CONSOLIDATED BALANCE SHEETS

(Dollars in Millions)

			(Unaudited)
			March 26,	December 25,
			2010	2009
ASSETS
Current Assets:
	Cash and Cash Equivalents		$993	$1,029
	Short-term Investments		57	61
	Accounts Receivable - Net (Note 1)		971	995
	Materials and Supplies		218	203
	Deferred Income Taxes		184	158
	Other Current Assets		78	124
	Total Current Assets		2,501	2,570
Properties			31,276	31,081
Accumulated Depreciation			(7,986)	(7,868)
	Properties - Net		23,290	23,213
Investment in Conrail			654	650
Affiliates and Other Companies			442	438
Other Long-term Assets			306	165
	Total Assets		$27,193	$27,036
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
	Accounts Payable		$931	$967
	Labor and Fringe Benefits Payable		376	383
	Casualty, Environmental and Other Reserves (Note 4)		185	190
	Current Maturities of Long-term Debt (Note 7)		617	113
	Income and Other Taxes Payable		162	112
	Other Current Liabilities		117	100
	Total Current Liabilities		2,388	1,865
Casualty, Environmental and Other Reserves (Note 4)			553	547
Long-term Debt (Note 7)			7,372	7,895
Deferred Income Taxes			6,668	6,585
Other Long-term Liabilities			1,327	1,284
	Total Liabilities		18,308	18,176
Shareholders' Equity:
Common Stock $1 Par Value			389	393
Other Capital			-	80
Retained Earnings			9,279	9,182
Accumulated Other Comprehensive Loss (Note 1)			(798)	(809)
Noncontrolling Interest			15	14
	Total Shareholders' Equity		8,885	8,860
	Total Liabilities and Shareholders' Equity		$27,193	$27,036

See accompanying notes to consolidated financial statements.

CONSOLIDATED CASH FLOW STATEMENTS   (Unaudited)

  (Dollars in Millions)

					First Quarters
					2010	2009
OPERATING ACTIVITIES
	Net Earnings				$306	$246
	Adjustments to Reconcile Net Earnings to Net Cash Provided
	by Operating Activities:
		Depreciation			229	224
		Deferred Income Taxes			47	79
		Other Operating Activities			64	(65)
		Changes in Operating Assets and Liabilities:
			Accounts Receivable		24	132
			Other Current Assets		(34)	(76)
			Accounts Payable		(26)	(36)
			Income and Other Taxes Payable		125	31
			Other Current Liabilities		12	(86)
		Net Cash Provided by Operating Activities			747	449
INVESTING ACTIVITIES
	Property Additions (Note 1)				(331)	(309)
	Other Investing Activities				18	37
		Net Cash Used in Investing Activities			(313)	(272)
FINANCING ACTIVITIES
	Long-term Debt Issued (Note 7)				-	500
	Long-term Debt Repaid (Note 7)				(17)	(26)
	Dividends Paid				(93)	(86)
	Stock Options Exercised (Note 3)				6	2
	Shares Repurchased				(229)	-
	Other Financing Activities (Note 1)				(137)	(180)
		Net Cash (Used in) Provided by Financing Activities			(470)	210
	Net (Decrease) Increase in Cash and Cash Equivalents				(36)	387
CASH AND CASH EQUIVALENTS
	Cash and Cash Equivalents at Beginning of Period				1,029	669
		Cash and Cash Equivalents at End of Period			$993	$1,056

See accompanying notes to consolidated financial statements.

NOTE 1.       Nature of Operations and Significant Accounting Policies

Background

CSX Corporation (“CSX”), and together with its subsidiaries (the “Company”), based in Jacksonville, Florida, is one of the nation's leading transportation suppliers.  The Company’s rail and intermodal businesses provide rail-based transportation services including traditional rail service and the transport of intermodal containers and trailers.

CSX’s principal operating subsidiary, CSX Transportation, Inc. (“CSXT”), provides an important link to the transportation supply chain through its approximately 21,000 route mile rail network, which serves major population centers in 23 states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec.  CSX Intermodal, Inc. (“Intermodal”) is a stand-alone, integrated intermodal transportation provider linking customers to railroads via trucks and terminals .

Other entities

In addition to CSXT, the rail segment includes non-railroad subsidiaries Total Distribution Services, Inc. (“TDSI”), Transflo Terminal Services, Inc. (“Transflo”), CSX Technology, Inc. (“CSX Technology”) and other subsidiaries.  TDSI serves the automotive industry with distribution centers and storage locations, while Transflo provides logistical solutions for transferring products from rail to trucks.  CSX Technology and other subsidiaries provide support services for the Company.

CSX’s other holdings include CSX Real Property, Inc., a subsidiary responsible for the Company’s real estate sales, leasing, acquisition and management and development activities.  These activities are classified in other income – net because they are not considered by the Company to be operating activities.  Results of these activities fluctuate with the timing of real estate sales.

Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements contain all normal, recurring adjustments necessary to fairly present the following:

·	Consolidated income statements for the quarters ended March 26, 2010 and March 27, 2009;

·	Consolidated balance sheets at March 26, 2010 and December 25, 2009; and

·	Consolidated cash flow statements for the quarters ended March 26, 2010 and March 27, 2009.

NOTE 1.     Nature of Operations and Significant Accounting Policies, continued

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted from these interim financial statements.  CSX suggests that these financial statements be read in conjunction with the audited financial statements and the notes included in CSX's most recent Annual Report on Form 10-K and any Current Reports on Form 8-K.

Fiscal Year

CSX follows a 52/53 week fiscal reporting calendar with the last day of each reporting period ending on a Friday:

·	The first fiscal quarter of 2010 and 2009 consisted of 13 weeks ending on March 26, 2010 and March 27, 2009, respectively.

·	Fiscal year 2009 consisted of 52 weeks ending on December 25, 2009.

·	Please note that fiscal year 2010 consists of 53 weeks ending on December 31, 2010.

Except as otherwise specified, references to quarters indicate CSX’s fiscal periods ending March 26, 2010 and March 27, 2009, and references to year-end indicate the fiscal year ended December 25, 2009.

Comprehensive Earnings

CSX reports comprehensive earnings or loss in accordance with the Comprehensive Income Topic in the Accounting Standards Codification (“ASC”) in the Consolidated Statement of Changes in Shareholders' Equity.  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 equals net earnings plus or minus adjustments for pension and other post-retirement liabilities.  Total comprehensive earnings represent the activity for a period net of related tax effects and were $318 million and $246 million for first quarters 2010 and 2009, 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 adjustments. Overall equity was reduced by $798 million and $809 million as of March 2010 and December 2009, respectively, primarily as a result of normal quarterly pension reclassifications .  In general, for CSX, AOCI is not materially impacted by other items.

NOTE 1.     Nature of Operations and Significant Accounting Policies, continued

Allowance for Doubtful Accounts

 

     The Company maintains an allowance for doubtful accounts on uncollectible amounts related to freight receivables, public project receivables (work done by the Company on behalf of a government agency), claims for damages and other various receivables. The allowance is based upon the credit worthiness of customers, historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account.  Allowance for doubtful accounts of $47 million is included in the consolidated balance sheets as of March 2010 and December 2009.

Capital Expenditures

 

     Property additions, which are classified as investing activities on the consolidated cash flow statements, consisted of $331 million and $309 million for first quarters 2010 and 2009, respectively.  Total capital expenditures for 2009 included purchases of new assets using seller financing of approximately $160 million, for which payments are included in other financing activities on the consolidated cash flow statements.  There were no purchases of new assets under seller financing agreements during first quarter 2010.  The Company plans to spend $1.7 billion for total capital expenditures in 2010.

Retained Earnings

 

     During first quarter 2010, CSX's other capital balance was reduced to zero as a result of share repurchases. In accordance with the Equity Topic in the ASC , other capital cannot be negative.  Therefore, a reclassification of $116 million was made between retained earnings and other capital to bring the other capital balance to zero.  Generally, retained earnings is only impacted by net earnings and dividends. 

 

NOTE 2.       Earnings Per Share

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:

		First Quarters
		2010	2009
Numerator (Dollars in millions) :
	Earnings from Continuing Operations	$306	$254
	Discontinued Operations - Net of Tax   (a)	-	(8)
	Net Earnings	306	246
Denominator (Units in thousands) :
	Average Common Shares Outstanding	391,079	391,160
	Convertible Debt	1,042	1,118
	Stock Option Common Stock Equivalents (b)	2,131	1,823
	Other Potentially Dilutive Common Shares	71	-
	Average Common Shares Outstanding, Assuming Dilution	394,323	394,101
Net Earnings Per Share, Basic:
	Continuing Operations	$0.78	$0.65
	Discontinued Operations (a)	-	(0.02)
	Net Earnings	$0.78	$0.63
Net Earnings Per Share, Assuming Dilution:
	Continuing Operations	$0.78	$0.64
	Discontinued Operations (a)	-	(0.02)
	Net Earnings	$0.78	$0.62

(a)	For additional information regarding discontinued operations, see Note 10, Discontinued Operations.

(b)

When calculating diluted earnings per share for stock option common stock equivalents, the Earnings Per Share Topic in the ASC requires CSX to include the potential shares that would be outstanding if all outstanding stock options were exercised.   This is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent.  This number is different from outstanding stock options, which is included in Note 3, Share-Based Compensation .   All stock options were dilutive for the periods presented; therefore, no stock options were excluded from the diluted earnings per share calculation.

NOTE 2.     Earnings Per Share, continued

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 adjusted for the effects of common stock that may be issued as a result of the following types of potentially dilutive instruments:

·	convertible debt;

·	employee stock options; and

·	other equity awards, which include long-term incentive awards.

The Earnings Per Share Topic in the ASC requires CSX to include additional shares in the computation of earnings per share, assuming dilution.  The additional shares included in diluted earnings per share represents the number of shares that would be issued if all of CSX’s outstanding convertible debentures were converted into CSX common stock.

As a result, diluted shares outstanding are not impacted when debentures are converted into CSX common stock because those shares were already included in the diluted shares calculation.  Shares outstanding for basic earnings per share, however, are impacted on a weighted-average basis when conversions occur.  During first quarter 2010, $3 million of face value of convertible debentures were converted into 95 thousand shares of CSX common stock.  There were no conversions of convertible debentures during first quarter 2009.  As of March 2010, approximately $28 million of convertible debentures at face value remained outstanding, which are convertible into approximately 1 million shares of CSX common stock.

NOTE 3.       Share-Based Compensation

CSX share-based compensation plans primarily include performance grants, restricted stock awards, stock options and stock plans for directors.  CSX has not granted stock options since 2003.  Awards granted under the various plans are determined and approved by the Compensation Committee of the Board of Directors or, in certain circumstances, by the Chief Executive Officer for awards to management employees other than senior executives.  The Board of Directors approves awards granted to the Company’s non-management directors upon recommendation of the Governance Committee.

Total pre-tax expense associated with share-based compensation and its related income tax benefit is as follows:

(a) Share-based compensation expense may fluctuate with estimates of the number of performance-based awards that are expected to be awarded in future periods.

NOTE 3.     Share-Based Compensation, continued

The following table provides information about stock options exercised.

	First Quarters
(In thousands)	2010	2009
Number of Stock Options Exercised	359	74

As of December 2009, all outstanding options are vested and therefore, there will be no future expense related to these options.  As of March 2010, CSX had approximately 5 million stock options outstanding.  However, the impact of options to diluted earnings per share is much smaller (see footnote b to the table in Note 2, Earnings Per Share for more information).

NOTE 4.       Casualty, Environmental and Other Reserves

Casualty, environmental and other reserves were determined to be critical accounting estimates due to the need for significant management judgments. They are provided for in the consolidated balance sheets as follows:

Details with respect to each type of reserve are described below.  Actual settlements and claims received could differ.  The final outcome of these matters cannot be predicted with certainty.  Considering the legal defenses available, the liabilities that have been recorded and other factors, it is the opinion of management that none of these items, when finally resolved, will have a material effect on the Company’s financial condition, results of operations or liquidity.  Should a number of these items occur in the same period, however, they could have a material effect on the financial condition, results of operations or liquidity in that particular period.

NOTE 4.     Casualty, Environmental and Other Reserves, continued

Casualty

Casualty reserves represent accruals for personal injury and occupational injury claims.  Currently, no individual claim is expected to exceed the Company’s self-insured retention amount of $25 million per injury.  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 independent third-party estimates, which are reviewed by management.  Most of the claims relate to CSXT unless otherwise noted below.  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 CSX subsidiaries or former 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 actuarial firm to assist management in assessing the value of personal injury claims and cases.  An analysis is performed by the independent actuarial firm semi-annually and is reviewed by management. The methodology used by the actuary includes a development factor to reflect growth or reduction in the value of these personal injury claims. It is based largely on CSXT’s historical claims and settlement experience.  Actual results may vary from estimates due to the number, type and severity of the injury, costs of medical treatments and uncertainties in litigation.

Occupational

Occupational claims arise from allegations of exposure to certain materials in the workplace, such as asbestos, solvents (which include soaps and chemicals) and diesel fuels or allegations of chronic physical injuries resulting from work conditions, such as repetitive stress injuries, carpal tunnel syndrome and hearing loss.

An analysis of occupational claims is performed semi-annually by an independent third party and reviewed by management.  The methodology used includes an estimate of future anticipated incurred but not reported claims based on the Company’s trends in average historical claim filing rates, future anticipated dismissal rates and settlement rates.  Actual claims may vary from estimates due to the number, type and severity of the injury, costs of medical treatments and uncertainties in litigation.

NOTE 4.     Casualty, Environmental and Other Reserves, continued

 

Separation

 

Separation liabilities provide for the estimated benefits provided to certain union employees as a result of implementing workforce reductions, improvements in productivity and certain other cost reductions at the Company's major transportation units since 1991. These liabilities are expected to be paid out over the next 10 to 15 years from general corporate funds and may fluctuate depending on the timing of payments and associated taxes.

 

Environmental

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 251 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, or 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 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.

NOTE 4.     Casualty, Environmental and Other Reserves, continued

Based on the review process, the Company has recorded amounts to cover anticipated contingent future environmental remediation costs with respect to each site to the extent such costs are 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, supplies and other on the consolidated income statement.

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 exposure, the amount and materiality of which cannot presently be reliably estimated.  Based upon information currently available, however, the Company believes its environmental reserves are adequate to fund remedial actions to comply with present laws and regulations, and that the ultimate liability for these matters, if any, will not materially affect its overall financial condition, results of operations or liquidity.

Other

 Other reserves include liabilities for various claims, such as longshoremen disability claims primarily associated with former subsidiaries’ activities, freight claims and claims for property, automobile and general liability.  These liabilities are accrued at the estimable and probable amount in accordance with the Contingencies Topic in the ASC.

NOTE 5.       Commitments and Contingencies

Insurance

The Company maintains numerous insurance programs with substantial limits for third-party casualty liability and Company property damage and business interruption.  A certain amount of risk is retained by the Company on each of the casualty and property programs.  For the first event in any given year, the Company has a $25 million deductible for each of the casualty and non-catastrophic property programs and a $50 million deductible for the catastrophic property program.

While the Company’s current insurance coverage is adequate to cover its damages, future claims could exceed existing insurance coverage or insurance may not continue to be available at commercially reasonable rates.

NOTE 5.     Commitments and Contingencies, continued

Guarantees

CSX and certain of its subsidiaries are contingently liable, individually and jointly with others, as guarantors of approximately $41 million in obligations principally relating to leased equipment, vessels and joint facilities used by the Company in its current and former business operations.  Utilizing the Company’s guarantee for these obligations allows the obligor to take advantage of lower interest rates and to obtain other favorable terms.  Guarantees are contingent commitments issued by the Company that could require CSX or one of its affiliates to make payment to, or to perform certain actions for, the beneficiary of the guarantee based on another entity’s failure to perform.

 
 

At March 2010, the Company’s guarantees primarily related to the following:

·

Guarantee of approximately $37 million of obligations of a former subsidiary, CSX Energy, in connection with a sale-leaseback transaction.  CSX is, in turn, indemnified by several subsequent owners of the subsidiary against payments made with respect to this guarantee.  Management does not expect that CSX will be required to make any payments under this guarantee for which CSX will not be reimbursed. CSX’s obligation for this guarantee will be completed in 2012.

·

Guarantee of approximately $4 million of lease commitments assumed by A.P. Moller-Maersk (“Maersk”) for which CSX is contingently liable.  CSX believes Maersk will fulfill its contractual commitments with respect to such lease commitments, and CSX will have no further liabilities for those obligations.  CSX’s obligation under this guarantee will be completed in 2011.

As of March 2010, the Company had not recognized any liabilities in its financial statements in connection with any guarantee arrangements.  The maximum amount of future payments the Company could be required to make under these guarantees is the sum of the guaranteed amounts.

For information related to CSX’s guarantee of CSXT’s secured equipment notes, see Note 13, Summarized Consolidating Financial Data.

Legal Proceedings

There were no material developments during the quarter concerning the fuel surcharge antitrust litigation or the Seminole Electric Cooperative, Inc. rate case.  For further details, see Note 7, Commitments and Contingencies, in CSX’s most recent Annual Report on Form 10-K.

NOTE 5.     Commitments and Contingencies, continued

In addition to the matters referenced above, 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 environmental matters, FELA claims by employees, other personal injury 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 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 CSX management that none of these items will 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 a particular quarter or fiscal year.

NOTE 6.       Employee Benefit Plans

The Company sponsors defined benefit pension plans principally for salaried, management personnel.  The plans provide eligible employees with retirement benefits based predominantly on years of service and compensation rates near retirement.  For employees hired after December 31, 2002, benefits are determined based on a cash balance formula, which provides benefits by utilizing interest and pays credits based upon age, service and compensation.

In addition to these plans, the Company sponsors a post-retirement medical plan and a life insurance plan that provide benefits to full-time, salaried, management employees hired on or before December 31, 2002 upon their retirement if certain eligibility requirements are met.  The post-retirement medical plan is contributory (partially funded by retirees), with retiree contributions adjusted annually.  The life insurance plan is non-contributory.

The Company engages independent, external actuaries to compute the amounts of liabilities and expenses relating to these plans subject to the assumptions that the Company selects.  The following table describes the components of expense/(income) related to net periodic benefit cost:

NOTE 6.     Employee Benefit Plans, continued

Qualified pension plan obligations are funded in accordance with prescribed regulatory requirements and with an objective of meeting minimum funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments.  The Company made pension plan contributions of $250 million to its qualified defined benefit pension plans in 2009.  At the current time, the Company anticipates that no contributions to its qualified pension plans will be required in 2010.  For further details, see Note 8, Employee Benefit Plans, in CSX’s most recent Annual Report on Form 10-K.

 

NOTE 7.    Debt and Credit Agreements

Total activity related to long-term debt as of March 2010 was as follows:

 

(Dollars in millions)	Current Portion	Long-term Portion	Total Long-term Debt Activity
Total long-term debt at December 2009	$113	$7,895	$8,008
2010 activity:
Issued	-	-	-
Repaid	(17)	-	(17)
Reclassifications	523	(523)	-
Converted into CSX stock	(2)	-	(2)
Total long-term debt at March 2010	$617	$7,372	$7,989

 

 

NOTE 9.      Income Taxes

 

NOTE 10.       Discontinued Operations

The Greenbrier

 

     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.

 

NOTE 13.     Summarized Consolidating Financial Data, continued

Consolidating Balance Sheet
(Dollars in Millions)
			CSX	CSX
As of March 2010			Corporation	Transportation	Other	Eliminations	Consolidated
ASSETS
Current Assets
	Cash and Cash Equivalents		$839	$61	$93	$-	$993
	Short-term Investments		-	-	57	-	57
	Accounts Receivable - Net		152	896	(77)	-	971
	Materials and Supplies		-	219	(1)	-	218
	Deferred Income Taxes		15	154	15	-	184
	Other Current Assets		20	62	569	(573)	78
	Total Current Assets		$1,026	$1,392	$656	$(573)	$2,501
Properties			4	29,916	1,356	-	31,276
Accumulated Depreciation			(6)	(7,137)	(843)	-	(7,986)
	Properties - Net		$(2)	$22,779	$513	$-	$23,290
Investments in Conrail			-	-	654	-	654
Affiliates and Other Companies			-	572	(130)	-	442
Investments in Consolidated Subsidiaries			15,700	-	47	(15,747)	-
Other Long-term Assets			183	75	91	(43)	306
	Total Assets		$16,907	$24,818	$1,831	$(16,363)	$27,193
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
	Accounts Payable		$99	$933	$(101)	$-	$931
	Labor and Fringe Benefits Payable		34	314	28	-	376
	Payable to Affiliates		952	358	(774)	(536)	-
	Casualty, Environmental and Other Reserves		-	170	15	-	185
	Current Maturities of Long-term Debt		507	107	3	-	617
	Income and Other Taxes Payable		143	247	(228)	-	162
	Other Current Liabilities		2	107	44	(36)	117
	Total Current Liabilities		$1,737	$2,236	$(1,013)	$(572)	$2,388
Casualty, Environmental and Other Reserves			-	451	102	-	553
Long-term Debt			6,048	1,320	4	-	7,372
Deferred Income Taxes			(317)	6,928	57	-	6,668
Long-term Payable to Affiliates			-	-	44	(44)	-
Other Long-term Liabilities			570	516	241	-	1,327
	Total Liabilities		$8,038	$11,451	$(565)	$(616)	$18,308
Shareholders' Equity
Common Stock, $1 Par Value			$389	$181	$-	$(181)	$389
Other Capital			-	5,572	1,968	(7,540)	-
Retained Earnings			9,278	7,666	448	(8,113)	9,279
Accumulated Other Comprehensive Loss			(798)	(75)	(63)	138	(798)
Noncontrolling Interest			-	23	43	(51)	15
	Total Shareholders' Equity		$8,869	$13,367	$2,396	$(15,747)	$8,885
	Total Liabilities and Shareholders' Equity		$16,907	$24,818	$1,831	$(16,363)	$27,193

NOTE 13.     Summarized Consolidating Financial Data, continued

Consolidating Balance Sheet
(Dollars in Millions)
			CSX	CSX
As of December  2009			Corporation	Transportation	Other	Eliminations	Consolidated
ASSETS
Current Assets
	Cash and Cash Equivalents		$918	$30	$81	$-	$1,029
	Short-term Investments		-	-	61	-	61
	Accounts Receivable - Net		4	888	103	-	995
	Materials and Supplies		-	203	-	-	203
	Deferred Income Taxes		13	137	8	-	158
	Other Current Assets		19	32	533	(460)	124
	Total Current Assets		$954	$1,290	$786	$(460)	$2,570
Properties			4	29,739	1,338	-	31,081
Accumulated Depreciation			(6)	(7,036)	(826)	-	(7,868)
	Properties - Net		$(2)	$22,703	$512	-	$23,213
Investments in Conrail			-	-	650	-	650
Affiliates and Other Companies			-	566	(128)	-	438
Investments in Consolidated Subsidiaries			15,474	-	47	(15,521)	-
Other Long-term Assets			46	75	87	(43)	165
	Total Assets		$16,472	$24,634	$1,954	$(16,024)	$27,036
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
	Accounts Payable		$111	$628	$228	$-	$967
	Labor and Fringe Benefits Payable		37	307	39	-	383
	Payable to Affiliates		625	786	(962)	(449)	-
	Casualty, Environmental and Other Reserves		-	168	22	-	190
	Current Maturities of Long-term Debt		-	110	3	-	113
	Income and Other Taxes Payable		32	182	(102)	-	112
	Other Current Liabilities		1	97	13	(11)	100
	Total Current Liabilities		$806	$2,278	$(759)	$(460)	$1,865
Casualty, Environmental and Other Reserves			-	449	98	-	547
Long-term Debt			6,557	1,334	4	-	7,895
Deferred Income Taxes			(337)	6,871	51	-	6,585
Long-term Payable to Affiliates			-	-	44	(44)	-
Other Long-term Liabilities			600	522	162	-	1,284
	Total Liabilities		$7,626	$11,454	$(400)	$(504)	$18,176
Shareholders' Equity
Common Stock, $1 Par Value			$393	$181	$ -	$(181)	$393
Other Capital			80	5,569	1,951	(7,520)	80
Retained Earnings			9,182	7,485	415	(7,900)	9,182
Accumulated Other Comprehensive Loss			(809)	(77)	(54)	131	(809)
Noncontrolling  Interest			-	22	42	(50)	14
	Total Shareholders' Equity		$8,846	$13,180	$2,354	$(15,520)	$8,860
	Total Liabilities and Shareholders' Equity		$16,472	$24,634	$1,954	$(16,024)	$27,036

NOTE 13.     Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in Millions)
		CSX	CSX
Quarter Ended March 2010		Corporation	Transportation	Other	Eliminations	Consolidated
Operating Activities
	Net Cash Provided by  Operating Activities	$98	$597	$52	$-	$747
Investing Activities
Property Additions		$ -	$(311)	$(20)	$-	$(331)
Other Investing Activities		2	(79)	7	88	18
	Net Cash Provided by (Used in) Investing Activities	$2	$(390)	$(13)	$88	$(313)
Financing Activities
Long-term Debt Repaid		$ -	$(16)	$(1)	$-	$(17)
Dividends Paid		(95)	-	2	-	(93)
Stock Options Exercised		6	-	-	-	6
Shares Repurchased		(229)	-	-	-	(229)
Other Financing Activities		139	(160)	(28)	(88)	(137)
	Net Cash Used in Financing Activities	$(179)	$(176)	$(27)	$(88)	$(470)
Net Increase (Decrease) in Cash and Cash Equivalents		$(79)	$31	$12	$-	$(36)
Cash and Cash Equivalents at Beginning of Period		918	30	81	-	1,029
Cash and Cash Equivalents at End of Period		$839	$61	$93	$-	$993
		CSX	CSX
Quarter Ended March 2009		Corporation	Transportation	Other	Eliminations	Consolidated
Operating Activities
	Net Cash Provided by (Used in) Operating Activities	$(162)	$370	$241	$-	$449
Investing Activities
Property Additions		$(1)	$(299)	$(9)	$-	$(309)
Purchases of Short-term Investments		-	-	-	-	-
Proceeds from Sales of Short-term Investments		-	-	-	-	-
Other Investing Activities		11	28	5	(7)	37
	Net Cash Provided by (Used in) Investing Activities	$10	$(271)	$(4)	$(7)	$(272)
Financing Activities
Long-term Debt Issued		$500	$-	$-	$-	$500
Long-term Debt Repaid		-	(25)	(1)	-	(26)
Dividends Paid		(88)	-	2	-	(86)
Stock Options Exercised		2	-	-	-	2
Shares Repurchased		-	-	-	-	-
Other Financing Activities		107	(67)	(227)	7	(180)
	Net Cash Provided by (Used in) Financing Activities	$521	$(92)	$(226)	$7	$210
Net Increase (Decrease) in Cash and Cash Equivalents		$369	$7	$11	$-	$387
Cash and Cash Equivalents at Beginning of Period		559	63	47	-	669
Cash and Cash Equivalents at End of Period		$928	$70	$58	$-	$1,056