The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:dilution.
Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock outstanding and common stock equivalents outstanding adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards which include long-term incentive awards,including performance units and employee stock options.
CSX Q3 2021 Form 10-Q p.10
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| CSX Q3 2017 Form 10-Q p.11
|
|
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2. Earnings Per Share, continued
Management'sShare Repurchases
In January 2019, the Company announced a $5 billion share repurchase program. During June 2021, this program was completed, and the Company began repurchasing shares under the $5 billion share repurchase program announced on October 21, 2020. Total repurchase authority remaining was $3.6 billion as of September 30, 2021. During third quarters and nine months ended 2021 and 2020, the Company engaged in the following repurchase activities:
| | | | | | | | | | | | | | | | | |
| Third Quarters | | Nine Months |
| 2021 | 2020 | | 2021 | 2020 |
Shares Repurchased (Millions) | 34 | | 2 | | | 74 | | 31 | |
Cost of Shares (Dollars in millions) | $ | 1,064 | | $ | 48 | | | $ | 2,316 | | $ | 664 | |
Share repurchases may be made through a variety of methods including, but not limited to, open market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and negotiated block purchases. The timing of share repurchases depends upon management's assessment of marketmarketplace conditions and other factors, guidesand the timing and volumeprogram remains subject to the discretion of repurchases.the Board of Directors. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the ASC,Accounting Standards Codification ("ASC"), the excess of repurchase price over par value is recorded in retained earnings. Generally,
Periodically, CSX enters into structured agreements for the repurchase of CSX shares. Upon execution of each agreement, the Company pays a fixed amount of cash in exchange for the right to receive either CSX stock or a predetermined amount of cash, including a premium. Shares acquired through these structured share repurchase agreements were recorded in common stock and retained earnings and are included in the share repurchases table above. Premiums received were not material. As a result of entering into and settling structured share repurchase agreements, the Company paid a net total of approximately $150 million and received approximately 5 million shares during the third quarter 2021 and paid a net total of approximately $378 million and received approximately 12 million shares during the nine months ended 2021. As of September 30, 2021, no such agreements were outstanding.
Dividend Increase
In February 2021, the Company's Board of Directors authorized an 8% increase in the quarterly cash dividend effective March 2021. The current split-adjusted quarterly dividend on the Company's common stock is only impacted by net earnings and dividends.$0.093 per common share. The dividend will be carried out to six decimal places to most closely approximate the $0.28 per share dividend amount prior to the 3-for-one stock split that occurred on June 28, 2021.
CSX Q3 2021 Form 10-Q p.11
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. Stock Plans and Share-Based Compensation
Under CSX's share-based compensation plans, awards consist of performance units, restricted stock awards,options, restricted stock units and restricted stock optionsawards for management and stock grants for directors. Awards granted under the various programs are determined and approved by the Compensation and Talent Management Committee of the Board of Directors or, in certain circumstances, byDirectors. Awards to the Chief Executive Officer forare approved by the full Board and awards to senior executives are approved by the Compensation and Talent Management Committee. In certain circumstances, the Chief Executive Officer or delegate approves awards to management employees other than senior executives. The Board of Directors approves awards granted to the Company'sCSX's non-management directors upon recommendation of the Governance and Sustainability Committee.
Share-based compensation expense for awards under share-based compensation plans and purchases made as part of the employee stock purchase plan is measured using the fair value of the award on the grant date and is recognized on a straight-line basis over the service period of the respective award.award or upon grant date to certain retirement-eligible employees whose agreements allow for continued vesting upon retirement. Forfeitures are recognized as they occur. Total pre-tax expense and income tax benefits associated with share-based compensation and its related income tax benefit isare shown in the table below. The year over year increase in expense related to performance unitsIncome tax benefits include impacts from option exercises and stock options is primarily due to modifications to the termsvesting of awards (see Equity Award Modificationsbelow) and higher expected award payouts.other equity awards.
| | | | | | | | | | | | | | | | | |
| Third Quarters | | Nine Months |
(Dollars in millions) | 2021 | 2020 | | 2021 | 2020 |
Share-Based Compensation Expense: | | | | | |
Performance Units | $ | 6 | | $ | 14 | | | 44 | | $ | 6 | |
Stock Options | 3 | | 3 | | | 13 | | 16 | |
Restricted Stock Units and Awards | 3 | | 2 | | | 10 | | 5 | |
Employee Stock Purchase Plan | 1 | | 1 | | | 3 | | 3 | |
Stock Awards for Directors | — | | — | | | 2 | | 2 | |
Total Share-Based Compensation Expense | $ | 13 | | $ | 20 | | | $ | 72 | | $ | 32 | |
Income Tax Benefit | $ | 4 | | $ | 6 | | | $ | 19 | | $ | 17 | |
CSX Q3 2021 Form 10-Q p.12
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
| | | | | | | | | | | | | |
| Third Quarters | | Nine Months |
(Dollars in millions) | 2017 | 2016 | | 2017 | 2016 |
| | | | | |
Share-Based Compensation Expense | | | | | |
Performance Units | $ | 3 |
| $ | 5 |
| | $ | 41 |
| $ | 9 |
|
Stock Options | 14 |
| 2 |
| | 47 |
| 5 |
|
Restricted Stock Units and Awards | 2 |
| 2 |
| | 11 |
| 8 |
|
Stock Awards for Directors | — |
| — |
| | 2 |
| 2 |
|
Total Share-Based Compensation Expense | $ | 19 |
| $ | 9 |
| | $ | 101 |
| $ | 24 |
|
Income Tax Benefit | $ | 7 |
| $ | 3 |
| | $ | 32 |
| $ | 9 |
|
NOTE 3. Stock Plans and Share-Based Compensation, continued
Long-term Incentive Plan
In February 2017,2021, the Company granted approximately 600566 thousand (split-adjusted) performance units to certain employees under a new long-term incentive plan ("LTIP") for the years 20172021 through 2019,2023, which was adopted under the CSX 2019 Stock and Incentive Award Plan.
Payouts of performance units for the cycle ending with fiscal year 20192023 will be based on the achievement of goals related to both operating ratioincome and return on assetsfree cash flow, in each case excluding non-recurring items as disclosed in the Company's financial statements. The average annual operating income growth percentage and cumulative operating ratio and average return on assetsfree cash flow measures over the plan period will each comprise 50% of the payout and will be measured independently of the other.
Grants were made in performance units, with each unit representing the right to receive one1 share of CSX common stock, and payouts will be made in CSX common stock. The payout range for participants will be between 0% and 200% of the target awards depending on Company performance against predetermined goals. Payouts for certain executive officers are subject to formulaic upward or downward adjustment by up to 30%25%, capped at an overall payout of 250%, based upon the Company's total shareholder return relative to specified comparable groups.groups over the performance period. Participants will receive stock dividend equivalents declared over the performance period based on the number of performance units paid upon vesting. Other immaterial grants of performance units were made during third quarter 2021. No grants were made during third quarter 2020. The fair values of the performance units awarded during the nine months ended 2021 and 2020 were primarily calculated using a Monte-Carlo simulation model with the following weighted-average assumptions:
| | | | | | | | | | | | | |
| | | Nine Months |
| | | | 2021 | 2020 |
| | | | | |
| | | | | |
Weighted-Average Assumptions Used: | | | | | |
Annual Dividend Yield | | | | N/A | N/A |
Risk-free Interest Rate | | | | 0.2 | % | 1.4 | % |
Annualized Volatility | | | | 33.6 | % | 24.5 | % |
Expected Life (in years) | | | | 2.9 | 2.9 |
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| CSX Q3 2017 Form 10-Q p.12
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. Share-Based Compensation, continued
Stock Options
Also, in In February 2017,2021, the Company granted approximately 1.3 million1,831 thousand (split-adjusted) stock options along with the corresponding LTIP. The fair value of stock options on the date of grant was $12.54 per option which was calculated using the Black-Scholes valuation model. StockThese stock options have beenwere granted with ten-year terms and vest over three years afterin equal installments each year on the dateanniversary of grant.the grant date. The exercise price for stock options granted equals the closing market price of the underlying stock on the date of grant. These awards are time-based and are not based upon attainment of performance goals. During third quarter 2021, there were additional immaterial grants of stock options. No options were granted during third quarter 2020.
CSX Q3 2021 Form 10-Q p.13
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. Stock Plans and Share-Based Compensation, continued
The fair values of all stock option awards during the quarters and nine months ended September 30, 2021 and September 30, 2020 were estimated at the grant date with the following weighted average assumptions:
| | | | | | | | | | | | | | | | | |
| Third Quarters | | Nine Months |
| 2021 | 2020 | | 2021 | 2020 |
Weighted-Average Grant Date Fair Value | $ | 8.86 | N/A | | $ | 7.94 | $ | 6.29 |
| | | | | |
Weighted-Average Assumptions Used: | | | | | |
Annual Dividend Yield | 1.2 | % | N/A | | 1.2 | % | 1.2 | % |
Risk-Free Interest Rate | 1.0 | % | N/A | | 0.7 | % | 1.4 | % |
Annualized Volatility | 30.7 | % | N/A | | 31.2 | % | 26.0 | % |
Expected Life (in years) | 6.3 | N/A | | 6.0 | 6.0 |
| | | | | |
Other Pricing Model Inputs: | | | | | |
Weighted-Average Grant Date Market Price of CSX Stock (strike price) | $ | 32.18 | N/A | | $ | 29.65 | $ | 26.49 |
Restricted Stock Units
Finally, in In February 2017,2021, the Company granted approximately 300490 thousand (split-adjusted) restricted stock units along with the corresponding LTIP. The restricted stock units vest three years after the date of grant. Participants will receive cashstock dividend equivalents on the unvestedvested shares during the restriction period.upon vesting. These awards are time-based and are not based upon CSX's attainment of performance goals.operational targets. Restricted stock units are paid out in CSX common stock on a 1-for-one basis. During third quarter 2021, there were additional immaterial grants of restricted stock units. For information related to the Company's other outstanding long-term incentive compensation, see CSX's most recent annual report on Form 10-K.
CEOEmployee Stock Option AwardPurchase Plan
In March 2017,May 2018, shareholders approved the 2018 CSX Employee Stock Purchase Plan (“ESPP”) for the benefit of Company granted 9employees. The Company registered 12 million (split-adjusted) shares of common stock optionsthat may be issued pursuant to this plan. Under the incoming CEOESPP, employees may contribute between 1% and 10% of base compensation, after-tax, to purchase up to $25,000 of market value CSX common stock per year at a fair value85% of $12.88 per option calculated using the Black-Scholes valuation model. These options were granted with a ten-year term and an exercise price equal to the closing market price on either the grant date or the last day of the underlying stock onsix-month offering period, whichever is lower. During the date of grant. Half of the options, or 4.5 million, will vest on the CEO's service anniversary in equal annual installments over four years. The other half will vest based on achievement of performance targets related to both operating ratiothird quarter and earnings before interest, taxes, depreciation and amortization adjusted for certain items.
Fair Value of All Stock Option Awards
No stock option awards were granted during third quarters 2017 and 2016. The fair values of all stock option awards during the nine months ended September 30, 2017, including those granted along with 2017 - 2019 LTIP2021 and September 30, 2020, the CEO stock option award, were estimated at the grant date withCompany issued the following weighted average assumptions:shares under this program:
| | | | | | | | | | | | | | | | | |
| Third Quarters | | Nine Months |
| 2021 | 2020 | | 2021 | 2020 |
Shares issued (in thousands) | 334 | | 360 | | | 730 | | 726 | |
Weighted average purchase price per share | $ | 24.93 | | $ | 19.76 | | | $ | 21.90 | | $ | 20.13 | |
CSX Q3 2021 Form 10-Q p.14
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| | | | | | | |
| | Nine Months |
| | 2017 | 2016 |
Weighted-average grant date fair value | | $ | 12.83 |
| $ | 4.68 |
|
| | | |
Stock options valuation assumptions: | | | |
Annual dividend yield | | 1.5 | % | 3.0 | % |
Risk-free interest rate | | 2.2 | % | 1.4 | % |
Annualized volatility | | 27.1 | % | 27.3 | % |
Expected life (in years) | | 6.3 |
| 6.5 |
|
| | | |
Other pricing model inputs: | | | |
Weighted-average grant-date market price of CSX stock (strike price) | | $ | 49.60 |
| $ | 24.13 |
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| CSX Q3 2017 Form 10-Q p.13
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. Share-Based Compensation, continued
Equity Award Modifications
The terms of performance units, restricted stock units and stock options granted as part of the Company's long-term share-based compensation plans typically require participants to be employed through the final day of the respective performance or vesting period as applicable, except in the case of death, disability or retirement. As part of an enhanced severance benefit under the management streamlining and realignment initiative discussed in Note 1, unvested performance units, restricted stock units and stock options for separated employees not eligible for retirement were permitted to vest on a pro-rata basis.
Additionally, the terms of unvested equity awards for the former CEO and President were modified prior to their retirements on March 6, 2017 to permit prorated vesting through May 31, 2018. The terms were modified in exchange for each agreeing to serve in an advisory capacity upon request until May 31, 2017, and waiving various rights and claims, including the cancellation of their respective change of control agreements with the Company.
Award modifications impacted approximately 70 employees and resulted in an increase to share-based compensation expense for revaluation of the affected awards of $31 million for the nine months ended September 30, 2017. No significant award modifications took place in third quarter 2017.
NOTE 4. Casualty, Environmental and Other Reserves
Casualty,Personal injury and environmental and other reserves are considered critical accounting estimates due to the need for significant management judgment. TheyCasualty, environmental and other reserves are provided for in the consolidated balance sheets as shown in the table below:below.
|
| | | | | | | | | | | | | | | | | | | |
| September 30, 2017 | | December 30, 2016 |
(Dollars in millions) | Current | Long-term | Total | | Current | Long-term | Total |
| | | | | | | |
Casualty: | | | | | | | |
Personal Injury | $ | 45 |
| $ | 120 |
| $ | 165 |
| | $ | 46 |
| $ | 124 |
| $ | 170 |
|
Occupational(a) | 4 |
| 55 |
| 59 |
| | 7 |
| 52 |
| 59 |
|
Total Casualty | 49 |
| 175 |
| 224 |
| | 53 |
| 176 |
| 229 |
|
Environmental | 43 |
| 46 |
| 89 |
| | 42 |
| 53 |
| 95 |
|
Other | 30 |
| 32 |
| 62 |
| | 20 |
| 30 |
| 50 |
|
Total | $ | 122 |
| $ | 253 |
| $ | 375 |
| | $ | 115 |
| $ | 259 |
| $ | 374 |
|
| |
(a)
| Occupational reserves include asbestos-related diseases and occupational injuries. |
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2021 | | December 31, 2020 |
(Dollars in millions) | Current | Long-term | Total | | Current | Long-term | Total |
| | | | | | | |
Casualty: | | | | | | | |
Personal Injury | $ | 44 | | $ | 82 | | $ | 126 | | | $ | 38 | | $ | 93 | | $ | 131 | |
Occupational | 7 | | 57 | | 64 | | | 11 | | 54 | | 65 | |
Total Casualty | 51 | | 139 | | 190 | | | 49 | | 147 | | 196 | |
Environmental (a) | 36 | | 72 | | 108 | | | 23 | | 53 | | 76 | |
Other (a) | 30 | | 41 | | 71 | | | 18 | | 24 | | 42 | |
Total | $ | 117 | | $ | 252 | | $ | 369 | | | $ | 90 | | $ | 224 | | $ | 314 | |
(a) The fair values of liabilities assumed as a result of the Company's acquisition of Quality Carriers on July 1, 2021, are included in environmental and other reserves as of September 30, 2021. See Note 12, Business Combinations.
These liabilities are accrued when probable and reasonably estimable and probable in accordance with the Contingencies Topic in the ASC. Actual settlements and claims received could differ, and final outcomes of these matters cannot be predicted with certainty. Considering the legal defenses currently available, the liabilities that have been recorded and other factors, it is the opinion of management that none of these items individually, when finally resolved, will have a material adverse effect on the Company's financial condition, results of operations or liquidity. Should a number of these items occur in the same period, however, their combined effect could be material in that particular period.
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| CSX Q3 2017 Form 10-Q p.14
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4. Casualty, Environmental and Other Reserves, continued
Casualty
Casualty reserves of $224$190 million and $229$196 million as of September 30, 20172021 and December 30, 2016,31, 2020, respectively, represent accruals for personal injury, occupational disease and occupational injury claims. TheBeginning June 1, 2021, the Company's self-insured retention amount for these claims is $50increased to $100 million per occurrence. Currently, no individual claim is expected to exceed the self-insured retention amount. In accordance with the Contingencies Topic in the ASC, to the extent the value of an individual claim exceeds the self-insured retention amount, the Company would present the liability on a gross basis with a corresponding receivable for insurance recoveries. These reserves fluctuate based upon the timing of payments as well as changes in estimate. Actual results may vary from estimates due to the number, type and severity of the injury, costs of medical treatments and uncertainties in litigation. Most of the Company's casualty claims relate to CSXT unless otherwise noted below.CSXT. Defense and processing costs, which historically have been insignificant and are anticipated to be insignificant in the future, are not included in the recorded liabilities.
Personal Injury
Personal injury reserves represent liabilities for employee work-related and third-party injuries. Work-related injuries for CSXT employees are primarily subject to the Federal Employers’ Liability Act (“FELA”). In addition to FELA liabilities, employees of other current or former CSX subsidiaries are covered by various state workers’ compensation laws, the Federal Longshore and Harbor Workers’ Compensation Program or the Maritime Jones Act.
CSXT retains an independent actuary to assist management in assessing the value of personal injury claims. An analysis is performed by the actuary quarterly and is reviewed by management. This analysis for the quarter resulteddid not result in an immateriala material adjustment to the personal injury reserve.reserve in the quarter ended September 30, 2021 or September 30, 2020. The methodology used by the actuary includes a development factor to reflect growth or reduction in the value of these personal injury claims. It isclaims based largely on CSXT's historical claims and settlement experience.
Occupational
Occupational reserves represent liabilities for occupational disease and injury claims. Occupational disease claims arise primarily from allegations of exposure to asbestos in the workplace. Occupational injury claims arise from allegations of exposure to certain other materials in the workplace, such as solvents, soaps, chemicals (collectively referred to as “irritants”) and diesel fuels (like exhaust fumes) or allegations of chronic physical injuries resulting from work conditions, such as repetitive stress injuries.
The greatest possible exposure to asbestos for employees resulted from work conducted in and around steam locomotive engines that were largely phased out beginning around the 1950s. Other types of exposures, however, including exposure from locomotive component parts and building materials, continued until these exposures were substantially eliminated by 1985. Diseases associated with asbestos typically have long latency periods (amount of time between exposure to asbestos and the onset of the disease) which can range from 10 to 40 years after exposure.
Management reviews asserted asbestos claims quarterly. Unasserted or incurred but not reported ("IBNR") asbestos claims are analyzed by a third-party specialist and reviewed by management annually. CSXT’s historical claim filings, settlement amounts, and dismissal rates are analyzed to determine future anticipated claim filing rates and average settlement values for asbestos claims reserves. The potentially exposed population is estimated by using CSXT’s employment records and industry data. From this analysis, the specialist estimates the IBNR claims liabilities.
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| CSX Q3 2017CSX Q3 2021 Form 10-Q p.15
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4. Casualty, Environmental and Other Reserves, continued
Occupational
Occupational reserves represent liabilities arising from allegations of exposure to certain materials in the workplace (such as solvents, soaps, chemicals and diesel fumes), past exposure to asbestos or allegations of chronic physical injuries resulting from work conditions (such as repetitive stress injuries). Beginning in second quarter 2020, the Company retains an independent actuary to analyze the Company’s historical claim filings, settlement amounts, and dismissal rates to assist in determining future anticipated claim filing rates and average settlement values. This analysis is performed by the actuary and reviewed by management quarterly. Previously, the quarterly analysis was performed by management. There were no material adjustments to the occupational reserve in the quarter ended September 30, 2021 or September 30, 2020.
Environmental
Environmental reserves were $89$108 million and $95$76 million as of September 30, 20172021 and December 30, 2016,31, 2020, respectively. The Company is a party to various proceedings related to environmental issues, including administrative and judicial proceedings involving private parties and regulatory agencies. The Company has been identified as a potentially responsible party at approximately 219240 environmentally impaired sites. Many of these are, or may be, subject to remedial action under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), also known as the Superfund Law, or similar state statutes. Most of these proceedings arose from environmental conditions on properties used for ongoing or discontinued railroad operations. A number of these proceedings, however, are based on allegations that the Company, or its predecessors, sent hazardous substances to facilities owned or operated by others for treatment, recycling or disposal. In addition, some of the Company's land holdings were leased to others for commercial or industrial uses that may have resulted in releases of hazardous substances or other regulated materials onto the property and could give rise to proceedings against the Company.
In any such proceedings, the Company is subject to environmental clean-up and enforcement actions under the Superfund Law, as well as similar state laws that may impose joint and several liability for clean-up and enforcement costs on current and former owners and operators of a site without regard to fault or the legality of the original conduct. These costs could be substantial.
In accordance with the Asset Retirement and Environmental Obligations Topic in the ASC, the Company reviews its role with respect to each site identified at least quarterly, giving consideration to a number of factors such as:
•type of clean-up required;
•nature of the Company's alleged connection to the location (e.g., generator of waste sent to the site or owner or operator of the site);
•extent of the Company's alleged connection (e.g., volume of waste sent to the location and other relevant factors); and
•number, connection and financial viability of other named and unnamed potentially responsible parties at the location.
CSX Q3 2021 Form 10-Q p.16
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4. Casualty, Environmental and Other Reserves, continued
Based on themanagement's review process, the Company hasamounts have been recorded amounts to cover contingent anticipated future environmental remediation costs with respect to each site to the extent such costs are reasonably estimable and probable. The recorded liabilities for estimated future environmental costs are undiscounted. The liability includes future costs for remediation and restoration of sites as well as any significant ongoing monitoring costs, but excludes any anticipated insurance recoveries. Payments related to these liabilities are expected to be made over the next several years. Environmental remediation costs are included in materials, suppliespurchased services and other on the consolidated income statement.statements.
Currently, the Company does not possess sufficient information to reasonably estimate the amounts of additional liabilities, if any, on some sites until completion of future environmental studies. In addition, conditions that are currently unknown could, at any given location, result in additional exposure, the amount and materiality of which cannot presently be reasonably estimated. Based upon information currently available, however, the Company believes its environmental reserves accurately reflect the estimated cost of remedial actions currently required.
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| CSX Q3 2017 Form 10-Q p.16
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4. Casualty, Environmental and Other Reserves, continued
Other
Other reserves of $62were $71 million and $50$42 million as of September 30, 20172021 and December 30, 2016, respectively,31, 2020, respectively. These reserves include liabilities for various claims, such as property, automobile and general liability. Also included in other reserves are longshoremen disability claims related to a previously owned international shipping business (these claims are in runoff) as well as claims for current port employees.
NOTE 5. Commitments and Contingencies
Purchase Commitments
CSXT has a commitment under a long-term maintenance program agreement that covers a portion of CSXT’s fleet of locomotives. The program costs are based on the maintenance cycle for each covered locomotive, which is determined by the asset's age and type. Expected future costs may change as required maintenance schedules are revised and locomotives are placed into or removed from service. Under CSXT’s current obligations, the agreement will expire no earlier than 2031. On August 9, 2017, the Company exercised certain rights under the agreement, which resulted in a reduction of the locomotive fleet covered from 50% as of December 30, 2016 to an estimated 34% of locomotives beginning August 2018. As a result, the total remaining payments decreased from approximately $5.0 billion at December 30, 2016 to an estimated $1.7 billion at September 30, 2017.
Insurance
The Company maintains numerous insurance programs with substantial limits for property damage, (which includesincluding resulting business interruption)interruption, and third-party liability. A certain amount of risk is retained by the Company on each ofinsurance program. Under its property insurance program, the property and liability programs. The Company has a $25retains all risk up to $100 million retention per occurrence for the non-catastrophic property program (such as a derailment)losses from floods and a $50named windstorms and $75 million retention per occurrence for other property losses. For third-party liability claims, the liability and catastrophic property programs (such as hurricanes and floods).Company retains all risk up to $100 million per occurrence. As CSX negotiates insurance coverage above its full self-retention amounts, it retains a percentage of risk at various layers of coverage. While the Company believes its insurance coverage is adequate, future claims could exceed existing insurance coverage or insurance may not continue to be available at commercially reasonable rates.
CSX Q3 2021 Form 10-Q p.17
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5. Commitments and Contingencies, continued
Legal
The Company is involved in litigation incidental to its business and is a party to a number of legal actions and claims, various governmental proceedings and private civil lawsuits, including, but not limited to, those related to fuel surcharge practices, tax matters, environmental and hazardous material exposure matters, FELA and labor claims by current or former employees, other personal injury or property claims and disputes and complaints involving certain transportation rates and charges. Some of the legal proceedings include claims for compensatory as well as punitive damages and others are, or are purported to be, class actions. While the final outcome of these matters cannot be reasonably determined,predicted with certainty, considering, among other things, the legal defenses available and liabilities that have been recorded along with applicable insurance, it is currently the opinion of management that none of these pending items is likely to have a material adverse effect on the Company's financial condition, results of operations or liquidity. An unexpected adverse resolution of one or more of these items, however, could have a material adverse effect on the Company's financial condition, results of operations or liquidity in that particular period.
The Company is able to estimate a range of possible loss for certain legal proceedings for which a loss is reasonably possible in excess of reserves established. The Company has estimated this range to be $2$3 million to $116$27 million in aggregate at September 30, 2017.2021. This estimated aggregate range is based upon currently available information and is subject to significant judgment and a variety of assumptions. Accordingly, the Company's estimate will change from time to time, and actual losses may vary significantly from the current estimate.
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| CSX Q3 2017 Form 10-Q p.17
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5. Commitments and Contingencies, continued
Fuel Surcharge Antitrust Litigation
In May 2007, class action lawsuits were filed against CSXT and three3 other U.S.-based Class I railroads alleging that the defendants' fuel surcharge practices relating to contract and unregulated traffic resulted from an illegal conspiracy in violation of antitrust laws. In November 2007, theThe class action lawsuits were consolidated into 1 case in federal court in the District of Columbia, where they are now pending. The suit seeks treble damages allegedly sustained by purported class members as well as attorneys' fees and other relief. Plaintiffs are expected to allege damages at least equal to the fuel surcharges at issue.
Columbia. In June 2012,2017, the District Court certified the case as aissued its decision denying class action. The decision was not a ruling on the merits of plaintiffs' claims, but rather a decision to allow the plaintiffs to seek to prove the case as a class. The defendant railroads petitionedcertification. On August 16, 2019, the U.S. Court of Appeals for the D.C. Circuit for permission to appealaffirmed the District Court's class certification decision. In August 2013, the D.C. Circuit issued a decision vacating the class certification decision and remanded theCourt’s ruling.
The consolidated case to the District Court to reconsider its class certification decision. On October 10, 2017, the District Court issued an order denyingis now moving forward without class certification. The District Court had delayed proceedings onAlthough a class was not certified, shippers other than those who brought the merits of the case pending the outcome of the class certification remand proceedings, and has not yet issuedoriginal lawsuit in 2007 must decide whether to bring their own individual claim against one or more railroads. Individual shipper claims filed to date have been consolidated into a further schedule in light of the order denying class certification.separate case.
CSXT believes that its fuel surcharge practices were arrived at and applied lawfully and that the case is without merit. Accordingly, the Company intends to defend itself vigorously. However, penalties for violating antitrust laws can be severe, and resolution of this matterthese matters individually or an unexpected adverse decision on the meritswhen aggregated could have a material adverse effect on the Company's financial condition, results of operations or liquidity in that particular period.
CSX Q3 2021 Form 10-Q p.18
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5. Commitments and Contingencies, continued
Environmental
CSXT is indemnifying Pharmacia LLC, (formerlyformerly known as Monsanto Company)Company, ("Pharmacia") for certain liabilities associated with real estate located in Kearny, New Jersey along the Lower Passaic River (the “Property”). The Property, which was formerly owned by Pharmacia, is now owned by CSXT. CSXT's indemnification and defense duties arise with respect to several matters. The U.S. Environmental Protection Agency ("EPA"), using its CERCLA authority, seeks cleanupthe investigation and removal costs and other damages associated with the presencecleanup of hazardous substances in the 17-mile Lower Passaic River Study Area (the "Study Area”). CSXT, on behalf of Pharmacia, and a significant number of other potentially responsible parties are together conducting a Remedial Investigation and Feasibility Study of the Study Area pursuant to an Administrative Settlement Agreement and Order on Consent with the EPA. Pharmacia’s share of responsibility, indemnified by CSXT, for the investigation and cleanup costs of the Study Area may be determined through various mechanisms including (a) an allocation and settlement with EPA; (b) litigation brought by EPA against non-settling parties; or (c) litigation among the responsible parties.
In March 2016, EPA issued its Record of Decision detailing the agency’s mandated remedial process for the lower 8 miles of the Study Area, which was basedArea. Approximately 80 parties, including Pharmacia, are participating in an EPA-directed allocation and settlement process to assign responsibility for the remedy selected for the lower 8 miles of the Study Area. CSXT is participating in the EPA-directed allocation and settlement process on a Focused Feasibility Study. EPA has estimated that it will take the potentially responsible parties approximately ten years to complete the work.behalf of Pharmacia. At a later date, EPA will select a remedy for the remainder of the Study Area and is expected to again seek the participation of private parties to implement the selected remedy using EPA’s CERCLA authority to compel such participation, if necessary.
CSXT is also defending and indemnifying Pharmacia with regard to the Property in litigation filed by Occidental Chemical Corporation ("Occidental"), which is seeking to recover various costs. These costs include costs for the remedial design of the lower 8 miles of the Study Area, as well as anticipated costs associated with the future remediation of the lower 8 miles of the Study Area and potentially the entire Study Area. Alternatively, Occidental seeks to compel some, or all of the defendants to participate in the remediation of the Study Area. Pharmacia is one of approximately 110 defendants in this federal lawsuit filed by Occidental on June 30, 2018.
CSXT is also defending and indemnifying Pharmacia in a cooperative natural resource damages assessment process related to the Property. Based on currently available information, the Company does not believe any indemnification or remediation costs potentially allocable to CSXT with respect to the Property and the Study Area would be material to the Company's financial condition, results of operations or liquidity.
CSX Q3 2021 Form 10-Q p.19
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| CSX Q3 2017 Form 10-Q p.18
|
|
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 6. Employee Benefit Plans
The Company sponsors defined benefit pension plans principally for salaried, management personnel. For employees hired priorBeginning in 2020, the CSX Pension Plan was closed to January 1, 2003, the plans provide eligible employees with retirement benefits based predominantly on years of service and compensation rates near retirement. For employees hired in 2003 or thereafter, benefits are determined based on a cash balance formula, which provides benefits by utilizing interest and pay credits based upon age, service and compensation.new participants.
In addition to these plans, the CompanyCSX also sponsors a post-retirement medical plan and a life insurance plan that provide certain benefits to full-time, salaried, managementeligible employees hired prior to January 1, 2003, upon their retirement if certain eligibility requirements are met. Eligible2003. Beginning in 2019, both the life insurance benefit and health savings account contributions made by the Company to eligible retirees who are ageyounger than 65 were eliminated for those retiring on or after January 1, 2019. Beginning in 2020, the employer-funded health reimbursement arrangements and life insurance benefit for eligible retirees 65 years or older (Medicare-eligible) are covered by a health reimbursement arrangement, which is an employer-funded account that can be used for reimbursement of eligible medical expenses. Eligible retirees younger than 65 years (non-Medicare eligible) are covered by a self-insured program partially funded by participating retirees. The life insurance plan is non-contributory.
The Company engages independentwere eliminated. Independent actuaries to compute the amounts of liabilities and expenses relating to these plans subject to the assumptions that the Company determines are appropriate based on historical trends, current market rates and future projections. These amounts are reviewed by management. The following table describes
Only the componentsservice cost component of expense / (income) related to net periodic benefit expense recordedcosts is included in labor and fringe expense on the consolidated income statement. All other components of net periodic benefit cost are included in other income - net.
|
| | | | | | | | | | | | | |
| Pension Benefits |
(Dollars in millions) | Third Quarters | | Nine Months |
| 2017 | 2016 | | 2017 | 2016 |
Service Cost | $ | 8 |
| $ | 12 |
| | $ | 28 |
| $ | 36 |
|
Interest Cost | 23 |
| 29 |
| | 69 |
| 89 |
|
Expected Return on Plan Assets | (43 | ) | (39 | ) | | (128 | ) | (118 | ) |
Amortization of Net Loss | 10 |
| 12 |
| | 31 |
| 36 |
|
Net Periodic Benefit Cost | $ | (2 | ) | $ | 14 |
| | $ | — |
| $ | 43 |
|
Special Termination Benefits - Management Workforce Reduction/Curtailment | — |
| — |
| | 57 |
| — |
|
Total Expense | $ | (2 | ) | $ | 14 |
| | $ | 57 |
| $ | 43 |
|
| | | | | |
| Other Post-retirement Benefits |
(Dollars in millions) | Third Quarters | | Nine Months |
| 2017 | 2016 | | 2017 | 2016 |
Service Cost | $ | — |
| $ | — |
| | $ | 1 |
| $ | 1 |
|
Interest Cost | 2 |
| 3 |
| | 6 |
| 9 |
|
Amortization of Net Loss | — |
| 1 |
| | — |
| 2 |
|
Net Periodic Benefit Cost | $ | 2 |
| $ | 4 |
| | $ | 7 |
| $ | 12 |
|
Special Termination Benefits - Management Workforce Reduction/Curtailment | — |
| — |
| | 13 |
| — |
|
Total Expense | $ | 2 |
| $ | 4 |
| | $ | 20 |
| $ | 12 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Pension Benefits Cost |
| Third Quarters | | Nine Months |
(Dollars in millions) | 2021 | | 2020 | | 2021 | | 2020 |
Service Cost Included in Labor and Fringe | $ | 10 | | | $ | 10 | | | $ | 28 | | | $ | 30 | |
| | | | | | | |
Interest Cost | 13 | | | 20 | | | 40 | | | 61 | |
Expected Return on Plan Assets | (46) | | | (43) | | | (139) | | | (130) | |
Amortization of Net Loss | 18 | | | 15 | | | 55 | | | 43 | |
Total Included in Other Income - Net | (15) | | | (8) | | | (44) | | | (26) | |
| | | | | | | |
Net Periodic Benefit (Credit)/Cost | $ | (5) | | | $ | 2 | | | $ | (16) | | | $ | 4 | |
| | | | | | | |
| | | | | | | |
| Other Post-retirement Benefits Cost |
| Third Quarters | | Nine Months |
(Dollars in millions) | 2021 | | 2020 | | 2021 | | 2020 |
Service Cost Included in Labor and Fringe | $ | 1 | | | $ | — | | | $ | 1 | | | $ | 1 | |
| | | | | | | |
Interest Cost | — | | | 1 | | | 1 | | | 2 | |
Amortization of Prior Service Credits | (2) | | | (2) | | | (6) | | | (5) | |
Total Included in Other Income - Net | (2) | | | (1) | | | (5) | | | (3) | |
| | | | | | | |
Net Periodic Benefit Credit | $ | (1) | | | $ | (1) | | | $ | (4) | | | $ | (2) | |
| | | | | | | |
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| CSX Q3 2017 Form 10-Q p.19
|
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 6. Employee Benefit Plans, continued
As a result of the management workforce reductions in 2017, charges were incurred related to special termination benefits and curtailment costs. (For additional information regarding the management workforce reductions, see Note 1, Nature of Operations and Significant Accounting Policies.) In first quarter 2017, the Company remeasured the other post-retirement benefits obligation and recorded a curtailment loss of $13 million in restructuring charge on the income statement. The remeasurement did not have a material impact on the other post-retirement benefits obligation. In connection with this remeasurement, the effective discount rate assumption was updated to 3.59% from 3.71%.
In the second quarter of 2017, the Company remeasured the pension benefits obligation and pension plan assets and recorded a curtailment loss of $4 million in restructuring charge on the income statement. This remeasurement resulted in a decrease to the liabilities for pension benefits of approximately $86 million and a corresponding decrease to accumulated other comprehensive loss. In connection with this remeasurement, the effective discount rate assumption was updated to 3.94% from 4.08%. There were no other changes to assumptions used to value pension benefits obligation and expense.
Qualified pension plan obligations are funded in accordance with regulatory requirements and with an objective of meeting or exceeding minimum funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments. No contributions to the Company's qualified pension plans are expected in 2017.2021.
CSX Q3 2021 Form 10-Q p.20
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 7. Debt and Credit Agreements
Total activity related to long-term debt as of the end of third quarter 20172021 is shown in the table below. For fair value information related to the Company's long-term debt, see Note 9,10, Fair Value Measurements.
| | | | | | | | | | | |
(Dollars in millions) | Current Portion | Long-term Portion | Total |
Long-term Debt as of December 31, 2020 | $ | 401 | | $ | 16,304 | | $ | 16,705 | |
2021 Activity: | | | |
| | | |
Long-term Debt Repaid | (390) | | — | | (390) | |
Reclassifications | 175 | | (175) | | — | |
Finance Lease Obligations and Debt Assumed (a) | 25 | | 43 | | 68 | |
Discount, Premium and Other Activity | — | | 10 | | 10 | |
| | | |
Long-term Debt as of September 30, 2021 | $ | 211 | | $ | 16,182 | | $ | 16,393 | |
|
| | | | | | | | | |
(Dollars in millions) | Current Portion | Long-term Portion | Total |
Long-term debt as of December 30, 2016 | $ | 331 |
| $ | 10,962 |
| $ | 11,293 |
|
2017 activity: | | | |
Long-term debt issued | — |
| 850 |
| 850 |
|
Long-term debt repaid | (332 | ) | — |
| (332 | ) |
Reclassifications | 20 |
| (20 | ) | — |
|
Discount, premium and other activity |
| (4 | ) | (4 | ) |
Long-term debt as of September 30, 2017 | $ | 19 |
| $ | 11,788 |
| $ | 11,807 |
|
(a) In third quarter 2021, finance lease obligations and debt were assumed related to the Company's acquisition of Quality Carriers on July 1, 2021. See Note 12, Business Combinations.
Debt IssuanceInterest Rate Derivatives
In May 2017, CSX issuedOn both April 29, 2020, and July 9, 2020, the Company executed a forward starting interest rate swap with a notional value of $250 million for an aggregate notional value of $500 million. These swaps were effected to hedge the benchmark interest rate associated with future interest payments related to the anticipated refinancing of $850 million of 3.25% notes due in 2027. These notes are includedIn accordance with the Derivatives and Hedging Topic in the ASC, the Company has designated these swaps as cash flow hedges. As of September 30, 2021 and December 31, 2020, the asset value of the forward starting interest rate swaps was $116 million and $80 million, respectively, and was recorded in other long-term assets on the consolidated balance sheets under long-term debtsheet.
Unrealized gains or losses associated with changes in the fair value of the hedge are recorded net of tax in accumulated other comprehensive income (“AOCI”) on the consolidated balance sheet. Unless settled early, the swaps will expire in 2027 and may be redeemed by the Company at any time. The net proceedsunrealized gain or loss in AOCI will be usedrecognized in earnings as an adjustment to interest expense over the same period during which the hedged transaction affects earnings. Unrealized amounts, recorded net of tax in other comprehensive income, related to the hedge were gains of$7 million and $25 million for general corporate purposes, which may include repurchasesthird quarters ended 2021 and 2020 and gains of CSX's common stock, capital investment, working capital requirements, improvement in productivity$28 million and other cost reductions at CSX’s major transportation units.$34 million for the nine months 2021 and 2020, respectively.
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| CSX Q3 2017 Form 10-Q p.20
|
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 7. Debt and Credit Agreements, continued
Credit Facility
CSX has a $1$1.2 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This facility allows same-day borrowings at floating interest rates, based on LIBOR or an agreed-upon replacement reference rate, plus a spread that depends upon CSX's senior unsecured debt ratings. This facility expires in May 2020,March 2024, and as of the date of this filing,at September 30, 2021, the Company hashad no outstanding balances under this facility. The facility allows borrowings at floating (LIBOR-based) interest rates, plus a spread, depending upon CSX's senior unsecured debt ratings. LIBOR is the London Interbank Offered Rate which is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds.
Commitment fees and interest rates payable under the facility were similar to fees and rates available to comparably rated investment-grade borrowers. As of third quarter 2017,2021, CSX was in compliance with all covenant requirements under this facility.
Receivables Securitization FacilityCSX Q3 2021 Form 10-Q p.21
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 7. Debt and Credit Agreements, continued
Commercial Paper
Under its commercial paper program, which is backed by the revolving credit facility, the Company may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $1.0 billion outstanding at any one time. Proceeds from issuances of the notes are expected to be used for general corporate purposes. At September 30, 2021, the Company had no outstanding debt under the commercial paper program.
NOTE 8. Revenues
The Company’s revenues are primarily derived from the transportation of freight as performance obligations that arise from its contracts with customers are satisfied. The following table presents the Company’s revenues disaggregated by market as this best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors:
| | | | | | | | | | | | | | | | | |
| Third Quarters | | Nine Months |
(Dollars in millions) | 2021 | 2020 | | 2021 | 2020 |
| | | | | |
Chemicals | $ | 624 | | $ | 566 | | | $ | 1,810 | | $ | 1,723 | |
Agricultural and Food Products | 343 | | 335 | | | 1,062 | | 1,011 | |
Forest Products(a) | 231 | | 209 | | | 684 | | 625 | |
Automotive | 209 | | 271 | | | 661 | | 645 | |
Metals and Equipment | 206 | | 159 | | | 596 | | 500 | |
Minerals | 162 | | 144 | | | 439 | | 405 | |
Fertilizers(a) | 106 | | 93 | | | 350 | | 303 | |
Total Merchandise | 1,881 | | 1,777 | | | 5,602 | | 5,212 | |
| | | | | |
Intermodal | 509 | | 445 | | | 1,488 | | 1,226 | |
| | | | | |
Coal | 460 | | 330 | | | 1,267 | | 1,022 | |
| | | | | |
Trucking(b) | 200 | | — | | | 200 | | — | |
| | | | | |
Other | 242 | | 96 | | | 538 | | 298 | |
| | | | | |
Total | $ | 3,292 | | $ | 2,648 | | | $ | 9,095 | | $ | 7,758 | |
(a) Effective first quarter 2021, changes were made in the categorization of certain lines of business, impacting Forest Products and Fertilizers. The impacts were not material and prior periods have been reclassified to conform to the current presentation.
(b) Effective third quarter 2021, Trucking revenue is comprised of revenue from the operations of Quality Carriers, which was acquired by CSX effective July 1, 2021.
Revenue Recognition
The Company hasgenerates revenue from freight billings under contracts with customers generally on a rate per carload, container or ton-basis based on length of haul and commodities carried. The Company’s performance obligation arises when it receives a bill of lading (“BOL”) to transport a customer's commodities at a negotiated price contained in a transportation services agreement or a publicly disclosed tariff rate. Once a BOL is received, a contract is formed whereby the parties are committed to perform, collectability of consideration is probable and the rights of the parties, shipping terms and conditions, and payment terms are identified. A customer may submit several BOLs for transportation services at various times throughout a service agreement term but each shipment represents a distinct service that is a separately identified performance obligation.
CSX Q3 2021 Form 10-Q p.22
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 8. Revenues, continued
The average transit time to complete a rail shipment is between 2 to 8 days depending on market. Payments for transportation services are normally billed once a BOL is received and are generally due within 15 days after the invoice date. The Company recognizes revenue over transit time of freight as it moves from origin to destination. Revenue for services started but not completed at the reporting date is allocated based on the relative transit time in each reporting period, with the portion allocated for services subsequent to the reporting date considered remaining performance obligations.
The certain key estimates included in the recognition and measurement of revenue and related accounts receivable are as follows:
•Revenue associated with shipments in transit is recognized ratably over transit time and is based on average cycle times to move commodities and products from their origin to their final destination or interchange;
•Adjustments to revenue for billing corrections and billing discounts;
•Adjustments to revenue for overcharge claims filed by customers, which are based on historical payments to customers for rate overcharges as a percentage of total billing; and
•Incentive-based refunds to customers, which are primarily volume-related, are recorded as a reduction to revenue on the basis of the projected liability (this estimate is based on historical activity, current volume levels and forecasted future volume).
Revenue related to interline transportation services that involve the services of another party, such as another railroad, is reported on a net basis. The portion of the gross amount billed to customers that is remitted by the Company to another party is not reflected as revenue.
Effective third quarter 2021, trucking revenue includes revenue from the operations of Quality Carriers. This revenue is mostly comprised of truck shipments of chemicals and is recorded ratably over transit time.
Other revenue is recorded upon completion of the service and is comprised of revenue from regional subsidiary railroads and incidental charges, including demurrage, switching, and intermodal storage and equipment usage. Revenue from regional subsidiary railroads includes shipments by railroads that the Company does not directly operate. Demurrage represents charges assessed when freight cars are held by a customer beyond a specified period of time. Switching represents charges assessed when a railroad switches cars for a customer or another railroad. Intermodal storage represents charges for customer storage of containers at an intermodal terminal or ramp facility beyond a specified period of time.
During the third quarters and nine months ended 2021 and 2020, revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price) was not material.
Remaining Performance Obligations
Remaining performance obligations represent the transaction price allocated to future reporting periods for freight services started but not completed at the reporting date. This includes the unearned portion of billed and unbilled amounts for cancellable freight shipments in transit. The Company expects to recognize the unearned portion of revenue for freight services in transit within one week of the reporting date. As of September 30, 2021, remaining performance obligations were not material.
CSX Q3 2021 Form 10-Q p.23
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 8. Revenues, continued
Contract Balances and Accounts Receivable
The timing of revenue recognition, billings and cash collections results in accounts receivable and customer advances and deposits (contract liabilities) on the consolidated balance sheets. Contract assets, contract liabilities and deferred contract costs recorded on the consolidated balance sheet as of September 30, 2021, were not material.
The Company’s accounts receivable - net consists of freight and non-freight receivables, securitization facility withreduced by an allowance for credit losses.
| | | | | | | | |
(Dollars in millions) | September 30, 2021 | December 31, 2020 |
| | |
Freight Receivables | $ | 950 | | $ | 716 | |
Freight Allowance for Credit Losses | (14) | | (16) | |
Freight Receivables, net | 936 | | 700 | |
| | |
Non-Freight Receivables | 402 | | 224 | |
Non-Freight Allowance for Credit Losses | (12) | | (12) | |
Non-Freight Receivables, net | 390 | | 212 | |
Total Accounts Receivable, net | $ | 1,326 | | $ | 912 | |
Freight receivables include amounts earned, billed and unbilled, and currently due from customersfor transportation-related services. Non-freight receivables include amounts billed and unbilled and currently due related to government reimbursement receivables and other non-revenue receivables. At September 30, 2021, non-freight receivables include a three-year term scheduled$168 million receivable related to expire in September 2019.the conveyance of an easement to the Commonwealth of Virginia. See Note 1, Nature of Operations and Significant Accounting Policies, for more details about this transaction. The purpose of this facility isCompany maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an alternative to commercial paperassessment of risk characteristics, historical payment experience, and a low cost sourcethe age of short-term liquidity of up to $200 million, dependingoutstanding receivables adjusted for forward-looking economic conditions as necessary.Credit losses recognized on eligible receivables balances. As of the date of this filing,Company’s accounts receivable were not material in the Company has no outstanding balances under this facility.third quarters or nine months ended 2021 and 2020.
NOTE 8.9. Income Taxes
There have been no material changes to the balance of unrecognized tax benefits reported at December 30, 2016.31, 2020.
CSX Q3 2021 Form 10-Q p.24
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 9.10. Fair Value Measurements
The Financial Instruments Topic in the ASC requiresdisclosures about fair value of financial instruments in annual reports as well as in quarterly reports. For CSX, this statement applies to certain investments, long-term debt and long-term debt.interest rate derivatives. Disclosure of the fair value of pension plan assets is only required annually. Also, this rule clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.
Various inputs are considered when determining the value of the Company's investments, pension plan assets, long-term debt and long-term debt.interest rate derivatives. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.
•Level 1 - observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets;
•Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.); and
•Level 3 - significant unobservable inputs (including the Company's own assumptions about the assumptions market participants would use in determining the fair value of investments).
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| CSX Q3 2017 Form 10-Q p.21
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 9. Fair Value Measurements, continued
The valuation methods described below may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Investments
The Company's investment assets, valued with assistance from a third-party trustee, consist of certificates of deposits, commercial paper, corporate bonds and government securities and are carried at fair value on the consolidated balance sheet per the Fair Value Measurements and Disclosures Topic in theASC. ThereThese assets are several valuation methodologies used for those assets as described below.
Certificates of Deposit and Commercial Paper (Level 2): Valued at amortized cost, which approximates fair value; and
Corporate Bonds and Government Securities (Level 2): Valuedvalued using broker quotes that utilize observable market inputs.
The Company's investment assets are carried at fair value on the consolidated balance sheets as summarized in the following table. All of the inputs used to determine the fair value of the Company's investments are Level 2 inputs.
The amortized cost basis of these investments was $186 million and $500 million as of September 30, 2017 and December 30, 2016, respectively.
|
| | | | | | | |
(Dollars in Millions) | September 30, 2017 | | December 30, 2016 |
Certificates of Deposit and Commercial Paper | $ | 100 |
| | $ | 415 |
|
Corporate Bonds | 60 |
| | 63 |
|
Government Securities | 29 |
| | 22 |
|
Total investments at fair value | $ | 189 |
| | $ | 500 |
|
These investments haveCompany's investment assets are summarized in the following maturities:table.
| | | | | | | | |
(Dollars in Millions) | September 30, 2021 | December 31, 2020 |
| | |
| | |
Corporate Bonds | $ | 65 | | $ | 68 | |
Government Securities | 28 | | 33 | |
| | |
Total investments at fair value | $ | 93 | | $ | 101 | |
| | |
Total investments at amortized cost | $ | 84 | | $ | 89 | |
CSX Q3 2021 Form 10-Q p.25
|
| | | | | | | |
(Dollars in millions) | September 30, 2017 | | December 30, 2016 |
Less than 1 year | $ | 113 |
| | $ | 417 |
|
1 - 2 years | 5 |
| | 12 |
|
2 - 5 years | 10 |
| | 4 |
|
Greater than 5 years | 61 |
| | 67 |
|
Total investments at fair value | $ | 189 |
| | $ | 500 |
|
|
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| CSX Q3 2017 Form 10-Q p.22
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CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 9.10. Fair Value Measurements, continued
These investments have the following maturities:
| | | | | | | | | | | |
(Dollars in millions) | September 30, 2021 | | December 31, 2020 |
Less than 1 year | $ | 3 | | | $ | 2 | |
1 - 5 years | 28 | | | 22 | |
5 - 10 years | 14 | | | 23 | |
Greater than 10 years | 48 | | | 54 | |
Total investments at fair value | $ | 93 | | | $ | 101 | |
Long-term Debt
Long-term debt is reported at carrying amount on the consolidated balance sheets and is the Company's only financial instrument with fair values significantly different from their carrying amounts. The majority of the Company's long-term debt is valued with assistance from an independenta third party adviser that utilizes closing transactions, market quotes or market values of comparable debt. For those instruments not valued by the independent adviser,third party, the fair value has been estimated by applying market rates of similar instruments to the scheduled contractual debt payments and maturities. These market rates are provided by the same independent adviser.third party. All of the inputs used to determine the fair value of the Company's long-term debt are Level 2 inputs.
The fair value of outstanding debt fluctuates with changes in a number of factors. Such factors include, but are not limited to, interest rates, market conditions, credit ratings, values of similar financial instruments, size of the transaction, cash flow projections and comparable trades. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The fair value of a company's debt is a measure of its current value under present market conditions. It does not impact the financial statements under current accounting rules.
The fair value and carrying value of the Company's long-term debt is as follows:
| | | | | | | | | | | |
(Dollars in millions) | September 30, 2021 | | December 31, 2020 |
Long-term Debt (Including Current Maturities): | | | |
Fair Value | $ | 19,654 | | | $ | 21,076 | |
Carrying Value | 16,393 | | | 16,705 | |
Interest Rate Derivatives
The Company’s forward starting interest rate swaps are carried at fair value and valued with assistance from a third party based upon pricing models using inputs observed from actively quoted markets. All of the inputs used to determine the fair value of the swaps are Level 2 inputs. The fair value of the Company’s forward starting interest rate swap asset was $116 million and $80 million as of September 30, 2021 and December 31, 2020, respectively. See Note 7, Debt and Credit Agreements, for further information.
CSX Q3 2021 Form 10-Q p.26
|
| | | | | | | |
(Dollars in millions) | September 30, 2017 | | December 30, 2016 |
Long-term Debt (Including Current Maturities): | | | |
Fair Value | $ | 13,082 |
| | $ | 12,096 |
|
Carrying Value | 11,807 |
| | 11,293 |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 10.11. Other Comprehensive Income (Loss)
CSX reports comprehensive earnings or loss in accordance with the Comprehensive Income Topic in the ASC in the Consolidated Comprehensive Income Statement. Total comprehensive earnings are defined as all changes in shareholders' equity during a period, other than those resulting from investments by and distributions to shareholders (e.g. issuance of equity securities and dividends). Generally, for CSX, total comprehensive earnings equal net earnings plus or minus adjustments for pension and other post-retirement liabilities.liabilities as well as other adjustments. Total comprehensive earnings represent the activity for a period net of tax and were $467$985 million and $465$770 million for third quarters 2021 and $1.42020 and $2.9 billion and $1.3$2.1 billion for the nine months 20172021 and 2016,2020, respectively.
While total comprehensive earnings is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income, net of tax, as of the balance sheet date. For CSX, AOCI is primarily the cumulative balance related to pension and other post-retirement benefit adjustments, interest rate derivatives and CSX's share of AOCI of equity method investees.
|
| | |
| CSX Q3 2017 Form 10-Q p.23
|
|
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 10. Other Comprehensive Income (Loss), continued
Changes in the AOCI balance by component are shown in the table below.following table. Amounts reclassified in pension and other post-employment benefits to net earnings relate to the amortization of actuarial losses and are included in labor and fringeother income - net on the consolidated income statements. See Note 6, Employee Benefit Plans, for further information. Interest rate derivatives consist of forward starting interest rate swaps classified as cash flow hedges. See Note 7, Debt and Credit Agreements, for further information. Other primarily represents CSX's share of AOCI of equity method investees. Amounts reclassified in other to net earnings are included in materials, suppliespurchased services and other or equipment and other rents on the consolidated income statements.
| | | | | | | | | | | | | | |
| Pension and Other Post-Employment Benefits | Interest Rate Derivatives | Other | Accumulated Other Comprehensive Income (Loss) |
(Dollars in millions) | | | | |
Balance December 31, 2020, Net of Tax | $ | (598) | | $ | 62 | | $ | (62) | | $ | (598) | |
Other Comprehensive Income (Loss) | | | | |
Income Before Reclassifications | — | | 36 | | — | | 36 | |
Amounts Reclassified to Net Earnings | 50 | | — | | (2) | | 48 | |
Tax Expense | (12) | | (8) | | — | | (20) | |
Total Other Comprehensive Income | 38 | | 28 | | (2) | | 64 | |
Balance September 30, 2021, Net of Tax | $ | (560) | | $ | 90 | | $ | (64) | | $ | (534) | |
CSX Q3 2021 Form 10-Q p.27
|
| | | | | | | | | |
| Pension and Other Post-Employment Benefits | Other | Accumulated Other Comprehensive Income (Loss) |
(Dollars in millions) | | | |
Balance December 30, 2016, Net of Tax | $ | (580 | ) | $ | (60 | ) | $ | (640 | ) |
Other Comprehensive Income (Loss) | | | |
Income Before Reclassifications | 86 |
| 2 |
| 88 |
|
Amounts Reclassified to Net Earnings | 33 |
| 2 |
| 35 |
|
Tax Expense | (43 | ) | (1 | ) | (44 | ) |
Total Other Comprehensive Income | 76 |
| 3 |
| 79 |
|
Balance September 30, 2017, Net of Tax | $ | (504 | ) | $ | (57 | ) | $ | (561 | ) |
NOTE 11. Summarized Consolidating Financial Data
In 2007, CSXT, a wholly-owned subsidiary of CSX Corporation, sold secured equipment notes maturing in 2023 in a registered public offering. CSX has fully and unconditionally guaranteed the notes. In connection with the notes, the Company is providing the following condensed consolidating financial information in accordance with SEC disclosure requirements. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation and the allocation of certain expenses of CSX incurred for the benefit of its subsidiaries. Condensed consolidating financial information for the obligor, CSXT, and parent guarantor, CSX, is shown in the following tables.
|
| | |
| CSX Q3 2017 Form 10-Q p.24
|
|
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 12. Business Combinations
NOTE 11.Summarized Consolidating Financial Data, continued
Acquisition of Quality Carriers, Inc.
On July 1, 2021, the Company completed its acquisition of Quality Carriers, the largest provider of bulk liquid chemicals truck transportation in North America, for $546 million in cash, subject to certain customary purchase price adjustments. Through a network of over 100 company-owned and affiliate terminals and facilities in key locations throughout the United States, Canada and Mexico, Quality Carriers provides transportation services to many of the leading chemical producers and shippers in North America. The results of Quality Carriers' operations and its cash flows were consolidated prospectively. |
| | | | | | | | | | | | |
Consolidating Income Statements |
(Dollars in millions) |
Third Quarter 2017 | CSX Corporation | CSX Transportation | Eliminations and Other | Consolidated |
Revenue | $ | — |
| $ | 2,725 |
| $ | 18 |
| $ | 2,743 |
|
Expense | (129 | ) | 2,025 |
| (29 | ) | 1,867 |
|
Operating Income | 129 |
| 700 |
| 47 |
| 876 |
|
| | | | |
Equity in Earnings of Subsidiaries | 472 |
| — |
| (472 | ) | — |
|
Interest (Expense) / Benefit | (147 | ) | (3 | ) | 18 |
| (132 | ) |
Other Income / (Expense) - Net | 1 |
| 13 |
| (8 | ) | 6 |
|
| | | | |
Earnings Before Income Taxes | 455 |
| 710 |
| (415 | ) | 750 |
|
Income Tax Benefit / (Expense) | 4 |
| (277 | ) | (18 | ) | (291 | ) |
Net Earnings | $ | 459 |
| $ | 433 |
| $ | (433 | ) | $ | 459 |
|
| | | | |
Total Comprehensive Earnings | $ | 467 |
| $ | 433 |
| $ | (433 | ) | $ | 467 |
|
| | | | |
Third Quarter 2016 | CSX Corporation | CSX Transportation | Eliminations and Other | Consolidated |
Revenue | $ | — |
| $ | 2,691 |
| $ | 19 |
| $ | 2,710 |
|
Expense | (63 | ) | 1,960 |
| (28 | ) | 1,869 |
|
Operating Income | 63 |
| 731 |
| 47 |
| 841 |
|
| | | | |
Equity in Earnings of Subsidiaries | 505 |
| 1 |
| (506 | ) | — |
|
Interest (Expense) / Benefit | (141 | ) | (7 | ) | 9 |
| (139 | ) |
Other Income / (Expense) - Net | — |
| 9 |
| 4 |
| 13 |
|
| | | | |
Earnings Before Income Taxes | 427 |
| 734 |
| (446 | ) | 715 |
|
Income Tax (Expense) / Benefit | 28 |
| (268 | ) | (20 | ) | (260 | ) |
Net Earnings | $ | 455 |
| $ | 466 |
| $ | (466 | ) | $ | 455 |
|
| | | | |
Total Comprehensive Earnings | $ | 465 |
| $ | 467 |
| $ | (467 | ) | $ | 465 |
|
The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805, Business Combinations. The allocation of the purchase price to assets acquired and liabilities assumed is based upon preliminary information and is subject to change as additional information becomes available and as certain tax returns are filed. Any adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The preliminary allocation of total consideration to the fair values of the acquired assets and liabilities of Quality Carriers is summarized in the table below.
|
| | | | |
(Dollars in millions) | CSX Q3 2017 Form 10-Q p.25
July 1, 2021 |
Assets Acquired: |
|
Cash and Cash Equivalents | $ | 3 | |
Accounts Receivable, net | 113 | |
Properties and Equipment, net | 225 | |
Goodwill | 200 | |
Intangible Assets | 190 | |
Other Assets | 11 | |
Total Assets Acquired | $ | 742 | |
Liabilities Assumed: | |
Accounts Payable and Accrued Liabilities | 48 | |
Finance Lease Obligations and Notes Payable | 68 | |
Casualty, Environmental and Other Reserves | 60 | |
Other Long-term Liabilities | 20 | |
Total Liabilities Assumed | 196 | |
Fair Value of Assets Acquired, Net of Liabilities Assumed: | $ | 546 | |
The goodwill of $200 million was calculated as the excess of the consideration paid over the fair value of net assets assumed as of July 1, 2021 and relates primarily to the ability of CSX to extend the reach of its network and gain access to new products, markets, and regions through a unique and competitive multimodal solution that leverages the reach of truck transportation with the cost advantage of rail-based services. Goodwill recognized in the acquisition is deductible for tax purposes.
CSX Q3 2021 Form 10-Q p.28
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 12. Business Combinations, continued
NOTE 11.Summarized Consolidating Financial Data, continued
Cash paid to acquire the business, net of acquired cash and cash equivalents of $3 million, is included in investing activities on the Company's consolidated statement of cash flows. Properties of $225 million include tractors and trailers, equipment, land, buildings and other assets. Intangible assets of $190 million consist of $160 million of customer relationships and $30 million of trade names that will be amortized over a weighted-average period of 20 years and 15 years, respectively.
The Company incurred costs related to this acquisition of approximately $16 million, $12 million of which was incurred during the three months ended September 30, 2021. All acquisition-related costs were expensed as incurred and have been recorded in purchased services and other in the accompanying consolidated income statements.
This acquisition is not material with respect to the Company’s financial statements when reviewed under the quantitative and qualitative considerations of Regulation S-X Article 11 and ASC Topic 805. As the acquisition is not material, CSX has not provided pro forma information relating to the pre-acquisition period.
Proposed Acquisition of Pan Am Systems, Inc.
On November 30, 2020, CSX signed a definitive agreement to acquire Pan Am Systems, Inc. (“Pan Am”) which is the parent company of Pan Am Railways, Inc. who jointly owns Pan Am Southern, LLC with a subsidiary of Norfolk Southern Corporation. Pan Am owns and operates a highly integrated, nearly 1,200-mile rail network and has a joint interest in the more than 600-mile Pan Am Southern system. This acquisition, if approved, will expand CSX’s reach in the Northeastern United States. Assets and facilities to be acquired as part of the proposed transaction include road and track assets, work equipment, land, buildings and other assets. On February 25, 2021, the Company began the process of seeking approval from the Surface Transportation Board ("STB"), with a decision expected by April 1, 2022. This proposed acquisition is not expected to be material with respect to the Company's financial statements when reviewed under the quantitative and qualitative considerations of Regulation S-X Article 11 and ASC Topic 805.
CSX Q3 2021 Form 10-Q p.29
|
| | | | | | | | | | | | |
Consolidating Income Statements |
(Dollars in millions) |
Nine Months 2017 | CSX Corporation | CSX Transportation | Eliminations and Other | Consolidated |
Revenue | $ | — |
| $ | 8,490 |
| $ | 55 |
| $ | 8,545 |
|
Expense | (171 | ) | 6,278 |
| (108 | ) | 5,999 |
|
Operating Income | 171 |
| 2,212 |
| 163 |
| 2,546 |
|
| | | | |
Equity in Earnings of Subsidiaries | 1,506 |
| — |
| (1,506 | ) | — |
|
Interest (Expense) / Benefit | (432 | ) | (21 | ) | 47 |
| (406 | ) |
Other Income / (Expense) - Net | 6 |
| 32 |
| (19 | ) | 19 |
|
| | | | |
Earnings Before Income Taxes | 1,251 |
| 2,223 |
| (1,315 | ) | 2,159 |
|
Income Tax (Expense) / Benefit | 80 |
| (844 | ) | (64 | ) | (828 | ) |
Net Earnings | $ | 1,331 |
| $ | 1,379 |
| $ | (1,379 | ) | $ | 1,331 |
|
| | | | |
Total Comprehensive Earnings | $ | 1,410 |
| $ | 1,378 |
| $ | (1,378 | ) | $ | 1,410 |
|
| | | | |
Nine Months 2016 | CSX Corporation | CSX Transportation | Eliminations and Other | Consolidated |
Revenue | $ | — |
| $ | 7,974 |
| $ | 58 |
| $ | 8,032 |
|
Expense | (202 | ) | 5,985 |
| (136 | ) | 5,647 |
|
Operating Income | 202 |
| 1,989 |
| 194 |
| 2,385 |
|
| | | | |
Equity in Earnings of Subsidiaries | 1,399 |
| 1 |
| (1,400 | ) | — |
|
Interest (Expense) / Benefit | (425 | ) | (27 | ) | 29 |
| (423 | ) |
Other Income / (Expense) - Net | 1 |
| 24 |
| 3 |
| 28 |
|
| | | | |
Earnings Before Income Taxes | 1,177 |
| 1,987 |
| (1,174 | ) | 1,990 |
|
Income Tax (Expense) / Benefit | 79 |
| (735 | ) | (78 | ) | (734 | ) |
Net Earnings | $ | 1,256 |
| $ | 1,252 |
| $ | (1,252 | ) | $ | 1,256 |
|
| | | | |
Total Comprehensive Earnings | $ | 1,282 |
| $ | 1,253 |
| $ | (1,253 | ) | $ | 1,282 |
|
| | | | |
|
| | |
| CSX Q3 2017 Form 10-Q p.26
|
|
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 11.Summarized Consolidating Financial Data, continued
|
| | | | | | | | | | | | |
Consolidating Balance Sheet |
(Dollars in millions) |
September 30, 2017 | CSX Corporation | CSX Transportation | Eliminations and Other | Consolidated |
| | | | |
ASSETS |
Current Assets | | | | |
Cash and Cash Equivalents | $ | 433 |
| $ | 147 |
| $ | 11 |
| $ | 591 |
|
Short-term Investments | 100 |
| — |
| 13 |
| 113 |
|
Accounts Receivable - Net | (1 | ) | 277 |
| 705 |
| 981 |
|
Receivable from Affiliates | 1,012 |
| 3,004 |
| (4,016 | ) | — |
|
Materials and Supplies | — |
| 392 |
| — |
| 392 |
|
Other Current Assets | 2 |
| 76 |
| 17 |
| 95 |
|
Total Current Assets | 1,546 |
| 3,896 |
| (3,270 | ) | 2,172 |
|
| | | | |
Properties | 1 |
| 41,292 |
| 2,812 |
| 44,105 |
|
Accumulated Depreciation | (1 | ) | (11,014 | ) | (1,511 | ) | (12,526 | ) |
Properties - Net | — |
| 30,278 |
| 1,301 |
| 31,579 |
|
| | | | |
Investments in Conrail | — |
| — |
| 864 |
| 864 |
|
Affiliates and Other Companies | (39 | ) | 667 |
| 14 |
| 642 |
|
Investments in Consolidated Subsidiaries | 25,221 |
| — |
| (25,221 | ) | — |
|
Other Long-term Assets | 9 |
| 592 |
| (285 | ) | 316 |
|
Total Assets | $ | 26,737 |
| $ | 35,433 |
| $ | (26,597 | ) | $ | 35,573 |
|
| | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | |
Current Liabilities | | | | |
Accounts Payable | $ | 178 |
| $ | 695 |
| $ | 32 |
| $ | 905 |
|
Labor and Fringe Benefits Payable | 76 |
| 483 |
| 42 |
| 601 |
|
Payable to Affiliates | 4,148 |
| 382 |
| (4,530 | ) | — |
|
Casualty, Environmental and Other Reserves | — |
| 109 |
| 13 |
| 122 |
|
Current Maturities of Long-term Debt | — |
| 19 |
| — |
| 19 |
|
Income and Other Taxes Payable | (115 | ) | 418 |
| 19 |
| 322 |
|
Other Current Liabilities | — |
| 103 |
| 3 |
| 106 |
|
Total Current Liabilities | 4,287 |
| 2,209 |
| (4,421 | ) | 2,075 |
|
| | | | |
Casualty, Environmental and Other Reserves | — |
| 207 |
| 46 |
| 253 |
|
Long-term Debt | 11,053 |
| 735 |
| — |
| 11,788 |
|
Deferred Income Taxes - Net | (198 | ) | 9,697 |
| 290 |
| 9,789 |
|
Other Long-term Liabilities | 708 |
| 375 |
| (317 | ) | 766 |
|
Total Liabilities | $ | 15,850 |
| $ | 13,223 |
| $ | (4,402 | ) | $ | 24,671 |
|
| | | | |
Shareholders' Equity | | | | |
Common Stock, $1 Par Value | $ | 894 |
| $ | 181 |
| $ | (181 | ) | $ | 894 |
|
Other Capital | 227 |
| 5,096 |
| (5,096 | ) | 227 |
|
Retained Earnings | 10,327 |
| 16,938 |
| (16,938 | ) | 10,327 |
|
Accumulated Other Comprehensive Loss | (561 | ) | (20 | ) | 20 |
| (561 | ) |
Noncontrolling Interest | — |
| 15 |
| — |
| 15 |
|
Total Shareholders' Equity | $ | 10,887 |
| $ | 22,210 |
| $ | (22,195 | ) | $ | 10,902 |
|
Total Liabilities and Shareholders' Equity | $ | 26,737 |
| $ | 35,433 |
| $ | (26,597 | ) | $ | 35,573 |
|
|
| | |
| CSX Q3 2017 Form 10-Q p.27
|
|
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 11.Summarized Consolidating Financial Data, continued
|
| | | | | | | | | | | | |
Consolidating Balance Sheet (Dollars in millions) |
December 30, 2016 | CSX Corporation | CSX Transportation | Eliminations and Other | Consolidated |
ASSETS |
Current Assets | | | | |
Cash and Cash Equivalents | $ | 305 |
| $ | 281 |
| $ | 17 |
| $ | 603 |
|
Short-term Investments | 415 |
| — |
| 2 |
| 417 |
|
Accounts Receivable - Net | 2 |
| 215 |
| 721 |
| 938 |
|
Receivable from Affiliates | 1,157 |
| 2,351 |
| (3,508 | ) | — |
|
Materials and Supplies | — |
| 407 |
| — |
| 407 |
|
Other Current Assets | — |
| 106 |
| 16 |
| 122 |
|
Total Current Assets | 1,879 |
| 3,360 |
| (2,752 | ) | 2,487 |
|
| | | | |
Properties | 1 |
| 40,518 |
| 2,708 |
| 43,227 |
|
Accumulated Depreciation | (1 | ) | (10,634 | ) | (1,442 | ) | (12,077 | ) |
Properties - Net | — |
| 29,884 |
| 1,266 |
| 31,150 |
|
| | | | |
Investments in Conrail | — |
| — |
| 840 |
| 840 |
|
Affiliates and Other Companies | (39 | ) | 643 |
| 15 |
| 619 |
|
Investment in Consolidated Subsidiaries | 24,179 |
| — |
| (24,179 | ) | — |
|
Other Long-term Assets | 2 |
| 607 |
| (291 | ) | 318 |
|
Total Assets | $ | 26,021 |
| $ | 34,494 |
| $ | (25,101 | ) | $ | 35,414 |
|
| | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | |
Current Liabilities | | | | |
Accounts Payable | $ | 95 |
| $ | 678 |
| $ | 33 |
| $ | 806 |
|
Labor and Fringe Benefits Payable | 40 |
| 440 |
| 65 |
| 545 |
|
Payable to Affiliates | 3,457 |
| 500 |
| (3,957 | ) | — |
|
Casualty, Environmental and Other Reserves | — |
| 102 |
| 13 |
| 115 |
|
Current Maturities of Long-term Debt | 313 |
| 19 |
| (1 | ) | 331 |
|
Income and Other Taxes Payable | (346 | ) | 459 |
| 16 |
| 129 |
|
Other Current Liabilities | — |
| 112 |
| 2 |
| 114 |
|
Total Current Liabilities | 3,559 |
| 2,310 |
| (3,829 | ) | 2,040 |
|
| | | | |
Casualty, Environmental and Other Reserves | — |
| 208 |
| 51 |
| 259 |
|
Long-term Debt | 10,203 |
| 759 |
| — |
| 10,962 |
|
Deferred Income Taxes - Net | (203 | ) | 9,541 |
| 258 |
| 9,596 |
|
Other Long-term Liabilities | 783 |
| 410 |
| (330 | ) | 863 |
|
Total Liabilities | $ | 14,342 |
| $ | 13,228 |
| $ | (3,850 | ) | $ | 23,720 |
|
| | | | |
Shareholders' Equity | | | | |
Common Stock, $1 Par Value | $ | 928 |
| $ | 181 |
| $ | (181 | ) | $ | 928 |
|
Other Capital | 138 |
| 5,095 |
| (5,095 | ) | 138 |
|
Retained Earnings | 11,253 |
| 15,994 |
| (15,994 | ) | 11,253 |
|
Accumulated Other Comprehensive Loss | (640 | ) | (19 | ) | 19 |
| (640 | ) |
Noncontrolling Minority Interest | — |
| 15 |
| — |
| 15 |
|
Total Shareholders' Equity | $ | 11,679 |
| $ | 21,266 |
| $ | (21,251 | ) | $ | 11,694 |
|
Total Liabilities and Shareholders' Equity | $ | 26,021 |
| $ | 34,494 |
| $ | (25,101 | ) | $ | 35,414 |
|
|
| | |
| CSX Q3 2017 Form 10-Q p.28
|
|
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 11.Summarized Consolidating Financial Data, continued
|
| | | | | | | | | | | | |
Consolidating Cash Flow Statements |
(Dollars in millions) |
Nine Months 2017 | CSX Corporation | CSX Transportation | Eliminations and Other | Consolidated |
Operating Activities | | | | |
Net Cash Provided by (Used in) Operating Activities | $ | 1,590 |
| $ | 1,544 |
| $ | (273 | ) | $ | 2,861 |
|
Investing Activities | |
| | |
Property Additions | — |
| (1,311 | ) | (151 | ) | (1,462 | ) |
Purchases of Short-term Investments | (639 | ) | — |
| (6 | ) | (645 | ) |
Proceeds from Sales of Short-term Investments | 955 |
| — |
| 2 |
| 957 |
|
Other Investing Activities | (2 | ) | 98 |
| (25 | ) | 71 |
|
Net Cash Provided by (Used in) Investing Activities | 314 |
| (1,213 | ) | (180 | ) | (1,079 | ) |
Financing Activities | | | | |
Long-term Debt Issued | 850 |
| — |
| — |
| 850 |
|
Long-term Debt Repaid | (312 | ) | (20 | ) | — |
| (332 | ) |
Dividends Paid | (530 | ) | (450 | ) | 450 |
| (530 | ) |
Shares Repurchased | (1,763 | ) | — |
| — |
| (1,763 | ) |
Other Financing Activities | (21 | ) | 5 |
| (3 | ) | (19 | ) |
Net Cash Provided by (Used in) Financing Activities | (1,776 | ) | (465 | ) | 447 |
| (1,794 | ) |
Net Increase (Decrease) in Cash and Cash Equivalents | 128 |
| (134 | ) | (6 | ) | (12 | ) |
Cash and Cash Equivalents at Beginning of Period | 305 |
| 281 |
| 17 |
| 603 |
|
Cash and Cash Equivalents at End of Period | $ | 433 |
| $ | 147 |
| $ | 11 |
| $ | 591 |
|
|
| | |
| CSX Q3 2017 Form 10-Q p.29
|
|
CSX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 11.Summarized Consolidating Financial Data, continued
|
| | | | | | | | | | | | |
Consolidating Cash Flow Statements |
(Dollars in millions) |
Nine Months 2016 | CSX Corporation | CSX Transportation | Eliminations and Other | Consolidated |
Operating Activities | | | | |
Net Cash Provided by (Used in) Operating Activities | $ | 644 |
| $ | 2,089 |
| $ | (245 | ) | $ | 2,488 |
|
Investing Activities | | | | |
Property Additions | — |
| (1,469 | ) | (121 | ) | (1,590 | ) |
Purchases of Short-term Investments | (410 | ) | — |
| — |
| (410 | ) |
Proceeds from Sales of Short-term Investments | 1,070 |
| — |
| — |
| 1,070 |
|
Other Investing Activities | (3 | ) | 107 |
| (67 | ) | 37 |
|
Net Cash Provided by (Used in) Investing Activities | 657 |
| (1,362 | ) | (188 | ) | (893 | ) |
Financing Activities | | | | |
Long-term Debt Issued | — |
| — |
| — |
| — |
|
Long-term Debt Repaid | — |
| (18 | ) | (1 | ) | (19 | ) |
Dividends Paid | (513 | ) | (450 | ) | 450 |
| (513 | ) |
Shares Repurchased | (778 | ) | — |
| — |
| (778 | ) |
Other Financing Activities | (6 | ) | (304 | ) | — |
| (310 | ) |
Net Cash Provided by (Used in) Financing Activities | (1,297 | ) | (772 | ) | 449 |
| (1,620 | ) |
Net Increase (Decrease) in Cash and Cash Equivalents | 4 |
| (45 | ) | 16 |
| (25 | ) |
Cash and Cash Equivalents at Beginning of Period | 444 |
| 175 |
| 9 |
| 628 |
|
Cash and Cash Equivalents at End of Period | $ | 448 |
| $ | 130 |
| $ | 25 |
| $ | 603 |
|
|
| | |
| CSX Q3 2017 Form 10-Q p.30
|
|
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIRD QUARTER 20172021 HIGHLIGHTS
•Revenue increased $33$644 million, to $2.7 billion, or 1 percent24% year over year.
•Expenses decreasedincreased$2349 million, to $1.9 billion.
or 23% year over year.•Operating income of $876 million$1.4 billion increased $35$295 million, or 4 percent26%, year over year.
•Operating ratio of 68.1%56.4% improved 9050 basis points versus last year's quarter.
•Earnings per diluted share of $0.51$0.43 increased$0.03,0.11, or 6 percent34% year over year.
| | | Third Quarters | | Nine Months | | Third Quarters | | Nine Months |
| 2017 | 2016 | Fav / (Unfav) | % Change | | 2017 | 2016 | Fav / (Unfav) | % Change | | 2021 | 2020 | Fav / (Unfav) | % Change | | 2021 | 2020 | Fav / (Unfav) | % Change |
Volume (in thousands) | 1,587 |
| 1,574 |
| 13 |
| 1% | | 4,799 |
| 4,720 |
| 79 |
| 2% | Volume (in thousands) | 1,563 | | 1,522 | | 41 | 3% | | 4,683 | | 4,293 | 390 | 9% |
| | | | | |
(in millions) | | | | | (in millions) | |
Revenue | $ | 2,743 |
| $ | 2,710 |
| $ | 33 |
| 1% | | $ | 8,545 |
| $ | 8,032 |
| $ | 513 |
| 6% | Revenue | $ | 3,292 | | $ | 2,648 | | $ | 644 | 24 | | $ | 9,095 | | $ | 7,758 | $ | 1,337 | 17 |
Expense | 1,867 |
| 1,869 |
| 2 |
| —% | | 5,999 |
| 5,647 |
| (352 | ) | (6)% | Expense | 1,856 | | 1,507 | | (349) | (23) | | 4,867 | | 4,611 | (256) | (6) |
Operating Income | $ | 876 |
| $ | 841 |
| $ | 35 |
| 4% | | $ | 2,546 |
| $ | 2,385 |
| $ | 161 |
| 7% | Operating Income | $ | 1,436 | | $ | 1,141 | | $ | 295 | 26% | | $ | 4,228 | | $ | 3,147 | $ | 1,081 | 34% |
| | | | | | | | |
Operating Ratio | 68.1 | % | 69.0 | % | 90 |
| bps | | 70.2 | % | 70.3 | % | 10 |
| bps | Operating Ratio | 56.4 | % | 56.9 | % | 50 | bps | | 53.5 | % | 59.4 | % | 590 | bps |
| | | | | |
Earnings Per Diluted Share | $ | 0.51 |
| $ | 0.48 |
| $ | 0.03 |
| 6% | | $ | 1.45 |
| $ | 1.32 |
| $ | 0.13 |
| 10% | Earnings Per Diluted Share | $ | 0.43 | | $ | 0.32 | | $ | 0.11 | 34% | | $ | 1.26 | | $ | 0.87 | | $ | 0.39 | 45% |
InAcquisition of Quality Carriers, Inc.
On July 1, 2021, CSX acquired Quality Carriers, Inc. ("Quality Carriers"). Accordingly, the consolidated third quarter 2017,and nine months 2021 results include the Company continued implementationresults of Precision Scheduled Railroading. AsQuality Carriers' operations after the acquisition date. For further details, refer to Note 12, Business Combinations.
COVID-19 Update
Demand for rail services has improved from steep declines in the first half of 2020, but the effects of the disruption of global manufacturing, supply chains and consumer spending as a result CSX is adjustingof the COVID-19 global pandemic are ongoing. Future impacts of the pandemic on the Company’s financial and operating results will be determined by its strategy to successfully execute this new plan, relentlessly focusingduration, effects on improving customer service, controlling costs, optimizing asset utilization, operating safely,the demand for the Company’s transportation services and developingthe supply chain, as well as the effect of governmental regulations imposed and valuing employees.
The restructuring charge was $1 millionlegislative stimulus packages passed in third quarter 2017 and $296 million year-to-date, which includes costs relatedresponse to the management workforce reduction program announced earlierpandemic. The duration of the pandemic is dependent on several factors, including the impacts of virus mutations and case resurgences across the country.
CSX employees that provide efficient and reliable rail service are essential to keeping supply chains fluid in response to this year.challenge. Accordingly, business operations have been modified to ensure the safety of employees across the network while continuing to provide a high level of service to customers. The Company expects estimated pre-tax savings on both future earningsis strongly encouraging employees to get vaccinated. A cross-functional task force continues to monitor and cash flows resulting from this programcoordinate the Company’s response to be approximately $200 million per year.
COVID-19.
CSX Q3 2021 Form 10-Q p.30
|
| | |
| CSX Q3 2017 Form 10-Q p.31
|
|
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Volume and Revenue (Unaudited) |
Volume (Thousands of units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars) |
Third Quarters |
| Volume | | Revenue | | Revenue Per Unit |
| 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change |
Chemicals | 166 | | | 165 | | | 1 | % | | $ | 624 | | | $ | 566 | | | 10 | % | | $ | 3,759 | | | $ | 3,430 | | | 10 | % |
Agricultural and Food Products | 109 | | | 115 | | | (5) | | | 343 | | | 335 | | | 2 | | | 3,147 | | | 2,913 | | | 8 | |
Minerals | 90 | | | 86 | | | 5 | | | 162 | | | 144 | | | 13 | | | 1,800 | | | 1,674 | | | 8 | |
Automotive | 75 | | | 102 | | | (26) | | | 209 | | | 271 | | | (23) | | | 2,787 | | | 2,657 | | | 5 | |
Forest Products(a) | 75 | | | 70 | | | 7 | | | 231 | | | 209 | | | 11 | | | 3,080 | | | 2,986 | | | 3 | |
Metals and Equipment | 70 | | | 58 | | | 21 | | | 206 | | | 159 | | | 30 | | | 2,943 | | | 2,741 | | | 7 | |
Fertilizers(a) | 54 | | | 54 | | | — | | | 106 | | | 93 | | | 14 | | | 1,963 | | | 1,722 | | | 14 | |
Total Merchandise | 639 | | | 650 | | | (2) | | | 1,881 | | | 1,777 | | | 6 | | | 2,944 | | | 2,734 | | | 8 | |
Intermodal | 744 | | | 717 | | | 4 | | | 509 | | | 445 | | | 14 | | | 684 | | | 621 | | | 10 | |
Coal | 180 | | | 155 | | | 16 | | | 460 | | | 330 | | | 39 | | | 2,556 | | | 2,129 | | | 20 | |
Trucking(b) | — | | | — | | | — | | | 200 | | | — | | | NM | | — | | | — | | | — | |
Other | — | | | — | | | — | | | 242 | | | 96 | | | 152 | | | — | | | — | | | — | |
Total | 1,563 | | | 1,522 | | | 3 | % | | $ | 3,292 | | | $ | 2,648 | | | 24 | % | | $ | 2,106 | | | $ | 1,740 | | | 21 | % |
| | | | | | | | | | | | | | | | | |
Nine Months |
| Volume | | Revenue | | Revenue Per Unit |
| 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change |
Chemicals | 496 | | | 495 | | | — | % | | $ | 1,810 | | | $ | 1,723 | | | 5 | % | | $ | 3,649 | | | $ | 3,481 | | | 5 | % |
Agricultural and Food Products | 342 | | | 338 | | | 1 | | | 1,062 | | | 1,011 | | | 5 | | | 3,105 | | | 2,991 | | | 4 | |
Minerals | 244 | | | 243 | | | — | | | 439 | | | 405 | | | 8 | | | 1,799 | | | 1,667 | | | 8 | |
Automotive | 239 | | | 241 | | | (1) | | | 661 | | | 645 | | | 2 | | | 2,766 | | | 2,676 | | | 3 | |
Forest Products(a) | 223 | | | 209 | | | 7 | | | 684 | | | 625 | | | 9 | | | 3,067 | | | 2,990 | | | 3 | |
Metals and Equipment | 209 | | | 173 | | | 21 | | | 596 | | | 500 | | | 19 | | | 2,852 | | | 2,890 | | | (1) | |
Fertilizers(a) | 173 | | | 168 | | | 3 | | | 350 | | | 303 | | | 16 | | | 2,023 | | | 1,804 | | | 12 | |
Total Merchandise | 1,926 | | | 1,867 | | | 3 | | | 5,602 | | | 5,212 | | | 7 | | | 2,909 | | | 2,792 | | | 4 | |
Intermodal | 2,222 | | | 1,963 | | | 13 | | | 1,488 | | | 1,226 | | | 21 | | | 670 | | | 625 | | | 7 | |
Coal | 535 | | | 463 | | | 16 | | | 1,267 | | | 1,022 | | | 24 | | | 2,368 | | | 2,207 | | | 7 | |
Trucking(b) | — | | | — | | | — | | | 200 | | | — | | | NM | | — | | | — | | | — | |
Other | — | | | — | | | — | | | 538 | | | 298 | | | 81 | | | — | | | — | | | — | |
Total | 4,683 | | | 4,293 | | | 9 | % | | $ | 9,095 | | | $ | 7,758 | | | 17 | % | | $ | 1,942 | | | $ | 1,807 | | | 7 | % |
NM - not meaningful
(a) Effective first quarter 2021, changes were made in the categorization of certain lines of business, impacting Forest Products and Fertilizers. The impacts were not material and prior periods have been reclassified to conform to the current presentation.
(b) Effective third quarter 2021, Trucking revenue is comprised of revenue from the operations of Quality Carriers, which was acquired by CSX effective July 1, 2021.
CSX Q3 2021 Form 10-Q p.31
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Volume and Revenue (Unaudited) |
Volume (Thousands of units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars) |
Third Quarters |
| Volume | | Revenue | | Revenue Per Unit |
| 2017 | | 2016 | | % Change | | 2017 | | 2016 | | % Change | | 2017 | | 2016 | | % Change |
Agricultural | | | | | | | | | | | | | | | | | |
Agricultural and Food Products | 106 |
| | 109 |
| | (3 | )% | | $ | 288 |
| | $ | 295 |
| | (2 | )% | | $ | 2,717 |
| | $ | 2,706 |
| | — | % |
Fertilizers | 68 |
| | 72 |
| | (6 | ) | | 106 |
| | 104 |
| | 2 |
| | 1,559 |
| | 1,444 |
| | 8 |
|
Industrial | | | | | | | | | | | | | | | | | |
Chemicals | 164 |
| | 173 |
| | (5 | ) | | 546 |
| | 542 |
| | 1 |
| | 3,329 |
| | 3,133 |
| | 6 |
|
Automotive | 105 |
| | 115 |
| | (9 | ) | | 269 |
| | 304 |
| | (12 | ) | | 2,562 |
| | 2,643 |
| | (3 | ) |
Metals and Equipment | 64 |
| | 63 |
| | 2 |
| | 178 |
| | 180 |
| | (1 | ) | | 2,781 |
| | 2,857 |
| | (3 | ) |
Housing and Construction | | | | | | | | | | | | | | | | | |
Minerals | 80 |
| | 86 |
| | (7 | ) | | 120 |
| | 125 |
| | (4 | ) | | 1,500 |
| | 1,453 |
| | 3 |
|
Forest Products | 64 |
| | 68 |
| | (6 | ) | | 181 |
| | 191 |
| | (5 | ) | | 2,828 |
| | 2,809 |
| | 1 |
|
Total Merchandise | 651 |
| | 686 |
| | (5 | ) | | 1,688 |
| | 1,741 |
| | (3 | ) | | 2,593 |
| | 2,538 |
| | 2 |
|
Coal | 218 |
| | 207 |
| | 5 |
| | 514 |
| | 467 |
| | 10 |
| | 2,358 |
| | 2,256 |
| | 5 |
|
Intermodal | 718 |
| | 681 |
| | 5 |
| | 446 |
| | 425 |
| | 5 |
| | 621 |
| | 624 |
| | — |
|
Other | — |
| | — |
| | — |
| | 95 |
| | 77 |
| | 23 |
| | — |
| | — |
| | — |
|
Total | 1,587 |
| | 1,574 |
| | 1 | % | | $ | 2,743 |
| | $ | 2,710 |
| | 1 | % | | $ | 1,728 |
| | $ | 1,722 |
| | — | % |
| | | | | | | | | | | | | | | | | |
Nine Months |
| Volume | | Revenue | | Revenue Per Unit |
| 2017 | | 2016 | | % Change | | 2017 | | 2016 | | % Change | | 2017 | | 2016 | | % Change |
Agricultural | | | | | | | | | | | | | | | | | |
Agricultural and Food Products | 341 |
| | 346 |
| | (1 | )% | | $ | 941 |
| | $ | 925 |
| | 2 | % | | $ | 2,760 |
| | $ | 2,673 |
| | 3 | % |
Fertilizers | 223 |
| | 220 |
| | 1 |
| | 353 |
| | 345 |
| | 2 |
| | 1,583 |
| | 1,568 |
| | 1 |
|
Industrial | | | | | | | | | | | | | | | | | |
Chemicals | 508 |
| | 520 |
| | (2 | ) | | 1,664 |
| | 1,622 |
| | 3 |
| | 3,276 |
| | 3,119 |
| | 5 |
|
Automotive | 340 |
| | 349 |
| | (3 | ) | | 892 |
| | 907 |
| | (2 | ) | | 2,624 |
| | 2,599 |
| | 1 |
|
Metals and Equipment | 201 |
| | 196 |
| | 3 |
| | 546 |
| | 531 |
| | 3 |
| | 2,716 |
| | 2,709 |
| | — |
|
Housing and Construction | | | | | | | | | | | | | | | | | |
Minerals | 233 |
| | 230 |
| | 1 |
| | 362 |
| | 345 |
| | 5 |
| | 1,554 |
| | 1,500 |
| | 4 |
|
Forest Products | 198 |
| | 204 |
| | (3 | ) | | 567 |
| | 572 |
| | (1 | ) | | 2,864 |
| | 2,804 |
| | 2 |
|
Total Merchandise | 2,044 |
| | 2,065 |
| | (1 | ) | | 5,325 |
| | 5,247 |
| | 1 |
| | 2,605 |
| | 2,541 |
| | 3 |
|
Coal | 631 |
| | 602 |
| | 5 |
| | 1,566 |
| | 1,282 |
| | 22 |
| | 2,482 |
| | 2,130 |
| | 17 |
|
Intermodal | 2,124 |
| | 2,053 |
| | 3 |
| | 1,328 |
| | 1,249 |
| | 6 |
| | 625 |
| | 608 |
| | 3 |
|
Other | — |
| | — |
| | — |
| | 326 |
| | 254 |
| | 28 |
| | — |
| | — |
| | — |
|
Total | 4,799 |
| | 4,720 |
| | 2 | % | | $ | 8,545 |
| | $ | 8,032 |
| | 6 | % | | $ | 1,781 |
| | $ | 1,702 |
| | 5 | % |
|
| | |
| CSX Q3 2017 Form 10-Q p.32
|
|
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Third Quarter 20172021
Revenue
Revenue for theTotal revenue increased 24% in third quarter increased $33 million or one percent2021 when compared to third quarter 2020 due to the previous year. Thisinclusion of Quality Carriers' results, increases in other revenue, higher fuel recovery, pricing gains and volume growth.
Merchandise Volume
Chemicals - Increased due to higher shipments of plastics, sand, waste, and other core chemicals, partially offset by lower shipments of crude oil.
Agricultural and Food Products - Decreased as a result of lower shipments of export grain and ethanol.
Minerals - Increased as a result of higher shipments of aggregates, cement, lime and limestone.
Automotive - Decreased due to lower North American vehicle production, which continues to be impacted by shortages of semi-conductors and other parts.
Forest Products - Increased primarily due to higher shipments of pulpboard, woodpulp and building products.
Metals and Equipment - Increased as growth across the metals markets was primarily drivenpartially offset by gains in coal and intermodal, partiallyreduced equipment shipments.
Fertilizers - Increased long-haul fertilizer shipments were offset by declines in the majority of the merchandise markets.short-haul phosphate shipments.
MerchandiseIntermodal Volume
Agricultural Sector
Agricultural and Food Products - Volume declinedIncreased due to challengeshigher international shipments as a result of strong demand, inventory replenishments and growth in the export marketrail volumes from east coast ports.
Coal Volume
Domestic coal increased due to higher shipments of utility coal as well as a large southeastern grain crop leading to local truck sourcing to feed mills. These declines were partially offset by gainshigher steel and industrial shipments. The increase in ethanolexport coal was driven by higher production levels and new business wins.
Fertilizers - Volume declined predominantly due to Hurricane Irma's impact on Central Florida phosphate operations causing reduced production levels and supply chain disruptions.
Industrial Sector
Chemicals - Volume fell, primarily reflecting sustained challenges in the Eastern crude-by-rail market. This decline offset an increase ininternational shipments of frac sandboth thermal and petroleum gases due to growth in drilling activity.metallurgical coal.
Automotive - Volume declined as North American vehicle production fell. Dealership inventory ended the quarter consistent with theTrucking Revenue
Trucking revenue increased $200 million versus prior four-year average.
Metals and Equipment - Volume increased slightly as an increase in equipment moves more than offset declines in steel sheet and scrap.
Housing and Construction Sector
Minerals - Volume fell, reflecting short-term competitive losses to other modes as the Company transitions its customers to the new operating plan.
Forest Products - Volume declined as mill closures and truck competition negatively impacted shipments of paper products. Additionally, lumber shipments were challengedyear due to the enforcementinclusion of duties on Canadian lumber.Quality Carriers' results.
CoalOther Revenue
Domestic Utility Coal - Volume declined reflecting the competitive loss of short-haul interchange trafficOther revenue increased $146 million versus prior year due to increases in revenue for intermodal storage and challenges from Hurricane Irma, which caused outages at southeastern customer facilities.
Domestic Coke, Iron Oreequipment usage as well as higher demurrage and Other - Volume was down, primarily driven by iron ore shipments, as a large customer continued to idle its production.
Export Coal - Volume increased as global supply levels and pricing conditions supported strong growth in U.S. coal exports.
affiliate revenue.
CSX Q3 2021 Form 10-Q p.32
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| | |
| CSX Q3 2017 Form 10-Q p.33
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|
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Intermodal
Domestic - Volume increased one percent as growth with existing customers and ongoing success of CSX’s highway-to-rail conversion initiative more than offset a prior year short-haul competitive loss which cycled mid-quarter and other competitive losses as the Company transitions its customers to the new operating plan.
International - Volume was up 11 percent driven by new customers and strong performance with existing customers as eastern port volumes increased.
Other
Other revenue increased $18 million versus the prior year primarily due to higher incidental charges and lower volume-based refunds.
Expenses
Expenses of approximately $1.9 billion remained relatively consistent, decreasing $2increased $349 million, year over year. This decrease was dueor 23%, in third quarter 2021 when compared to efficiency savings of $95 million and lower volume related costs of $13 million due to a decrease in gross ton-miles, nearly offset by inflation of $53 million, fuel price increases of $32 million and other items.third quarter 2020.
Labor and Fringe expense decreased $45increased $57 million due to the following:
•The acquisition of Quality Carriers resulted in increased costs of $30 million.
•Inflation and higher volume resulted in $23 million of $43increased expenses.
•Other expenses increased $4 million was driven primarily by increased health and welfare and wage increases.
Efficiency savings of $73 million were driven by reduced management headcount as a result of the 2017 restructuring initiative, as well as lower operating support costs.
Volume-related$16 million in costs decreased by $4 million.
Other costs decreased by $11 million primarily due to a decrease in pension expensefor hiring and retention programs, partially offset by other items, none of which were individually significant.non-significant items.
Materials, SuppliesPurchased Services and Other expense increased $9$195 million due to the following:
Additional expense•The inclusion of $13 million resulted from train accidents during the quarter.
Inflation resulted in $8Quality Carriers' operations drove $126 million of additional cost.costs.
Technology-related asset impairment charges were $5 million.
Efficiency savings of $30 million were•Higher operating support costs, primarily relateddue to lower maintenance costs from the reduction in the activean increased locomotive fleet, and a reduction in contingent workers.as well as higher intermodal terminal costs drove an increase of $31 million.
Volume-related costs decreased by $4 million.
•Other costs increased $17$38 million due to relocation$14 million of acquisition-related costs, inflation and other items, none of which were individually significant.non-significant items.
Depreciationexpense increased $10$19 million primarily due to a larger asset base.base, which includes Quality Carriers' assets.
Fuel expense increased $31$128 million primarily resulting from a 77% increase in locomotive fuel prices and the inclusion of non-locomotive fuel used for trucking.
Equipment and Other Rents expense was $6 million higher primarily due to the following:addition of Quality Carriers' costs as increased car hire was offset by other items.
A 19 percent price increase drove $32
Gains on Property Dispositions increased to $60 million in additional fuel expense.2021 from $4 million in 2020.
Efficiency savings were $1 million.
Interest Expense
Interest expense decreased $10 million primarily due to lower average interest rates.
Other Income - Net
Other income - net increased $6 million primarily due to an increase in net pension benefit credits.
Income Tax Expense
Income tax expense increased $79 million primarily due to higher earnings before income taxes.
CSX Q3 2021 Form 10-Q p.33
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| | |
| CSX Q3 2017 Form 10-Q p.34
|
|
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Equipment and Other Rents expense decreased $8 million due to the following:
Efficiency losses of $9 million were due to increased days per load for automotive and merchandise markets.
Inflation resulted in $2 million of additional cost due to higher rates across most car types.
Volume-related costs were $5 million lower.
Other costs decreased $14 million primarily due to rental income that was previously classified as other income in the prior years being reclassified to operating expense in the current year as well as other items, none of which were individually significant.
Restructuring charge of $1 million was incurred during the quarter.
Interest expense decreased $7 million primarily due to lower average interest rates partially offset by higher average debt balances.
Other income - net decreased$7 million primarily due to prior quarter income from non-operating real estate transactions, which are now included in operating income.
Income tax expense increased $31 million primarily due to increased earnings before income taxes, state legislative changes and non-deductible executive compensation.
Nine Months Results of Operations
Revenue increased $513 million reflecting pricing gains, volume growth, higher fuel recoveries and a $58 million settlement in 2017 related to a customer that did not meet historical volume commitments.
Expenses were higher by $352 million driven primarily by a restructuring charge of $296 million, inflation of $153 million and fuel price increases of $127 million, partially offset by efficiency savings of $308 million.
Operating income increased $161 million$1.3 billion primarily due to volume growth, increases in other revenue driven by intermodal storage and equipment usage, trucking revenue from the acquisition of Quality Carriers, pricing gains volume growthacross all markets, and efficiency savings, partially offset by restructuring charges, inflation and increases inhigher fuel price.recovery.
InterestTotal expense decreased $17 increased $256 million primarily due to lower average interest ratesdriven by rising fuel prices, the inclusion of Quality Carriers' operations, higher volume-related costs and increased incentive compensation, partially offset by higher gains on property dispositions.
Interest expense decreased $23 million primarily as a result of lower average debt balances.interest rates.
Other income - net decreased increased $9 million primarily due to prior quarter income from non-operating real estate transactions, which are now includedan increase in operating income, and other non-operating items, none of which were individually significant.net pension benefit credits, partially offset by lower interest income.
Income tax expense increased $94$271 million primarily due to increasedhigher earnings before income taxes, non-deductible executive compensation, and state legislative changes.taxes.
CSX Q3 2021 Form 10-Q p.34
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| CSX Q3 2017 Form 10-Q p.35
|
|
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Non-GAAP Measures - Unaudited
CSX reports its financial results in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). CSX also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior reported results. Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP. Therefore, CSX’s non-GAAP measures are unlikely to be comparable to similar measures presented by other companies. The presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with GAAP. Reconciliations of non-GAAP measures to corresponding GAAP measures are below.
Adjusted Operating Results
Management believes that adjusted operating income, adjusted operating ratio, adjusted net earnings and adjusted net earnings per share, assuming dilution are important in evaluating the Company’s operating performance and for planning and forecasting future business operations and future profitability. These non-GAAP measures provide meaningful supplemental information regarding operating results because they exclude certain significant items that are not considered indicative of future financial trends. The restructuring charge was tax effected using rates reflective of the applicable tax amounts for each component of the restructuring charge, including an adjustment for the non-deductibility of executive compensation.
|
| | | | | | | | | | | | | | | |
| | For the Quarter ended September 30, 2017 |
(in millions, except operating ratio and net earnings per share, assuming dilution) | | Operating Income | | Operating Ratio | | Net Earnings | | Net Earnings Per Share, Assuming Dilution |
| | | | | | | | |
GAAP Operating Results | | $ | 876 |
| | 68.1 | % | | $ | 459 |
| | $ | 0.51 |
|
Restructuring Charge (a) | | 1 |
| | (0.1 | )% | | 4 |
| | — |
|
Adjusted Operating Results (non-GAAP) | | $ | 877 |
| | 68.0 | % | | $ | 463 |
| | $ | 0.51 |
|
| | | | | | | | |
|
| | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2017 |
(in millions, except operating ratio and net earnings per share, assuming dilution) | | Operating Income | | Operating Ratio | | Net Earnings | | Net Earnings Per Share, Assuming Dilution |
| | | | | | | | |
GAAP Operating Results | | $ | 2,546 |
| | 70.2 | % | | $ | 1,331 |
| | $ | 1.45 |
|
Restructuring Charge (a) | | 296 |
| | (3.5 | )% | | 193 |
| | 0.21 |
|
Adjusted Operating Results (non-GAAP) | | $ | 2,842 |
| | 66.7 | % | | $ | 1,524 |
| | $ | 1.66 |
|
(a) See Note 1, Nature of Operations and Significant Accounting Policies - Other Items - Restructuring Charge, for additional information.
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| CSX Q3 2017 Form 10-Q p.36
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Free Cash Flow
Management believes that free cash flow is supplemental information useful to investors as it is important in evaluating the Company’s financial performance. More specifically, free cash flow measures cash generated by the business after reinvestment. This measure represents cash available for both equity and bond investors to be used for dividends, share repurchases or principal reduction on outstanding debt. Free cash flow should be considered in addition to, rather than a substitute for, cash provided by operating activities. Free cash flow is calculated by using net cash from operations and adjusting for property additions and certain other investing activities, which includes proceeds from property dispositions. Free cash flow should be considered in addition to, rather than a substitute for, cash provided by operating activities. The increase in free cash flow before dividends from the prior year of $958 million is primarily due to higher cash from operating activities and increased proceeds from property dispositions. For the nine months 2021, other investing activities include $200 million of proceeds related to the conveyance of a permanent land easement to the Commonwealth of Virginia.
The following table reconciles cash provided by operating activities (GAAP measure) to adjusted free cash flow, after restructuring, before dividends (non-GAAP measure). The restructuring charge impact to free cash flow was tax effected using the applicable tax rate of the charge.
| | | | | | | | |
| Nine Months |
(Dollars in millions) | 2021 | 2020 |
Net cash provided by operating activities | $ | 3,819 | | $ | 3,128 | |
Property Additions | (1,220) | | (1,209) | |
Other Investing Activities | 297 | | 19 | |
Free Cash Flow (before payment of dividends) | $ | 2,896 | | $ | 1,938 | |
|
| | | | | | |
| Nine Months |
(Dollars in millions) | 2017 | 2016 |
Net cash provided by operating activities | $ | 2,861 |
| $ | 2,488 |
|
Property additions | (1,462 | ) | (1,590 | ) |
Other investing activities | 71 |
| 37 |
|
Free Cash Flow (before payment of dividends) | 1,470 |
| 935 |
|
Add back: Cash Payments for Restructuring Charge (after-tax) (a) | 96 |
| — |
|
Adjusted Free Cash Flow Before Dividends (non-GAAP) | $ | 1,566 |
| $ | 935 |
|
(a) During the nine months ended September 30, 2017, the Company made cash payments of $147 million related to the restructuring charge. The Company also made $7 million in payments to the former CEO and President for previously accrued non-qualified pension benefits that are not included in the restructuring charge.
Operating Statistics (Estimated)
The Company measures and reportsis committed to continuous improvement in safety and service performance. The Company strives for continuous improvement in these measuresperformance through training, innovation and investment. Investment in trainingTraining and technology also is designed to allow CSX employees to have an additional layer of protection that can detect and avoid many types of human factor incidents. The Company's safety programs are designed to prevent incidents that can adversely impact employees, customers and communities. Technological innovations that can detect and avoid many types of human factor incidents are designed to serve as an additional layer of protection for the Company's employees. Continued capital investment in the Company's assets, including track, bridges, signals, equipment and detection technology also supports safety performance.
In order to more accurately represent the Company’s operating performance, CSX has revised the way it calculates train velocity and terminal dwell effective third quarter 2017. These revisions are2021, velocity decreased by 10% and dwell increased by 8% versus prior year. Both metrics were consistent with the principlessecond quarter 2021 levels. Intermodal trip plan performance remained strong at 88% and carload trip plan performance of Precision Scheduled Railroading. Updated definitions for each key68% was consistent with second quarter 2021 levels. CSX expects both network fluidity and trip plan performance measure are included beneath the Operating Statistics table. Prior periods have been restated to conformimprove commensurate with ongoing hiring efforts and actions being taken to offset the current methodology. Details of the changes are as follows:supply chain challenges.
Train velocity has been expanded to include intermediate dwell, now measuring end-to-end transit time.
Dwell has been expanded to include car dwell time at terminals on through trains, now measuring all car dwell time on an end-to-end trip.
These revisions differ from the methodology prescribed by the Surface Transportation Board ("STB") for reporting train velocity and dwell. CSX will continue to report train velocity and dwell, using the prescribed methodology, to the STB on a weekly basis. At the STB's request, CSX is providing additional operating measures on a weekly basis that are available on the Company's website. CSX participated in a public listening session on October 11, 2017 at the STB regarding CSX's rail service. Information related to this session is available at the STB under matter E.P. 742.
CSX Q3 2021 Form 10-Q p.35
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| CSX Q3 2017 Form 10-Q p.37
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CSX’s operating performance declinedThe FRA train accident rate of 3.09 in the third quarter of 2017 compared to 2016 due to network fluidity challenges, train accidents and the impacts from Hurricane Irma. Network fluidity was unfavorably impacted early in the quarter as the Company's operations adjusted to the implementation of a new, balanced train plan.2021 improved 7% year over year. The Company expects to improve its level of performance through increased efficiency within terminals and refinement of the operating plan.
CSX’s FRA reportable personal injury frequency index of 1.41 for the third quarter of 2017 was 11 percent unfavorable to the prior year as a decline in overall injuries was offset by a significant decline in man-hours from fewer employees. The FRA train accident frequency rate of 3.82 for the quarter was 46 percent unfavorable to0.85 degraded 12% versus the prior year. Safety remains a top priority at CSX, remainsand the Company is committed to ongoingreducing risk and enhancing the overall safety improvement, with a focus on reducing injury severityof its employees, customers and avoiding catastrophic events.communities in which the Company operates.
| |
| Third Quarters | | Nine Months |
| Third Quarters | | Nine Months |
| 2017 | 2016 | Improvement/ (Deterioration) | | 2017 | 2016 | Improvement/ (Deterioration) | | 2021 | 2020 | Improvement/ (Deterioration) | | 2021 | 2020 | Improvement/ (Deterioration) |
Operations Performance | | | | Operations Performance | | | |
| | | | |
Train Velocity (Miles per hour)(a) | 14.0 |
| 14.9 |
| (6 | )% | | 14.7 |
| 15.2 |
| (3 | )% | Train Velocity (Miles per hour)(a) | 17.7 | | 19.6 | | (10) | % | | 18.1 | | 20.7 | | (13) | % |
Dwell (Hours)(a) | 12.1 |
| 11.2 |
| (8 | )% | | 11.5 |
| 11.2 |
| (3 | )% | Dwell (Hours)(a) | 10.5 | | 9.7 | | (8) | % | | 10.6 | | 9.0 | | (18) | % |
| | | | |
Cars Online(a) | | Cars Online(a) | 130,841 | | 115,823 | | (13) | % | | 130,273 | | 108,437 | | (20) | % |
On-Time Originations | 74 | % | 84 | % | (12 | )% | | 81 | % | 84 | % | (4 | )% | On-Time Originations | 71 | % | 85 | % | (16) | % | | 76 | % | 88 | % | (14) | % |
On-Time Arrivals | 48 | % | 54 | % | (11 | )% | | 57 | % | 56 | % | 2 | % | On-Time Arrivals | 62 | % | 71 | % | (13) | % | | 66 | % | 80 | % | (18) | % |
Carload Trip Plan Performance | | Carload Trip Plan Performance | 68 | % | 73 | % | (7) | % | | 68 | % | 78 | % | (13) | % |
Intermodal Trip Plan Performance | | Intermodal Trip Plan Performance | 88 | % | 87 | % | 1 | % | | 87 | % | 92 | % | (5) | % |
Fuel Efficiency | | Fuel Efficiency | 0.92 | | 0.93 | | 1 | % | | 0.96 | | 0.97 | | 1 | % |
| Revenue Ton-Miles (Billions) | | Revenue Ton-Miles (Billions) | |
Merchandise | | Merchandise | 30.8 | | 31.0 | | (1) | % | | 94.2 | | 91.9 | | 3 | % |
Coal | | Coal | 8.9 | | 7.1 | | 25 | % | | 26.9 | | 21.7 | | 24 | % |
Intermodal | | Intermodal | 7.8 | | 7.4 | | 5 | % | | 23.6 | | 20.3 | | 16 | % |
Total Revenue Ton-Miles | | Total Revenue Ton-Miles | 47.5 | | 45.5 | | 4 | % | | 144.7 | | 133.9 | | 8 | % |
| Total Gross Ton-Miles (Billions) | | Total Gross Ton-Miles (Billions) | 92.9 | | 90.3 | | 3 | % | | 282.3 | | 262.6 | | 8 | % |
| | | | |
Safety | | | | Safety | |
FRA Personal Injury Frequency Index | 1.41 |
| 1.27 |
| (11 | )% | | 1.17 |
| 1.04 |
| (13 | )% | FRA Personal Injury Frequency Index | 0.85 | | 0.76 | | (12) | % | | 0.94 | | 0.84 | | (12) | % |
FRA Train Accident Rate | 3.82 |
| 2.61 |
| (46 | )% | | 2.99 |
| 2.69 |
| (11 | )% | FRA Train Accident Rate | 3.09 | | 3.31 | | 7 | % | | 2.81 | | 2.83 | | 1 | % |
(a) The methodologymethodologies for calculating train velocity, dwell and dwellcars online differ from thatthose prescribed by the STB. CSXSTB as the Company believes these numbers more accurately reflect railroad performance. CSXT will continue to report train velocity and dwell,these metrics, using the prescribed methodology, to the STB on a weekly basis.
See additional discussion on the Company's website.
Certain operating statistics are estimated and can continue to be updated as actuals settle.
Key Performance Measures Definitions
Train Velocity - Average train speed between origin and destination in miles per hour (does not include locals, yard jobs, work trains or passenger trains). Train velocity measures the profiled schedule of trains (from departure to arrival and all interim time), and train profiles are periodically updated to align with a changing operation.
Dwell - Average amount of time in hours between car arrival to and departure from the yard.
Cars Online - Average number of active freight rail cars on lines operated by CSX, excluding rail cars that are being repaired, in storage, those that have been sold, or private cars dwelling at a customer location more than one day.
On-Time Originations - Percent of scheduled road trains that depart the origin yard on-time or ahead of schedule.
On-Time Arrivals - Percent of scheduled road trains that arrive at the destination yard on-time.on-time to within two hours of scheduled arrival. Carload Trip Plan Performance - Percent of measured cars destined for a customer that arrive at or ahead of the original estimated time of arrival, notification or interchange (as applicable).
Intermodal Trip Plan Performance - Percent of measured containers destined for a customer that arrive at or ahead of the original estimated time of arrival, notification or interchange (as applicable).
Fuel Efficiency - Gallons of locomotive fuel per 1,000 gross ton-miles.
Revenue Ton-Miles (RTM's) - The movement of one revenue-producing ton of freight over a distance of one mile.
Gross Ton-Miles (GTM's) - The movement of one ton of train weight over one mile. GTM's are calculated by multiplying total train weight by distance the train moved. Total train weight is comprised of the weight of the freight cars and their contents.
FRA Personal Injury Frequency Index - Number of FRA-reportable injuries per 200,000 man-hours.
FRA Train Accident Rate - Number of FRA-reportable train accidents per million train-miles.
CSX Q3 2021 Form 10-Q p.36
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| CSX Q3 2017 Form 10-Q p.38
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The following are material changes in the significant cash flows, sources of cash and liquidity, capital investments, consolidated balance sheets and sources of liquidity andworking capital, which provide an update to the discussion included in CSX's most recent annual report on Form 10-K.
Material Changes in Consolidated Balance Sheets and Significant Cash Flows
Consolidated Balance Sheets
Total assets increased $159 million from year end primarily due to an increase in net properties of $429 million, partially offset by a decrease in cash and short-term investment activity of $316 million. Total liabilities and shareholders' equity combined increased $159 million from year end primarily due to net earnings of $1.3 billion, an increase in net debt of $514 million and an increase in taxes payable of $193 million mostly due to a temporary tax payment extension for companies in areas affected by Hurricane Irma. These increases were partially offset by share repurchases of $1.8 billion.
Significant Cash Flows
The following chart highlights the operating, investing and financing components of the net decrease of $950 million and net increase of $1.9 billion in cash and cash equivalents of $12 million as compared to a net decrease of $25 million for operating, investing and financing activities for nine months ended 20172021 and 2016,2020, respectively.
•Cash provided by operating activities increased $373$691 million primarily driven by a temporary tax payment extension for companies in areas affected by Hurricane Irma, higher working capital and other activities,cash-generating income and higher net earnings. These increases were partially offset by payments related to restructuring activities.favorable working capital.
•Cash used in investing activities increased $186 million$1.3 billion primarily driven by higheras a result of decreased net purchasessales of short-term investments and net cash paid to acquire Quality Carriers, partially offset by lowerhigher proceeds from property additions.dispositions.
•Cash used in financing activities increased $174 million primarily due to$2.3 billion driven by higher share repurchases, partially offset by higher netlower proceeds from debt issuedissuances and increased long-term debt repayments.
Sources of Cash and Liquidity and Uses of Cash
As of the end of third quarter 2021, CSX had nearly $2.2 billion of cash, cash equivalents and short-term investments. CSX uses current cash balances for general corporate purposes, which may include capital expenditures, working capital requirements, reduction or refinancing of outstanding indebtedness, redemptions and repurchases of CSX common stock, dividends to shareholders, acquisitions and other business opportunities, and contributions to the Company's qualified pension plan. See Note 7, Debt and Credit Agreements.
The Company has multiple sources of liquidity, including cash generated from operations and financing sources. The Company filed a prior year repayment of seller-financed assets that did not repeat inshelf registration statement with the current year.
Projected capital investments for 2017 are expectedSEC on February 12, 2019, which is unlimited as to be $2.1 billion, including approximately $270 million for Positive Train Control ("PTC"). Of the 2017 investment, over half willamount and may be used to sustainissue debt or equity securities at CSX’s discretion, subject to market conditions and CSX Board authorization. While CSX seeks to give itself flexibility with respect to cash requirements, there can be no assurance that market conditions would permit CSX to sell such securities on acceptable terms at any given time, or at all. During the core infrastructure. The remaining amounts will be allocated to projects supporting productivity initiatives, service enhancements and profitable growth.nine months ended 2021, CSX intends to fund capital investments through cash generated from operations.did not issue any new long-term debt.
CSX Q3 2021 Form 10-Q p.37
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| CSX Q3 2017 Form 10-Q p.39
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company has incurred significant capital costs in connection with the implementation of PTC and has substantial work ahead. CSX estimates that the total multi-year cost of PTC implementation will be approximately $2.4 billion. This estimate includes costs for installing the new system along tracks, upgrading locomotives, adding communication equipment and developing new technologies. Total PTC spending through September 2017 was $2.0 billion.
Liquidity and Working Capital
As of the end of third quarter 2017, CSX had $704 million of cash, cash equivalents and short-term investments. CSX has a $1.0$1.2 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This facilitybanks that expires in May 2020 and as of the date of this filing,March 2024. At September 30, 2021, the Company hashad no outstanding balances under this facility. The Company also has a commercial paper program, backed by the revolving credit facility, under which the Company may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $1.0 billion outstanding at any one time. At September 30, 2021, the Company had no outstanding debt under the commercial paper program.
Planned capital investments for 2021 are expected to be between $1.7 billion and $1.8 billion. Of the total 2021 investment, the majority will be used to sustain the core infrastructure and the remaining amounts will be allocated to projects supporting service enhancements, productivity initiatives and profitable growth. CSX uses currentintends to fund capital investments through cash balances for general corporate purposes, which may include reduction or refinancinggenerated from operations.
Material Changes in the Consolidated Balance Sheets and Working Capital
Consolidated Balance Sheets
Total assets increased $336 million from year end primarily due to a $414 million increase in accounts receivable, the recognition of outstanding indebtedness, capital expenditures, working capital requirements, contributions$390 million of goodwill and intangible assets related to the Company's qualified pension plan, redemptionsacquisition of Quality Carriers and net property increases of $370 million, partially offset by the $950 million decrease in cash described above. The increase in accounts receivable was driven by the Virginia easement conveyance and increased trade accounts receivable commensurate with higher revenue, including trucking. Of the increase in net property, $225 million was the result of consolidating Quality Carriers' properties. See Note 12, Business Combinations, for more details on purchase accounting.
Total liabilities increased $274 million from year end primarily due to an increase in income and other taxes payable of $165 million driven by the timing of estimated income tax payments, an increase in accounts payable of $163 million and a $130 million increase in deferred tax liabilities primarily driven by accelerated tax depreciation. These increases were offset by debt repayments of $390 million. Total shareholders' equity increased $62 million from year end primarily driven by total comprehensive earnings of $2.9 billion, mostly offset by share repurchases of CSX common stock$2.3 billion and dividends to shareholders. See Note 7, Debt and Credit Agreements.paid of $633 million.
The Company has a receivables securitization facility with a three-year term scheduled to expire in September 2019. The purpose of this facility is to provide an alternative to commercial paper and a low cost source of short-term liquidity of up to $200 million, depending on eligible receivables balances. As of the date of this filing, the Company has no outstanding balances under this facility.
Working capital can also beis considered a measure of a company's ability to meet its short-term needs. CSX had a working capital surplus of $97 million and $447 million$1.6 billion as of September 30, 20172021 and $2.4 billion as of December 30, 2016, respectively.31, 2020, a decrease of $793 million since year end. The decrease in working capital since year end of $350 million iscurrent assets was primarily due to share repurchases of $1.8 billion, property additions of $1.5 billion and dividends paid of $530 million. These decreases werethe $950 million decrease in cash, partially offset by cash provided from operationsa $414 million increase in accounts receivable described above. The increase in current liabilities was primarily the result of $2.9 billiona $165 million increase in income and net debt issuedother taxes payable and a $163 million increase in accounts payable, partially offset by $190 million decrease in current maturities of $518 million.
long term debt. The Company's working capital balance varies due to factors such as the timing of scheduled debt payments and changes in cash and cash equivalent balances as discussed above. The Company continues to maintain adequate liquidity to satisfy current liabilities and maturing obligations when they come due. CSX has sufficient financial capacity, including its revolving credit facility, trade receivable facilitycommercial paper program and shelf registration statement to manage its day-to-day cash requirements and any anticipated obligations. The Company from time to time accesses the credit markets for additional liquidity.
CSX is currently reviewing its cash deployment strategy with respect to capital structure and shareholder distributions and is committed to returning cash to shareholders and maintaining an investment gradeinvestment-grade credit profile.
Contractual Obligations Capital structure, capital investments and Commercial Commitments
CSXT has a commitment under a long-term maintenance program agreement that covers a portion of CSXT’s fleet of locomotives. The program costscash distributions, including dividends and share repurchases, are based on the maintenance cycle for each covered locomotive, which is determinedreviewed at least annually by the asset's ageBoard of Directors. Management's assessment of market conditions and type. Expected future costs may change as required maintenance schedulesother factors guides the timing and volume of repurchases. Future share repurchases are revisedexpected to be funded by cash on hand, cash generated from operations and locomotives are placed into or removed from service. Under CSXT’s current obligations, the agreement will expire no earlier than 2031. On August 9, 2017, the Company exercised certain rights under the agreement, which resulted in a reduction of the locomotive fleet covered from 50% as of December 30, 2016 to an estimated 34% of locomotives beginning August 2018. As a result, the total remaining payments decreased from approximately $5.0 billion at December 30, 2016 to an estimated $1.7 billion at September 30, 2017.debt issuances.
CSX Q3 2021 Form 10-Q p.38
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| CSX Q3 2017 Form 10-Q p.40
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Completed and Pending Transactions
Acquisition of Quality Carriers, Inc.
On July 1, 2021, CSX acquired Quality Carriers, Inc. from Quality Distribution, Inc. for a purchase price of $546 million in cash, subject to certain customary purchase price adjustments. This transaction was funded by cash on hand. For further details, please refer to Note 12, Business Combinations.
Proposed Acquisition of Pan Am Systems, Inc.
On November 30, 2020, CSX signed a definitive agreement to acquire Pan Am Systems, Inc. (“Pan Am”) which is the parent company of Pan Am Railways, Inc. who jointly owns Pan Am Southern, LLC with a subsidiary of Norfolk Southern Corporation. Pan Am owns and operates a highly integrated, nearly 1,200-mile rail network and has a joint interest in the more than 600-mile Pan Am Southern system. This acquisition, if approved, will expand CSX’s reach in the Northeastern United States. Assets and facilities to be acquired as part of the proposed transaction include road and track assets, work equipment, land, buildings and other assets. On February 25, 2021, the Company began the process of seeking approval from the STB with a decision expected by April 1, 2022. This proposed acquisition is not expected to be material with respect to the Company's financial statements when reviewed under the quantitative and qualitative considerations of Regulation S-X Article 11 and ASC 805, Business Combinations.
Sale of Property Rights to the Commonwealth of Virginia
On March 26, 2021, the Company entered into a comprehensive agreement to sell certain property rights in three CSX-owned line segments to the Commonwealth of Virginia (“Commonwealth”) over three phases for a total of $525 million.
In April 2021, in the first phase of the transaction, the Company closed on the conveyance of a permanent land easement for passenger rail operations, resulting in a $349 million gain recognized in gains on property dispositions on the consolidated income statement. Upon closing of the first phase, cash proceeds of $200 million were received and a receivable was recorded in the amount of $168 million. The Company expects to collect proceeds of $200 million in fourth quarter 2021, partly attributable to the first phase with the remainder towards the next phase. Additional future proceeds and related gains attributable to this conveyance are subject to state funding.
The Company anticipates closing on the remaining conveyances by the end of 2022, which will result in future cash proceeds and gains. The timing of future gain recognition is dependent upon the timing of future conveyances as well as collectability. As of September 30, 2021, the carrying values of the remaining assets subject to this transaction were not material.
CSX Q3 2021 Form 10-Q p.39
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Guaranteed Notes Issued By CSXT
In 2007, CSXT, a wholly-owned subsidiary of CSX Corporation, issued in a registered public offering $381 million of secured equipment notes maturing in 2023. CSX Corporation has fully and unconditionally guaranteed the notes. At CSXT’s option, CSXT may redeem any or all of the notes, in whole or in part, at any time, at the redemption price including premium. In the case of loss or destruction of any item of equipment securing the notes, if CSXT does not substitute another item of equipment for the item suffering such loss or destruction, CSXT will be required to redeem the notes in part at par. The guarantee of the notes will rank equally in right of payment with all existing and future senior obligations of CSX Corporation and will be effectively subordinated to all future secured indebtedness of CSX Corporation to the extent of the assets securing such indebtedness. The guarantee is subject to release in limited circumstances only upon the occurrence of certain customary conditions. As of September 30, 2021, the principal balance of these secured equipment notes was $149 million.
In accordance with SEC rules, including amendments adopted in 2020, CSX is not required to present separate condensed consolidating financial information for wholly-owned subsidiaries who issued or guaranteed notes. Additionally, presentation of combined summary financial information regarding subsidiary issuers and guarantors is not required because the assets, liabilities and results of operations of the combined issuers and guarantors of the notes are not materially different from the corresponding amounts presented in the consolidated financial statements.
LABOR AGREEMENTS
Approximately 15,500 of the Company's approximately 20,500 employees are members of a labor union. For the 13 rail unions that participate in national bargaining, a round of negotiations for benefits, wages and work rules is underway. Typically, these negotiations take several years. Current agreements remain in place until modified by new agreements.
CSX Q3 2021 Form 10-Q p.40
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates in reporting the amounts of certain assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and certain revenues and expenses during the reporting period. Actual results may differ from those estimates. These estimates and assumptions are discussed with the Audit Committee of the Board of Directors on a regular basis. Consistent with the prior year, significant estimates using management judgment are made for the areas below. For further discussion of CSX's critical accounting estimates, see the Company's most recent annual report on Form 10-K.
casualty,•personal injury, environmental and legal reserves;
•pension and post-retirement medical plan accounting; and
•depreciation policies for assets under the group-life method; andmethod.
income taxes.
FORWARD-LOOKING STATEMENTS
Certain statements in this report and in other materials filed with the SEC,Securities and Exchange Commission, as well as information included in oral statements or other written statements made by the Company, are forward-looking statements. The Company intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements within the meaning of the Private Securities Litigation Reform Act may contain, among others, statements regarding:
•projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes or other financial items;
•expectations as to results of operations and operational initiatives;
•expectations as to the effect of claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements on the Company's financial condition, results of operations or liquidity;
•management's plans, strategies and objectives for future operations, capital expenditures, workforce levels, dividends, share repurchases, safety and service performance, proposed new services and other matters that are not historical facts, and management's expectations as to future performance and operations and the time by which objectives will be achieved; and
•future economic, industry or market conditions or performance and their effect on the Company's financial condition, results of operations or liquidity.
Forward-looking statements are typically identified by words or phrases such as "will," "should," “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. The Company cautions against placing undue reliance on forward-looking statements, which reflect its good faith beliefs with respect to future events and are based on information currently available to it as of the date the forward-looking statement is made. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the timing when, or by which, such performance or results will be achieved.
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| CSX Q3 2017CSX Q3 2021 Form 10-Q p.41
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements are subject to a number of risks and uncertainties and actual performance or results could differ materially from those anticipated by any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement. If the Company does update any forward-looking statement, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements. The following important factors, in addition to those discussed in Part II,I, Item 1A (Risk Factors)Risk Factors of CSX's most recent annual report on Form 10-K and elsewhere in this report, may cause actual results to differ materially from those contemplated by any forward-looking statements:
•legislative, regulatory or legal developments involving transportation, including rail or intermodal transportation, the environment, hazardous materials, taxation, international trade and initiatives to further regulate the rail industry;
•the outcome of litigation, claims and other contingent liabilities, including, but not limited to, those related to fuel surcharge, environmental matters, taxes, shipper and rate claims subject to adjudication, personal injuries and occupational illnesses;
•changes in domestic or international economic, political or business conditions, including those affecting the transportation industry (such as the impact of industry competition, conditions, performance and consolidation) and the level of demand for products carried by CSXT;
•natural events such as severe weather conditions, including floods, fire, hurricanes and earthquakes, a pandemic crisis, including the outbreak of COVID-19, affecting the health of the Company's employees, its shippers or the consumers of goods, or other unforeseen disruptions of the Company's operations, systems, property, equipment or equipment;supply chain;
•competition from other modes of freight transportation, such as trucking and competition and consolidation or financial distress within the transportation industry generally;
•the cost of compliance with laws and regulations that differ from expectations (including those associated with PTC implementation), as well as costs, penalties and operational and liquidity impacts associated with noncompliance with applicable laws or regulations;
•the impact of increased passenger activities in capacity-constrained areas, including potential effects of high speed rail initiatives, or regulatory changes affecting when CSXT can transport freight or service routes;
•unanticipated conditions in the financial markets that may affect timely access to capital markets and the cost of capital, as well as management's decisions regarding share repurchases;
•changes in fuel prices, surcharges for fuel and the availability of fuel;
•the impact of natural gas prices on coal-fired electricity generation;
•the impact of global supply and price of seaborne coal on CSXT's export coal market;
CSX Q3 2021 Form 10-Q p.42
CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
•availability of insurance coverage at commercially reasonable rates or insufficient insurance coverage to cover claims or damages;
•the inherent business risks associated with safety and security, including the transportation of hazardous materials or a cybersecurity attack which would threaten the availability and vulnerability of information technology;
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| CSX Q3 2017 Form 10-Q p.42
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
•adverse economic or operational effects from actual or threatened war or terrorist activities and any governmental response;
•loss of key personnel or the inability to hire and retain qualified employees;
•labor and benefit costs and labor difficulties, including stoppages affecting either the Company's operations or customers' ability to deliver goods to the Company for shipment;
•the Company's success in implementing its strategic, financial and operational initiatives, including Precision Scheduled Railroading;acquisitions;
•the impact of conditions in the real estate market on the Company's ability to sell assets;
•changes in operating conditions and costs or commodity concentrations;
•the continued and uncertain impact of the COVID-19 pandemic; and
•the inherent uncertainty associated with projecting economic and business conditions.
Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified elsewhere in this report and in CSX's other SEC reports, which are accessible on the SEC's website at www.sec.gov and the Company's website at www.csx.com. The information on the CSX website is not part of this quarterly report on Form 10-Q.
CSX Q3 2021 Form 10-Q p.43
CSX CORPORATION
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risk from the information provided under Part II, Item 7A (Quantitative and Qualitative Disclosures about Market Risk) of CSX's most recent annual report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
As of September 30, 2017,2021, under the supervision and with the participation of CSX's Chief Executive Officer (“CEO”) and Acting Chief Financial Officer (“CFO”), management has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the CEO and CFO concluded that, as of September 30, 2017,2021, the Company's disclosure controls and procedures were effective at the reasonable assurance level in timely alerting them to material information required to be included in CSX's periodic SEC reports. There were no changes in the Company's internal controls over financial reporting during the third quarter of 20172021 that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.
CSX Q3 2021 Form 10-Q p.44
CSX CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold. Pursuant to SEC amendments to this Item, the Company will be using a threshold of $1 million for such proceedings. For further details, please refer to Note 5.5, Commitments and Contingencies of this quarterly report on Form 10-Q. Also refer to Part I, Item 3.3, Legal Proceedings in CSX's most recent annual report on Form 10-K.
Item 1A. Risk Factors
For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussed under Part II,I, Item 7 (Management's Discussion and Analysis of Financial Condition and Results of Operations)1A (Risk Factors) of CSX's most recent annual report on Form 10-K. See also Part I, Item 2 (Forward-Looking Statements) of this quarterly report on Form 10-Q.
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Item 2. CSX Purchases of Equity Securities
CSX purchases its own The Company continues to repurchase shares for two primary reasons: (1) to further its goals under its share repurchase program and (2) to fund the Company’s contribution required to be paid in CSX common stock under a 401(k) plan that covers certain union employees.
In July 2017, the Board of Directors approved an additional $500 million of share repurchase authority under the $5 billion share repurchase program announced in April 2017, bringing the total program size to $1.5October 2020. Total repurchase authority remaining as of September 30, 2021, was $3.6 billion. As of October 2, 2017, the Company had completed allFor more information about share repurchases, under this program. During the third quartersof 2017 and 2016, the Company repurchased approximately $1 billion, or 20 million shares, and $263 million, or 10 million shares, respectively.
Management's assessment of market conditions and other factors guides the timing and volume of repurchases. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the ASC, the excess of repurchase price over par value is recorded in retained earnings. Generally, retained earnings is only impacted by net earnings and dividends.
see Note 2, Earnings Per Share. Share repurchase activity for the third quarter 20172021 was as follows:
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| CSX Purchases of Equity Securities for the Quarter | |
Third Quarter | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
Beginning Balance | | | | $ | 4,637,085,325 | |
July 1 - July 31, 2021 | 12,631,812 | | $ | 31.70 | | 12,631,812 | | 4,236,614,639 | |
August 1 - August 31, 2021 | 4,250,947 | | 32.90 | | 4,250,947 | | 4,096,758,338 | |
September 1 - September 30, 2021 | 16,976,353 | | 30.86 | | 16,976,353 | | 3,572,838,310 | |
Ending Balance | 33,859,112 | | $ | 31.43 | | 33,859,112 | | $ | 3,572,838,310 | |
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| CSX Purchases of Equity Securities for the Quarter | |
Third Quarter | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
Beginning Balance | | | | $ | 512,661,389 |
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July 1 - July 31, 2017 | 9,920,229 |
| $ | 52.24 |
| 9,805,644 |
| 500,360,263 |
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August 1 - August 31, 2017 | 6,642,545 |
| 49.85 |
| 6,642,545 |
| 169,256,400 |
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September 1 - September 30, 2017 | 3,129,053 |
| 51.64 |
| 3,128,708 |
| 7,696,097 |
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Ending Balance | 19,691,827 |
| $ | 51.34 |
| 19,576,897 |
| $ | 7,696,097 |
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(a) The difference of 114,930 shares between the "Total Number of Shares Purchased" and the "Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs" for the quarter represents shares purchased to fund the Company's contribution to a 401(k) plan that covers certain union employees.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information
None
CSX Q3 2021 Form 10-Q p.45
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Item 6. Exhibits
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Exhibit designation | Nature of exhibit | Previously filed as exhibit to |
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Exhibit designation | Nature of exhibit | Previously filed as exhibit to |
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Officer certifications:31* | | |
31*32* | | |
32* | | |
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Interactive data files: |
101* | The following financial information from CSX Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 20172021 filed with the SEC on October 18, 2017,20, 2021, formatted in inline XBRL includes: (i) consolidated income statements for the fiscal periodsquarters and nine months ended September 30, 20172021 and September 23, 2016,30, 2020, (ii) condensed consolidated comprehensive income statements for the fiscal periodsquarters and nine months ended September 30, 20172021 and September 23, 201630, 2020, (iii) consolidated balance sheets at September 30, 20172021 and December 30, 2016,31, 2020, (iv) consolidated cash flow statements for the fiscal periodsnine months ended September 30, 20172021 and September 23, 2016,30, 2020, (v) consolidated statement of changes in shareholders' equity for the quarters and (v)nine months ended September 30, 2021 and September 30, 2020, and (vi) the notes to consolidated financial statements.
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104 | Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101) | |
* Filed herewith | | |
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* Filed herewith | | |
CSX Q3 2021 Form 10-Q p.46
SIGNATURE
Pursuant to the requirements 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.
CSX CORPORATION
(Registrant)
By:/s/ ANDREW L. GLASSMANANGELA C. WILLIAMS
Andrew L. GlassmanAngela C. Williams
Vice President and Controller
Chief Accounting Officer
(Principal Accounting Officer)
Dated: October 18, 201720, 2021
CSX Q3 2021 Form 10-Q p.47
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