The Company provides customers access to an increasingly modernized transportation network that connects ports, production facilities and distribution centers to markets in the Northeast, Midwest and the rapidly growing southern states. The Company transports a diversified portfolio of products, from coal to new energy sources such as ethanol, from automobiles produced by traditional American manufacturers to "new domestic" factories owned by European, Japanese and Korean automotive companies, and from chemicals to consumer electronics. Additionally, the Company serves every major market in the eastern United States and has direct access to all Atlantic and Gulf Coast ports, as well as the Mississippi River, the Great Lakes and the St. Lawrence Seaway. Furthermore, the Company has access to Pacific ports through alliances with western railroads. Overall, the CSXT transportation network encompasses approximately 21,000 route miles of track in 23 states, the District of Columbia and the Canadian provinces of Ontario and Quebec.

The Company's transportation network, located in some of the largest and fastest-growing population centers in the nation, is well-positioned to capitalize on consumption growth trends. In this regard, more than two-thirds of Americans live within the Company's service territory, accounting for about three-quarters of the nation's consumption. As the nation consumes increasingly higher quantities of imported goods, those products must be transported across the country in a way that minimizes the impact on the environment, takes traffic off an already congested highway system and minimizes fuel consumption and transportation costs.

The Company has made substantial strides in improving operating performance in order to capitalize on consumption growth trends. In 2004, CSXT implemented the ONE Plan, which continues to focus on optimizing the train network and utilizing rail assets more efficiently. Anchored by the ONE Plan and a variety of other initiatives implemented after the ONE Plan was introduced, the Company has achieved significant operational improvements that have enhanced safety, service reliability and productivity.

In addition to the ONE Plan, the Company continues to implement its Total Service Integration initiative, which aims to better align the Company's capabilities with customer demands. Total Service Integration aims to optimize train size and increase asset utilization while delivering more reliable service to customers.

These initiatives delivered strong results for shareholders while higher levels of customer service have led to improved pricing. These efforts combined with operational efficiencies have resulted in substantial improvements in CSX's operating income and operating ratio since 2004.

In addition to driving better financial results to create value for shareholders, CSX employs a balanced approach in deploying its capital for the benefit of shareholders. This approach includes strategic investment, share repurchases and dividends. Through this balanced use of financial resources, CSX will strive to capitalize on an economic environment that is increasingly favoring rail transportation.

· Revenue of nearly $3 billion grew $460 million or 18%.

· Expenses increased $285 million or 15% to $2.2 billion driven primarily by rising fuel costs.

· Operating income was $733 million, an increase of $175 million or 31%.

CSX delivered impressive financial results in a challenging economy. Revenue and revenue-per-unit increased 18% and 21%, respectively, driven by the value CSX provides to its customers through better service as well as higher fuel recovery due to higher fuel prices. The Company was able to achieve pricing gains predominantly due to the overall cost advantages that the Company's rail-based solutions provide to customers versus other modes of transportation.

These results in revenue were achieved despite a 2% overall decline in volume, which was primarily driven by continued weakness in housing construction, domestic automotive production and related markets. Certain lines of business, though, such as coal, agricultural products and metals, still showed volume growth during the quarter, highlighting the benefit of providing diversified shipping services.

Expenses increased 15% during third quarter 2008 driven by a $178 million increase in fuel due to the effects of rising fuel prices. All other expenses excluding fuel, increased 7% largely driven by inflation and weather related costs.

For additional information, refer to Rail and Intermodal Results of Operations discussed on pages 37 through 40.

Safety statistics remained solid with both FRA personal injuries and FRA train accidents showing a 12% improvement and a 10% improvement respectively versus the same period last year. These statistics remained at historically strong levels. The Company remains committed to its safety program, which has a proven track record of improving results, and expects continued improvement in safety performance.

During the quarter, hurricanes Gustav and Ike resulted in numerous network service interruptions including track outages, flooding and reroutes. The storms caused significant damage to the New Orleans line, putting it out of service for over 5 weeks. As a result, interchange volumes to western rail partners were rerouted through alternative gateways, causing congestion. Currently, the New Orleans line has been restored and volumes are now flowing through normal gateways. In addition, heavy rains caused service disruptions in key terminals in the Midwest, including Chicago, Indianapolis and Louisville. Also, the surge in export coal demand created further congestion in key lanes connecting coal production to coal piers on the coast. Actions have been taken to position additional resources where required to handle this continued coal demand.

Key service metrics reflected the impact of these challenges as the Company worked to improve continuously over last year's performance. As of September 2008, velocity was 20.1 mph, on-time train originations were 77%, dwell was 24.1 hours and on-time destination arrivals for customers was 67%. The Company's strong focus on achieving results through proactive actions, rules compliance, coaching and increased safety awareness continues.

                                CSX CORPORATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                 OF OPERATIONS



RAIL OPERATING STATISTICS (Estimated)                  Third Quarters  Improvement
                                                          2008    2007  (Decline)  %
Service
Measurements FRA Personal Injuries Frequency Index        1.12    1.27          12 %

             FRA Train Accident Rate                      2.75    3.06          10

             On-Time Train Originations                    77%     83%         (7)
             On-Time Destination Arrivals                  67%     76%        (12)

             Dwell                                        24.1    22.7         (6)
             Cars-On-Line                              226,425 220,604         (3)

             System Train Velocity                        20.1    21.4         (6)

                                                                        Increase/
                                                                       (Decrease)
Resources    Route Miles                                21,203  21,224           - %
             Locomotives (owned and long-term leased)    4,133   3,925           5
             Freight Cars (owned and long-term leased)  91,833  96,866         (5) %

FRA Personal Injuries Frequency Index - Number of FRA-reportable injuries per 200,000 man-hours.

FRA Train Accident Rate - Number of FRA-reportable train accidents per million train-miles.

On-Time Train Originations - Percent of scheduled road trains that depart the origin yard on-time or ahead of schedule.

On-Time Destination Arrivals - Percent of scheduled road trains that arrive at the destination yard on-time to two hours late (30 minutes for intermodal trains).

Dwell - Amount of time in hours between car arrival at and departure from the yard. It does not include cars moving through the yard on the same train.

Cars-On-Line - A count of all cars on the CSX network (does not include locomotives, cabooses, trailers, containers or maintenance equipment).

System Train Velocity - Average train speed between terminals in miles per hour (does not include locals, yard jobs, work trains or passenger trains).

                        FINANCIAL RESULTS OF OPERATIONS

                           Results of Operations(Unaudited)(a)
                                  (Dollars in Millions)
                                     Third Quarters

                                                                 Operating
                               Rail(b)         Intermodal         Income
                              2008     2007     2008    2007     2008     2007  $ Change
Revenue                     $2,562   $2,164     $399    $337   $2,961   $2,501       $460
Operating Expense:
   Labor and Fringe            735      728       19      20      754      748        (6)
   Materials, Supplies
   and Other (c)               521      424       47      47      568      471       (97)
   Fuel (c)                    506      329        2       1      508      330      (178)
   Depreciation                221      211        6       9      227      220        (7)
   Equipment and Other
   Rents                        78       88       28      26      106      114          8
   Inland Transportation     (135)    (111)      200     171       65       60        (5)
        Total Expense        1,926    1,669      302     274    2,228    1,943      (285)
   Operating Income           $636     $495      $97     $63     $733     $558       $175

   Operating Ratio           75.2%    77.1%    75.7%   81.3%    75.2%    77.7%

(a) Beginning in 2008, certain items have been reclassified within the income statement. These reclassifications include reclassifying all items within other operating income and certain items within other income into the Rail segment. As a result of this change, CSX consolidated operating income and Surface Transportation operating income are now the same; therefore, the Company no longer reports separate Surface Transportation results. The Rail segment was not materially impacted by these reclassifications. Certain prior-year data have been reclassified to conform to the 2008 presentation.

(b) In addition to CSXT, the Rail segment includes non-railroad subsidiaries such as TDSI, Transflo, CSX Technology and other subsidiaries.

(c) Beginning in 2008, the Company reclassified all non-locomotive fuel related costs previously included in materials, supplies and other into fuel on the Company's consolidated income statement so that it now includes all fuel used for operations and maintenance. For third quarters 2008 and 2007, these amounts were $39 million and $25 million, respectively.

                                       VOLUME AND REVENUE (Unaudited)
           Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
                                               Third Quarters

                               Volume                       Revenue                   Revenue Per Unit
                        2008   2007   % Change       2008    2007   % Change        2008    2007   % Change
  Chemicals              124    130       (5) %      $381    $336      13  %      $3,073  $2,585     19 %
  Emerging Markets       112    128      (13)         171     157       9          1,527   1,227     24
  Forest Products         82     87       (6)         196     182       8          2,390   2,092     14
  Agricultural
  Products               106    101         5         259     190      36          2,443   1,881     30
  Metals                  92     89         3         215     181      19          2,337   2,034     15
  Phosphates and
  Fertilizers             87     89       (2)         116     100      16          1,333   1,124     19
  Food and Consumer       50     52       (4)         119     112       6          2,380   2,154     10
Total Merchandise        653    676       (3)       1,457   1,258      16          2,231   1,861     20

  Coal                   440    441         -         802     619      30          1,823   1,404     30
  Coke and Iron Ore       28     24        17          48      30      60          1,714   1,250     37
Total Coal               468    465         1         850     649      31          1,816   1,396     30

Automotive                79    102      (23)         195     198     (2)          2,468   1,941     27

Other                      -      -         -          60      59       2              -       -      -
Total Rail             1,200  1,243       (3)       2,562   2,164      18          2,135   1,741     23

  International          258    280       (8)         137     129       6            531     461     15
  Domestic               274    250        10         255     202      26            931     808     15
  Other                    -      -         -           7       6      17              -       -      -
Total Intermodal         532    530         -         399     337      18            750     636     18

Total                  1,732  1,773       (2) %    $2,961  $2,501      18  %       1,710   1,411     21  %

Prior periods have been reclassified to conform to the current presentation.

Third Quarter Rail Results of Operations

Rail Operating Revenue
The Company was able to achieve continued pricing gains during the third quarter 2008 predominantly due to the overall cost advantages that rail-based solutions provide versus other modes of transportation. These pricing gains, and higher fuel recovery due to higher fuel prices, more than offset the continuing volume weakness in housing construction, domestic automobile production and related markets.

Merchandise

Chemicals - Improved pricing and increased fuel recovery continued to drive revenue and revenue-per-unit gains. Volume was down due to weakness in plastic shipments and chemicals used in construction and automobile production. Additionally, hurricanes forced a temporary shutdown of many chemical plants and refineries across the Texas and Louisiana Gulf coast late in the quarter.

Emerging Markets, Forest Products, and Food and Consumer - Revenue and revenue-per-unit increases were driven by pricing initiatives and favorable fuel recoveries. Volume declines in lumber, building products, appliances and aggregates, which include crushed stone, sand and gravel were due to continued softness in residential construction.

Agricultural Products - Volume growth was driven by increased shipments of ethanol and feed grain. Gains in price and fuel surcharge recovery led to increases in revenue and revenue per unit.

Metals - Volume growth was driven by increased shipments of scrap metal, steel used for non-residential construction, pipe and plate shipments. Domestic production was strong, in part, due to declining imports. Revenue and revenue-per-unit increases were driven primarily by improved pricing and increased fuel recovery.

Phosphates and Fertilizers - Revenue and revenue per unit increased due to favorable pricing actions and fuel recovery. Large carryover fertilizer inventories from the first half of the year resulted in a decline in fertilizer moves.

Coal

Sustained growth in yield and improved fuel recovery positively influenced revenue and revenue per unit. Volumes increased in the export market due to continued strong overseas demand. These gains were partially offset by lower shipments to electric utilities.

Automotive

Revenue and volume were down due to declining sales of trucks and SUV's resulting from high fuel prices, the weak economic environment and tight credit conditions. Revenue per unit improved due to price increases and higher fuel recoveries.

Rail Operating Expense

Labor and Fringe expense increased $7 million. This increase was primarily driven by wage and benefit inflation which was mostly offset by a reduction of train crew headcount due to lower volumes.

Materials, Supplies and Other expenses increased $97 million primarily as a result of the storms during the quarter, mostly the write-off of assets that were damaged, inflation and proxy-related costs. Additionally, there was an increase in cost of risk, primarily driven by higher train-accident related expenses and various other items.

Fuel expense increased $177 million due to higher fuel prices which more than offset increased fuel efficiency and volume.

Depreciation expense increased $10 million. A larger asset base related to higher capital spending was partially offset by lower depreciation rates resulting from a previous periodic review of asset useful lives.

Equipment and Other Rents expense decreased $10 million primarily due to the impacts of lower volume and reduced locomotive lease expense.

Third Quarter Intermodal Results of Operations

Intermodal Operating Revenue

International - Revenue-per-unit increases were primarily driven by increased fuel recovery and yield management. Volumes were down due to continued import softness as well as changes in international shipping patterns.

Domestic - Volume gains were driven by continued strength in truckload, transcontinental and short-haul services. Revenue-per-unit increases were primarily driven by increased fuel recovery as yield and mix impacts were relatively flat year-over-year.

Intermodal Operating Expense

Intermodal operating expense increased due to higher inland transportation expense. This was driven by higher fuel expense charged by CSXT for purchased transportation services and increased purchased transportation services from other railroads to support Intermodal's growing coast-to-coast business. A continued focus on managing controllable costs kept remaining operating expenses flat.

Additional Third Quarter Consolidated Results

Other Income

Other income decreased $6 million to $8 million in third quarter 2008. This was largely driven by lower investment returns due to a gradual shift towards investing in lower risk, more liquid securities versus traditional short-term investments.

Interest Expense

Interest expense increased $29 million to $131 million due primarily to higher average debt balances in third quarter 2008.

Income Tax Expense

Income tax expense increased $55 million to $228 million, which was driven by higher operating income in third quarter 2008.

Net Earnings

Consolidated net earnings decreased $25 million to $382 million primarily due to a $110 million prior year gain related to the resolution of certain tax matters associated with previously discontinued operations. This was mostly offset by an increase in net earnings from continuing operations of $85 million. Earnings per diluted share increased $.03 to $.94 due to the impact on shares outstanding of CSX's share repurchase program.

                     Results of Operations(Unaudited)(a)
                            (Dollars in Millions)
                                 Nine Months

                                                         Operating
                            Rail(b)      Intermodal       Income
                           2008    2007    2008  2007    2008    2007 $ Change
Revenue                  $7,449  $6,455  $1,132  $998  $8,581  $7,453   $1,128
Operating Expense:
   Labor and Fringe       2,175   2,165      57    60   2,232   2,225      (7)
   Materials, Supplies
   and Other (c)          1,439   1,328     147   134   1,586   1,462    (124)
   Fuel (c)               1,481     926       5     4   1,486     930    (556)
   Depreciation             658     635      18    28     676     663     (13)
   Equipment and Other
   Rents                    248     259      81    82     329     341       12
   Inland
   Transportation         (394)   (330)     590   507     196     177     (19)
        Total Expense     5,607   4,983     898   815   6,505   5,798    (707)
   Operating Income      $1,842  $1,472    $234  $183  $2,076  $1,655     $421

   Operating Ratio        75.3%   77.2%   79.3% 81.7%   75.8%   77.8%

(a) Beginning in 2008, certain items have been reclassified within the income statement. These reclassifications include reclassifying all items within other operating income and certain items within other income into the Rail segment. As a result of this change, CSX consolidated operating income and Surface Transportation operating income are now the same; therefore, the Company no longer reports separate Surface Transportation results. The Rail segment was not materially impacted by these reclassifications. Certain prior-year data have been reclassified to conform to the 2008 presentation.

(b) In addition to CSXT, the Rail segment includes non-railroad subsidiaries such as TDSI, Transflo, CSX Technology and other subsidiaries.

(c) The Company reclassified all non-locomotive fuel related costs previously included in materials, supplies and other into fuel on the Company's consolidated income statement so that it now includes all fuel used for operations and maintenance. For nine months 2008 and 2007, these amounts were $114 million and $77 million, respectively.

                                CSX CORPORATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                 OF OPERATIONS


                                    VOLUME AND REVENUE (Unaudited)
        Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
                                             Nine Months

                              Volume                     Revenue                 Revenue Per Unit
                        2008   2007 % Change       2008    2007 % Change       2008    2007 % Change
  Chemicals              381    397     (4) %    $1,115    $980     14  %    $2,927  $2,469    19 %
  Emerging Markets       330    376    (12)         479     458      5        1,452   1,218    19
  Forest Products        245    271    (10)         558     553      1        2,278   2,041    12
  Agricultural
  Products               323    301       7         740     560     32        2,291   1,860    23
  Metals                 280    276       1         622     539     15        2,221   1,953    14
  Phosphates and
  Fertilizers            269    270       -         374     310     21        1,390   1,148    21
  Food and Consumer      151    163     (7)         343     335      2        2,272   2,055    11
Total Merchandise      1,979  2,054     (4)       4,231   3,735     13        2,138   1,818    18

  Coal                 1,330  1,324       -       2,299   1,829     26        1,729   1,381    25
  Coke and Iron Ore       78     69      13         137      91     51        1,756   1,319    33
Total Coal             1,408  1,393       1       2,436   1,920     27        1,730   1,378    26

Automotive               267    330    (19)         602     624    (4)        2,255   1,891    19

Other                      -      -       -         180     176      2            -       -     -
Total Rail             3,654  3,777     (3)       7,449   6,455     15        2,039   1,709    19

  International          773    872    (11)         397     402    (1)          514     461    11
  Domestic               797    706      13         717     580     24          900     822     9
  Other                    -      -       -          18      16     13            -       -     -
Total Intermodal       1,570  1,578     (1)       1,132     998     13          721     632    14

Total                  5,224  5,355     (2) %    $8,581  $7,453     15  %    $1,643  $1,392    18  %

Prior periods have been reclassified to conform to the current presentation.

Nine Month Consolidated Results

Operating Revenue

Operating revenue increased $1.1 billion to $8.6 billion for the nine months ended 2008 due to continued pricing gains and higher fuel recoveries.

Operating Income

Operating income increased $421 million to $2.1 billion as operating revenue gains were partially offset by significant increases in fuel expenses.

Other Income

Other income increased $60 million to $69 million due to higher income from real estate sales and a $30 million non-cash adjustment to correct equity earnings from a non-consolidated subsidiary in first quarter 2008. The impact of this adjustment is expected to be immaterial in future reporting periods.

. . .