PAGE 1
FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 199330, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- -------------------
Commission file number 1-3359
------
CSX TRANSPORTATION, INC.
(Exact name of registrant as specified in its charter)
Virginia 54-6000720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Water Street, Jacksonville, FL. 32202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 359-3100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which each
Title of each class class is registered
- ---------------------------------- -------------------------------------
The Baltimore and Ohio Railroad Company
First Consolidated Mortgage 4-1/4%
Bonds, Series C, due October 1, 1995 New York Stock Exchange
Hocking Valley Railroad Company
First Consolidated Mortgage 4-1/2%
Bonds, due July 1, 1999 New York Stock Exchange
Louisville and Nashville Railroad
Company First and Refunding Mortgage
3-3/8% Bonds, Series F, due April 1, 2003 New York Stock Exchange
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J (1) (a) AND
(b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
- 1 -
PAGE 2
Securities registered pursuant to Section 12(b) of the Act: continued,
Name of each exchange on which each
Title of each class class is registered
- ---------------------------------- -------------------------------------
Louisville and Nashville Railroad
Company First and Refunding Mortgage
2-7/8% Bonds, Series G, due April 1, 2003 New York Stock Exchange
Monon Railroad 6% Income Debentures,
due January 1, 2007 New York Stock Exchange
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J (1) (a) AND
(b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
- 1 -
PAGE 2
Securities Registered Pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. The aggregate market value of the voting stock at March 4,
1994,9,
1995, was $-0-, excluding the voting stock held by the parent of the registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. The registrant has 9,061,038
shares of common stock, par value $20.00, outstanding at March 4, 1994.9, 1995.
- 2 -
PAGE 3
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
19931994 FORM 10-K ANNUAL REPORT
Table of Contents
Item No. Page
- -------- ----
PART I
1. Business 4
2. Properties 4
3. Legal Proceedings 65
4. Submission of Matters to a Vote of Security Holders 75
PART II
5. Market for Registrant's Common Stock and Related
Stockholder Matters 75
6. Selected Financial Data 75
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 76
8. Financial Statements and Supplementary Data 76
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 76
PART III
10. Directors, Executive Officers, Promoters
and Control Persons of the Registrant 86
11. Executive Compensation 86
12. Security Ownership of Certain Beneficial
Owners and Management 86
13. Certain Relationships and Related Transactions 86
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 86
Signatures 98
Index to Financial Statements 109
- 3 -
PAGE 4
PART I
Items 1. & 2. Business and Properties.
General
-------
CSX Transportation, Inc. (CSXT) is engaged principally in the business
of railroad transportation and operates a system comprising 18,77918,759 miles of
first main line track in 20 states principally east of the Mississippi River
(exclusive of New England), southern Ontario and the District of Columbia,
employing an average of 29,21628,773 employees. It conducts railroad operations in
its own name and through railroad subsidiaries.
CSXT is a wholly-owned subsidiary of CSX Corporation (CSX). CSX is a
publicly-owned Virginia corporation with headquarters at One James Center, 901
East Cary Street, Richmond, Virginia, 23219. CSXT is one of the largest
railroads in the United States, offering single-system service in its operating
area.23219-4031. Also in the transportation
field, CSX controls Sea-Land Service, Inc., an ocean container-shipping company,
CSX Intermodal, Inc., an intermodal and trucking company, and American Commercial
Lines, Inc., which engages in inland barging and other marine-related
businesses.businesses, and Customized Transportation, Inc., a contract logistics service
supplier. CSX also has interests in contract
logistics, real estate holdings, including resort management and
operations, and information technology.
For information concerning business done by CSXT during 1993,1994, see
"Management's Narrative Analysis and Results of Operations" on pages 3533 through
41.
- 4 -
PAGE 540.
Roadway
-------
On December 31, 1993,30, 1994, CSXT's consolidated system consisted of 32,84432,462
miles of track as follows:
Track
Miles
-----
First Main 18,77918,759
Second Main 3,0252,945
Passing, Crossovers
and Turnouts 2,4642,436
Way and Yard Switching 8,5768,322
------
Total 32,84432,462
======
Included above are 887886 miles of leased track, 2,8222,856 miles of track
under trackage rights agreements with other railroads and 185 miles of track
under operating contracts.
- 4 -
PAGE 5
Equipment
---------
On December 31, 1993,30, 1994, CSXT and subsidiaries owned or leased the
following:
Owned Leased Total
----- ------ ------
Locomotives
Freight 1,882 585 2,4671,895 567 2,462
Switching 150143 15 165158
Auxiliary Units 178165 --- 178165
------- ------- -------
Total 2,210 600 2,8102,203 582 2,785
======= ======= =======
Freight Cars
Open Top Hoppers 26,082 9,846 35,92824,931 10,678 35,609
Gondolas 6,646 13,958 20,6046,744 13,879 20,623
Covered Hoppers 11,034 7,774 18,80811,246 7,543 18,789
Box Cars 9,820 5,192 15,0129,454 5,264 14,718
Flat Cars 497 9,906 10,403476 10,789 11,265
Other 2,379 2,002 4,3812,236 1,591 3,827
------- ------- -------
Total 56,458 48,678 105,13655,087 49,744 104,831
======= ======= =======
Item 3. Legal Proceedings.
A number of legal actions, other than the environmental matters
described below, are pending against CSXT in which claims are made in
substantial amounts. Management does not currently expect that these matters
will have a material adverse effect on the consolidated financial position,
results of operations and cash flows of the Company.
CSXT has been identified, together with other parties, as a
potentially responsible party in a number of governmental investigations and
actions relating to environmentally impaired sites. Such sites frequently
involve other waste generators and disposal companies to whom costs associated
with site investigation and cleanup may be allocated or from whom such costs may
be recovered.
Due to the number of parties involved at many of these sites, the wide
range of costs of possible remediation alternatives, changing cleanup
technology, the length of time over which these matters develop and evolving
governmental standards, it is not always possible to estimate precisely the
Company's liability for the costs associated with the assessment and remediation
of contaminated sites.
CSXT maintained reserves for 106 environmental sites at year-end 1994.
CSXT periodically reviews its environmental reserves
to determine whether additional provisions are necessary. Based on current
information, CSXT believes its reserves are adequate to meet remedial actions to
comply with present laws and regulations. Although CSXT's financial results
could be significantly affected in any future quarterly reporting period in
which CSXT incurred substantial remedial expenses at a number of these and other
sites, CSXT believes the ultimate liability for these matters will not
materially affect its overall financial position, results of operations and cash
flows.
- 5 -
PAGE 6
Item 3. Legal Proceedings.
In December 1993, a Consent Decree was entered in the U. S. District
Court in Jacksonville, Florida to settle claims of Federal Clean Water Act
violations alleged against CSXT. The Consent Decree resolves a civil
enforcement action initiated in June, 1992, by the U.S. Environmental Protection
Agency with respect to alleged violations by CSXT of permit discharge
limitations at five rail yard waste water treatment facilities in Florida and
North Carolina. The settlement called for a civil penalty of $3 million, which
has been paid by CSXT, as well as the establishment of an escrow account in the
amount of $4 million to fund certain environmentally beneficial projects.
See Note 12 to the Consolidated Financial Statements, Contingent
Liabilities and Long-Term Operating Agreements, on pages 32 and 33.
- 6 -
PAGE 7
Item 4. Submission of Matters to a Vote of Security Holders.
Information omitted in accordance with General Instruction J(2)(c).
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.
There is no market for CSXT's common stock as CSXT is a wholly-
owned subsidiary of CSX. During the years 1994, 1993 1992 and 1991,1992, CSXT paid
dividends on its common stock aggregating $28 million, $74$28 million and $120$74
million, respectively.
Item 6. Selected Financial Data.
Information omitted in accordance with General Instruction J(2)(a).
However, included as part of "Management's Narrative Analysis and
Results of Operations" on page 3533 is various selected financial and statistical
information.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Information omitted in accordance with General Instruction J(2)(a).
However, in compliance with said Instruction, see "Management's
Narrative Analysis and Results of Operations" on pages 3533 through 41.40.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements of CSXT and notes thereto
required in response to this item are included herein (refer to Index to
Financial Statements on page 10)9).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
- 7 -
PAGE 8
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons
of the Registrant.
Information omitted in accordance with General Instruction J(2)(c).
Item 11. Executive Compensation.
Information omitted in accordance with General Instruction J(2)(c).
- 6 -
PAGE 7
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information omitted in accordance with General Instruction J(2)(c).
Item 13. Certain Relationships and Related Transactions.
Information omitted in accordance with General Instruction J(2)(c).
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements.
See Index to Financial Statements on page 10.9.
2. Financial Statement Schedules.
None.All schedules are omitted because of the absence of the
conditions under which they are required or because the
required information is set forth in the financial statements
or related notes thereto.
3. Exhibits.
(3.1) Articles of Incorporation, as amended, incorporated
herein by reference tofrom Registrant's report on
Form 10-K for the year ended December 31, 1987.
(3.2) By-laws of the Registrant, incorporated herein by
reference tofrom Registrant's report on Form 10-K for
the year ended December 31, 1992.
(b) Reports on Form 8-K.
None.
- 87 -
PAGE 98
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 11th18th day of
March, 1994.January, 1996.
CSX TRANSPORTATION, INC.
/s/ GREGORY R. WEBER
------------------------------
Gregory R. Weber
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title
- ----------------------- -------------------------------------
/s/ John W. Snow Chairman of the Board and Director
- -----------------
John W. Snow*
/s/ Alvin R. Carpenter President and Chief Executive Officer
- ----------------------- (Principal Executive Officer) and
Alvin R. Carpenter* Director
/s/ Jerry R. DavisGerald L. Nichols Executive Vice-President and Chief
- ----------------------------------------- Operating Officer and Director
Jerry R. Davis*Gerald L. Nichols*
/s/ Mark G. Aron Director
- -----------------
Mark G. Aron*
/s/ James Ermer Director
- ----------------
James Ermer*
/s/ Paul R. Goodwin Director
- --------------------
Paul R. Goodwin*
/s/ Michael J. Ward Senior Vice President - FinancePresident-Finance
- -------------------- (Principal Finance Officer)
Paul R. Goodwin*Michael J. Ward*
/s/ PATRICIA J. AFTOORA
- -----------------------
*Patricia J. Aftoora
(Attorney-in-Fact) March 11, 1994January 18, 1996
- 98 -
PAGE 109
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
Page
----
Report of Independent Auditors 1110
CSX Transportation, Inc. and Subsidiaries:
Consolidated Financial Statements and Notes to Consolidated
Financial Statements Submitted Herewith:
Consolidated Statement of Earnings -
Fiscal Years Ended December 30, 1994, and
December 31, 1993 and 1992 and 1991 1211
Consolidated Statement of Cash Flows -
Fiscal Years Ended December 30, 1994, and
December 31, 1993 and 1992 and 1991 1312
Consolidated Statement of Financial Position -
December 30, 1994 and December 31, 1993 and 1992 1514
Consolidated Statement of Retained Earnings -
Fiscal Years Ended December 30, 1994 and
December 31, 1993 and 1992 and 1991 1615
Notes to Consolidated Financial Statements 17
All schedules are omitted because of the absence of the conditions
under which they are required or because the required information is set forth
in the financial statements or related notes thereto.16
- 109 -
PAGE 1110
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
----------------------------------------------------------------------------------------------
To the Shareholder and Board of Directors
of CSX Transportation, Inc.
We have audited the accompanying consolidated statement of financial
position of CSX Transportation, Inc. and subsidiaries as of December 30, 1994
and December 31, 1993,
and 1992, and the related consolidated statements of earnings, and cash
flows, and retained earnings for each of the three years in the period ended
December 31, 1993.30, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above (appearing on pages 12-34)11-32) present fairly, in all material respects, the
consolidated financial position of CSX Transportation, Inc. and subsidiaries at
December 30, 1994 and December 31, 1993, and 1992, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
December 31,
199330, 1994, in conformity with generally accepted accounting principles.
As discussed in Notes 1 and 11 to the consolidated financial
statements, CSXT changed its method of accounting for post-retirement benefits
other than pensions in 1991.
/s/ ERNST & YOUNG -----------------LLP
---------------------
Ernst & Young LLP
Richmond, Virginia
January 28,27, 1995
- 10 -
PAGE 11
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Millions of Dollars)
Fiscal Year Ended
--------------------------------
Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992
------- ------- -------
OPERATING REVENUE
Merchandise $ 3,048 $ 2,909 $ 2,770
Coal 1,465 1,363 1,565
Other 112 108 99
------- ------- -------
Transportation 4,625 4,380 4,434
Non-Transportation 78 64 74
------- ------- -------
Total 4,703 4,444 4,508
------- ------- -------
OPERATING EXPENSE
Labor and Fringe Benefits 1,856 1,809 1,830
Materials, Supplies and Other 1,022 1,011 973
Equipment Rent 392 387 383
Depreciation 371 371 354
Fuel 251 253 262
Productivity Charge --- --- 664
------- ------- -------
Transportation 3,892 3,831 4,466
Non-Transportation 31 22 20
------- ------- -------
Total 3,923 3,853 4,486
------- ------- -------
OPERATING INCOME 780 591 22
Other Income 49 11 1
Interest Expense 45 60 73
------- ------- -------
EARNINGS (LOSS) BEFORE INCOME TAXES 784 542 (50)
Income Tax Expense (Benefit) 289 234 (33)
------- ------- -------
NET EARNINGS (LOSS) $ 495 $ 308 $ (17)
======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
- 11 -
PAGE 12
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGSCASH FLOWS
(Millions of Dollars)
Fiscal Year Ended
December---------------------------
Dec. 30, Dec. 31, --------------------------------Dec. 31,
1994 1993 1992
1991
------- --------------- -------- -------
OPERATING REVENUE
MerchandiseACTIVITIES
Net Earnings (Loss) $ 2,909 $ 2,770 $ 2,634
Coal 1,363 1,565 1,573
Other 108 99 129
------- ------- -------
Transportation 4,380 4,434 4,336
Non-Transportation 64 74 88
------- ------- -------
Total 4,444 4,508 4,424
------- ------- -------
OPERATING EXPENSE
Labor and Fringe Benefits 1,809 1,830 1,849
Materials, Supplies and Other 1,011 973 1,026
Equipment Rent 387 383 376
Depreciation 371 354 344
Fuel 253 262 271
Productivity Charge --- 664 647
------- ------- -------
Transportation 3,831 4,466 4,513
Non-Transportation 22 20 20
------- ------- -------
Total 3,853 4,486 4,533
------- ------- -------
OPERATING INCOME (LOSS) 591 22 (109)
Other Income 11 1 20
Interest Expense 60 73 87
------- ------- -------
EARNINGS (LOSS) BEFORE INCOME TAXES 542 (50) (176)
Income Tax Expense (Benefit) 234 (33) (71)
------- ------- -------
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING 308 (17) (105)
Cumulative Effect on Years Prior to 1991
of Change in Accounting for Post-
retirement Benefits Other than Pensions --- --- (159)
------- ------- -------
NET EARNINGS (LOSS)495 $ 308 $ (17)
$ (264)
======= ======= =======
See accompanying NotesAdjustments to Consolidated Financial Statements.Reconcile Net Earnings (Loss)
to Cash Provided
Depreciation 371 371 354
Deferred Income Taxes (Benefit) 171 183 (52)
Productivity Charge - Provision --- --- 664
- Payments (129) (245) (353)
Proceeds from Real Estate Sales 42 28 41
(Gain) Loss on Investment Transactions 26 (26) ---
Gain on Sale of South Florida Track (91) (20) (7)
Gain from Disposition of Properties (38) (25) (38)
Other Operating Activities 40 12 (31)
Changes in Operating Assets and Liabilities
Accounts Receivable (27) 27 30
Sale of Accounts Receivable-Net 20 6 200
Materials and Supplies (1) (4) 10
Other Current Assets 32 22 20
Accounts Payable and Other Current
Liabilities (15) (7) (96)
------- ------- -------
Cash Provided by Operating Activities 896 630 725
------- ------- -------
INVESTING ACTIVITIES
Property Additions (676) (569) (539)
Proceeds from Property Dispositions 18 36 41
Affiliated Company Activity (37) --- ---
Proceeds/(Loss) from Investment Transactions (26) 26 ---
Proceeds from Sale of South Florida Track 130 26 10
Other Investing Activities (9) 3 (18)
------- ------- -------
Cash Used by Investing Activities (600) (478) (506)
------- ------- -------
- 12 -
PAGE 13
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS, (Millions of Dollars)
Year Ended December 31,
--------------------------
1993 1992 1991
------- ------- -------
OPERATING ACTIVITIES
Net Earnings (Loss) $ 308 $ (17) $ (264)
Adjustments to Reconcile Earnings (Loss) to
Cash Provided
Depreciation 371 354 344
Deferred Income Taxes (Benefits) 183 (52) (152)
Productivity Charge - Provision --- 664 647
- Payments (245) (353) (72)
Cumulative Effect of Change in Accounting --- --- 159
Proceeds from Real Estate Sales 28 41 41
Gain on Sale of Investments (26) --- (39)
Gain on Sale of South Florida Track (20) (7) (7)
Gain from Disposition of Properties (25) (38) (32)
Other Operating Activities 12 (31) (38)
Changes in Operating Assets and Liabilities
Accounts Receivable 27 30 60
Sale of Accounts Receivable-Net 6 200 ---
Materials and Supplies (4) 10 43
Other Current Assets 22 20 (9)
Accounts Payable and Other Current
Liabilities (7) (96) (156)
------- ------- -------
Cash Provided by Operating Activities 630 725 525
------- ------- -------
INVESTING ACTIVITIES
Property Additions (569) (539) (563)
Proceeds from Sale-Leaseback Transactions --- --- 117
Acquisition and Reconstruction Costs for
Sale-Leaseback Transactions --- --- (80)
Proceeds from Property Dispositions 36 41 53
Proceeds from Sale of Investments 26 --- 106
Proceeds from Sale of South Florida Track 26 10 9
Other Investing Activities 3 (18) (37)
------- ------- -------
Cash Used by Investing Activities (478) (506) (395)
------- ------- -------
- 13 -
PAGE 14
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
(Millions of Dollars)
Fiscal Year Ended
December---------------------------
Dec. 30, Dec. 31, --------------------------Dec. 31,
1994 1993 1992
1991
------- --------------- -------- -------
FINANCING ACTIVITIES
Long-Term Debt Issued 92 80 148 79
Long-Term Debt Repaid (93) (160) (213) (135)
Cash Dividends Paid (28) (28) (74)
(120)
AffiliatedParent Company ActivityAdvances Issued --- --- 30
Parent Company Advances Repaid (86) (18) (123) 82(153)
Other Financing Activities (1) (2) 4 8
------- ------- -------
Cash Used by Financing Activities (116) (128) (258) (86)
------- ------- -------
CASH AND CASH EQUIVALENTS
Increase (Decrease) in Cash and Cash Equivalents 180 24 (39) 44
Cash and Cash Equivalents at Beginning of Year 272 248 287 243
------- ------- -------
Cash and Cash Equivalents at End of Year $ 452 $ 272 $ 248 $ 287
======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
- 1413 -
PAGE 1514
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Millions of Dollars)
DecemberDec. 30, Dec. 31,
---------------------1994 1993
1992
------ -------------- --------
ASSETS
Current Assets
Cash and Cash Equivalents $ 272452 $ 248272
Accounts and Notes Receivable 93 98 83
Materials and Supplies 117 116 112
Deferred Income Taxes 241 103 ---
Other Current Assets 57 43
63
------------- ------
Total Current Assets 960 632
506
------------- ------
Properties and Other Assets
Properties-Net 8,897 8,631 8,463
Affiliates and Other Companies 189 155 169
Other Assets 195 235
337
------------- ------
Total Properties and Other Assets 9,281 9,021
8,969
------------- ------
Total Assets $10,241 $9,653
$9,475
============= ======
LIABILITIES
Current Liabilities
Accounts Payable and Other Current
Liabilities $ 1,159 $1,111 $1,280
Current Maturities of Long-Term Debt 89 87 114
Due to Parent Company 23 40
43
------------- ------
Total Current Liabilities 1,271 1,238
1,437
------------- ------
Long-Term Debt 591 593
646
------------- ------
Due to Parent Company --- 69
86
------------- ------
Deferred Income Taxes 2,246 1,937
1,649------- ------
Casualty, Environmental and Other Reserves 724 965
------- ------
Long-TermOther Liabilities and Deferred Gains 1,631 1,754
------757 666
------- ------
SHAREHOLDER'S EQUITY
Common Stock, $20 Par Value; Authorized
10,000,000 Shares; 9,061,038 Shares
Issued and Outstanding 181 181
Other Capital 1,047 1,047
Retained Earnings 3,424 2,957
2,675
------------- ------
Total Shareholder's Equity 4,652 4,185
3,903
------------- ------
Total Liabilities and Shareholder's Equity $10,241 $9,653
$9,475======= ======
See accompanying Notes to Consolidated Financial Statements.
- 14 -
PAGE 15
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(Millions of Dollars)
Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992
------ ------ ------
Beginning Balance $2,957 $2,675 $2,764
Net Earnings (Loss) 495 308 (17)
Dividends - Common (28) (28) (74)
Minimum Pension Liability Adjustments
and Other --- 2 2
------ ------ ------
Ending Balance $3,424 $2,957 $2,675
====== ====== ======
See accompanying Notes to Consolidated Financial Statements.
- 15 -
PAGE 16
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(Millions of Dollars)
1993 1992 1991
------ ------ ------
BALANCE - JANUARY 1 $2,675 $2,764 $3,152
Net Earnings (Loss) 308 (17) (264)
Dividends - Common (28) (74) (120)
Minimum Pension Liability Adjustments
and Other 2 2 (4)
------ ------ ------
BALANCE - DECEMBER 31 $2,957 $2,675 $2,764
====== ====== ======
See accompanying Notes to Consolidated Financial Statements.
- 16 -
PAGE 17
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Tables in Millions of Dollars)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES.
Principles of Consolidation
The Consolidated Financial Statements reflect the results of
operations, cash flows and financial position of CSXT and its majority-owned
subsidiaries as a single entity. All significant intercompany accounts and
transactions have been eliminated. CSXT is a wholly-owned subsidiary of CSX
Corporation (CSX).
Investments in companies that are not majority-owned are carried at
either cost or equity, depending on the extent of control.
Change in Fiscal Reporting Periods
Effective January 1, 1994, the company changed its fiscal reporting
period from a calendar year to a fiscal year ending on the last Friday in
December. The financial statements presented are for the fiscal years ended
December 30, 1994, and December 31, 1993 and 1992.
Cash and Cash Equivalents
Cash and cash equivalents primarily represent amounts due from CSX for
CSXT's participation in the CSX cash management plan and are net of outstanding
checks which are funded daily as presented for payment.
Accounts Receivable
CSXT has an ongoing agreement to sell without recourse, on a revolving
basis each month, an undivided percentage ownership interest in all freight
accounts receivable to CSX Trade Receivable Corporation (CTRC), a wholly-owned
subsidiary of CSX. At December 30, 1994, December 31, 1993 and December 31,
1992, accounts receivable sold under this agreement totaled $579 million, $556
million and $600 million, respectively. In addition, CSXT has an agreement to
sell with recourse on a monthly basis, an undivided ownership interest in all
miscellaneous accounts receivable to a financial institution. At December 30,
1994 and December 31, 1993, accounts receivable sold under this agreement
totaled $46 million and $50 million.million, respectively. The sales of receivables
have been reflected as reductions of "Accounts and Notes Receivable" in the
Consolidated Statement of Financial Position. The discounts on the sales of the
receivables and related servicing costs were $45 million in 1994, $44 million in
1993 and $17 million in 1992. These costs have been reported in "Other Income"
in the Consolidated Statement of Earnings.
Materials and Supplies
Materials and supplies are carried at average cost.
Properties
Main line track is depreciated on a group basis using a unit-of-
- 1716 -
PAGE 1817
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES, Continued
Properties
Propertiesproduction method. All other property and equipment are carried principally at cost. Provisions for
depreciation are baseddepreciated on a
straight-line basis over their estimated useful service lives of seven to 42 years,
computed primarilyyears.
Interstate Commerce Commission (ICC) regulations require periodic formal studies
of ultimate service lives for all railroad assets. Resulting service life
estimates are subject to review and approval by the ICC. Significant premature
retirements, which would include major casualty losses, abandonments, sales and
obsolescence of assets, are recorded as gains or losses at the time of their
occurrence. Expenditures which significantly increase asset values or extend
useful lives are capitalized. Repair and maintenance expenditures are charged
to operating expense when the work is performed. All properties are stated at
cost.
CSXT uses the specific identification method to assess potential
impairment of properties and other assets. CSXT compares the estimated
recoverable value of a specific asset to its book value. If the recoverable
value of an asset is less than its book value, the asset is considered for
write-down to its recoverable value.
Revenue Recognition
Transportation revenue is recognized proportionately as a shipment
moves from origin to destination on the straight-line composite method. Under this method,
gains and losses on ordinary dispositions are recorded to accumulated
depreciation.
Post-retirement Benefits Other Than Pensions
CSXT has adopted SFAS No. 106, "Employers' Accounting for
Post-retirement Benefits Other than Pensions." Under the accrual method
specified by SFAS No. 106, the total future cost of providing other
post-retirement employment benefits (OPEBs) is estimated and recognized as
expense over the employees' requisite service period.
Fair Values of Financial Instruments
The following methods and assumptions were used by CSXT in estimating
fair values for financial instruments as required by SFAS No. 107, "Disclosures
about Fair Value of Financial Instruments":
Current Assets and Current Liabilities
The carrying amounts reported in the statement of financial position
for current assets and current liabilities qualifying as financial
instruments approximate their fair values.
Long-Term Debt
The fair values of CSXT's long-term debt have been based upon market
quotations for similar debt instruments or have been estimated using
discounted cash flow analyses based upon CSXT's current incremental
borrowing rates for similar types of borrowing arrangements.
Currently, CSXT has no short-term debt arrangements.
CSXT's remaining financial instruments at December 31, 1993, are not
significant.system.
Environmental Costs
Environmental costs that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to remediating an existing
condition caused by past operations, and which do not contribute to current or
future revenue generation, are expensed. Liabilities are recorded when CSXT's
responsibility for environmental remedial efforts is deemed probable, and the
costs can be reasonably estimated. Generally, the timing of these accruals
coincides with the completion of a feasibility study or CSXT's commitment to a
formal plan of action.
Financial Instruments
The recorded liabilities for estimated future
environmental costscompany does not and has not traded in derivative financial
instruments and there were no significant derivative financial instruments
outstanding at December 31, 1993, 1992 and 1991, were $131 million, $77
million and $81 million, respectively.
- 18 -
PAGE 19
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES, Continued30, 1994.
Common Stock and Other Capital
There have been no changes in common stock during the last three
years.
Prior Year Data
Certain prior-year data have been reclassified to conform to the 19931994
presentation.
- 17 -
PAGE 18
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 2. PRODUCTIVITY CHARGES.
In the fourth quarter of 1991, CSXT recorded a pretax charge to
provide for the estimated costs of implementing work force reductions,
improvements in productivity and other cost reductions. The charge amounted to
$647 million on a pretax basis and reduced 1991 net earnings by $409 million.
In the second quarter of 1992, CSXT recorded a charge principally to
recognize the estimated additional costs of buying out certain trip-based
compensation elements paid to train crew employees. These compensation elements
were based upon collective bargaining agreements with train crew employees. The
additional pretax charge amounted to $664 million and reduced net earnings for
1992 by $427 million.
The $1.3 billion in combined charges includes $1.2 billion for
reductions from threethree- to two membertwo-member train crews and for buying out productivity
funds and short-crew allowances. CSXT has reached labor agreements across virtually all
portions of its rail system allowingwhere it is allowed to operate trains with two-membertwo-
member crews.
The estimated cost based ontrip-based compensation amounts vary by labor agreement. Upon
ratification of the ratified labor agreements, witheach affected employee received a cash
payment. Each employee then elected to receive the United Transportation Union members is approximately 93%remainder of their
negotiated settlement in the form of a lump-sum payment or deferral to be paid
upon resignation, retirement or death. CSXT expects 90% of the amount initially
provided.payments will
have been made by the year 2019.
As of December 31, 1993,30, 1994, payments totaling $518$637 million have been
recorded as a reduction of the aggregate liabilities for the productivity
charges. The remaining liability consists of $604$376 million for employee
separations and associated costs and $189(see Note 9). Based upon current negotiated
agreements, CSXT expects the remaining liability of $376 million for claims, litigation and
other negotiated settlements.
- 19 -
PAGE 20
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUEDto be adequate.
NOTE 3. SUPPLEMENTAL STATEMENT OF EARNINGS FINANCIAL DATA.
1994 1993 1992 1991
------ ------ ------
Maintenance and Repair Expense $987 $994 $1,015
==== ==== ======
Selling, General and Administrative Expense (a) $849 $802 $673
$ 687
==== ==== ======
Taxes Other Than Income and Payroll Taxes $ 79 $ 75 $ 68
==== ==== ======
(a) Selling, general and administrative expense during 1994 increased
$47 million over 1993 increased
$129and $176 million over 1992 primarily due to an increase in
the management service fee charged by CSX and increases in certain employee
related incentive costs.
- 18 -
PAGE 19
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 4. OTHER INCOME (EXPENSE).INCOME.
1994 1993 1992 1991
---- ---- ----
Interest Income - Other $ 20 $ 16 $ 18
$ 21Interest Income - CSX Cash Management Plan 13 12 9
9
Gain (Loss) on Sale of RF&P Corporation Stock (a) --- --- 39
Gain on Sale of Investment Transactions (26) 26 --- ---
Gain on Sale of South Florida Track (b)Sale (a) 91 20 7
7
Fees on Sale ofRelated to Accounts Receivable Sold (45) (44) (17)
(32)
Miscellaneous (4) (19) (16) (24)
---- ---- ----
Total $ 49 $ 11 $ 1 $ 20
==== ==== ====
(a) In a series of transactions consummated in October 1991, CSXT
exchanged its 6.8 million shares of RF&P Corporation (RF&P) stock for the rail
assets of RF&P and $106 million in cash. These transactions resulted in a
pretax gain of $39 million, before associated minority interest expense of $5
million.
(b) In May 1988, CSXT sold approximately 80 miles of track and right
of way in Broward, Dade and Palm Beach counties to the state of Florida for $264
million.million subject to annual appropriations which were accounted for on an
installment basis. On December 1, 1994, the state of Florida elected to satisfy
its remaining unfunded obligation issued in 1988 to consummate the purchase of
track and right of way. The sale, which is being recognized on the installment basis,transaction resulted in cash proceeds of $75$102
million and a pretax gain of $59 million and an after-tax
gain of $37$69 million. The remaining proceeds of $189scheduled payment resulted in a
$22 million which were
receivedgain in the form of an installment mortgage note, are subject to annual
legislative appropriations. The deferred installment gain of $148 million will
be recognized each year through 1997 as scheduled payments are received. At
December 31, 1993 and 1992, the long-term portion of the mortgage note
receivable totaled $102 and $130 million, respectively, and was included in
other assets in the consolidated statement of financial position.
- 20 -
PAGE 21
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED1994.
NOTE 5. INCOME TAXES.
Effective January 1, 1993, CSXT adopted Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." SFAS No.
109 superseded SFAS No. 96, "Accounting for Income Taxes," which CSXT adopted effective January 1,in
1987. SFAS No. 109 requires that deferred income tax assets and liabilities be
classified as current or non-current based upon the classification of the
related asset or liability for financial reporting. Net earnings for 1993 were
not impacted by the adoption of SFAS No. 109. As permitted under the new rules,
prior-year financial statements have not been restated.
Income tax expense (benefit) information is as follows:
1994 1993 1992 1991
------- ------- -------
Current
Federal $106 $ 47 $ 17
$ 66
State and Foreign 12 4 2 15
---- ---- ----
Total Current 118 51 19 81
---- ---- ----
Deferred
Federal 164 166 (48)
(122)
State 7 17 (4) (30)
---- ---- ----
Total Deferred 171 183 (52) (152)
---- ---- ----
Total Expense (Benefit) $289 $234 $(33) $(71)
==== ==== ====
- 19 -
PAGE 20
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 5. INCOME TAXES, Continued
Income tax expense (benefit) reconciled to the tax computed at
statutory rate is as follows:
1994 1993 1992 1991
----------- ----------- -----------
Tax at Statutory Rates $274 35% $190 35 % $(17) (34)% $(60) (34)%
State Income Taxes 13 2 13 2 (2) (4) (10) (6)
Prior Years' Income Taxes --- -- (15) (3) (10) (20) (10) (6)
Increase in Statutory Rate (a) --- -- 46 9 --- --
---Other 2 --
Other --- -- (4) (9) 9 6
---- -- ---- -- ---- --
Total Expense (Benefit) $289 37% $234 43 % $(33) (67)% $(71) (40)%
==== == ==== == ==== ==
(a) CSXT revised its annual effective tax rate in 1993 to reflect the
change in the federal statutory rate from 34 to 35 percent. The
effect of this change was to increase deferred income tax expense by
$46 million related to applying the newly enacted statutory income tax
rate to deferred tax balances as of January 1, 1993.
- 21 -
PAGE 22
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 5. INCOME TAXES, Continued
The significant components of deferred tax assets and liabilities
after considering the adoption of SFAS No. 109 include:
December 30, December 31, January 1,
1994 1993 1993
------ ------ ------
Deferred Tax Assets
Productivity Charge $ 227 $ 289 $ 356
Employee Benefit Plans 151 167 143
Investment Tax Credits --- 100 126
Alternative Minimum Tax Credits 166 168 148
Other 268 215 206
------ ------ ------
Total 812 939 979
------ ------ ------
Deferred Tax Liabilities
Accelerated Depreciation 2,600 2,556 2,455
Other 217 217 173
------ ------ ------
Total 2,817 2,773 2,628
------ ------ ------
Net Deferred Tax Liabilities $2,005 $1,834 $1,649
====== ====== ======
In addition to the annual provision for deferred income tax expense,
the change in the year-end net deferred income tax liability balances included
the income tax benefit for the minimum pension liability adjustments in 1993.
- 20 -
PAGE 21
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
In late 1994, an additional income tax payment was made for $50
million for prepayment of 1995 tax liabilities. Income tax payments during 1994,
1993 and 1992 totaled $192 million, $80 million and $56 million, respectively.
CSXT and its subsidiaries are included in the consolidated federal
income tax return filed by CSX. The consolidated federal income tax expense or
benefit is allocated to CSXT and its subsidiaries as though CSXT had filed a
separate consolidated return.
Federal income tax payments to CSX and payments to state taxing
authorities during 1993, 1992 and 1991 totaled $80 million, $56 million and $58
million, respectively.
At December 31, 1993 and 1992, investment tax credits of approximately
$100 million and $126 million and alternative minimum tax credits of $168
million and $148 million, respectively, are being carried forward for separate
tax return purposes and have been recognized for financial reporting purposes as
a reduction of the deferred tax liability. Investment tax credits are accounted
for under the flow-through method. The earliest carryforwards of investment tax
credits begin to expire in 1997.
Examinations of the federal income tax returns of CSX and its
principal subsidiaries have been completed through 1987. Returns for 1988-1990
are currently under examination. Management believes adequate provision has
been made for any adjustments that might be assessed.
- 22 -
PAGE 23
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 6. RELATED PARTIES.
Cash and cash equivalents at December 30, 1994 and December 31, 1993,
and 1992, includes $336$510 million and $310$336 million, respectively, representing amounts due
from CSX for CSXT's participation in the CSX cash management plan. Under this
plan, excess cash is advanced to CSX for investment and CSX makes cash funds
available to its subsidiaries as needed for use in their operations. CSX is
committed to repay all amounts due on demand should circumstances require. The
companies are charged for borrowings or compensated for investments based on
returns earned by the plan portfolio.
Effective December 18,January 1, 1994, CSXT entered into a loan agreement with
Customized Transportation, Inc. ("CTI"), a wholly-owned subsidiary of CSX,
whereby CTI borrowed $40 million from CSXT. Interest is due from CTI semi-
annually commencing June 30, 1994, with the entire principal amount due on
January 1, 2001. Interest income related to the CTI loan was $2 million.
During 1992, CSXT entered into an agreement with CTRC to sell, on a
revolving basis, without recourse, all existing accounts receivable to CTRC. In
October, 1993, this agreement was amended to sell only freight accounts receivable to
CTRC. As of December 30, 1994 and December 31, 1993, and 1992, CSXT had sold $556$579 million
and $600$556 million, respectively, of accounts receivable to CTRC.
During 1994, CSXT hasrepaid the remaining formal long-term borrowings
from CSX which mature from 1994
to 2012 and total $86 millionoutstanding at December 31, 1993, and $106 million at December
31, 1992. Maturities during the next five years aggregate $17 million in 1994,
$17 million in 1995, $7 million in 1996, $7 million in 1997 and $7 million in
1998. Fixed interest rates range from 9% to 10% per annum and are based on the
market rates in effect when the respective borrowings were placed.1993. Interest expense on borrowings from
CSX was $3 million, $9 million and $11 million in 1994, 1993 and $15 million in
1993, 1992,
and 1991, respectively.
InDuring 1989, CSXT's pension plan for salaried employees was merged
with the CSX Corporation Plan, and all assets of CSXT's plan were transferred to
the CSX merged plan. Since the plans were merged, CSX has allocated to CSXT a
portion of the net pension expense for the CSX Corporation Plan based on CSXT's
relative level of participation in the merged plan which considers the assets
and personnel previously in the CSXT plan. The allocated expense from the CSX
Corporation Plan amounted to $42 million in 1994, $32 million in 1993 and $23
million in 1992 and $32
million in 1991.1992.
- 21 -
PAGE 22
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 6. RELATED PARTIES, Continued
Included in Materials, Supplies and Other expense are amounts related
to a management service fee charged by CSX, data processing related charges from
CSX Technology, Inc., and the reimbursement, under an operating agreement, from
CSX Intermodal, Inc. (CSXI), for costs incurred by CSXT related to intermodal
operations. The management service fee charged by CSX represents compensation
for certain corporate services provided to CSXT. These services include
development of corporate policy and long-range strategic plans, allocation of
capital, placement of debt, maintenance of employee benefit plans, internal
audit and tax administration. The data processing related charges are
compensation to CSX Technology, Inc. for the development, implementation and
maintenance of computer systems, software and associated documentation for the
day to day operations of CSXT. CSX Technology and CSXI are wholly-owned
subsidiaries of CSX. Materials, Supplies and Other expense includes net expense
of $192 million, $214 million and $128 million in 1994, 1993 and $183 million in 1993, 1992, and 1991,
respectively, relating to the above arrangements. The $86 million increase from
19931992 to 19921993 was predominately the result of an increase in the management fee
charged by CSX and a one-time intercompany transfer to CSXI in 1992.
InDuring 1991, CSXT entered into an operating lease agreement with CSXI
for 3,400 rebuilt coal gondola cars. The cars, which were previously owned and
rebuilt by CSXT, were sold to CSXI for $117 million which resulted in no gain.
These cars are presently being leased by CSXT through March 2006. In addition,
CSXT is leasing 65 locomotives from CSXI pursuant to a pre-existing operating
- 23 -
PAGE 24
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 6. RELATED PARTIES, Continued
lease agreement acquired by CSXI from a third party at year-end 1992. These
locomotives are being leased by CSXT through May 2008. The minimum lease
payments for the locomotives and coal gondola cars discussed above are
approximately $18 million annually. These lease payments are included in the
minimum lease payments as discussed in Note 12.
In13.
During 1988, CSXT participated with Sea-Land Service, Inc. (Sea-Land),
a wholly-owned subsidiary of CSX, in four sale-leaseback arrangements. Under
these arrangements, Sea-Land sold equipment to a third party and CSXT leased the
equipment and assigned the lease to Sea-Land. Sea-Land is obligated for all
lease payments and other associated equipment expenses. If Sea-Land defaults on
its obligations, CSXT would assume the asset lease rights and obligations of
$174$161 million at December 31, 1993,30, 1994, under the arrangements.
CSX purchases futures and options contracts as a partial hedge against
fluctuations in fuel oil prices on behalf of CSXT and other CSX subsidiaries.
Gains and losses on contractsrelated to hedge fuel oil commitmentshedges of existing assets or liabilities are
deferred and accounted for as a partrecognized over the expected remaining life of the commitment transaction. When recognized, these
gainsrelated asset or
liability. Gains and losses related to hedges of anticipated transactions are
recorded by the subsidiary. During 1993also deferred and 1991, CSXT
recognized $2 million and $3 million, respectively, in net losses with 1992
yielding a slight gain associated with these fuel hedges. The counterparties to
certain futures and options contracts consist of a large number of major
financial institutions. Through CSX, the positions and the credit ratings of
these counterparties are continually monitored, and the amount of agreements or
contracts entered into with any one party are limited. While the company may be
exposed to credit lossesincome in the eventsame period as the hedged
transaction. CSX had no significant hedging or derivative financial instruments
employed at December 30, 1994 and December 31, 1993.
- 22 -
PAGE 23
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 7. PROPERTIES.
Balance Retirement, Balance
at Beginning Sales and at End
of non-performance by counterparties, it
does not currently anticipate losses.Year Additions Other Changes of Year
------------ --------- ------------- -------
1994
Property:
Transportation
Road $ 9,026 $ 394 $(224) $ 9,196
Equipment 3,615 254 (143) 3,726
------- ------ ----- -------
12,641 648 (367) 12,922
Non-Transportation 63 28 (2) 89
------- ------ ----- -------
Total $12,704 $ 676 $(369) $13,011
======= ====== ===== =======
Accumulated Depreciation:
Transportation
Road $ 2,617 $ 211 $(219) $ 2,609
Equipment 1,452 160 (111) 1,501
------- ------ ----- -------
4,069 371 (330) 4,110
Non-Transportation 4 --- --- 4
------- ------ ----- -------
Total $ 4,073 $ 371 $(330) $ 4,114
======= ====== ===== =======
Properties - December 30, 1994 $ 8,897
=======
- 23 -
PAGE 24
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 7. PROPERTIES, Continued
Balance Retirement, Balance
at Beginning Sales and at End
of Year Additions Other Changes of Year
------------ --------- ------------- -------
1993
Property:
Transportation
Road $ 9,074 $ 323 $(371) $ 9,026
Equipment 3,567 243 (195) 3,615
------- ------ ----- -------
12,641 566 (566) 12,641
Non-Transportation 61 3 (1) 63
------- ------ ----- -------
Total $12,702 $ 569 $(567) $12,704
======= ====== ===== =======
Accumulated Depreciation:
Transportation
Road $ 2,781 $ 209 $(373) $ 2,617
Equipment 1,453 162 (163) 1,452
------- ------ ----- -------
4,234 371 (536) 4,069
Non-Transportation 5 --- (1) 4
------- ------ ----- -------
Total $ 4,239 $ 371 $(537) $ 4,073
======= ====== ===== =======
Properties - December 31, 1993 $ 8,631
=======
NOTE 8. ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES.
DecemberDec. 30, Dec. 31,
----------------------1994 1993 1992
------ ------
Trade Accounts Payable $ 457511 $ 457
Labor and Fringe Benefits(a) 374 337 543
Interest, Taxes and Other 141 180 144
Casualty Reserves 133 137 136
------ ------
Total $1,159 $1,111 $1,280
====== ======
(a) Labor and Fringe Benefits includes separation liabilities of $10
million for 1994 and $26 million for 1993 and $225 million for 1992.1993.
- 24 -
PAGE 25
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 8. PROPERTIES.9. CASUALTY, ENVIRONMENTAL AND OTHER RESERVES.
Activity relating to casualty, environmental and other reserves is as
follows:
Casualty Environmental Separation
Reserves(a) Reserves(a) Liabilities(a)
----------- ------------ -----------
Balance 12/31/92 $ 369 $ 77 $ 917
Charged to Expense
and Other Additions 189(b) 63 ---
Payments and Other
Reductions (179) (9) (295)(c)
----- ----- -----
Balance 12/31/93 379 131 622
Charged to Expense
and Other Additions 159(b) 32 ---
Payments and Other
Reductions (184) (23) (228)(c)
----- ----- -----
Balance 12/30/94 $ 354 $ 140 $ 394
===== ===== =====
(a) Balances include current portion of casualty and environmental
reserves and separation liabilities, respectively, of $133 million,
$20 million and $14 million at Beginning Retirements OtherDecember 30, 1994 and $137 million, $1
million and $26 million at End
of Year Additions and Sales Changes of Year
------------ --------- ----------- ------- -------
1993
- ----
Property:
Transportation
Road $ 9,074 $ 323 $380 $ 9 $ 9,026
Equipment 3,567 243 199 4 3,615
------- ------ ---- ---- -------
12,641 566 579 13 12,641
Non-transportation 61 3 2 1 63
------- ------ ---- ---- -------
Total $12,702 $ 569 $581 $ 14 $12,704
======= ====== ==== ==== =======
Accumulated Depreciation:
Transportation
Road $ 2,781 $ 209 $373 $--- $ 2,617
Equipment 1,453 162 163 --- 1,452
------- ------ ---- ---- -------
4,234 371 536 --- 4,069
Non-transportation 5 --- 1 --- 4
------- ------ ---- ---- -------
Total $ 4,239 $ 371 $537 $--- $ 4,073
======= ====== ==== ==== =======
Properties - December 31, 1993.
(b) Casualty reserves are estimated based upon the first reporting of an
accident or personal injury to an employee. Liabilities for accidents
are based upon field reports and liabilities for personal injuries are
based upon the type and severity of the injury and the use of current
trends and historical data.
(c) Includes the transfer of $156 million in 1994 to a separation-related
pension obligation and the reallocation of $95 million in 1993 $ 8,631
=======to
other negotiated settlements contemplated by the 1991 Productivity
Charge. The transfer for 1994 represents the future cost of a pension
obligation for certain train crew employees arising from the 1992
buyout of trip-based compensation (see Note 2). The 1993 reallocation
adjusted for an over accrual of separation liabilities and an under
accrual of amounts recorded for other negotiated settlements.
- 25 -
PAGE 26
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 8. PROPERTIES, Continued
Balance Balance
at Beginning Retirements Other at End
of Year Additions and Sales Changes of Year
------------ --------- ----------- ------- -------
1992
- ----
Property:
Transportation
Road $ 9,003 $ 313 $ 211 $(31) $9,074
Equipment 3,618 226 268 (9) 3,567
------- ------ ----- ---- -------
12,621 539 479 (40) 12,641
Non-transportation 63 --- 1 (1) 61
------- ------ ----- ---- -------
Total $12,684 $ 539 $ 480 $(41) $12,702
======= ====== ===== ==== =======
Accumulated Depreciation:
Transportation
Road $ 2,787 $ 205 $ 208 $ (3) $ 2,781
Equipment 1,527 149 223 --- 1,453
------- ------ ----- ---- -------
4,314 354 431 (3) 4,234
Non-transportation 5 1 --- (1) 5
------- ------ ----- ---- -------
Total $ 4,319 $ 355 $ 431 $ (4) $ 4,239
======= ====== ===== ==== =======
Properties - December 31, 1992 $ 8,463
=======
- 26 -
PAGE 27
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 9. CASUALTY AND OTHER RESERVES, SEPARATION LIABILITIES AND DEFERRED GAINS.
Long-term liabilities and deferred gains totaled $1.6 billion and $1.8
billion in 1993 and 1992, respectively, and include casualty reserves; deferred
gains; pension and other post-retirement obligations; productivity/restructuring
charge liabilities; and other liabilities.
Activity relating to casualty reserves, separation liabilities and
deferred gains is as follows:
Deferred Gains
---------------------------
Casualty Separation Sale-Leaseback Installment
Reserves(a) Liabilities(a) Transactions(c) Sale(d)
----------- ------------ --------------- -----------
Balance 12/31/91 $ 354 $ 655 $ 84 $ 129
Charged to Expense
and Other Additions 237 644 (1) ---
Payments and Other
Reductions (222) (382)(b) (6) (7)
----- ----- ----- -----
Balance 12/31/92 369 917 77 122
Charged to Expense
and Other Additions 189 --- --- ---
Payments and Other
Reductions (179) (295)(b) (6) (20)
----- ----- ----- -----
Balance 12/31/93 $ 379 $ 622 $ 71 $ 102
===== ===== ===== =====
(a) Balances include current portion of casualty reserves and separation
liabilities, respectively, of $136 million and $225 million at
December 31, 1992 and $137 million and $26 million at December 31,
1993.
(b) Includes reallocation of $95 million in 1993 and $62 million in 1992
to litigation claims and other negotiated settlements.
(c) Deferred gains on sale-leaseback transactions are being amortized over
periods not exceeding 21 years.
(d) A portion of the deferred gain on South Florida Track installment sale
will be recognized each year through 1997 as scheduled payments are
received.
- 27 -
PAGE 28
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 10. LONG-TERM DEBT.
December 31,
Type Average ----------------------
(Maturity Dates) Interest Rates 1994 1993 1992
- ----------------- -------------- ------ ------
Equipment Obligations
(1994-2008)(1995-2009) 9% $ 417381 $ 437417
Mortgage Bonds
(1995-2003) 4%(1998-2003) 3% 78 84 137
Other Obligations
(1994-2021) 6%(1995-2021) 8% 221 179 186
------ ------
Total 8%7% 680 760680
Less Debt Due Within One Year 89 87 114
------ ------
Total Long-Term Debt $ 593591 $ 646593
====== ======
The estimated fair value of long-term debt at December 31, 1993 and
1992, is as follows:
Fair Value of Total Debt
1993 1992
------------------------
Equipment Obligations $453 $476
Mortgage Bonds 69 115
Other Obligations 192 194
---- ----
Total $714 $785
==== ====
In March 1993, CSXT issued $74 million of Series A Equipment Trust
Certificates. The certificates will mature in 15 annual installments from 1994
through 2008.
CSXT has long-term debt maturities during the next five years
aggregating $87 million in 1994, $85$89 million in 1995, $64$68 million in 1996, $45$49 million in 1997, and $41$47
million in 1998.1998 and $63 million in 1999.
Substantially all of the properties and certain other assets of CSXT
and its subsidiaries are pledged as security for various long-term debt issues.
Interest payments, including thenet of amounts on CSX borrowingscapitalized, totaled $53 million,
$74 million $85 million and $93$85 million, respectively, for 1994, 1993 1992 and 1991.
These payments are net1992.
NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS.
The following table presents the carrying amounts and estimated fair
values of capitalized interest,financial instruments as required by SFAS No. 107, "Disclosures about
Fair Value of Financial Instruments." SFAS 107 defines the fair value of a
financial instrument as the amount at which was approximately $7
million for each of the three years.instrument could be exchanged in
a current transaction between willing parties.
1994 1993
---------------- ----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
Assets:
Cash and Cash Equivalents $452 $452 $272 $272
Accounts and Notes Receivable 93 93 98 98
Liabilities:
Accounts Payable 511 511 457 457
Long-Term Debt 680 650 680 714
- 2826 -
PAGE 2927
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS, Continued
The following methods and assumptions were used by the company in
estimating fair values for financial instruments:
Cash and Cash Equivalents
The carrying amounts approximate fair value because of the short-term
maturity of the instruments.
Current Assets and Current Liabilities
The carrying amounts reported in the statement of financial position
for current assets and current liabilities qualifying as financial instruments
approximate their fair values.
Long-Term Debt
The fair values of the company's long-term debt have been estimated
using discounted cash flow analyses based upon the company's current incremental
borrowing rates for similar types of borrowing arrangements.
NOTE 12. EMPLOYEE BENEFIT PLANS.
Pension Plans
CSX and its subsidiaries, including CSXT, have defined benefit pension
plans principally for salaried employees. The plans provide for eligible
employees to receive benefits primarily based on years of service and
compensation rates near retirement. Contributions to the plans are made on the
basis of not less than the minimum funding standards set forth in the Employee
Retirement Income Security Act of 1974, as amended. See Note 6 for the
allocated pension expense from the CSX Corporation Plan.
Savings Plans
CSXT has established savings plans for virtually all full-time
salaried employees and certain employees covered by collective bargaining units
of CSXT and subsidiary companies. Eligible employees may contribute from 1% to
15% of their annual compensation in 1% multiples to these plans. CSXT matches
eligible employees' contributions in an amount equal to the lesser of 50% of
each salaried employee'sparticipating employees' contribution which is limited to 6%or 3% of the employee's earnings.their annual compensation.
In addition CSXT contributes fixed amounts for each participating employee
covered by a collective bargaining agreement. Expense for these plans was $22
million for each of the years 1994, 1993 1992 and 1991.1992.
- 27 -
PAGE 28
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 12. EMPLOYEE BENEFIT PLANS, Continued
Other Post-Retirement Benefit Plans
In addition to the CSX defined benefit pension plans, CSXT
participates in two defined benefit post-retirement plans along with CSX and
other affiliates which cover most full-time salaried employees. One plan
provides medical benefits and another provides life insurance benefits. The
post-retirement health care plan is contributory, with retiree contributions
adjusted annually, and contains other cost-sharing features such as deductibles
and coinsurance. The accounting for the health care plan anticipates future
cost-sharing changes to the written plan that are consistent with the company's
expressed intent to increase the retiree contribution rate annually for the
expected medical inflation rate for that year. The life insurance plan is non-
contributory.
Effective January 1, 1991, CSXT adopted SFAS No. 106. The effect of
adopting the new guidelines had a minimal impact on 1991 results, as the net
periodic post-retirement benefit expense of $28 million approximated the expense
under the prior method of accounting for the above defined benefit plans, which
was on a pay-as-you-go basis. Net earnings for 1991 were decreased by $159
million (net of related income tax benefit of $96 million), by the cumulative
effect of the change in accounting related to years prior to 1991, which were
not restated.
The SFAS No. 106 calculations shown below were prepared for CSXT as if
it was participating in such plans on a stand-alone basis. Therefore, although
CSXT participates along with CSX and other affiliates in these two plans, a
separate measurement of the funding status and benefit expense attributable to
its participation in the plans was determined and recognized by CSXT on this
basis.
- 29 -
PAGE 30
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 11. EMPLOYEE BENEFIT PLANS, Continued
Other Post-Retirement Benefit Plans, Continued
The company's current policy is to fund the cost of the post-
retirement health care and life insurance benefits on a pay-as-you-go basis, as
in prior years. The following table shows the two plans' combined status
reconciled with the amounts recognized in CSXT's statement of financial
position:
Life
Medical Insurance
Plan Plan
1994 1993 19921994 1993 1992
---- ---- ---- ----
Accumulated Post-Retirement
Benefit Obligation:
Retirees $144 $154 $125$61 $67 $62
Fully Eligible Active Participants 1312 13 2 2
Other Active Participants 18 20 161 2 1
---- ---- --- ---
Accumulated Post-Retirement
Benefit Obligation 174 187 15464 71 65
Unrecognized Prior Service Cost 13 17 21 4 4
Unrecognized Net Loss (22) (40) (5) (10) (10) (3)
---- ---- --- ---
Net Post-Retirement Benefit Obligation $165 $164 $165$63 $65 $66
==== ==== === ===
Net periodic post-retirement benefit expense for 1994, 1993 and 1992
was $21 million, $16 million and 1991
is as follows:
Life
Medical Insurance
Plan Plan
1993 1992 1991 1993 1992 1991
---- ---- ---- ---- ---- ----
Service Cost $ 4 $ 4 $ 5 $1 $1 $1
Interest Cost 12 13 16 5 6 6
Amortization of Prior Service
Cost (Benefit) (4) (2) --$22 million, respectively.
- 28 -
-
Unrecognized Net Gain (2) -- -- - - -
--- --- --- -- -- --
Net PeriodicPAGE 29
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 12. EMPLOYEE BENEFIT PLANS, Continued
Other Post-Retirement Benefit Expense $10 $15 $21 $6 $7 $7
=== === === == == ==Plans, Continued
The weighted-average annual assumed rate of increase in the per capita
cost of covered benefits (i.e., health care cost trend rate) for the medical
plan is 11.5%11% for 1993-19941994-1995 and is assumed to decrease gradually to 5.5% inby 2005
and remain at that level thereafter. The health care cost trend rate assumption
has a significant effect on the amounts reported. For example, increasing the
- 30 -
PAGE 31
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 11. EMPLOYEE BENEFIT PLANS, Continued
Other Post-Retirement Benefit Plans, Continued
assumed health care cost trend rates by one percentage point in each year would
increase the accumulated post-retirement benefit obligation for the medical plan
as of December 31, 19931994 by 9%, and the aggregate of the service and interest
cost components of net periodic post-retirement benefit expense for 19931994 by $2$3
million. The weighted-average discount rate used in determining the accumulated
post-retirement benefit obligation was 8.25% and 7.25% at December 30, 1994 and 8.25% at
December 31, 1993, and
1992, respectively.
Post-employment Benefits
Effective January 1, 1994, the company will adopt SFAS No. 112
"Employers' Accounting for Post-employment Benefits." This statement requires
that certain benefits provided to former or inactive employees, after employment
but before retirement, such as workers' compensation and disability benefits, be
accrued if attributable to employees' service already rendered. The financial
impact of adopting SFAS No. 112 is not expected to be significant.
Other Plans
Under collective bargaining agreements, the company participates in a
number of union-sponsored, multi-employer benefit plans. Payments to these
plans are made as part of aggregate assessments generally based on hours worked,
tonnage moved or a combination thereof. The administrators of the multi-
employer plans generally allocate funds received from participating companies to
various health and welfare benefit plans and pension plans. Current information
regarding such allocations has not been provided by the administrators. Total
contributions of $125 million, $139 million $125 million and $150$125 million were made to these
plans in 1994, 1993 1992 and 1991,1992, respectively.
Certain officers and key employees of CSXT participate in stock
purchase, performance and award plans of CSX. CSXT is allocated its share of
any cost to participate in these plans.
NOTE 12.13. SUMMARY OF COMMITMENTS AND CONTINGENCIES.
Lease Commitments
CSXT leases equipment under agreements with terms up to 2120 years.
Non-cancelable, long-term leases generally include provisions for maintenance,
and options to purchase at fair value and to extend the terms. At December 31,
1993,30,
1994, minimum equipment rentals under non-cancelable operating leases totaled
approximately $180 million for 1994, $165$178 million for 1995, $161$171 million for 1996, $165$173 million for
1997, $167$176 million for 1998, $160 million for 1999 and $1.6$1.5 billion thereafter.
- 31 -
PAGE 32
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 12. SUMMARY OF COMMITMENTS AND CONTINGENCIES, Continued
Lease Commitments, Continued
Rent expense on equipment operating leases, including net daily rental
charges on railroad operating equipment of $220 million, $214 million and $204
million in 1994, 1993 and $182
million in 1993, 1992, and 1991, respectively, amounted to $392 million in 1994,
$387 million in 1993 and $383 million in 1992 and $376 million in 1991.1992. Deferred gains arising from
sale-leaseback transactions are being amortized over periods not exceeding 2120
years and have reduced rent expense by $6 million in 1994, 1993 $6 million inand 1992,
and $5 million in 1991.respectively.
- 29 -
PAGE 30
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 13. SUMMARY OF COMMITMENTS AND CONTINGENCIES, Continued
Purchase Commitment
CSXT entered into an agreement to purchase 300 locomotives from GE
Transportation Systems, a unit of General Electric Co.locomotives. This
large single order will covercovers CSXT's normal locomotive replacement needs over the next four years.for 1994
through 1997. This purchase agreement will introduce alternating current
traction technology to CSXT's locomotive fleet. CSXT will taketook delivery of 50 direct
current and 30 alternating current locomotives in 1994, and the remaining 220
alternating current units will be delivered during 1995-1997.
Contingent Liabilities and Long-Term Operating Agreements
CSXT and its subsidiaries are contingently liable individually and
jointly with others principally as guarantors of long-term debt and obligations,
primarily related to leased properties, joint ventures and joint facilities.
These contingent obligations amounted to approximately $199$185 million at December
31, 1993.30, 1994.
CSXT has various long-term railroad operating agreements that allow
for exclusive operating rights over various railroad lines. Under these
agreements, CSXT is obligated to pay usage fees of approximately $10 million
annually. The terms of these agreements range from 30 to 40 years.
CSXT is a party toin various proceedings brought both byinvolving private parties and
regulatory agencies related to environmental issues. CSXT has been identified
as a potentially responsible party in a number of governmental
investigations and actions
relating to 106 environmentally impaired sites that are or may be subject to
remedial action under the Federal Superfund Statute ("Superfund") or
corresponding state statutes. The majorityMany of these proceedings are based on
allegations that CSXT, or its railroad predecessors, sent hazardous substances
to the facilities in question for disposal. Such proceedings arising under
Superfund or corresponding state statutes typically involve numerous other waste
generators and disposal companies and seek to allocate or recover costs
associated with site investigation and cleanup, which could be substantial.
The assessment of the required response and remedial costs associated
with thesemost sites is extremely complex. AmongCost estimates are based on information
available for each site, financial viability of other potentially responsible
parties, where available, and existing technology, laws and regulations. CSXT's
best estimate of the variables that management must
assessallocation method and percentage of liability when other
potentially responsible parties are imprecise and changing remedial cost estimates and continually
evolving governmental standards.
- 32 -
PAGE 33
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 12. SUMMARY OF COMMITMENTS AND CONTINGENCIES, Continued
Contingent Liabilities and Long-Term Operating Agreements, Continuedinvolved are based on assessments by
consultants, agreements among potentially responsible parties, or determinations
by the EPA or other regulatory agencies.
At least once each quarter CSXT frequently reviews its role, if any, with respect
to each such location, giving consideration to the nature of CSXT's alleged
connection to the location (e.g., generator, owner or operator), the extent of
CSXT's alleged connection (e.g., volume of waste sent to the location and other
relevant factors), the accuracy and strength of evidence connecting CSXT to the
location,
- 30 -
PAGE 31
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 13. SUMMARY OF COMMITMENTS AND CONTINGENCIES, Continued
and the number, connection and financial position of other named and unnamed
potentially responsible parties at the location. Further,The ultimate liability for
remediation is difficult to determine with certainty because of the number of
and creditworthiness of PRPs involved. Through the assessment process, CSXT
periodically
reviews its exposuremonitors the creditworthiness of such PRPs in all non-Superfund environmental proceedings with which
it is involved.determining ultimate liability.
Based upon such reviews and updates of the sites with which it is
involved, CSXT has recorded, and periodicallyat least quarterly reviews for adequacy,
reserves to cover estimated contingent future environmental costs with respect
to such sites. Liabilities areThe recorded liabilities for estimated future environmental
matters in accordance withcosts at December 30, 1994 and December 31, 1993 were $140 million and $131
million, respectively. These recorded liabilities include amounts representing
CSXT's accounting policy described in Note 1.estimate of unasserted claims, which CSXT believes to be immaterial. The
liability has been accrued for future costs for all sites where the company's
obligation is probable and where such costs can be reasonably estimated. The
liability includes the estimated future costs for remediation and restoration of
sites as well as any significant ongoing monitoring costs, but excludes any
anticipated insurance recoveries. The majority of the December 30, 1994
environmental liability is expected to be paid out over the next five years,
funded by cash generated from operations.
The company does not currently possess sufficient information to
reasonably estimate the amounts of additional liabilities, if any, on some sites
until completion of future environmental studies. Such additional liabilitiesIn addition, latent
conditions at any given location could result in exposure, the amount and
materiality of which cannot presently be significant to future
consolidated results of operations and cash flows.reliably estimated. Based upon
information currently available, however, CSXTthe company believes that its
environmental reserves are adequate to accomplish remedial actions to comply
with present laws and regulations. The company believes that the ultimate
liability for these matters will not materially affect its overall results of
operations and financial condition.
Legal Proceedings
A number of legal actions, other than environmental, are pending
against CSXT in which claims are made in substantial amounts. While the
ultimate results of environmental investigations, lawsuits and claims involving
CSXT cannot be predicted with certainty, management does not currently expect
that these matters will have a material adverse effect on the consolidated
financial position, results of operations and cash flows of the company.
In December 1993, a Consent Decree was entered in the U. S. District
Court in Jacksonville, Florida to settle claims of Federal Clean Water Act
violations alleged against CSXT. The Consent Decree resolves a civil
enforcement action initiated in June, 1992, by the U.S. Environmental Protection
Agency with respect to alleged violations by CSXT of permit discharge
limitations at five rail yard waste water treatment facilities in Florida and
North Carolina. The settlement called for a civil penalty of $3 million, which
has been paid by CSXT, as well as the establishment of an escrow account in the
amount of $4 million to fund certain environmentally beneficial projects.
- 3331 -
PAGE 3432
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 13.14. QUARTERLY DATA (Unaudited).
1994(a)
-----------------------------------------
1st 2nd 3rd 4th(b)
------ ------ ------ ------
Operating Revenue $1,127 $1,190 $1,173 $1,213
Operating Income 135 230 184 231
Net Earnings 73 136 105 181
1993
-----------------------------------------
1st 2nd 3rd(a) 4th(b)3rd(c) 4th(d)
------ ------ ------ ------
Operating Revenue $1,094 $1,134 $1,081 $1,135
Operating Income 105 172 123 191
Net Earnings 56 131 19 102
1992
-----------------------------------------
1st 2nd(c)2nd(e) 3rd 4th
------ ------ ------ ------
Operating Revenue $1,123 $1,123 $1,104 $1,158
Operating Income (Loss) 125 (498) 149 246
Net Earnings (Loss) 65 (322) 80 160
1991
-----------------------------------------
1st(d) 2nd 3rd 4th(e)(f)
------ ------ ------ ------
Operating Revenue $1,059 $1,079 $1,130 $1,156
Operating Income (Loss) 111 137 150 (507)
Earnings (Loss) before Cumulative
Effect(a) Effective January 1, 1994, the company changed its fiscal reporting
periods from four calendar quarters to four 13-week quarters. Fiscal
1994 began on January 1, 1994, and included 52 weeks. The four 13-
week quarters ended on April 1, July 1, September 30 and December 30,
1994.
(b) On December 1, 1994, the state of ChangeFlorida elected to satisfy its
remaining unfunded obligation issued in Accounting 57 74 78 (314)
(a)1988 to consummate the
purchase of 80 miles of track and right of way. The transaction
resulted in cash proceeds of $102 million and a pretax gain of $69
million.
(c) CSXT revised its estimated annual effective tax rate in the third
quarter of 1993 to reflect the change in the federal statutory rate
from 34 to 35 percent. The effect of this change was to increase
income tax expense for the third quarter of 1993 by $50 million. Of
this amount, $46 million related to applying the newly enacted
statutory income tax rate to deferred tax balances as of January 1,
1993.
(b)(d) The quarterly results were affected by certain adjustments, including
credits of $12 million for favorable experience on health and welfare
benefits. Other adjustments were not significant to the operating
results for the quarter.
(c)(e) Includes impact of $664 million pretax productivity charge, $427
million after tax.
(d) The first quarter 1991 results excludetax, to reflect the cumulative effectestimated costs of the
accounting change for years prior to 1991 that decreased net earnings
$159 million. The effect of adopting SFAS No. 106 on 1991 operating
income was not significant and was included in the results of the
fourth quarter. The first-, second- and third-quarter 1991 results
were not restated.
(e) Includes impact of $647 million pretax productivity charge, $409
million after tax.
(f) Includes pretax gain of $39 million, before associated minority
interest expense of $5 million, on the sale of the stock of RF&P
Corporation.implementing
work-force reductions.
- 3432 -
PAGE 3533
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
MANAGEMENT'S NARRATIVE ANALYSIS AND RESULTS OF OPERATIONS
(Millions of Dollars)
The following information should be read in conjunction with all other
items in this report including "Business", "Properties" and "Financial
Statements and Supplementary Data."
Selected Financial & Statistical Information
--------------------------------------------
1994 1993 1992(a) 1991(b)(c)1990 1989
------- ------ ----- ------ ----------- -----
Selected Earnings Data:
Operating Revenue $ 4,703 $4,444 $4,508 $4,424 $4,551
$4,470
Operating Expense 3,923 3,853 3,822 3,886 3,929
3,876
Productivity/RestructuringProductivity Charge --- --- 664 647 ---
---
------------- ------ ------ ------ ------
Operating Income (Loss) 780 591 22 (109) 622
594
Other Income 49 11 1 20 ---
29
Interest Expense 45 60 73 87 111
146
Income Tax Expense (Benefit)
Productivity/RestructuringProductivity Charge --- --- (237) (238) ---
---
Other 289 234 204 167 164 173
Cumulative Effect of Change
in Accounting --- --- --- (159) ---
---
------------- ------ ------ ------ ------
Net Earnings (Loss) $ 495 $ 308 $ (17) $ (264) $ 347
$ 304
============= ====== ====== ====== ======
Selected Cash Flow Data:
Cash Provided by Operating
Activities $ 896 $ 630 $ 725 $ 525 $ 814
$ 881
Cash Used by Investing
Activities $ (600) $ (478) $ (506) $ (395) $ (394)
$ (296)
Cash Used by Financing
Activities $ (116) $ (128) $ (258) $ (86) $ (364) $ (461)
Selected Financial Position Data:
Cash and Cash Equivalents $ 452 $ 272 $ 248 $ 287 $ 243
$ 187
Working Capital (Deficit) $ (311) $ (606) $ (931) $ (773) $ (707)
$ (590)
Total Assets $10,191 $9,653 $9,475 $9,629 $9,510
$9,357
Long-Term Debt $ 591 $ 593 $ 646 $ 639 $ 742
$ 874
Due to Parent Company:
Long-Term Advances $ --- $ 69 $ 86 $ 178 $ 157
$ 198
Shareholder's Equity $ 4,652 $4,185 $3,903 $3,992 $4,368 $4,103
(a) Includes impact of $664 million pretax productivity charge, $427
million after tax.
(b) Includes impact of $647 million pretax productivity charge, $409
million after tax.
(c) Net earnings for 1991 were decreased by $159 million by the cumulative
effect of the change in accounting related to the adoption of SFAS No.
106.
- 3533 -
PAGE 3634
CSX TRANSPORTATION, INC. AND SUBSIDIARIES
MANAGEMENT'S NARRATIVE ANALYSIS AND RESULTS OF OPERATIONS
Results of Operations
---------------------
CSXT metposted three consecutive quarters of record operating income in
1994. These results were due to strong traffic across virtually all merchandise
commodities and continued success in cost reductions. CSXT also rebounded from
the challenges1993 coal strikes to yield notable increases in domestic coal tonnage. These
results were achieved in spite of a prolonged U.S. coal strike and sharp
decline in itslower export coal markets in 1993 by continuing to lower the cost of
its operations while increasing its focus on merchandise markets. Despite a $202
million decline in coal revenue, this dual emphasis allowedloadings.
CSXT to earn operating income ofin 1994 totaled $780 million, $189 million above
1993's $591 million $95and $94 million belowabove 1992's comparable $686 million. Operating income rose 10% compared with 1991 earnings of $538 million
onThis
latter figure excludes a like basis. These comparisons excludenet productivity chargescharge of $664 million
and $647 million in 1992 and 1991, respectively, associated with
labor reductions. Including these charges, thethis charge, rail unit recorded operating income ofwas $22 million
in 1992 and an operating loss of $109 million in 1991.
Transportation operating revenue was $4.38 billion, a 1% decline from
$4.43 billion a year earlier, but a slight increase from 1991's revenue of $4.34
billion. The decrease in 1993 was caused by a 13% decline in coal revenue, the
largest source of CSXT revenue. Coal revenue also was 13% lower than 1991's
level. Total coal originated by CSXT was 144.1 million tons in 1993, 11% and 13%
below levels originated in 1992 and 1991, respectively.1992.
CSXT COMMODITIES BY CARLOADS AND REVENUE
Market
Share (a) Carloads Revenue
(Percent) (Thousands) (Millions of Dollars)
--------- -------------------- ----------------------
19931994 1994 1993 1992 19911994 1993 1992 1991
---- ----- ----- ----- ----- ------ ------
Automotive 2728 354 326 288 265$ 493 $ 461 $ 413
$ 367
Chemicals 4039 386 371 356 347685 652 619
587
Minerals 3638 419 374 345 327365 332 310 290
Food and Consumer 3433 176 166 161 164204 196 196
201
Agricultural Products 3028 263 284 264 262318 327 297
295
Metals 2228 292 258 225 199285 243 219
200
Forest Products 3033 442 435 441 439444 442 448 425
Phosphates and Fertilizer 7076 470 423 457 475254 256 268
269
Coal 40 1,678 1,566 1,760 1,8161,465 1,363 1,565 1,573
----- ----- ----- ----- ------ ------
Total Freight Revenue4,480 4,203 4,297 4,2944,513 4,272 4,335 4,207
===== ===== =====
Other Revenue 112 108 99 129
------ ------ ------
Total Transportation Operating Revenue $4,625 $4,380 $4,434 $4,336
====== ====== ======
(a) Market share is defined as CSXT carloads vs.versus carloads handled by
all major Eastern railroads.
Weakened- 34 -
PAGE 35
PRODUCTIVITY CHARGES
--------------------
(Millions of Dollars)
1992 1991
---- ----
Provision:
Severance Costs $664 $583
Exit, Settlement and Other Costs --- 64
---- ----
Total Provision 664 647
---- ----
Payments and Other Reductions:
Severance Costs (288) (583)
Exit, Settlement and Other Costs --- (64)
---- ----
Balance December 30, 1994 $376 $---
==== ====
Transportation operating revenue rose to $4.63 billion, a 6% increase
from 1993 and a 4% increase over 1992, driven primarily by a rebound in domestic
coal tonnage and exceptional merchandise traffic. Transportation operating
revenue totaled $4.38 billion in 1993 and $4.43 billion in 1992.
CSXT overcame severe winter conditions in early 1994 and weaker than
expected export coal traffic to increase coal tonnage to 153.7 million tons vs.
144.1 million tons in 1993. Domestic coal shipments rose 8% as utility demand,
for U.S. coaldriven by the need to rebuild stockpiles depleted from the European Community nations1993 strikes and Japan, due to lower levelsthe
harsh winter weather, surged during the year. CSXT's export shipments faced a
number of economic growth, continuedmarket obstacles, including decreased demand and increased foreign
government
- 36 -
PAGE 37
subsidies and intensified foreign competition, caused CSXT'scompetition. In 1994, export coal shipments decreased to decline significantly16 million tons from
the prior two years. In addition, both
domestic and export shipments were negatively affected by selective coal strikes
against eastern coal operators, which diminished shipments during nine months of16.7 million tons in 1993. While
CSXT anticipates only a slightmodest recovery in the U.S. export coal market and
slightly better domestic coal loadings in 1995. The implementation of Phase I of
the company does expect notably higher carloadingsClean Air Act in 1995 is expected to provide a net tonnage gain for CSXT, as
an increase in the production of high-quality, low-sulfur coal at CSXT-served
mines should more than offset any displacement caused by the Act.
CSXT's total merchandise carloads and revenue increased 6% and 5%,
respectively, over 1993 levels, reflecting the strength of the U.S. economy and
successful efforts to utilities since
the strikes ended in December 1993.
CSXT merchandiseexpand market share. These same figures both rose 10% vs.
1992's volume and revenue.
CSXT's automotive carloads increased 9% from a strong 1993 traffic
base. This growth, driven by increased U.S. auto production, soaring consumer
demand and improved service, pushed automotive revenue jumpedup 7% in 1994.
Demand for plastic products from the auto industry, housing
construction and the consumer goods market helped spur a 4% carload growth in
the chemicals market. Bulk Intermodal Distribution (BIDS) terminals, where
customers transfer and store bulk chemicals, gave CSXT a significant competitive
advantage in this market. The customer response to this service is reflected in
the 5% from 1992's
levelsincrease in chemicals revenue for 1994.
- 35 -
PAGE 36
Minerals traffic and 6%revenue for the year improved 12% and 10% from 1991's results,,
respectively, to 2.6 million carloadspropelled by growth in highway construction and $2.9 billiondemand for sand
used in revenue. The gains reflected expansionauto castings.
Shipments in the domestic
economyfood and improved conditionsconsumer category, which includes government
traffic and consumer durables, increased 6%, reflecting strong industrial
production, particularly in key industries served by CSXT.
With U.S. auto producers enjoying large gainsappliances.
Agricultural products experienced a surge in market share and
increased demand from consumers, CSXT's automotiveexport grain traffic led the growth in
merchandise carloadings and revenue. CSXT also recorded large gains in metals,
due to surging scrap demand from U.S. mini-mill steel producers. Minerals
traffic advanced due to renewed activity in construction and highway projects.
CSXT's agriculture volumes and revenues moved well beyond prior-year levels,
benefiting from export of 1992's bumper grain crop through late summer 1993 and
continued expansion
in the southeastern poultry andyear, but it was not enough to offset the devastating effect of the 1993
floods that caused a short supply of grain through the first three quarters of
1994. Strong domestic feed grain businesses
throughoutloadings to the Southeast poultry farms
provided a solid base of traffic during the year. The strengthening economy and higher level of auto
production contributed to a sizeable increase in chemical traffic.
With foreign demand for U.S.-mined phosphates remaining depressed,
phosphate and fertilizer carloadingsCarloads declined further. The forest products
market also was off slightly from 1992 and 1991 levels7%, while
revenue decreased only 3% as a result of excessfavorable yield and mix changes.
The metals industry enjoyed one of its best years ever, as strong
demand from steel mini-mills led to a 13% carload increase in 1994. New service
packages offered by CSXT improved market share and contributed to a 17% gain in
revenue.
Forest products traffic, which includes lumber, paper production during 1992.
CSXT anticipates modest improvement in merchandise traffic volume and revenue for 1994, reflectingconstruction
materials, improved 2% due to continued expansionhousing demand and steady recovery of
the U.S. economy. Also,
while no marked improvement is forecastpaper business. CSXT's market position in lumber was aided by the addition
of several new lumber distribution centers.
The phosphates and fertilizer category experienced an 11% growth in
traffic as export phosphate demand,loads rose with increased foreign demand. The distance CSXT
hauls export shipments of fertilizer productsphosphate from Florida's Bone Valley to the Port of
Tampa is far less than that for domestic moves to the U.S. Midwest, leading to
lower revenue-per-carload comparisons.
Although merchandise traffic experienced significant gains in 1994,
CSXT anticipates continued strength in the principal markets it serves in the
U.S. industrial sector in 1995. Combined with selective price increases, a
modest improvement is expected as farmers
replenish fields following last year's flooding.in merchandise traffic and revenue in 1995.
CSXT undertook an effort to re-engineer key components of its service
delivery to meet customer needs better and enhance service reliability in 1994.
In the future, the unit hopes to strengthen traffic levels in the various
commodity groups by further satisfying customers through improved performance.
CSXT transportation operating expense for 1994 was $3.8$3.9 billion, ana 2%
increase of
1% from comparableover 1993 and 1992, expense and a decline of 1% from 1991 expense, excluding the previously mentioned 1992
productivity charges.charge. These results reflect the continuing efforts of the rail
unit to reduce expenses and control costs while retaining its customer focus.
Labor and fringe benefits expense continuedincreased 3% to decline, to $1.81$1.86 billion, from a level ofvs.
$1.8 billion in 1993 and $1.83 billion and $1.85 billion in 1992 and 1991, respectively, despite1992. Despite the negative impact ofincreased traffic
levels, which required a greater number of crew starts, associated with movingand the impact of a
larger proportion of merchandise traffic. The 1993 expense includes a 3% wage
increase awarded to most contract employees mid-year and also reflects a
decrease in employment levels due to implementation of two-member crews and
continued personnel reductions. A 4%
wage increase, is scheduled for mid-1994.
CSXT expects tocontrolled labor and fringe benefits expense. The company
will continue to decrease the size of its work forceimplement work-force reductions over the next few years.
CSXT estimated- 36 -
PAGE 37
As the average sizeimplementation of its traintwo-member crews for through, local
and yard trains to be 2.7 members at year-end. CSXT plans to lower itsextends throughout the rail
system, the average crew size for all trainscontinues to 2.3 overfall. At year-end 1994, the average
crew size was 2.5 members. In the next few years, through implementation
of smallerreductions in yard and local
crews will result in an average crew size of 2.25 members.
CSXT, as contemplateda participant in national bargaining, is actively engaged in
contract negotiations with rail labor organizations. CSXT seeks to improve the
future competitiveness of its labor force through these negotiations.
CSXT continued to reduce accidents and injuries in 1994, and it
remains one of the safest railroads in the industry. Reportable injuries to
employees were reduced 20% and train accidents fell 21% by year-end, helping
CSXT maintain one of the 1992highest rankings among Class I railroads. The company's
progress in safety not only continues to save lives, but increases the quality
and 1991
productivity charges.
- 37 -
PAGE 38
Materials, supplies and other expense, which includes the costreliability of maintenance, information services, management fees from CSX and personal
injuries, increased 4% over 1992 and decreased 1% from 1991 levels. The 1993
increase over 1992 was primarily the result of increased management fees from
CSX, partially offset by CSXT's intensiverail service while driving out unnecessary expense.
Performance Improvement Team (PIT)
program andinitiatives reduced expenses by more than
$350 million from 1991 through 1994. Besides shrinking the company's ongoing commitment to safety.
CSXT's PIT process has been responsible for marked reductions in the
expensecost base, of CSXT operations over the past two years and is expected to
contribute additional savings in 1994 and 1995. While shrinking expenses, this
program also has led to significanthelped conserve capital as improvements are realized in reliability,
performance and efficiency. Major strides have been made in locomotive and freight car
maintenance and repair, information technology, contract labor scheduling and
purchasing among otherefficiency throughout the system. All areas of rail activity. Specifically, through PIT
initiatives, CSXT reduced expenses by $147 millionoperations
and $116 million in 1993administration - from repair and 1992, respectively.maintenance of locomotives and freight cars
to purchases of office supplies - were targeted. Further savings of overmore than
$100 million each year arehave been targeted by CSXT for 1994 and 1995.
Fuel expense fell to $253 million from $262 million and $271 million
in 1992 and 1991, respectively. Fuel consumption decreased from levels in
earlier years, reflecting the level of operation and increased fuel efficiency.
In 1993, CSXT locomotives consumed 1.33 gallons of diesel fuel per thousand
gross ton miles, compared with 1.37 gallons in the prior year and 1.4 gallons in
1991. CSXT diesel fuel averaged 64 cents per gallon vs. 65 cents in 1992 and 68
cents in 1991, neteach of the CSX hedging program.
Building and equipment rent expense increased slightly from earliernext three years.
Depreciation expense increased slightly from earlier years as new
equipment was purchased and deployed in the business.
With continued effort throughout CSXT will continue to lower its expensecost base the
company anticipates only a slight increase in total operating expense1995 and beyond through
increased asset utilization, crew-size reductions, improved safety and continued
Performance Improvement Team savings.
CSXT's property additions for 1994 assuming modest improvements in traffic levels and no unusual operating
conditions.
Property additions for 1993 totaledincreased to $676 million from
1993's $569 million and 1992's $539 million. Expenditures for roadway
improvements totaled $404 million, or 60% of the total. CSXT's maintenance-of-
way program installed or replaced 289 miles of rail in 1994, compared with $539400
miles in both 1993 and 1992. The remaining rail property additions included $131
million for locomotives and $563$109 million for the years 1992 and 1991, respectively. Included in
the 1993 total was $323 million for roadway improvements, including 400 miles of
rail that were installed or replaced.
CSXT added a total of 75 new, fuel-efficient locomotives to its fleet
during the year at a cost of $101 million, bringing the total fleet to 2,810
locomotives compared with 2,965 and 3,123 for year-end 1992 and 1991,
respectively. At year-end 1993, the average age of the locomotive fleet was 14.3
years, reflecting the retirement of 230 older units from service.
CSXT's car fleet benefited from $73 million in new capital. Additional
capital was spent on terminals, technology and other equipment.
For 1994, CSXT projects an increase of approximately 10% in its
capital additions program. As in past years, the largest share of the total will
be directed to track and roadway improvements.
- 38 -
PAGE 39fleet.
Property Additions
---------------------
(Millions of Dollars)
Property Additions 1994 1993 1992 1991
- ------------------ ---- ---- ----
Merchandise Cars $105 $ 68 $ 45
$ 43
Coal Cars 4 5 4 10
---- ---- ----
Total Freight Cars 109 73 49 53
---- ---- ----
Locomotives 131 120 134
168
Roadway 404 323 306 327
Other Equipment and Properties 32 53 50 15
---- ---- ----
Total Property Additions $676 $569 $539 $563
==== ==== ====
- 37 -
PAGE 38
CSXT has embarked on a four-year programreduced its locomotive fleet size by 1% to acquire 300 locomotives,
with 80 of these to be delivered2,785 in 1994. Included will be 50 Dash-9-44CW direct
current (DC) powered and 250 alternating currentEighty
new locomotives were added to the fleet, including 30 alternating-current (AC)
locomotives, 197 of these
at 4,400 horsepower and 53 at 6,000 horsepower. The first of the AC units will
be delivered in mid-1994.locomotives. This new technological breakthrough for the railroad
industryAC technology, which provides substantially better
tractive effort, or pulling power, will allow CSXT to replace an average of two
older units in its existing fleet with each new unit. Remaining capitalThese AC locomotives are
the first of 250 fuel-efficient units to be delivered to CSXT through 1997.
In late 1994, CSXT resumed repairing and rebuilding freight cars at
its Raceland Car Shop in Kentucky. The facility plans to refurbish or rebuild
4,000 coal hopper cars in 1995. Notwithstanding this program, enhanced
utilization through improved car turn times will yield a net reduction in the
1994 budget has been earmarked foroverall car acquisitions,fleet.
CSXT is engaged in preliminary negotiations to obtain all its
telecommunication services from AT&T. The goal of this transaction would be to
provide CSXT with the strategic opportunity to obtain state-of-the-art
technology, equipment and a rail-barge ventureservices from AT&T, without diverting CSXT's capital
and management resources from its core business. The arrangement, if
consummated, would enable CSXT to transfer freight between
CSXT's rail territoryleverage technological enhancements as they
become available in the southeastern United Statesrapidly changing telecommunications industry. The
transaction could result in a significant future charge to cover the writedown
of certain telecommunications assets and ports along Mexico's
eastern coast.labor separation costs.
In 1995, CSXT expects to improve equipment utilization further and
increase capital expenditures by approximately 10%, the majority of which will
go to the Raceland car program.
- 3938 -
PAGE 4039
Financial Condition
Liquidity and Capital Resources
-------------------------------
Cash provided by operating activities totaled $630$896 million, a decreasean
increase of $95$266 million from 19921993 and an increase of $105$171 million from 1991.1992.
Cash provided by operating activities included an increase of $20 million for
1994, an increase of $6 million for 1993 and an increase of $200 million for
1992, and a decrease of $75 million for 1991, relating to the amount of accounts receivable sold. In addition, cash
provided by operating activities included payments for productivity and
restructuring charges of $129 million, $245 million and $353 million for 1994,
1993 and $72 million for 1993, 1992, and 1991, respectively. Excluding the effect of the sale of receivables and
the productivity charge payments, cash provided by operating activities would
have been $1,005 million in 1994, $869 million in 1993 and $878 million in 1992 and $672 million in 1991.1992.
Cash used by investing activities was $478$600 million which was $28$122
million lowerhigher than the $478 million used in 1993 and $94 million higher than
the $506 million used in 1992 and $83 million higher than the
$395 million used in 1991. Proceeds from the sale of RF&P Corporation stock of
$106 million in 1991 resulted in lower overall uses of cash in 1991 as compared
to 1993 and 1992.
Property additions of $676 million in 1994 increased $107 million from
$569 million in 1993, increased $30and $137 million from $539 million in 1992, and $6 million from $563 million in 1991. In the late
1980's, the company launched a major roadway, equipment and locomotive
improvement program. Completion of this program has allowed a return to a
normalized capital budget that assures the required level of routine
maintenance, customer service and safe operation.
Sale-leaseback transactions provided net cash of $37 million in 1991.
These transactions were focused primarily on improving the rail car fleet.
There were no sale-leaseback transactions in 1993 and 1992.
Cash used by financing activities decreased to $116 million in 1994
from $128 million in 1993 and decreased $142 million from $258 million in 1992 and increased from $86 million in 1991.1992.
The 19931994 decrease in cash used was primarily the result of lower repayments of
public and affiliated company debt.
Cash and cash equivalents increased $24$180 million during 19931994 to a
level of $272$452 million versus $248$272 million at the end of 19921993 and decreased $15increased $204
million over the 19911992 level of $287$248 million.
Working capital increased by $325$295 million to a year-end deficit of
$311 million in 1994, compared to $606 million in 1993 compared toand $931 million in 1992 and $773 million in 1991.
A working capital deficit is not unusual for CSXT and does not indicate a lack
of liquidity. CSXT maintains adequate current assets to satisfy current
liabilities when they are due and has sufficient financial resource capacity,
primarily from access to advances from CSX, to manage its day-to-day cash
requirements.
Environmental concerns have drawn considerable attention. CSXT, like
many American companies today, faces the challenge of dealing with this issue
and is addressing its environmental responsibilities and managing the related
expenditures. Environmental management is an important part of CSXT's strategic
planning, which includes promotion of policies and procedures that emphasize
environmental awareness throughout the company.
- 4039 -
PAGE 4140
The following financial ratios exclusive of the cumulative effect of
the change in accounting in 1991, are measures of the condition of CSXT
and its subsidiaries as of the respective year end:ends:
1994 1993 1992 1991
---- ---- ----
Current Ratio .7 .5 .4 .5
Debt-to-Total Capitalization Ratio 11.3% 13.7% 15.8% 16.4%
Return on Assets 4.9% 3.2% (0.2)% (1.1)%
Return on Equity 10.6% 7.4% (0.4)% (2.5)%
Ratio of Earnings to Fixed Charges 7.1X 4.8X 0.6X N/A0.6x
Excluding the impacts of the 1992 and 1991 productivity charges,charge, the 1992
measures would have been as follows:
1993 1992 1991
---- ----
----
Current Ratio .5 .4 .5
Debt-to-Total Capitalization Ratio 13.7% 14.5% 15.2%
Return on Assets 3.2% 4.3% 3.2%
Return on Equity 7.4% 9.5% 6.7%
Ratio of Earnings to Fixed Charges 4.8X 4.6X
3.6X
- 4140 -