employees. So while you see overall has come down slightly, our T&E productivity is at all-time high, remains at all-time high levels. So it really has to do with some hiring we're doing now to begin implementation of PTC, the things Oscar talked about in terms of our incremental headcount, other than our T&E headcount. So we do have initiatives as we go into the coming years in around productivity. We've had a strong performance in the past with productivity and we believe in the future, we'll continue to accomplish that, understanding that we brought on some additional cost that will continue into the future because we're putting service reliability in a very high priority. Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division: Okay, good. And then as a follow-up, Clarence, could you talk a little bit about the pricing dynamics on the Domestic Intermodal side, given freight demand has moderated here, truckload pricing still positive but decelerating. Can you talk a little bit about your outlook here in the fourth quarter in the 2012, given your assumption that, and I think rightfully so, that the conversion on the truckload side, that opportunity will continue?

Well, Ben, as you know, we price to the market dynamics. And right now, our pricing is actually up at the last few weeks because as I mentioned, the demand coming off the West Coast is strong. Container supply on the West Coast has been extremely tight for the last 2 or 3 weeks. And so in pricing that market, we've taken these rates up. Now January is going to be a different dynamic. It's just January, business drops down, we'll price accordingly to what our competition and what the market is as that occurs. And then as the early weeks around March and all start to pick back up in economic activity, our rates will again start to move up. So they go in sort of cycles, if you will, based on what the demand is.

But longer term, the CSA 2010 highway congestion fuel prices are going to give us some good strength in that...

Absolutely, and is in fact doing it.

The next question is from Jason Seidl with Dahlman Rose. Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division: One quick question on headcount. Can you give us a sense as when the hiring is going to start to level out sort of beyond the normal attrition rate so we could sort of forecast maybe more normalized productivity for the people not coming to the training and then are put to work on the railroad?

We do model our forward hiring based on attrition primarily with any additional hiring and in terms of headcount based on any volumes or traffic flow changes that we see occur because we do hire locally and we do have many, many centers or population centers for our employees. So we really have not changed our hiring strategy from prior years into this year, other than forward hiring a little bit for some volumes we see coming in next year. So in terms of the numbers, the absolute numbers, it's almost entirely based on our attrition rates that we see continuing in the future. Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division: So just a follow-up on that, the forward hires for some of the anticipated volumes next year, whether it'd be the new Maersk traffic or other business, have already been completed now and those people sort of are in training now to be put to work next year.

Yes, that's right.

The next question is from Matt Troy with Susquehanna.

Two questions. I guess, first, on Export Coal, we obviously saw some misperception in the market a couple of weeks ago surrounding some pre-announcements by some of the coal guys on the exports. I'm just wondering if you could put some context, I don't think the market quite understand the profitability of your export coal or that somehow they might be grossly exaggerating its profit contribution. Could you just maybe broadly put some context around the Export Coal profitability relative to both your normal coal, Domestic Coal work of business as well as the broader growth?

Yes. This is Michael, let me address that one, Matt. As we look, we look at -- we love our Coal business, we love our Export Coal business and we love our Utility Coal business. I think you're right, there was a misperception out there in the marketplace that somehow that Export Coal was extraordinarily profitable versus our regular Utility business. Both of them are profitable and fairly similar in their profitability. So we love both of them, but there is not an extraordinarily profitability to the Export Coal.

Okay. And secondarily, just on the domestic front, you seem to strike a more cautious tone than your competitor in Norfolk Southern particularly around utility demand into next year and also I think expressing to get ahead of some of the issues that might impact your business from the regulatory perspective. Could you just perhaps talk to those, what those issues might be and from your kind of triage or analysis, what percentage of your book of business might be vulnerable? And what's accounting for the share underperformance on a more near-term basis?

Matt, this is Clarence. First, our utilities, and please, I don't mean to smart-aleckly -- our facilities are not Norfolk Southern's utilities. They operate in different areas, their different plants, some are base loads, some are intermediate and there's a difference in how those 2 things operate, so that accounts for one thing. Number two is, is it will vary by utility to utility as to what their gas burns are. Some utilities, for example, will have forced burns in their coal contracts and that has some influence on it. A third thing, I guess, you were addressing, which was the casper [ph]. We think we've seen most of the impacts already for that, both as a result of older plants being idled and as a result of natural gas displacing the more inefficient plants. So we expect to see some slight downside next year, as I mentioned earlier, as a result of casper [ph] and as a result of some of the utility stockpiles, but that's about the extent of it.

So just to be clear, it's reflected in the numbers today. There's not like some incremental drop off on the [indiscernible] result of casper [ph] or gas?

That's right. That's the upgrade.

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

Just wanted to play double dodge just for a moment here and just sort of clarify for me how I'm interpreting this, because initially, you had given us a headcount guidance of 3% for the year. You then increased that to 4% and my numbers it looks like it's coming in well over 5%, maybe closer to 6%. You've indicated that, that is going to service growth and service and then when I look at your slide deck on Page 6, I mean, those are the same lines that economists and everybody else are looking at but are really drawing the opposite conclusion of kind of an expanding economy. And I think looking at that slide, I see inventories coming up quite significantly and the ISM Purchasing Managers Index coming down to almost breaching through that contraction line. So looking at that and then looking at the third quarter performance, yes, you've got 2 weeks of positive performance but we know that's not a trend and I guess if you could take the growth that you're talking about in your employee headcount that sort of guide us more directly as to, is this really going to service, a growth component that you're looking or is this to more to address the service component that you're pointing to on Slide 17?

Well, Walter you certainly are being the devils advocate here, I'll give you credit for that. As we look at it, well, obviously, the economy has moderated here some. So when we talk to our customers, and I know you wanted to mention the indices, they still are positive, although less so. But our customers are really indicating they see modest growth in the coming quarters and we think in most of our major markets, that is what we're going to see. As we talked about, we do have the Maersk business coming on January 1. So if I think about the headcount we're bringing on, it's really some to maintain this high levels of service that supports our growth initiatives, as well as our pricing initiatives. And some of it is for just a natural attrition, so it's really for both, for the service and for the growth that we anticipate. And we do think in '12, we're going to continue to see modest growth going forward and we want to be prepared to handle that growth.

Okay. And I appreciate your candid nature there. I mean, it is a question we are going to get, so I just want to put it to you as well. Second question...

Walter, if I could interrupt for a just second. Your starting point was you saw a 5% or 6% increase at some point in time and our year-to-date increase is as we stated and we are going to over full year basis due to that 4%. So you might want to check in later to see what our math is but that is our projection.

Okay. Well, we're probably looking at average. I was looking at end of period and then -- but we could certainly double check on that after the quarter, after the call. Second question here is on your inflation. You've actually quantified for us, it's the first time we've seen that, thank you very much, to 4.2% is what you consider to be rail inflation. Is that a number that is representative in your view of a longer-term number or is there something in the next 12 months that would cause that 4.2% to be an abnormally high number and perhaps the real kind of expected long-term inflation would be somewhat below the 4.2%?

Actually, Walter, that's a great question. It has recently been modified. I think...

Global Insight.

Global Insight is the folks that calculate that work and I think the latest one came in around 3.5%. So it already has dropped a bit.

The next question is from Jeff Kauffman with Sterne Agee. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: Oscar, question for you. Once we get pass this investment phase and once we get to a more normal static kind of growth world, what do you believe the incremental margin, the railroad should be making on the incremental dollar is?

Well, clearly, probably... Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: Not 18%, right?

Probably, clearly, the run rates we had in the first half of this year would be the things we'd focus on. And again, as we grow to 65, the math is inherent in that but you're going to have to see those 50-, 60-plus incremental margins. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: How long you think it takes us to get back toward that run rate there? Are we looking kind of a year-end 2012, 2013 just because of some of these issues with the utility stockpiles and investment that you're talking about?

Well, clearly, volume is productivity and price get us a long way there but volume is an inherent part of that grow to 65 initiative. And so as far as the timing, I mean, your guess is as good as ours. We have a good vantage point, we see the modest growth into 2012 that Clarence outlined. But beyond that, it's hard for me to tell you exactly when that's going to...

Well, to that point, on the incremental growth, I mean, David, you have, what 10% to 15% capacity on your Merchandise trains and 15% to 20% on the Intermodal. So clearly, Jeff, as we bring those volumes on, there's very good incrementally of those. So we think these modest growth we're expecting will help fill those trains out.

The next question is from Anthony Gallo with Wells Fargo.

I wanted to just briefly go back to the Export Coal. What is the end market mix this year? And how do you expect that to change in 2012? And is there any -- will there be expected change between met and steam coal?

Met is 65, thermal is 35. As Michael said, it's 6 months away from the metallurgical contracts being renewed. So it's a little bit too early for us to tell if that mix will change at all in 2012.

How about the end markets, you'd mentioned Europe, Asia, South America, what is that today and do you expect that to change much in '12?

Not in 2012.

Basically it was about 50% into Europe, 30% into South America and about 20% into Asia.

And then I'm sorry I just want to make sure I understand the pricing in the export business. You mentioned met coal contracts are annual, but is pricing quarterly or could you remind us export pricing, how often that is?

Well, you have 2 types of pricing in that export -- 3 types, actually. You got the tariff pricing, then you have annual contracts usually run from April 1 of the year until March 31, and then you have spot market contracts, which is what you're alluding to with the quarterly pricing that goes in, as well as the adjustment in the tariff on a quarterly basis.

But only about 10% of the business moves on tariff, right?

That's correct.

And how much on spot?

I don't know off the top of my head. More moves under contract than moves under spot.

Our final question will come from Peter Nesvold with Jefferies. H. Peter Nesvold - Jefferies & Company, Inc., Research Division: Just one very quick one here at the end. Any early expectations for CapEx and rolling stock for '12? And how would that kind of split between locomotives and rail cars?

It's Oscar, Peter. No change to our broad long-term guidance, but no specificity on 2012. Yes, we're still working through those plans. But certainly, locomotives and cars are big part of that plan.

Thank you all for joining us today. See you next quarter.

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