Commission File Number 1-8022
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CSX CORPORATION
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(
Exact name of registrant as specified in its charter
)
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Virginia
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62-1051971
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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500 Water Street, 15th Floor, Jacksonville, FL
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32202
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(904) 359-3200
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(Address of principal executive offices)
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(Zip Code)
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(Telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of exchange on which registered
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Common Stock, $1 Par Value
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Nasdaq Global Select Market
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CSX CORPORATION
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FORM 10-K
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TABLE OF CONTENTS
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Item No.
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Page
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PART I
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1.
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2.
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3.
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4.
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PART II
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5.
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6.
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7.
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· Terms Used by CSX
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· 2017 Highlights
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·
Critical Accounting Estimates
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·
Forward-Looking Statements
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7A.
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8.
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9.
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9A.
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9B.
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PART III
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10.
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Directors, Executive Officers
of the Registrant and Corporate Governance
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11.
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12.
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13.
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14.
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PART IV
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15.
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•
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The merchandise business shipped
2.7 million
carloads and generated
62 percent
of revenue and
42 percent
of volume in
2017
. The Company’s merchandise business is comprised of shipments in the following diverse markets: chemicals, automotive, agricultural and food products, minerals, fertilizers, forest products, and metals and equipment.
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•
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The coal business shipped
855 thousand
carloads and accounted for
18 percent
of revenue and
13 percent
of volume in
2017
. The Company transports domestic coal, coke and iron ore to electricity-generating power plants, steel manufacturers and industrial plants as well as export coal to deep-water port facilities.
Roughly one-third
of export coal and
the majority
of the domestic coal that the Company transports is used for generating electricity.
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•
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The intermodal business accounted for
16 percent
of revenue and
44 percent
of volume in
2017
. The intermodal business combines the superior economics of rail transportation with the short-haul flexibility of trucks and offers a cost advantage over long-haul trucking. Through a network of more than
40
terminals, the intermodal business serves all major markets east of the Mississippi River and transports mainly manufactured consumer goods in containers, providing customers with truck-like service for longer shipments.
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Track
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Miles
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Mainline track
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26,500
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Terminals and switching yards
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9,348
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Passing sidings and turnouts
|
920
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Total
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36,768
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Yards and Terminals
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Chicago, IL - Bedford Park Intermodal Terminal
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North Baltimore, OH - Northwest Ohio Intermodal Terminal
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Waycross, GA
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Cincinnati, OH
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Selkirk, NY
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Avon, IN (Indianapolis)
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Willard, OH
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Nashville, TN
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Louisville, KY
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Hamlet, NC
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Locomotives
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%
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Average Age
(years)
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|||
Freight
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3,659
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|
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88
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%
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20
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Switching
|
299
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|
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7
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%
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|
37
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Auxiliary Units
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208
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5
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%
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|
24
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Total
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4,166
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|
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100
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%
|
|
20
|
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Equipment
|
Number of Units
|
|
%
|
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Gondolas
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21,209
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35
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%
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Multi-level flat cars
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11,686
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19
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%
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Open-top hoppers
|
10,298
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|
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17
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%
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Covered hoppers
|
9,623
|
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16
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%
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Box cars
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6,374
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|
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11
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%
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Flat cars
|
624
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|
1
|
%
|
Other cars
|
337
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|
—
|
%
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Subtotal freight cars
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60,151
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100
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%
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Containers
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18,088
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Total equipment
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78,239
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Name and Age
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Business Experience During Past Five Years
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James M. Foote, 64
President and Chief Executive Officer
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Foote has served as President and Chief Executive Office since December 2017. He joined CSX in October 2017 as Chief Operating Officer, with responsibility for both operations and sales and marketing.
Mr. Foote has more than 40 years of railroad industry experience. Most recently, he was President and Chief Executive Officer of Bright Rail Energy. Before heading Bright Rail, he was Executive Vice President, Sales and Marketing with Canadian National Railway Company. At Canadian National, Mr. Foote also served as Vice President – Investor Relations and Vice President Sales and Marketing – Merchandise.
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Frank A. Lonegro, 49
Executive Vice President and Chief Financial Officer
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Lonegro has served as Executive Vice President and Chief Financial Officer of CSX since September 2015. In this capacity, he directs all financial aspects of the company’s business, including financial and economic analysis, accounting, tax, treasury and purchasing activities.
In his 17 years with CSX, Mr. Lonegro has also served as Vice President Internal Audit, President of CSX Technology, Vice President Mechanical and Vice President Service Design. Additionally, he led development and implementation of Positive Train Control, an advanced train control system, to further enhance the Company’s safety performance.
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Edmond L. Harris, 68
Executive Vice President of Operations
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Harris has served as CSX's Executive Vice President of Operations since January 2018. In this role, he is responsible for mechanical, engineering, transportation and network operations.
Mr. Harris has more than 40 years of railroad industry experience. Most recently, Mr. Harris served as a senior advisor to Global Infrastructure Partners, an independent fund that invests in infrastructure assets worldwide; Chairman of Omnitrax Rail Network; and Board Director for Universal Rail Services. His previous experience also includes having served as Chief Operations Officer at Canadian Pacific, and subsequently, a member of the Board. He also served as Executive Vice President of Operations at Canadian National.
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Quarter
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||||||||||||||||
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1st
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2nd
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3rd
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4th
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Year
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2017
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Dividends
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$
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0.18
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$
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0.20
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$
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0.20
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$
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0.20
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$
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0.78
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Common Stock Price
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||||||||||||||||||
High
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$
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50.31
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$
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55.06
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$
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55.48
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$
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58.35
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$
|
58.35
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Low
|
$
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35.59
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$
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46.04
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$
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47.99
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$
|
48.26
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|
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$
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35.59
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|
2016
|
|||||||||||||||||||
Dividends
|
$
|
0.18
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|
|
$
|
0.18
|
|
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$
|
0.18
|
|
|
$
|
0.18
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$
|
0.72
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Common Stock Price
|
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||||||||||||||||||
High
|
$
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27.27
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$
|
27.97
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$
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30.11
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$
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37.42
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$
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37.42
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Low
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$
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21.33
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$
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24.36
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$
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24.43
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$
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29.39
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$
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21.33
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Fiscal Years
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2017
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2016
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2015
|
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Shares Repurchased
(Units in Millions)
|
39
|
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|
38
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|
26
|
|
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Cost of Shares
(Dollars in Millions)
|
$
|
1,970
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|
$
|
1,056
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$
|
804
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CSX Purchases of Equity Securities for the Quarter
|
||||||||||||
Fourth Quarter
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Total Number of Shares Purchased
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Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(a)
|
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
Beginning Balance
|
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$
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7,696,097
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|
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October 1 - October 31, 2017
|
165,307
|
|
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$
|
53.59
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|
142,982
|
|
|
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1,500,000,000
|
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November 1 - November 30, 2017
|
1,560,559
|
|
|
|
50.17
|
|
1,560,559
|
|
|
|
1,421,712,580
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December 1 - December 31, 2017
|
2,261,847
|
|
|
|
55.64
|
|
2,189,313
|
|
|
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1,299,953,624
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Ending Balance
|
3,987,713
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$
|
53.41
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3,892,854
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$
|
1,299,953,624
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Fiscal Years
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||||||||||||||||||
(Dollars and Shares in Millions, Except Per Share Amounts)
|
2017
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2016
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2015
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2014
|
|
2013
|
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Financial Performance
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|||||||||||
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Revenue
|
$
|
11,408
|
|
|
$
|
11,069
|
|
|
$
|
11,811
|
|
|
$
|
12,669
|
|
|
$
|
12,026
|
|
|
Expense
|
7,741
|
|
|
7,680
|
|
|
8,227
|
|
|
9,056
|
|
|
8,553
|
|
|||||
|
Operating Income
|
$
|
3,667
|
|
|
$
|
3,389
|
|
|
$
|
3,584
|
|
|
$
|
3,613
|
|
|
$
|
3,473
|
|
|
Adjusted Operating Income
(a)
|
$
|
3,850
|
|
|
$
|
3,389
|
|
|
$
|
3,584
|
|
|
$
|
3,613
|
|
|
$
|
3,473
|
|
Net Earnings from Continuing Operations
(b)
|
5,471
|
|
|
1,714
|
|
|
1,968
|
|
|
1,927
|
|
|
1,864
|
|
||||||
Adjusted Net Earnings from Continuing Operations
(a)
|
2,097
|
|
|
1,714
|
|
|
1,968
|
|
|
1,927
|
|
|
1,864
|
|
||||||
|
Operating Ratio
|
67.9
|
%
|
|
69.4
|
%
|
|
69.7
|
%
|
|
71.5
|
%
|
|
71.1
|
%
|
|||||
|
Adjusted Operating Ratio
(a)
|
66.3
|
%
|
|
69.4
|
%
|
|
69.7
|
%
|
|
71.5
|
%
|
|
71.1
|
%
|
|||||
Net Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
From Continuing Operations, Basic
(b)
|
$
|
6.01
|
|
|
$
|
1.81
|
|
|
$
|
2.00
|
|
|
$
|
1.93
|
|
|
$
|
1.83
|
|
|
From Continuing Operations, Assuming Dilution
(b)
|
5.99
|
|
|
1.81
|
|
|
2.00
|
|
|
1.92
|
|
|
1.83
|
|
|||||
|
Adjusted From Continuing Operations, Assuming Dilution
(a)
|
2.30
|
|
|
1.81
|
|
|
2.00
|
|
|
1.92
|
|
|
1.83
|
|
|||||
Average Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Basic
|
911
|
|
|
947
|
|
|
983
|
|
|
1,001
|
|
|
1,019
|
|
|||||
|
Assuming Dilution
|
914
|
|
|
948
|
|
|
984
|
|
|
1,002
|
|
|
1,019
|
|
|||||
Financial Position
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Cash, Cash Equivalents and Short-term Investments
|
$
|
419
|
|
|
$
|
1,020
|
|
|
$
|
1,438
|
|
|
$
|
961
|
|
|
$
|
1,079
|
|
|
Total Assets
|
35,739
|
|
|
35,414
|
|
|
34,745
|
|
|
32,747
|
|
|
31,462
|
|
|||||
|
Long-term Debt
|
11,790
|
|
|
10,962
|
|
|
10,515
|
|
|
9,349
|
|
|
8,857
|
|
|||||
|
Shareholders' Equity
|
14,721
|
|
|
11,694
|
|
|
11,668
|
|
|
11,176
|
|
|
10,504
|
|
|||||
|
Dividend Per Share
|
$
|
0.78
|
|
|
$
|
0.72
|
|
|
$
|
0.70
|
|
|
$
|
0.63
|
|
|
$
|
0.59
|
|
Additional Data
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Capital Expenditures
|
$
|
2,040
|
|
|
$
|
2,705
|
|
|
$
|
2,562
|
|
|
$
|
2,449
|
|
|
$
|
2,313
|
|
|
Employees -- Annual Averages
(estimated)
|
25,230
|
|
|
27,350
|
|
|
31,285
|
|
|
31,511
|
|
|
31,254
|
|
|||||
|
Employees -- Year-end Count
(estimated)
|
24,006
|
|
|
26,628
|
|
|
29,410
|
|
|
32,287
|
|
|
31,413
|
|
•
|
Earnings per diluted share of
$5.99
increased
$4.18
or
231 percent
year over year.
|
|
Fiscal Years
|
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
$
Change
|
|
%
Change
|
|
|||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|||||||
Revenue
|
$
|
11,408
|
|
|
$
|
11,069
|
|
|
$
|
339
|
|
|
3
|
%
|
|
Expense
|
|
|
|
|
|
|
|
|
|||||||
Labor and Fringe
|
2,914
|
|
|
3,159
|
|
|
245
|
|
|
8
|
|
|
|||
Materials, Supplies and Other
|
2,113
|
|
|
2,092
|
|
|
(21
|
)
|
|
(1
|
)
|
|
|||
Depreciation
|
1,315
|
|
|
1,301
|
|
|
(14
|
)
|
|
(1
|
)
|
|
|||
Fuel
|
864
|
|
|
713
|
|
|
(151
|
)
|
|
(21
|
)
|
|
|||
Equipment and Other Rents
|
429
|
|
|
465
|
|
|
36
|
|
|
8
|
|
|
|||
Restructuring Charge
|
325
|
|
|
—
|
|
|
(325
|
)
|
|
—
|
|
|
|||
Equity Earnings of Affiliates
|
(219
|
)
|
|
(50
|
)
|
|
169
|
|
|
338
|
|
|
|||
Total Expense
|
7,741
|
|
|
7,680
|
|
|
(61
|
)
|
|
(1
|
)
|
|
|||
Operating Income
|
3,667
|
|
|
3,389
|
|
|
278
|
|
|
8
|
|
|
|||
Interest Expense
|
(546
|
)
|
|
(579
|
)
|
|
33
|
|
|
6
|
|
|
|||
Debt Repurchase Expense
|
—
|
|
|
(115
|
)
|
|
115
|
|
|
(100
|
)
|
|
|||
Other Income - Net
|
21
|
|
|
46
|
|
|
(25
|
)
|
|
(54
|
)
|
|
|||
Income Tax Benefit (Expense)
|
2,329
|
|
|
(1,027
|
)
|
|
3,356
|
|
|
327
|
|
|
|||
Net Earnings
|
$
|
5,471
|
|
|
$
|
1,714
|
|
|
$
|
3,757
|
|
|
219
|
|
|
Earnings Per Diluted Share:
|
|
|
|
|
|
|
|
|
|||||||
Net Earnings
|
$
|
5.99
|
|
|
$
|
1.81
|
|
|
$
|
4.18
|
|
|
231
|
%
|
|
Operating Ratio
|
67.9
|
%
|
|
69.4
|
%
|
|
|
|
150
|
|
bps
|
Volume and Revenue
(Unaudited)
(a)
|
||||||||||||||||||||||||||||||
Volume (Thousands of units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
|
||||||||||||||||||||||||||||||
|
Volume
|
|
Revenue
|
|
Revenue Per Unit
|
|||||||||||||||||||||||||
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Chemicals
|
672
|
|
|
700
|
|
|
(4
|
)%
|
|
$
|
2,210
|
|
|
$
|
2,191
|
|
|
1
|
%
|
|
$
|
3,289
|
|
|
$
|
3,130
|
|
|
5
|
%
|
Automotive
|
457
|
|
|
482
|
|
|
(5
|
)%
|
|
1,195
|
|
|
1,261
|
|
|
(5
|
)%
|
|
2,615
|
|
|
2,616
|
|
|
—
|
%
|
||||
Agricultural and Food Products
|
454
|
|
|
477
|
|
|
(5
|
)%
|
|
1,262
|
|
|
1,286
|
|
|
(2
|
)%
|
|
2,780
|
|
|
2,696
|
|
|
3
|
%
|
||||
Minerals
|
308
|
|
|
310
|
|
|
(1
|
)%
|
|
477
|
|
|
464
|
|
|
3
|
%
|
|
1,549
|
|
|
1,497
|
|
|
3
|
%
|
||||
Fertilizers
|
291
|
|
|
300
|
|
|
(3
|
)%
|
|
466
|
|
|
463
|
|
|
1
|
%
|
|
1,601
|
|
|
1,543
|
|
|
4
|
%
|
||||
Forest Products
|
264
|
|
|
274
|
|
|
(4
|
)%
|
|
755
|
|
|
773
|
|
|
(2
|
)%
|
|
2,860
|
|
|
2,821
|
|
|
1
|
%
|
||||
Metals and Equipment
|
256
|
|
|
259
|
|
|
(1
|
)%
|
|
703
|
|
|
704
|
|
|
—
|
%
|
|
2,746
|
|
|
2,718
|
|
|
1
|
%
|
||||
Total Merchandise
|
2,702
|
|
|
2,802
|
|
|
(4
|
)%
|
|
7,068
|
|
|
7,142
|
|
|
(1
|
)%
|
|
2,616
|
|
|
2,549
|
|
|
3
|
%
|
||||
Coal
|
855
|
|
|
838
|
|
|
2
|
%
|
|
2,107
|
|
|
1,833
|
|
|
15
|
%
|
|
2,464
|
|
|
2,187
|
|
|
13
|
%
|
||||
Intermodal
|
2,843
|
|
|
2,811
|
|
|
1
|
%
|
|
1,799
|
|
|
1,726
|
|
|
4
|
%
|
|
633
|
|
|
614
|
|
|
3
|
%
|
||||
Other
|
—
|
|
|
—
|
|
|
—
|
%
|
|
434
|
|
|
368
|
|
|
18
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||||
Total
|
6,400
|
|
|
6,451
|
|
|
(1
|
)%
|
|
$
|
11,408
|
|
|
$
|
11,069
|
|
|
3
|
%
|
|
$
|
1,783
|
|
|
$
|
1,716
|
|
|
4
|
%
|
•
|
Efficiency and volume savings of $274 million were driven primarily by reductions in overall headcount and other effects of implementing scheduled railroading as well as the impacts of the 2017 restructuring initiative, slightly offset by higher volume-related costs.
|
•
|
Pension costs decreased $66 million primarily due to adoption in 2017 of the spot rate approach for measuring service and interest costs, prior year contributions and other favorable plan experience.
|
•
|
The extra fiscal week in 2016 resulted in $51 million of additional cost compared to 2017.
|
•
|
Inflation resulted in $152 million of additional cost driven by increased health and welfare costs and wage increases.
|
•
|
Various other costs decreased $6 million.
|
•
|
Real estate gains were $14 million in 2017 compared to $115 million in 2016 related to the sale of an operating property and other related income. (See additional discussion of real estate gains in the Equity Earnings of Affiliates section below.)
|
•
|
Inflation resulted in $37 million of additional cost.
|
•
|
Asset impairments of $25 million resulted from the discontinuation of certain in-progress projects as a result of transition to scheduled railroading.
|
•
|
Relocation costs increased $19 million, which includes the impact of the Company’s initiative to consolidate dispatchers.
|
•
|
Additional expense of $13 million resulted from train accidents during the year.
|
•
|
Efficiency and volume savings of $152 million are primarily related to lower maintenance costs from the reduction in the active locomotive fleet, lower operating support costs and a reduction in contingent workers.
|
•
|
Favorable judgments resulted in compensation to CSX for previously condemned properties, reflecting gains of $73 million.
|
•
|
The extra week in 2016 resulted in $18 million of additional cost compared to 2017.
|
•
|
Other costs increased $69 million due to various non-significant items.
|
•
|
A 24 percent increase in the average fuel price per gallon, from $1.48 to $1.84 per gallon versus the prior year, drove $154 million in increased fuel expense.
|
•
|
The extra week in 2016 resulted in $15 million of additional cost compared to 2017.
|
•
|
Other costs increased $12 million primarily due to increased fuel expense for non-locomotive fuel, partially offset by efficiency and volume savings.
|
•
|
The extra week in 2016 resulted in $7 million of additional cost compared to 2017.
|
•
|
Other costs decreased $29 million primarily due to the reclassification of rental income from other non-operating to operating income in 2017, partially offset by inflation.
|
•
|
Tax reform resulted in a $142 million increase in earnings (primarily related to TTX and Conrail).
|
•
|
Real estate gains of $16 million were recognized on the sale of a property owned by one of the Company's equity affiliates.
|
•
|
Other increases were primarily due to increased equity earnings from affiliates, primarily TTX as a result of higher rental volumes and decreased costs.
|
|
Fiscal Years
|
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
$
Change |
|
%
Change |
|
|||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|||||||
Revenue
|
$
|
11,069
|
|
|
$
|
11,811
|
|
|
$
|
(742
|
)
|
|
(6
|
)%
|
|
Expense
|
|
|
|
|
|
|
|
|
|||||||
Labor and Fringe
|
3,159
|
|
|
3,290
|
|
|
131
|
|
|
4
|
|
|
|||
Materials, Supplies and Other
|
2,092
|
|
|
2,356
|
|
|
264
|
|
|
11
|
|
|
|||
Depreciation
|
1,301
|
|
|
1,208
|
|
|
(93
|
)
|
|
(8
|
)
|
|
|||
Fuel
|
713
|
|
|
957
|
|
|
244
|
|
|
25
|
|
|
|||
Equipment and Other Rents
|
465
|
|
|
456
|
|
|
(9
|
)
|
|
(2
|
)
|
|
|||
Equity Earnings of Affiliates
|
(50
|
)
|
|
(40
|
)
|
|
10
|
|
|
25
|
|
|
|||
Total Expense
|
7,680
|
|
|
8,227
|
|
|
547
|
|
|
7
|
|
|
|||
Operating Income
|
3,389
|
|
|
3,584
|
|
|
(195
|
)
|
|
(5
|
)
|
|
|||
Interest Expense
|
(579
|
)
|
|
(544
|
)
|
|
(35
|
)
|
|
(6
|
)
|
|
|||
Debt Repurchase Expense
|
(115
|
)
|
|
—
|
|
|
(115
|
)
|
|
—
|
|
|
|||
Other Income - Net
|
46
|
|
|
98
|
|
|
(52
|
)
|
|
(53
|
)
|
|
|||
Income Tax Expense
|
(1,027
|
)
|
|
(1,170
|
)
|
|
143
|
|
|
12
|
|
|
|||
Net Earnings
|
$
|
1,714
|
|
|
$
|
1,968
|
|
|
$
|
(254
|
)
|
|
(13
|
)
|
|
Earnings Per Diluted Share:
|
|
|
|
|
|
|
|
|
|||||||
Net Earnings
|
$
|
1.81
|
|
|
$
|
2.00
|
|
|
$
|
(0.19
|
)
|
|
(10
|
)%
|
|
Operating Ratio
|
69.4
|
%
|
|
69.7
|
%
|
|
|
|
30
|
|
bps
|
Volume and Revenue
(Unaudited)
(a)
|
||||||||||||||||||||||||||||||
Volume (Thousands of units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
|
||||||||||||||||||||||||||||||
|
Volume
|
|
Revenue
|
|
Revenue Per Unit
|
|||||||||||||||||||||||||
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
|||||||||||||
Chemicals
|
700
|
|
|
726
|
|
|
(4
|
)%
|
|
2,191
|
|
|
2,284
|
|
|
(4
|
)%
|
|
3,130
|
|
|
3,146
|
|
|
(1
|
)%
|
||||
Automotive
|
482
|
|
|
450
|
|
|
7
|
|
|
1,261
|
|
|
1,175
|
|
|
7
|
|
|
2,616
|
|
|
2,611
|
|
|
—
|
%
|
||||
Agricultural and Food Products
|
477
|
|
|
503
|
|
|
(5
|
)
|
|
1,286
|
|
|
1,345
|
|
|
(4
|
)
|
|
2,696
|
|
|
2,674
|
|
|
1
|
%
|
||||
Minerals
|
310
|
|
|
306
|
|
|
1
|
|
|
464
|
|
|
459
|
|
|
1
|
|
|
1,497
|
|
|
1,500
|
|
|
—
|
%
|
||||
Fertilizers
|
300
|
|
|
301
|
|
|
—
|
|
|
463
|
|
|
489
|
|
|
(5
|
)
|
|
1,543
|
|
|
1,625
|
|
|
(5
|
)%
|
||||
Forest Products
|
274
|
|
|
290
|
|
|
(6
|
)
|
|
773
|
|
|
796
|
|
|
(3
|
)
|
|
2,821
|
|
|
2,745
|
|
|
3
|
%
|
||||
Metals and Equipment
|
259
|
|
|
284
|
|
|
(9
|
)
|
|
704
|
|
|
723
|
|
|
(3
|
)
|
|
2,718
|
|
|
2,546
|
|
|
7
|
%
|
||||
Total Merchandise
|
2,802
|
|
|
2,860
|
|
|
(2
|
)
|
|
7,142
|
|
|
7,271
|
|
|
(2
|
)
|
|
2,549
|
|
|
2,542
|
|
|
—
|
%
|
||||
Coal
|
838
|
|
|
1,063
|
|
|
(21
|
)
|
|
1,833
|
|
|
2,300
|
|
|
(20
|
)
|
|
2,187
|
|
|
2,164
|
|
|
1
|
%
|
||||
Intermodal
|
2,811
|
|
|
2,838
|
|
|
(1
|
)
|
|
1,726
|
|
|
1,762
|
|
|
(2
|
)
|
|
614
|
|
|
621
|
|
|
(1
|
)%
|
||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
368
|
|
|
478
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||||
Total
|
6,451
|
|
|
6,761
|
|
|
(5
|
)%
|
|
$
|
11,069
|
|
|
$
|
11,811
|
|
|
(6
|
)%
|
|
$
|
1,716
|
|
|
$
|
1,747
|
|
|
(2
|
)%
|
•
|
Efficiency savings of $249 million were driven by lower T&E and operating support costs as a result of structural changes, reduced crew training and the Company's train length initiative that began in the second quarter of 2015.
|
•
|
Volume-related costs were $116 million lower.
|
•
|
Incentive compensation was $111 million higher reflecting the expected award payouts on existing plans.
|
•
|
Inflation resulted in $106 million of additional cost driven by increased health and welfare costs.
|
•
|
The extra week resulted in $51 million of additional cost.
|
•
|
Restructuring costs decreased $37 million due to the 2015 workforce reduction initiatives costs that nearly all occurred in 2015.
|
•
|
Various other costs increased $3 million.
|
•
|
Real estate gains increased $98 million primarily related to a current year gain of $115 million related to the sale of an operating property and other related income partially offset by a prior year real estate gain.
|
•
|
Efficiency savings of $95 million were primarily related to lower operating support costs driven by structural changes and broad cost containment.
|
•
|
Train accident and casualty costs were $70 million lower due to the continuing declines in the severity of train accidents as well as injuries.
|
•
|
Inflation resulted in $34 million of additional costs.
|
•
|
The extra week resulted in $18 million of additional cost.
|
•
|
Volume-related costs were $11 million lower.
|
•
|
Various other costs decreased $42 million.
|
•
|
Average fuel price per gallon decreased 18 percent, from $1.80 to $1.48 per gallon versus the prior year, which reduced expenses by $137 million.
|
•
|
Efficiency savings of $60 million were primarily related to locomotive fuel reduction technology and process improvement.
|
•
|
Volume-related costs were $58 million lower
.
|
•
|
The extra week resulted in $15 million of additional cost.
|
•
|
Various other costs decreased $4 million.
|
•
|
Inflation resulted in $18 million of additional cost primarily related to rates on automotive freight cars.
|
•
|
Volume related costs were $14 million higher due primarily to growth in automotive volume.
|
•
|
The extra week resulted in $7 million of additional cost.
|
•
|
Efficiency savings of $23 million were due to improved car cycle times.
|
•
|
Net other costs decreased $7 million.
|
|
|
For the Year ended December 31, 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
|
|
$
|
3,667
|
|
|
67.9
|
%
|
|
$
|
5,471
|
|
|
$
|
5.99
|
|
Restructuring Charge
|
|
325
|
|
|
(2.8
|
)%
|
|
203
|
|
|
0.22
|
|
|||
Tax Reform Benefit (net)
|
|
(142
|
)
|
|
1.2
|
%
|
|
(3,577
|
)
|
|
(3.91
|
)
|
|||
Adjusted Operating Results (non-GAAP)
|
|
$
|
3,850
|
|
|
66.3
|
%
|
|
$
|
2,097
|
|
|
$
|
2.30
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
(Dollars in Millions)
|
|||||||||||
Net cash provided by operating activities
|
$
|
3,472
|
|
|
$
|
3,041
|
|
|
$
|
3,370
|
|
Property additions
|
(2,040
|
)
|
|
(2,398
|
)
|
|
(2,562
|
)
|
|||
Other investing activities
|
134
|
|
|
204
|
|
|
184
|
|
|||
Free Cash Flow (before payment of dividends)
|
$
|
1,566
|
|
|
$
|
847
|
|
|
$
|
992
|
|
Add back: Cash Payments for Restructuring Charge (after-tax)
(a)
|
$
|
135
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Adjusted Free Cash Flow Before Dividends (non-GAAP)
|
$
|
1,701
|
|
|
$
|
847
|
|
|
$
|
992
|
|
|
Fiscal Years
|
|||||||
|
2017
|
|
2016
|
|
Improvement/
(Deterioration)
|
|||
Safety
|
|
|
|
|
|
|||
FRA Personal Injury Frequency Index
|
1.19
|
|
|
1.05
|
|
|
(13
|
)%
|
FRA Train Accident Rate
|
3.17
|
|
|
2.83
|
|
|
(12
|
)
|
|
|
|
|
|
|
|||
Operations Performance
|
|
|
|
|
|
|||
Train Velocity
(Miles per hour)
(a)
|
15.1
|
|
|
14.9
|
|
|
1
|
|
Dwell (Hours)
(a)
|
11.3
|
|
|
11.4
|
|
|
1
|
|
|
|
|
|
|
|
|||
On-Time Originations
|
80
|
%
|
|
84
|
%
|
|
(5
|
)
|
On-Time Arrivals
|
56
|
%
|
|
55
|
%
|
|
2
|
|
•
|
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.
|
|
Fiscal Years
|
||||||||||
Capital Expenditures
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Track
|
$
|
733
|
|
|
$
|
714
|
|
|
$
|
866
|
|
Bridges, Signals and Other
|
570
|
|
|
433
|
|
|
491
|
|
|||
Total Infrastructure
|
1,303
|
|
|
1,147
|
|
|
1,357
|
|
|||
Freight Cars
|
20
|
|
|
82
|
|
|
218
|
|
|||
Capacity and Commercial Facilities
|
417
|
|
|
447
|
|
|
309
|
|
|||
Regulatory (including PTC)
|
284
|
|
|
313
|
|
|
341
|
|
|||
Locomotives
|
16
|
|
|
409
|
|
|
337
|
|
|||
Total Property Additions
|
2,040
|
|
|
2,398
|
|
|
2,562
|
|
|||
Cash paid for new assets using seller financing
(a)
|
$
|
—
|
|
|
$
|
307
|
|
|
$
|
—
|
|
Total Capital Expenditures
|
$
|
2,040
|
|
|
2,705
|
|
|
2,562
|
|
(a)
|
In 2016, CSX made payments related to locomotive purchases made in 2015 using seller financing of $307 million.
|
Type of Obligation
|
2018
|
2019
|
2020
|
2021
|
2022
|
Thereafter
|
Total
|
||||||||||||||
(Dollars in Millions) (Unaudited)
|
|
|
|
|
|
|
|
||||||||||||||
Contractual Obligations
|
|
|
|
|
|
|
|
||||||||||||||
Total Debt (See Note 9)
|
$
|
19
|
|
$
|
18
|
|
$
|
745
|
|
$
|
371
|
|
$
|
162
|
|
$
|
10,494
|
|
$
|
11,809
|
|
Interest on Debt
|
550
|
|
549
|
|
537
|
|
498
|
|
484
|
|
7,953
|
|
10,571
|
|
|||||||
Purchase Obligations (See Note 7)
|
290
|
|
229
|
|
253
|
|
258
|
|
258
|
|
2,929
|
|
4,217
|
|
|||||||
Other Post-Employment Benefits (See Note 8)
(a)
|
53
|
|
43
|
|
41
|
|
39
|
|
36
|
|
145
|
|
357
|
|
|||||||
Operating Leases - Net (See Note 7)
(b)
|
38
|
|
34
|
|
20
|
|
15
|
|
11
|
|
74
|
|
192
|
|
|||||||
Agreements with Conrail (See Note 12)
(b)
|
27
|
|
27
|
|
27
|
|
27
|
|
27
|
|
48
|
|
183
|
|
|||||||
Total Contractual Obligations
|
$
|
977
|
|
$
|
900
|
|
$
|
1,623
|
|
$
|
1,208
|
|
$
|
978
|
|
$
|
21,643
|
|
$
|
27,329
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Other Commitments
(c)
|
$
|
100
|
|
$
|
2
|
|
$
|
2
|
|
$
|
2
|
|
$
|
2
|
|
$
|
—
|
|
$
|
108
|
|
(a)
|
Other post-employment benefits include estimated other post-retirement medical and life insurance payments and payments under non-qualified pension plans which are unfunded. No amounts are included for funded pension obligations as no contributions are currently required.
|
(b)
|
Agreements with Conrail represent minimum future lease payments of
$183 million
under the shared asset area agreements (see Note 12, Related Party Transactions). These amounts plus total operating leases-net of
$192 million
above equals total net lease commitments of
$375 million
disclosed in Note 7, Commitments and Contingencies.
|
(c)
|
Other commitments of
$108 million
consisted of surety bonds, letters of credit, uncertain tax positions and public private partnerships. Surety bonds of
$43 million
and letters of credit of
$30 million
arise from assurances issued by a third-party that CSX will fulfill certain obligations and are typically a contract, state, federal or court requirement. Uncertain tax positions of
$24 million
, which include interest and penalties, are all included in year 2018 as the year of settlement cannot be reasonably estimated. Contractual commitments related to public-private partnerships are
$11 million
.
|
•
|
personal injury, environmental and legal reserves;
|
•
|
pension and post-retirement medical plan accounting;
|
•
|
depreciation policies for assets under the group-life method; and
|
•
|
income taxes.
|
•
|
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.
|
•
|
discount rates used to measure future obligations and interest expense;
|
•
|
long-term rate of return on plan assets;
|
•
|
salary scale inflation rates; and
|
•
|
other assumptions.
|
(Dollars in Millions)
|
|
Pension Expense
|
|
Post-Retirement Expense
|
||||
Discount Rate
|
|
$
|
12
|
|
|
$
|
1
|
|
Long-term Rate of Return
|
|
$
|
26
|
|
|
N/A
|
|
|
Salary Inflation
|
|
$
|
7
|
|
|
N/A
|
|
•
|
statistical analysis of historical life and salvage data for each group of property;
|
•
|
statistical analysis of historical retirements for each group of property;
|
•
|
evaluation of current operations;
|
•
|
evaluation of technological advances and maintenance schedules;
|
•
|
previous assessment of the condition of the assets;
|
•
|
management's outlook on the future use of certain asset groups;
|
•
|
expected net salvage to be received upon retirement; and
|
•
|
comparison of assets to the same asset groups with other companies.
|
•
|
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.
|
•
|
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 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 or equipment;
|
•
|
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 CSX's export coal market;
|
•
|
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;
|
•
|
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;
|
•
|
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; and
|
•
|
the inherent uncertainty associated with projecting economic and business conditions.
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
||
|
|
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
||
|
|
|
CSX Corporation
|
|
|
|
|
|
Consolidated Financial Statements and Notes to Consolidated Financial Statements
|
|
|
|
Herewith:
|
|
|
|
|
Consolidated Income Statements for the Fiscal Years Ended:
|
||
|
December 31, 2017
|
|
|
December 30, 2016
|
|
|
December 25, 2015
|
|
|
|
|
Consolidated Comprehensive Income Statements for the Fiscal Years Ended:
|
||
|
December 31, 2017
|
|
|
December 30, 2016
|
|
|
December 25, 2015
|
|
|
|
|
Consolidated Balance Sheets as of:
|
||
|
December 31, 2017
|
|
|
December 30, 2016
|
|
|
|
|
Consolidated Cash Flow Statements for Fiscal Years Ended:
|
||
|
December 31, 2017
|
|
|
December 30, 2016
|
|
|
December 25, 2015
|
|
|
|
|
Consolidated Statements of Changes in Shareholders' Equity:
|
||
|
December 31, 2017
|
|
|
December 30, 2016
|
|
|
December 25, 2015
|
|
|
|
|
Notes to Consolidated Financial Statements
|
/s/ Ernst & Young LLP
|
Certified Public Accountants
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
$
|
11,408
|
|
|
$
|
11,069
|
|
|
$
|
11,811
|
|
Expense
|
|
|
|
|
|
||||||
Labor and Fringe
|
2,914
|
|
|
3,159
|
|
|
3,290
|
|
|||
Materials, Supplies and Other
|
2,113
|
|
|
2,092
|
|
|
2,356
|
|
|||
Depreciation
|
1,315
|
|
|
1,301
|
|
|
1,208
|
|
|||
Fuel
|
864
|
|
|
713
|
|
|
957
|
|
|||
Equipment and Other Rents
|
429
|
|
|
465
|
|
|
456
|
|
|||
Restructuring Charges (Note 1)
|
325
|
|
|
—
|
|
|
—
|
|
|||
Equity Earnings of Affiliates
|
(219
|
)
|
|
(50
|
)
|
|
(40
|
)
|
|||
Total Expense
|
7,741
|
|
|
7,680
|
|
|
8,227
|
|
|||
|
|
|
|
|
|
||||||
Operating Income
|
3,667
|
|
|
3,389
|
|
|
3,584
|
|
|||
|
|
|
|
|
|
||||||
Interest Expense
|
(546
|
)
|
|
(579
|
)
|
|
(544
|
)
|
|||
Debt Repurchase Expense
|
—
|
|
|
(115
|
)
|
|
—
|
|
|||
Other Income (Expense) - Net (Note 10)
|
21
|
|
|
46
|
|
|
98
|
|
|||
Earnings Before Income Taxes
|
3,142
|
|
|
2,741
|
|
|
3,138
|
|
|||
|
|
|
|
|
|
||||||
Income Tax Benefit (Expense) (Note 11)
|
2,329
|
|
|
(1,027
|
)
|
|
(1,170
|
)
|
|||
Net Earnings
|
$
|
5,471
|
|
|
$
|
1,714
|
|
|
$
|
1,968
|
|
|
|
|
|
|
|
||||||
Per Common Share (Note 2)
|
|
|
|
|
|
||||||
Net Earnings Per Share
|
|
|
|
|
|
||||||
Basic
|
$
|
6.01
|
|
|
$
|
1.81
|
|
|
$
|
2.00
|
|
Assuming Dilution
|
$
|
5.99
|
|
|
$
|
1.81
|
|
|
$
|
2.00
|
|
|
|
|
|
|
|
||||||
Average Common Shares Outstanding
(Millions)
|
|
|
|
|
|
||||||
Basic
|
911
|
|
|
947
|
|
|
983
|
|
|||
Assuming Dilution
|
914
|
|
|
948
|
|
|
984
|
|
|||
|
|
|
|
|
|
||||||
Cash Dividends Paid Per Common Share
|
$
|
0.78
|
|
|
$
|
0.72
|
|
|
$
|
0.70
|
|
|
Fiscal Years
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Net Earnings
|
$
|
5,471
|
|
$
|
1,714
|
|
$
|
1,968
|
|
Other Comprehensive Income (Loss) - Net of Tax:
|
|
|
|
||||||
Pension and Other Post-Employment Benefits
|
140
|
|
21
|
|
10
|
|
|||
Other
|
14
|
|
4
|
|
(9
|
)
|
|||
Total Other Comprehensive Income (Loss)
|
154
|
|
25
|
|
1
|
|
|||
Comprehensive Earnings (Note 14)
|
$
|
5,625
|
|
$
|
1,739
|
|
$
|
1,969
|
|
|
December
|
|
December
|
||||
|
2017
|
|
2016
|
||||
ASSETS
|
|||||||
Current Assets:
|
|
|
|
||||
Cash and Cash Equivalents (Note 1)
|
$
|
401
|
|
|
$
|
603
|
|
Short-term Investments
|
18
|
|
|
417
|
|
||
Accounts Receivable - Net (Note 1)
|
970
|
|
|
938
|
|
||
Materials and Supplies
|
372
|
|
|
407
|
|
||
Other Current Assets
|
154
|
|
|
122
|
|
||
Total Current Assets
|
1,915
|
|
|
2,487
|
|
||
|
|
|
|
||||
Properties
|
44,324
|
|
|
43,227
|
|
||
Accumulated Depreciation
|
(12,560
|
)
|
|
(12,077
|
)
|
||
Properties - Net (Note 6)
|
31,764
|
|
|
31,150
|
|
||
|
|
|
|
||||
Investment in Conrail (Note 12)
|
907
|
|
|
840
|
|
||
Affiliates and Other Companies
|
779
|
|
|
619
|
|
||
Other Long-term Assets
|
374
|
|
|
318
|
|
||
Total Assets
|
$
|
35,739
|
|
|
$
|
35,414
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||
Current Liabilities:
|
|
|
|
||||
Accounts Payable
|
$
|
847
|
|
|
$
|
806
|
|
Labor and Fringe Benefits Payable
|
602
|
|
|
545
|
|
||
Casualty, Environmental and Other Reserves (Note 5)
|
108
|
|
|
115
|
|
||
Current Maturities of Long-term Debt (Note 9)
|
19
|
|
|
331
|
|
||
Income and Other Taxes Payable
|
157
|
|
|
129
|
|
||
Other Current Liabilities
|
161
|
|
|
114
|
|
||
Total Current Liabilities
|
1,894
|
|
|
2,040
|
|
||
|
|
|
|
||||
Casualty, Environmental and Other Reserves (Note 5)
|
266
|
|
|
259
|
|
||
Long-term Debt (Note 9)
|
11,790
|
|
|
10,962
|
|
||
Deferred Income Taxes - Net (Note 11)
|
6,418
|
|
|
9,596
|
|
||
Other Long-term Liabilities
|
650
|
|
|
863
|
|
||
Total Liabilities
|
21,018
|
|
|
23,720
|
|
||
|
|
|
|
||||
Shareholders' Equity:
|
|
|
|
|
|
||
Common Stock, $1 Par Value (Note 3)
|
890
|
|
|
928
|
|
||
Other Capital
|
217
|
|
|
138
|
|
||
Retained Earnings (Note 1)
|
14,084
|
|
|
11,253
|
|
||
Accumulated Other Comprehensive Loss (Note 14)
|
(486
|
)
|
|
(640
|
)
|
||
Noncontrolling Minority Interest
|
16
|
|
|
15
|
|
||
Total Shareholders' Equity
|
14,721
|
|
|
11,694
|
|
||
Total Liabilities and Shareholders' Equity
|
$
|
35,739
|
|
|
$
|
35,414
|
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net Earnings
|
$
|
5,471
|
|
|
$
|
1,714
|
|
|
$
|
1,968
|
|
Adjustments to Reconcile Net Earnings to Net Cash
|
|
|
|
|
|
|
|
||||
Provided by Operating Activities:
|
|
|
|
|
|
||||||
Depreciation
|
1,315
|
|
|
1,301
|
|
|
1,208
|
|
|||
Restructuring Charge (Note 1)
|
325
|
|
|
—
|
|
|
—
|
|
|||
Cash Payments for Restructuring Charge
|
(187
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred Income Taxes
|
(3,233
|
)
|
|
405
|
|
|
456
|
|
|||
Earnings of equity-method investments
|
(219
|
)
|
|
(50
|
)
|
|
(40
|
)
|
|||
Contributions to Qualified Pension Plans (Note 8)
|
—
|
|
|
(250
|
)
|
|
—
|
|
|||
Gain on Property Dispositions
|
(18
|
)
|
|
(128
|
)
|
|
(90
|
)
|
|||
Other Operating Activities
|
(17
|
)
|
|
(20
|
)
|
|
62
|
|
|||
Changes in Operating Assets and Liabilities:
|
|
|
|
|
|
||||||
Accounts Receivable
|
(70
|
)
|
|
84
|
|
|
149
|
|
|||
Other Current Assets
|
1
|
|
|
(113
|
)
|
|
(84
|
)
|
|||
Accounts Payable
|
41
|
|
|
40
|
|
|
(79
|
)
|
|||
Income and Other Taxes Payable
|
20
|
|
|
23
|
|
|
(62
|
)
|
|||
Other Current Liabilities
|
43
|
|
|
35
|
|
|
(118
|
)
|
|||
Net Cash Provided by Operating Activities
|
3,472
|
|
|
3,041
|
|
|
3,370
|
|
|||
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Property Additions
|
(2,040
|
)
|
|
(2,398
|
)
|
|
(2,562
|
)
|
|||
Purchase of Short-term Investments
|
(782
|
)
|
|
(929
|
)
|
|
(1,739
|
)
|
|||
Proceeds from Sales of Short-term Investments
|
1,193
|
|
|
1,325
|
|
|
1,225
|
|
|||
Proceeds from Property Dispositions
|
97
|
|
|
195
|
|
|
147
|
|
|||
Other Investing Activities
|
37
|
|
|
9
|
|
|
37
|
|
|||
Net Cash Used in Investing Activities
|
(1,495
|
)
|
|
(1,798
|
)
|
|
(2,892
|
)
|
|||
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Long-term Debt Issued (Note 9)
|
850
|
|
|
2,200
|
|
|
1,200
|
|
|||
Long-term Debt Repaid (Note 9)
|
(333
|
)
|
|
(1,419
|
)
|
|
(229
|
)
|
|||
Dividends Paid
|
(708
|
)
|
|
(680
|
)
|
|
(686
|
)
|
|||
Shares Repurchased
|
(1,970
|
)
|
|
(1,056
|
)
|
|
(804
|
)
|
|||
Other Financing Activities
|
(18
|
)
|
|
(313
|
)
|
|
—
|
|
|||
Net Cash Used in Financing Activities
|
(2,179
|
)
|
|
(1,268
|
)
|
|
(519
|
)
|
|||
Net Decrease in Cash and Cash Equivalents
|
(202
|
)
|
|
(25
|
)
|
|
(41
|
)
|
|||
CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
||||||
Cash and Cash Equivalents at Beginning of Period
|
603
|
|
|
628
|
|
|
669
|
|
|||
Cash and Cash Equivalents at End of Period
|
$
|
401
|
|
|
$
|
603
|
|
|
$
|
628
|
|
|
|
|
|
|
|
||||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
||||||
Interest Paid - Net of Amounts Capitalized
|
$
|
555
|
|
|
$
|
606
|
|
|
$
|
566
|
|
Income Taxes Paid
|
$
|
911
|
|
|
$
|
580
|
|
|
$
|
768
|
|
Seller Financed Assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
307
|
|
|
Common Shares Outstanding
(Thousands)
|
Common Stock and Other Capital
|
Retained Earnings
|
Accumulated
Other
Comprehensive
Income
(Loss)
(a)
|
Non-
controlling Interest
|
Total Shareholders' Equity
|
|||||||||||
December 26, 2014
|
991,591
|
|
$
|
1,084
|
|
$
|
10,734
|
|
$
|
(666
|
)
|
$
|
24
|
|
$
|
11,176
|
|
Comprehensive Earnings:
|
|
|
|
|
|
|
|
||||||||||
Net Earnings
|
—
|
|
|
—
|
|
1,968
|
|
—
|
|
—
|
|
1,968
|
|
||||
Other Comprehensive Income (Note 14)
|
—
|
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
||||
Total Comprehensive Earnings
|
|
|
|
|
|
|
1,969
|
|
|||||||||
Common stock dividends, $0.70 per share
|
—
|
|
|
—
|
|
(686
|
)
|
—
|
|
—
|
|
(686
|
)
|
||||
Share Repurchases
|
(26,359
|
)
|
|
(26
|
)
|
(778
|
)
|
—
|
|
—
|
|
(804
|
)
|
||||
Bond Conversions
|
13
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Other
|
269
|
|
|
21
|
|
—
|
|
—
|
|
(8
|
)
|
13
|
|
||||
December 25, 2015
|
965,514
|
|
|
1,079
|
|
11,238
|
|
(665
|
)
|
16
|
|
11,668
|
|
||||
Comprehensive Earnings:
|
|
|
|
|
|
|
|
||||||||||
Net Earnings
|
—
|
|
|
—
|
|
1,714
|
|
—
|
|
—
|
|
1,714
|
|
||||
Other Comprehensive Income (Note 14)
|
—
|
|
|
—
|
|
—
|
|
25
|
|
—
|
|
25
|
|
||||
Total Comprehensive Earnings
|
|
|
|
|
|
|
1,739
|
|
|||||||||
Common stock dividends, $0.72 per share
|
—
|
|
|
—
|
|
(680
|
)
|
—
|
|
—
|
|
(680
|
)
|
||||
Share Repurchases
|
(38,379
|
)
|
|
(38
|
)
|
(1,018
|
)
|
—
|
|
—
|
|
(1,056
|
)
|
||||
Bond Conversions
|
94
|
|
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
|
||||
Other
|
951
|
|
|
24
|
|
(1
|
)
|
—
|
|
(1
|
)
|
22
|
|
||||
December 30, 2016
|
928,180
|
|
|
1,066
|
|
11,253
|
|
(640
|
)
|
15
|
|
11,694
|
|
||||
Comprehensive Earnings:
|
|
|
|
|
|
|
|
||||||||||
Net Earnings
|
—
|
|
|
—
|
|
5,471
|
|
—
|
|
—
|
|
5,471
|
|
||||
Other Comprehensive Income (Note 14)
|
—
|
|
|
—
|
|
—
|
|
154
|
|
—
|
|
154
|
|
||||
Total Comprehensive Earnings
|
|
|
|
|
|
|
5,625
|
|
|||||||||
Common stock dividends, $0.78 per share
|
—
|
|
|
—
|
|
(708
|
)
|
—
|
|
—
|
|
(708
|
)
|
||||
Share Repurchases
|
(38,785
|
)
|
|
(39
|
)
|
(1,931
|
)
|
—
|
|
—
|
|
(1,970
|
)
|
||||
Other
|
456
|
|
|
80
|
|
(1
|
)
|
—
|
|
1
|
|
80
|
|
||||
December 31, 2017
|
889,851
|
|
$
|
1,107
|
|
$
|
14,084
|
|
$
|
(486
|
)
|
$
|
16
|
|
$
|
14,721
|
|
•
|
The merchandise business shipped
2.7 million
carloads and generated
62 percent
of revenue and
42 percent
of volume in
2017
. The Company’s merchandise business is comprised of shipments in the following diverse markets: chemicals, automotive, agricultural and food products, minerals, fertilizers, forest products, and metals and equipment.
|
•
|
The coal business shipped about
855 thousand
carloads and accounted for
18 percent
of revenue and
13 percent
of volume in
2017
. The Company transports domestic coal, coke and iron ore to electricity-generating power plants, steel manufacturers and industrial plants as well as export coal to deep-water port facilities.
Roughly one-third
of export coal and
the majority
of the domestic coal that the Company transports is used for generating electricity.
|
•
|
The intermodal business accounted for
16 percent
of revenue and
44 percent
of volume in
2017
. The intermodal business combines the superior economics of rail transportation with the short-haul flexibility of trucks and offers a cost advantage over long-haul trucking. Through a network of more than
40
terminals, the intermodal business serves all major markets east of the Mississippi River and transports mainly manufactured consumer goods in containers, providing customers with truck-like service for longer shipments.
|
•
|
Fiscal year 2017 (December 31, 2016 through December 31, 2017) contained 366 days, and fiscal year 2016 (December 26, 2015 through December 30, 2016) contained 371 days
|
•
|
Fiscal first quarter 2017 (December 31, 2016 through March 31, 2017) contained 91 days, and fiscal first quarter 2016 (December 26, 2015 through March 25, 2016) contained 91 days
|
•
|
Fiscal second quarter 2017 (April 1, 2017 through June 30, 2017) contained 91 days, and fiscal second quarter 2016 (September 24, 2016 through December 30, 2016) contained 91 days
|
•
|
Fiscal third quarter 2017 (July 1, 2017 through September 30, 2017) contained 92 days, and fiscal third quarter 2016 (June 25, 2016 through September 23, 2016) contained 91 days
|
•
|
Fiscal fourth quarter 2017 (October 1, 2017 through December 31, 2017) contained 92 days, and fiscal fourth quarter 2016 (September 24, 2016 through December 30, 2016) contained 98 days
|
•
|
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, billing discounts and bad debts or to accounts receivable for allowances for doubtful accounts;
|
•
|
adjustments to revenue for overcharge claims filed by customers, which are based on historical cash paid to customers for rate overcharges as a percentage of total billing;
|
•
|
incentive-based refunds to customers, which are primarily based on customers achieving certain volume thresholds, are recorded as a reduction to revenue on the basis of management’s best estimate of the projected liability (this estimate is based on historical activity, current volume levels and forecasted future volume).
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
||||||||
Increase in Operating Income
|
$
|
53
|
|
|
$
|
24
|
|
|
$
|
44
|
|
Decrease in Other Income
|
(53
|
)
|
|
(24
|
)
|
|
(44
|
)
|
•
|
personal injury, environmental and legal reserves (see Note 5,
Casualty, Environmental and Other Reserves
);
|
•
|
pension and post-retirement medical plan accounting (see Note 8,
Employee Benefit Plans
);
|
•
|
depreciation policies for assets under the group-life method (see Note 6,
Properties
); and
|
•
|
income taxes (see Note 11,
Income Taxes
).
|
|
2017
|
||||||||||||||
(Dollars in millions)
|
First
Quarter
|
Second Quarter
|
Third Quarter
|
Fourth Quarter
|
Year-to-Date
|
||||||||||
Severance
|
$
|
81
|
|
$
|
10
|
|
$
|
—
|
|
$
|
7
|
|
$
|
98
|
|
Pension and Other Post-Retirement Benefit Charges
|
63
|
|
7
|
|
—
|
|
3
|
|
73
|
|
|||||
Share-Based Compensation Remeasurement
|
5
|
|
3
|
|
—
|
|
7
|
|
15
|
|
|||||
Relocation
|
6
|
|
2
|
|
—
|
|
—
|
|
8
|
|
|||||
Subtotal Management Workforce Reduction
|
$
|
155
|
|
$
|
22
|
|
$
|
—
|
|
$
|
17
|
|
$
|
194
|
|
Reimbursement Arrangements
|
—
|
|
84
|
|
—
|
|
—
|
|
84
|
|
|||||
Non-Cash Executive Equity Awards Proration
|
8
|
|
16
|
|
—
|
|
—
|
|
24
|
|
|||||
Non-Cash Pension Settlement Charge
|
—
|
|
—
|
|
—
|
|
12
|
|
12
|
|
|||||
Other Charges Including Fees Related to Shareholder Matters
|
10
|
|
—
|
|
1
|
|
—
|
|
11
|
|
|||||
Total Restructuring Charge
|
$
|
173
|
|
$
|
122
|
|
$
|
1
|
|
$
|
29
|
|
$
|
325
|
|
(Dollars in millions)
|
2017 Charges
|
2017
Payments
|
Non-cash
Items
|
Liability
12/31/2017
|
||||||||
Severance
|
$
|
98
|
|
$
|
(86
|
)
|
$
|
—
|
|
$
|
12
|
|
Pension, Other Post-Retirement Benefit Charges
(a)
|
73
|
|
—
|
|
(73
|
)
|
—
|
|
||||
Share-Based Compensation Remeasurement
|
15
|
|
—
|
|
(15
|
)
|
—
|
|
||||
Relocation
|
8
|
|
(6
|
)
|
—
|
|
2
|
|
||||
Subtotal Management Workforce Reduction
|
$
|
194
|
|
$
|
(92
|
)
|
$
|
(88
|
)
|
$
|
14
|
|
Reimbursement Arrangements
|
84
|
|
(84
|
)
|
—
|
|
—
|
|
||||
Non-Cash Executive Equity Awards Proration
|
24
|
|
—
|
|
(24
|
)
|
—
|
|
||||
Non-Cash Pension Settlement Charge
|
12
|
|
—
|
|
(12
|
)
|
—
|
|
||||
Other Charges Including Fees Related to Shareholder Matters
|
11
|
|
(11
|
)
|
—
|
|
—
|
|
||||
Total Restructuring Charge
|
$
|
325
|
|
$
|
(187
|
)
|
$
|
(124
|
)
|
$
|
14
|
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator
(Dollars in Millions)
:
|
|
|
|
||||||||
Net Earnings
|
$
|
5,471
|
|
|
$
|
1,714
|
|
|
$
|
1,968
|
|
Dividend Equivalents on Restricted Stock
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Net Earnings, Attributable to Common Shareholders
|
$
|
5,470
|
|
|
$
|
1,713
|
|
|
$
|
1,967
|
|
|
|
|
|
|
|
||||||
Denominator
(Units in Millions)
:
|
|
|
|
|
|
||||||
Average Common Shares Outstanding
|
911
|
|
|
947
|
|
|
983
|
|
|||
Other Potentially Dilutive Common Shares
|
3
|
|
|
1
|
|
|
1
|
|
|||
Average Common Shares Outstanding, Assuming Dilution
|
914
|
|
|
948
|
|
|
984
|
|
|||
|
|
|
|
|
|
||||||
Net Earnings Per Share, Basic
|
$
|
6.01
|
|
|
$
|
1.81
|
|
|
$
|
2.00
|
|
Net Earnings Per Share, Assuming Dilution
|
$
|
5.99
|
|
|
$
|
1.81
|
|
|
$
|
2.00
|
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Shares Repurchased
(Units in Millions)
|
39
|
|
|
38
|
|
|
26
|
|
|||
Cost of Shares
(Dollars in Millions)
|
$
|
1,970
|
|
|
$
|
1,056
|
|
|
$
|
804
|
|
|
||
Common Stock, $1 Par Value
|
December 2017
|
|
|
(Units in Millions)
|
|
Common Shares Authorized
|
1,800
|
|
Common Shares Issued and Outstanding
|
890
|
|
|
|
|
Preferred Stock
|
|
|
Preferred Shares Authorized
|
25
|
|
Preferred Shares Issued and Outstanding
|
—
|
|
|
Fiscal Years
|
||||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Share-Based Compensation Expense
|
|
|
|
|
|
||||||
Performance Units
|
$
|
49
|
|
|
$
|
17
|
|
|
$
|
(1
|
)
|
Restricted Stock Units and Awards
|
15
|
|
|
11
|
|
|
11
|
|
|||
Stock Options
|
22
|
|
|
7
|
|
|
—
|
|
|||
Stock Awards for Directors
|
3
|
|
|
2
|
|
|
2
|
|
|||
Total Share-based Compensation Expense
|
$
|
89
|
|
|
$
|
37
|
|
|
$
|
12
|
|
Income Tax Benefit
|
$
|
34
|
|
|
$
|
14
|
|
|
$
|
4
|
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted-average grant date fair value
|
$
|
49.50
|
|
|
$
|
24.17
|
|
|
$
|
35.45
|
|
Fair value of units vested in fiscal year ending
(in millions)
|
$
|
26
|
|
|
$
|
31
|
|
|
$
|
34
|
|
|
Performance Units Outstanding
(in Thousands) |
|
Weighted-Average Fair Value at Grant Date
|
|||
Unvested at December 30, 2016
|
1,581
|
|
|
$
|
30.00
|
|
Granted
|
644
|
|
|
49.50
|
|
|
Forfeited
|
(530
|
)
|
|
38.47
|
|
|
Vested
|
(719
|
)
|
|
35.94
|
|
|
Unvested at December 31, 2017
|
976
|
|
|
$
|
33.90
|
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted-average grant date fair value
|
$
|
48.35
|
|
|
$
|
24.21
|
|
|
$
|
35.94
|
|
Fair value of units and awards vested during fiscal year ended
(in millions)
|
$
|
8
|
|
|
$
|
14
|
|
|
$
|
9
|
|
|
Restricted Stock Units and Awards Outstanding
(in Thousands) |
|
Weighted-Average Fair Value at Grant Date
|
|||
Unvested at December 30, 2016
|
1,076
|
|
|
$
|
28.19
|
|
Granted
|
328
|
|
|
48.35
|
|
|
Forfeited
|
(297
|
)
|
|
36.48
|
|
|
Vested
|
(300
|
)
|
|
28.09
|
|
|
Unvested at December 31, 2017
|
807
|
|
|
$
|
33.37
|
|
|
Fiscal Years
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted-average grant date fair value
|
$
|
12.84
|
|
|
$
|
4.68
|
|
|
$
|
5.31
|
|
|
|
|
|
|
|
||||||
Stock options valuation assumptions:
|
|
|
|
|
|
||||||
Annual dividend yield
|
1.5
|
%
|
|
3
|
%
|
|
3
|
%
|
|||
Risk-free interest rate
|
2.2
|
%
|
|
1
|
%
|
|
2
|
%
|
|||
Annualized volatility
|
27.1
|
%
|
|
27
|
%
|
|
28
|
%
|
|||
Expected life (in years)
|
6.3
|
|
|
6.5
|
|
|
6.5
|
|
|||
Other pricing model inputs:
|
|
|
|
|
|
||||||
Weighted-average grant-date market price of CSX stock (strike price)
|
$
|
49.63
|
|
|
$
|
24.13
|
|
|
$
|
24.99
|
|
|
Stock Options Outstanding
(in Thousands) |
|
Weighted-Average Exercise Price
|
|||
Outstanding at December 30, 2016
|
4,582
|
|
|
$
|
24.57
|
|
Granted
|
10,462
|
|
|
49.63
|
|
|
Forfeited
|
(10,860
|
)
|
|
46.81
|
|
|
Exercised
|
22
|
|
|
25.18
|
|
|
Outstanding at December 31, 2017
|
4,163
|
|
|
$
|
29.52
|
|
Exercisable at December 31, 2017
|
—
|
|
|
—
|
|
|
Casualty
|
|
Environmental
|
|
Other
|
|
|
||||||||
(Dollars in Millions)
|
Reserves
|
|
Reserves
|
|
Reserves
|
|
Total
|
||||||||
December 26, 2014
|
$
|
265
|
|
|
$
|
94
|
|
|
$
|
59
|
|
|
$
|
418
|
|
Charged to Expense
|
60
|
|
|
45
|
|
|
37
|
|
|
142
|
|
||||
Payments
|
(56
|
)
|
|
(57
|
)
|
|
(47
|
)
|
|
(160
|
)
|
||||
December 25, 2015
|
269
|
|
|
82
|
|
|
49
|
|
|
400
|
|
||||
Charged to Expense
|
52
|
|
|
46
|
|
|
30
|
|
|
128
|
|
||||
Change in Estimate
(a)
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
||||
Payments
|
(64
|
)
|
|
(33
|
)
|
|
(29
|
)
|
|
(126
|
)
|
||||
December 30, 2016
|
229
|
|
|
95
|
|
|
50
|
|
|
374
|
|
||||
Charged to Expense
|
43
|
|
|
26
|
|
|
45
|
|
|
114
|
|
||||
Payments
|
(44
|
)
|
|
(31
|
)
|
|
(39
|
)
|
|
(114
|
)
|
||||
December 31, 2017
|
$
|
228
|
|
|
$
|
90
|
|
|
$
|
56
|
|
|
$
|
374
|
|
(a)
|
Changes in estimates are the result of continued safety improvements and a continuing decline in the severity of injuries.
|
|
December 2017
|
|
December 2016
|
||||||||||||||||||||
(Dollars in Millions)
|
Current
|
|
Long-term
|
|
Total
|
|
Current
|
|
Long-term
|
|
Total
|
||||||||||||
Casualty:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Personal Injury
|
$
|
43
|
|
|
$
|
125
|
|
|
$
|
168
|
|
|
$
|
46
|
|
|
$
|
124
|
|
|
$
|
170
|
|
Occupational
|
6
|
|
|
54
|
|
|
60
|
|
|
7
|
|
|
52
|
|
|
59
|
|
||||||
Total Casualty
|
$
|
49
|
|
|
$
|
179
|
|
|
$
|
228
|
|
|
$
|
53
|
|
|
$
|
176
|
|
|
$
|
229
|
|
Environmental
|
31
|
|
|
59
|
|
|
90
|
|
|
42
|
|
|
53
|
|
|
95
|
|
||||||
Other
|
28
|
|
|
28
|
|
|
56
|
|
|
20
|
|
|
30
|
|
|
50
|
|
||||||
Total
|
$
|
108
|
|
|
$
|
266
|
|
|
$
|
374
|
|
|
$
|
115
|
|
|
$
|
259
|
|
|
$
|
374
|
|
•
|
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.
|
(Dollars in Millions)
|
|
|
|
Accumulated
|
|
Net Book
|
|
Annual Depreciation
|
|
Estimated Useful Life
|
|
Depreciation
|
||||||||
December 2017
|
|
Cost
|
|
Depreciation
|
|
Value
|
|
Rate
|
|
( Avg. Years)
|
|
Method
(a)
|
||||||||
Road
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Rail and Other Track Material
|
|
$
|
7,694
|
|
|
$
|
(1,606
|
)
|
|
$
|
6,088
|
|
|
2.5%
|
|
40
|
|
Group Life
|
|
|
Ties
|
|
5,665
|
|
|
(1,446
|
)
|
|
4,219
|
|
|
3.7%
|
|
27
|
|
Group Life
|
|||
|
|
Grading
|
|
2,662
|
|
|
(542
|
)
|
|
2,120
|
|
|
1.4%
|
|
90
|
|
Group Life
|
|||
|
|
Ballast
|
|
2,994
|
|
|
(921
|
)
|
|
2,073
|
|
|
2.7%
|
|
37
|
|
Group Life
|
|||
|
|
Bridges, Trestles, and Culverts
|
|
2,405
|
|
|
(356
|
)
|
|
2,049
|
|
|
1.6%
|
|
70
|
|
Group Life
|
|||
|
|
Signals and Interlockers
|
|
2,759
|
|
|
(588
|
)
|
|
2,171
|
|
|
4.0%
|
|
25
|
|
Group Life/ Straight Line
|
|||
|
|
Buildings
|
|
1,278
|
|
|
(464
|
)
|
|
814
|
|
|
2.5%
|
|
40
|
|
Group Life
|
|||
|
|
Other
|
|
4,634
|
|
|
(1,867
|
)
|
|
2,767
|
|
|
4.2%
|
|
24
|
|
Group Life
|
|||
Total Road
|
|
30,091
|
|
|
(7,790
|
)
|
|
22,301
|
|
|
|
|
|
|
|
|||||
Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Locomotive
|
|
6,083
|
|
|
(2,490
|
)
|
|
3,593
|
|
|
3.5%
|
|
29
|
|
Group Life
|
|||
|
|
Freight Cars
|
|
3,262
|
|
|
(998
|
)
|
|
2,264
|
|
|
2.9%
|
|
35
|
|
Group Life
|
|||
|
|
Work Equipment and Other
|
|
2,261
|
|
|
(1,282
|
)
|
|
979
|
|
|
7.4%
|
|
14
|
|
Group Life/ Straight Line
|
|||
Total Equipment
|
|
11,606
|
|
|
(4,770
|
)
|
|
6,836
|
|
|
|
|
|
|
|
|||||
Land
|
|
|
|
1,849
|
|
|
—
|
|
|
1,849
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|||
Construction In Progress
|
|
778
|
|
|
—
|
|
|
778
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|||||
Total Properties
|
|
$
|
44,324
|
|
|
$
|
(12,560
|
)
|
|
$
|
31,764
|
|
|
|
|
|
|
|
(Dollars in Millions)
|
|
|
|
Accumulated
|
|
Net Book
|
|
Annual Depreciation
|
|
Estimated Useful Life
|
|
Depreciation
|
||||||||
December 2016
|
|
Cost
|
|
Depreciation
|
|
Value
|
|
Rate
|
|
(Avg. Years)
|
|
Method
(a)
|
||||||||
Road
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Rail and Other Track Material
|
|
$
|
7,326
|
|
|
$
|
(1,493
|
)
|
|
$
|
5,833
|
|
|
2.5%
|
|
40
|
|
Group Life
|
|
|
Ties
|
|
5,368
|
|
|
(1,292
|
)
|
|
4,076
|
|
|
3.7%
|
|
27
|
|
Group Life
|
|||
|
|
Grading
|
|
2,600
|
|
|
(514
|
)
|
|
2,086
|
|
|
1.4%
|
|
90
|
|
Group Life
|
|||
|
|
Ballast
|
|
2,897
|
|
|
(860
|
)
|
|
2,037
|
|
|
2.7%
|
|
37
|
|
Group Life
|
|||
|
|
Bridges, Trestles, and Culverts
|
|
2,306
|
|
|
(317
|
)
|
|
1,989
|
|
|
1.6%
|
|
70
|
|
Group Life
|
|||
|
|
Signals and Interlockers
|
|
2,523
|
|
|
(496
|
)
|
|
2,027
|
|
|
4.0%
|
|
25
|
|
Group Life/ Straight Line
|
|||
|
|
Buildings
|
|
1,238
|
|
|
(447
|
)
|
|
791
|
|
|
2.5%
|
|
40
|
|
Group Life
|
|||
|
|
Other
|
|
4,566
|
|
|
(1,905
|
)
|
|
2,661
|
|
|
4.2%
|
|
24
|
|
Group Life
|
|||
Total Road
|
|
28,824
|
|
|
(7,324
|
)
|
|
21,500
|
|
|
|
|
|
|
|
|||||
Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Locomotive
|
|
6,110
|
|
|
(2,504
|
)
|
|
3,606
|
|
|
3.5%
|
|
29
|
|
Group Life
|
|||
|
|
Freight Cars
|
|
3,386
|
|
|
(1,046
|
)
|
|
2,340
|
|
|
2.9%
|
|
35
|
|
Group Life
|
|||
|
|
Work Equipment and Other
|
|
2,108
|
|
|
(1,190
|
)
|
|
918
|
|
|
7.4%
|
|
14
|
|
Group Life/ Straight Line
|
|||
Total Equipment
|
|
11,604
|
|
|
(4,740
|
)
|
|
6,864
|
|
|
|
|
|
|
|
|||||
Land
|
|
|
|
1,833
|
|
|
—
|
|
|
1,833
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|||
Construction In Progress
|
|
913
|
|
|
—
|
|
|
913
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|||||
Other
|
|
|
|
53
|
|
|
(13
|
)
|
|
40
|
|
|
N/A
|
|
32
|
|
Straight Line
|
|||
Total Properties
|
|
$
|
43,227
|
|
|
$
|
(12,077
|
)
|
|
$
|
31,150
|
|
|
|
|
|
|
|
•
|
labor costs, because many of the assets are self-constructed;
|
•
|
costs to purchase or construct new track or to prepare ground for the laying of track;
|
•
|
welding (rail, field and plant) which are processes used to connect segments of rail;
|
•
|
new ballast, which is gravel and crushed stone that holds track in line;
|
•
|
fuels and lubricants associated with tie, rail and surfacing work which is the process of raising track to a designated elevation over an extended distance;
|
•
|
cross, switch and bridge ties which are the braces that support the rails on a track;
|
•
|
gauging which is the process of standardizing the distance between rails;
|
•
|
handling costs associated with installing rail, ties or ballast;
|
•
|
usage charge of machinery and equipment utilized in construction or installation; and
|
•
|
other track materials.
|
|
Fiscal Years
|
||||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Rent Expense on Operating Leases
(a)
|
$
|
78
|
|
|
$
|
77
|
|
|
$
|
86
|
|
(Dollars in Millions)
|
Operating
|
|
Sublease
|
|
Net Lease
|
||||||
Years
|
Leases
|
|
Income
|
|
Commitments
|
||||||
2018
|
$
|
68
|
|
|
$
|
(3
|
)
|
|
$
|
65
|
|
2019
|
64
|
|
|
(3
|
)
|
|
61
|
|
|||
2020
|
50
|
|
|
(3
|
)
|
|
47
|
|
|||
2021
|
45
|
|
|
(3
|
)
|
|
42
|
|
|||
2022
|
41
|
|
|
(3
|
)
|
|
38
|
|
|||
Thereafter
|
128
|
|
|
(6
|
)
|
|
122
|
|
|||
Total
|
$
|
396
|
|
|
$
|
(21
|
)
|
|
$
|
375
|
|
|
Fiscal Years
|
||||||||||
(Dollars in Millions)
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Amounts Paid
|
$
|
197
|
|
|
$
|
230
|
|
|
$
|
233
|
|
Number of Locomotives
|
2,062
|
|
|
2,243
|
|
|
2,310
|
|
(Dollars in Millions)
|
Locomotive Maintenance Payments
|
|
Other
Commitments
|
|
Total
|
||||||
2018
|
$
|
171
|
|
|
$
|
119
|
|
|
$
|
290
|
|
2019
|
162
|
|
|
67
|
|
|
229
|
|
|||
2020
|
218
|
|
|
35
|
|
|
253
|
|
|||
2021
|
223
|
|
|
35
|
|
|
258
|
|
|||
2022
|
225
|
|
|
33
|
|
|
258
|
|
|||
Thereafter
|
2,716
|
|
|
213
|
|
|
2,929
|
|
|||
Total
|
$
|
3,715
|
|
|
$
|
502
|
|
|
$
|
4,217
|
|
|
Summary of Participants as of
|
||||
|
January 1, 2017
|
||||
|
Pension Plans
|
|
Post-retirement Medical Plan
|
||
Active Employees
|
3,744
|
|
|
458
|
|
Retirees and Beneficiaries
|
12,723
|
|
|
9,940
|
|
Other
(a)
|
3,591
|
|
|
36
|
|
Total
|
20,058
|
|
|
10,434
|
|
•
|
service cost (benefits attributed to employee service during the period);
|
•
|
interest cost (interest on the liability due to the passage of time);
|
•
|
actuarial gains/losses (experience during the year different from that assumed and changes in plan assumptions); and
|
•
|
benefits paid to participants.
|
|
Expected Cash Flows
|
||||||
(Dollars in Millions)
|
Pension Benefits
|
|
Post-retirement Benefits
|
||||
2018
|
$
|
198
|
|
|
$
|
38
|
|
2019
|
193
|
|
|
28
|
|
||
2020
|
189
|
|
|
26
|
|
||
2021
|
186
|
|
|
24
|
|
||
2022
|
183
|
|
|
22
|
|
||
2023-2026
|
888
|
|
|
76
|
|
||
Total
|
$
|
1,837
|
|
|
$
|
214
|
|
|
December 2017
|
|
December 2016
|
||||||||||
|
|
|
Percent of
|
|
|
|
Percent of
|
||||||
(Dollars in Millions)
|
Amount
|
|
Total Assets
|
|
Amount
|
|
Total Assets
|
||||||
Equity
|
$
|
2,060
|
|
|
73
|
%
|
|
$
|
1,806
|
|
|
71
|
%
|
Fixed Income
|
729
|
|
|
26
|
|
|
665
|
|
|
26
|
|
||
Cash and Cash Equivalents
|
44
|
|
|
1
|
|
|
68
|
|
|
3
|
|
||
Total
|
$
|
2,833
|
|
|
100
|
%
|
|
$
|
2,539
|
|
|
100
|
%
|
|
Pension Benefits
|
|
Post-retirement Benefits
|
||||||||||||
|
Plan Year
|
|
Plan Year
|
|
Plan Year
|
|
Plan Year
|
||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Actuarial Present Value of Benefit Obligation
|
|
|
|
|
|
|
|
||||||||
Accumulated Benefit Obligation
|
$
|
2,873
|
|
|
$
|
2,717
|
|
|
N/A
|
|
|
N/A
|
|
||
Projected Benefit Obligation
|
3,002
|
|
|
2,871
|
|
|
$
|
250
|
|
|
$
|
274
|
|
||
|
|
|
|
|
|
|
|
||||||||
Change in Projected Benefit Obligation:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Projected Benefit Obligation at
Beginning of Plan Year
|
$
|
2,871
|
|
|
$
|
2,860
|
|
|
$
|
274
|
|
|
$
|
314
|
|
Service Cost
|
36
|
|
|
48
|
|
|
2
|
|
|
2
|
|
||||
Interest Cost
|
92
|
|
|
119
|
|
|
7
|
|
|
12
|
|
||||
Plan Participants' Contributions
|
—
|
|
|
—
|
|
|
7
|
|
|
6
|
|
||||
Workforce Reduction Program/Curtailment
|
58
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Actuarial Loss (Gain)
|
163
|
|
|
20
|
|
|
(17
|
)
|
|
(22
|
)
|
||||
Benefits Paid
|
(218
|
)
|
|
(176
|
)
|
|
(36
|
)
|
|
(38
|
)
|
||||
Benefit Obligation at End of Plan Year
|
$
|
3,002
|
|
|
$
|
2,871
|
|
|
$
|
250
|
|
|
$
|
274
|
|
|
|
|
|
|
|
|
|
||||||||
Change in Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair Value of Plan Assets at Beginning of Plan Year
|
$
|
2,539
|
|
|
$
|
2,309
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual Return on Plan Assets
|
467
|
|
|
139
|
|
|
—
|
|
|
—
|
|
||||
Qualified Employer Contributions
|
—
|
|
|
250
|
|
|
—
|
|
|
—
|
|
||||
Non-qualified Employer Contributions
|
45
|
|
|
17
|
|
|
29
|
|
|
32
|
|
||||
Plan Participants' Contributions
|
—
|
|
|
—
|
|
|
7
|
|
|
6
|
|
||||
Benefits Paid
|
(218
|
)
|
|
(176
|
)
|
|
(36
|
)
|
|
(38
|
)
|
||||
Fair Value of Plan Assets at End of Plan Year
|
2,833
|
|
|
2,539
|
|
|
—
|
|
|
—
|
|
||||
Funded Status at End of Plan Year
|
$
|
(169
|
)
|
|
$
|
(332
|
)
|
|
$
|
(250
|
)
|
|
$
|
(274
|
)
|
|
Pension Benefits
|
|
Post-retirement Benefits
|
||||||||||||
|
December
|
|
December
|
|
December
|
|
December
|
||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Amounts Recorded in Consolidated
|
|
|
|
|
|
|
|
||||||||
Balance Sheets:
|
|
|
|
|
|
|
|
||||||||
Long-term Assets
(a)
|
$
|
57
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current Liabilities
|
(15
|
)
|
|
(15
|
)
|
|
(38
|
)
|
|
(39
|
)
|
||||
Long-term Liabilities
|
(211
|
)
|
|
(326
|
)
|
|
(212
|
)
|
|
(235
|
)
|
||||
Net Amount Recognized in
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated Balance Sheets
|
$
|
(169
|
)
|
|
$
|
(332
|
)
|
|
$
|
(250
|
)
|
|
$
|
(274
|
)
|
(a)
|
Long-term assets as of December 2017 and 2016 relate to qualified pension plans where assets exceed projected benefit obligations.
|
|
Aggregate
|
|
||||
(Dollars in Millions)
|
Fair Value
|
Aggregate
|
||||
Benefit Obligations in Excess of Plan Assets
|
of Plan Assets
|
Benefit Obligation
|
||||
Projected Benefit Obligation
|
$
|
—
|
|
$
|
(226
|
)
|
Accumulated Benefit Obligation
|
—
|
|
(216
|
)
|
|
Pension Benefits
Fiscal Years
|
|
Post-retirement Benefits
Fiscal Years
|
||||||||||||||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Service Cost
|
$
|
36
|
|
|
$
|
48
|
|
|
$
|
45
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest Cost
|
92
|
|
|
119
|
|
|
116
|
|
|
7
|
|
|
12
|
|
|
12
|
|
||||||
Expected Return on Plan Assets
|
(171
|
)
|
|
(157
|
)
|
|
(162
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of Net Loss
|
41
|
|
|
48
|
|
|
70
|
|
|
—
|
|
|
3
|
|
|
4
|
|
||||||
Amortization of Prior Service Cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
Net Periodic Benefit Expense
|
(2
|
)
|
|
58
|
|
|
69
|
|
|
9
|
|
|
17
|
|
|
17
|
|
||||||
Special Termination Benefits - Workforce Reduction Program/Curtailment
|
60
|
|
|
—
|
|
|
7
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||||
Settlement Loss (Gain)
|
11
|
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total Expense
|
$
|
69
|
|
|
$
|
57
|
|
|
$
|
74
|
|
|
$
|
22
|
|
|
$
|
17
|
|
|
$
|
17
|
|
(Dollars in Millions)
|
Pension Benefits
|
|
Post-retirement Benefits
|
||||||||||||
Components of Other Comprehensive
|
December
|
|
December
|
|
December
|
|
December
|
||||||||
Loss (Income)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Recognized in the balance sheet
|
|
|
|
|
|
|
|
||||||||
(Gains) Losses
|
$
|
(131
|
)
|
|
$
|
38
|
|
|
$
|
(17
|
)
|
|
$
|
(22
|
)
|
Expense (Income) recognized in the income statement
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of net losses
(a)
|
$
|
41
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Settlement gain
|
11
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Curtailment loss
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(a)
|
Amortization of net losses estimated to be expensed for
2018
is approximately
$43 million
for pension benefits.
|
|
Pension Benefits
|
|
Post-retirement Benefits
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Expected Long-term Return on Plan Assets:
|
|
|
|
|
|
|
|
||||
Benefit Cost for Current Plan Year
|
6.75
|
%
|
|
7.00
|
%
|
|
N/A
|
|
|
N/A
|
|
Benefit Cost for Subsequent Plan Year
|
6.75
|
%
|
|
6.75
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
||||
Discount Rates:
|
|
|
|
|
|
|
|
||||
Benefit Cost for Plan Year
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Service Cost for Plan Year
|
4.26
|
%
|
(a)
|
4.30
|
%
|
|
4.11
|
%
|
(b)
|
3.85
|
%
|
Interest Cost for Plan Year
|
3.26
|
%
|
(a)
|
4.30
|
%
|
|
2.78
|
%
|
(b)
|
3.85
|
%
|
Benefit Obligation at End of Plan Year
|
3.56
|
%
|
|
4.08
|
%
|
|
3.34
|
%
|
|
3.71
|
%
|
|
|
|
|
|
|
|
|
||||
Salary Scale Inflation
|
4.60
|
%
|
|
4.60
|
%
|
|
N/A
|
|
|
N/A
|
|
(a)
|
The pension benefits service cost and interest cost for 2017 were based on a weighted average discount rate of
4.35%
and
3.37%
, respectively, prior to the management workforce reduction program initiated in 2017 and were reduced to
4.26%
and
3.26%
, respectively, after the Company remeasured the pension benefits obligation and pension plan assets in the second quarter of 2017.
|
(b)
|
The post-retirement benefits service cost and interest cost for 2017 were based on a weighted average discount rate of
4.20%
and
2.88%
, respectively, prior to the management workforce reduction program initiated in 2017 and were reduced to
4.11%
and
2.78%
, respectively, after the Company remeasured the other post-retirement benefits obligation in the first quarter of 2017.
|
|
Maturity at
December
|
Average
Interest
Rates at
December
|
December
|
December
|
||||
(Dollars in Millions)
|
2017
|
2017
|
2017
|
2016
|
||||
Notes
|
2020-2066
|
4.3%
|
$
|
11,591
|
|
$
|
11,055
|
|
Equipment Obligations
(a)
|
2018-2023
|
6.3%
|
213
|
|
232
|
|
||
Capital Leases
|
2018-2026
|
16.2%
|
5
|
|
6
|
|
||
Subtotal Long-term Debt (including current portion)
|
|
|
$
|
11,809
|
|
$
|
11,293
|
|
Less Debt Due within One Year
|
|
|
(19
|
)
|
(331
|
)
|
||
Long-term Debt (excluding current portion)
|
|
|
$
|
11,790
|
|
$
|
10,962
|
|
(Dollars in Millions)
|
Maturities as of
|
||
Fiscal Years Ending
|
December 2017
|
||
2018
|
$
|
19
|
|
2019
|
18
|
|
|
2020
|
745
|
|
|
2021
|
371
|
|
|
2022
|
162
|
|
|
Thereafter
|
10,494
|
|
|
Total Long-term Debt Maturities, including current portion
|
$
|
11,809
|
|
|
Fiscal Years
|
||||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Interest Income
|
$
|
13
|
|
|
$
|
10
|
|
|
$
|
6
|
|
Income from Non-operating Real Estate Activities
|
—
|
|
|
27
|
|
|
83
|
|
|||
Miscellaneous Income (Expense)
|
8
|
|
|
9
|
|
|
9
|
|
|||
Total Other Income (Expense) - Net
|
$
|
21
|
|
|
$
|
46
|
|
|
$
|
98
|
|
Gross Revenue from Real Estate
|
|
|
|
|
|
||||||
Operations included above
|
$
|
—
|
|
|
$
|
56
|
|
|
$
|
104
|
|
|
Fiscal Years
|
||||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
||||||||
Federal
|
$
|
787
|
|
|
$
|
540
|
|
|
$
|
619
|
|
State
|
117
|
|
|
82
|
|
|
95
|
|
|||
Subtotal Current
|
904
|
|
|
622
|
|
|
714
|
|
|||
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(3,277
|
)
|
|
355
|
|
|
414
|
|
|||
State
|
44
|
|
|
50
|
|
|
42
|
|
|||
Subtotal Deferred
|
(3,233
|
)
|
|
405
|
|
|
456
|
|
|||
Total
|
$
|
(2,329
|
)
|
|
$
|
1,027
|
|
|
$
|
1,170
|
|
|
Fiscal Years
|
|||||||||||||||||||
(Dollars In Millions)
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Federal Income Taxes
|
$
|
1,100
|
|
|
35.0
|
%
|
|
$
|
959
|
|
|
35.0
|
%
|
|
$
|
1,098
|
|
|
35.0
|
%
|
State Income Taxes
|
102
|
|
|
3.2
|
%
|
|
83
|
|
|
3.0
|
%
|
|
86
|
|
|
2.7
|
%
|
|||
Deferred Tax Rate Change
|
(3,506
|
)
|
|
(111.6
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Other
|
(25
|
)
|
|
(0.8
|
)%
|
|
(15
|
)
|
|
(0.5
|
)%
|
|
(14
|
)
|
|
(0.4
|
)%
|
|||
Income Tax (Benefit) Expense/Rate
|
$
|
(2,329
|
)
|
|
(74.2
|
)%
|
|
$
|
1,027
|
|
|
37.5
|
%
|
|
$
|
1,170
|
|
|
37.3
|
%
|
|
2017
|
|
2016
|
||||||||||||
(Dollars in Millions)
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||
Pension Plans
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
125
|
|
|
$
|
—
|
|
Other Employee Benefit Plans
|
182
|
|
|
—
|
|
|
272
|
|
|
—
|
|
||||
Accelerated Depreciation
|
—
|
|
|
6,576
|
|
|
—
|
|
|
9,925
|
|
||||
Other
|
657
|
|
|
722
|
|
|
225
|
|
|
293
|
|
||||
Total
|
$
|
880
|
|
|
$
|
7,298
|
|
|
$
|
622
|
|
|
$
|
10,218
|
|
Net Deferred Income Tax Liabilities
|
|
|
|
$
|
6,418
|
|
|
|
|
|
$
|
9,596
|
|
•
|
annual provision for deferred income tax expense including the impact of the recently enacted federal corporate tax rate change from
35 percent
to
21 percent
, and
|
•
|
accumulated other comprehensive income/loss.
|
Unrecognized Tax Benefits:
|
Fiscal Year
|
||||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at beginning of the year
|
$
|
25
|
|
|
$
|
23
|
|
|
$
|
21
|
|
Additions based on tax positions related to current year
|
1
|
|
|
1
|
|
|
1
|
|
|||
Additions based on tax positions related to prior years
|
4
|
|
|
4
|
|
|
4
|
|
|||
Reductions based on tax positions related to prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements with taxing authorities
|
(4
|
)
|
|
—
|
|
|
1
|
|
|||
Lapse of statute of limitations
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|||
Balance at end of the year
|
$
|
24
|
|
|
$
|
25
|
|
|
$
|
23
|
|
(Dollars in Millions)
|
Conrail Shared
|
||
Years
|
Asset Agreement
|
||
2018
|
$
|
27
|
|
2019
|
27
|
|
|
2020
|
27
|
|
|
2021
|
27
|
|
|
2022
|
27
|
|
|
Thereafter
|
48
|
|
|
Total
|
$
|
183
|
|
|
Fiscal Years
|
||||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Rents, fees and services
|
$
|
120
|
|
|
$
|
114
|
|
|
$
|
123
|
|
Purchase price amortization and other
|
4
|
|
|
4
|
|
|
4
|
|
|||
Equity earnings of Conrail
|
(58
|
)
|
|
(37
|
)
|
|
(33
|
)
|
|||
Total Conrail Expense
|
$
|
66
|
|
|
$
|
81
|
|
|
$
|
94
|
|
|
December
|
|
December
|
||||
(Dollars in Millions)
|
2017
|
|
2016
|
||||
Balance Sheet Information:
|
|
|
|
||||
CSX payable to Conrail
|
$
|
123
|
|
|
$
|
91
|
|
Promissory notes payable to Conrail subsidiary
|
|
|
|
||||
2.89% CSX promissory note due October 2044
|
73
|
|
|
73
|
|
||
2.89% CSXT promissory note due October 2044
|
151
|
|
|
151
|
|
|
Fiscal Years
|
||||||||||
(Dollars in Millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Income statement information:
|
|
|
|
|
|
||||||
Car hire rents
|
$
|
237
|
|
|
$
|
233
|
|
|
$
|
218
|
|
Equity earnings of TTX
|
(157
|
)
|
|
(26
|
)
|
|
(20
|
)
|
|||
Total TTX expense
|
$
|
80
|
|
|
$
|
207
|
|
|
$
|
198
|
|
|
|
|
|
|
|
|
December
|
|
December
|
|
||||
Balance sheet information:
|
2017
|
|
2016
|
|
||||
CSX payable to TTX
|
$
|
43
|
|
|
$
|
47
|
|
|
|
|
|
|
|
•
|
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).
|
•
|
Certificates of Deposit and Commercial Paper (Level 2):
Valued at amortized cost, which approximates fair value;
|
•
|
Corporate Bonds and Government Securities (Level 2):
Valued using broker quotes that utilize observable market inputs; and
|
|
Fiscal Years
|
||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||
(Dollars in Millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Certificates of Deposit and Commercial Paper
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
415
|
|
$
|
—
|
|
$
|
415
|
|
Corporate Bonds
|
—
|
|
61
|
|
—
|
|
61
|
|
|
—
|
|
63
|
|
—
|
|
63
|
|
||||||||
Government Securities
|
—
|
|
34
|
|
—
|
|
34
|
|
|
—
|
|
22
|
|
—
|
|
22
|
|
||||||||
Total investments at fair value
|
$
|
—
|
|
$
|
95
|
|
$
|
—
|
|
$
|
95
|
|
|
$
|
—
|
|
$
|
500
|
|
$
|
—
|
|
$
|
500
|
|
(Dollars in Millions)
|
December 2017
|
|
December 2016
|
||||
Less than 1 year
|
$
|
18
|
|
|
$
|
417
|
|
1 - 2 years
|
3
|
|
|
12
|
|
||
2 - 5 years
|
8
|
|
|
4
|
|
||
Greater than 5 years
|
66
|
|
|
67
|
|
||
Total investments at fair value
|
$
|
95
|
|
|
$
|
500
|
|
(Dollars in Millions)
|
December 2017
|
|
December 2016
|
||||
Long-term Debt (Including Current Maturities):
|
|
|
|
||||
Fair Value
|
$
|
13,220
|
|
|
$
|
12,096
|
|
Carrying Value
|
11,809
|
|
|
11,293
|
|
•
|
Common stock (Level 1):
Valued at the closing price reported on the active market on which the individual securities are traded on the last day of the year and classified in Level 1 of the fair value hierarchy.
|
•
|
Mutual funds (Level 1)
: Valued at the net asset value of shares held at year end based on quoted market prices determined in an active market. These assets are classified in Level 1 of the fair value hierarchy.
|
•
|
Corporate bonds, government securities, asset-backed securities and derivatives (Level 2):
Valued using price evaluations reflecting the bid and/or ask sides of the market for a similar investment at year end. Asset-backed securities include commercial mortgage-backed securities and collateralized mortgage obligations. These assets are classified in Level 2 of the fair value hierarchy.
|
•
|
Partnerships:
Net asset value of private equity is based on the fair market values associated with the underlying investments at year end. These funds have redemption restrictions that require advanced notice of 15 business days.
|
•
|
Common collective trust funds:
This class consists of private funds that invest in government and corporate securities and various short-term debt instruments and are measured at net asset value to estimate the fair value of the investments. The net asset value of the investments is determined by reference to the fair value of the underlying securities, which are valued primarily through the use of directly or indirectly observable inputs. These funds have redemption restrictions that require advanced notice of up to 15 business days.
|
|
Fiscal Years
|
||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||
(Dollars in Millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Common Stock
|
$
|
1,022
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,022
|
|
|
$
|
940
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
940
|
|
Mutual funds
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
||||||||
Cash equivalents
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||||
Corporate bonds
|
—
|
|
|
537
|
|
|
—
|
|
|
537
|
|
|
—
|
|
|
497
|
|
|
—
|
|
|
497
|
|
||||||||
Government securities
|
—
|
|
|
169
|
|
|
—
|
|
|
169
|
|
|
—
|
|
|
141
|
|
|
—
|
|
|
141
|
|
||||||||
Asset-backed securities
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||||||
Derivatives and other
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||||
Total investments in the fair value hierarchy
|
$
|
1,038
|
|
|
$
|
726
|
|
|
$
|
—
|
|
|
$
|
1,764
|
|
|
$
|
953
|
|
|
$
|
663
|
|
|
$
|
—
|
|
|
$
|
1,616
|
|
Investments measured at net asset value
(a)
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
$
|
1,069
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
$
|
923
|
|
||||||
Investments at fair value
|
$
|
1,038
|
|
|
$
|
726
|
|
|
$
|
—
|
|
|
$
|
2,833
|
|
|
$
|
953
|
|
|
$
|
663
|
|
|
$
|
—
|
|
|
$
|
2,539
|
|
|
Pension and Other Post-Employment Benefits
|
Other
|
Accumulated Other Comprehensive Income (Loss)
|
||||||
(Dollars in millions)
|
|
|
|
||||||
Balance December 26, 2014 - Net of Tax
|
$
|
(611
|
)
|
$
|
(55
|
)
|
$
|
(666
|
)
|
Other Comprehensive Income(Loss)
|
|
|
|
||||||
Loss Before Reclassifications
|
(53
|
)
|
(8
|
)
|
(61
|
)
|
|||
Amounts Reclassified to Net Earnings
|
71
|
|
(2
|
)
|
69
|
|
|||
Tax (Expense) Benefit
|
(8
|
)
|
1
|
|
(7
|
)
|
|||
Total Other Comprehensive (Loss) Income
|
10
|
|
(9
|
)
|
1
|
|
|||
Balance December 25, 2015 - Net of Tax
|
(601
|
)
|
(64
|
)
|
(665
|
)
|
|||
Other Comprehensive Income
|
|
|
|
||||||
(Loss) Income Before Reclassifications
|
(16
|
)
|
3
|
|
(13
|
)
|
|||
Amounts Reclassified to Net Earnings
|
50
|
|
1
|
|
51
|
|
|||
Tax Expense
|
(13
|
)
|
—
|
|
(13
|
)
|
|||
Total Other Comprehensive Income
|
21
|
|
4
|
|
25
|
|
|||
Balance December 30, 2016 - Net of Tax
|
(580
|
)
|
(60
|
)
|
(640
|
)
|
|||
Other Comprehensive Income
|
|
|
|
||||||
Income Before Reclassifications
|
148
|
|
13
|
|
161
|
|
|||
Amounts Reclassified to Net Earnings
|
56
|
|
2
|
|
58
|
|
|||
Tax Expense
|
(64
|
)
|
(1
|
)
|
(65
|
)
|
|||
Total Other Comprehensive Income
|
140
|
|
14
|
|
154
|
|
|||
Balance December 31, 2017 - Net of Tax
|
$
|
(440
|
)
|
$
|
(46
|
)
|
$
|
(486
|
)
|
Fiscal Year Ended December 2017
(a)
|
Quarters
|
||||||||||||||||||
(Dollars in Millions, Except Per Share Amounts)
|
1st
|
|
2nd
|
|
3rd
|
|
4th
|
|
Full Year
|
||||||||||
Revenue
|
$
|
2,869
|
|
|
$
|
2,933
|
|
|
$
|
2,743
|
|
|
$
|
2,863
|
|
|
$
|
11,408
|
|
Operating Income
|
712
|
|
|
958
|
|
|
876
|
|
|
1,121
|
|
|
3,667
|
|
|||||
Net Earnings
(b)
|
362
|
|
|
510
|
|
|
459
|
|
|
4,140
|
|
|
5,471
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings Per Share, Basic
(b)
|
$
|
0.39
|
|
|
$
|
0.55
|
|
|
$
|
0.51
|
|
|
$
|
4.63
|
|
|
$
|
6.01
|
|
Earnings Per Share, Assuming Dilution
(b)
|
0.39
|
|
|
0.55
|
|
|
0.51
|
|
|
4.62
|
|
|
5.99
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal Year Ended December 2016
(a)
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
2,618
|
|
|
$
|
2,704
|
|
|
$
|
2,710
|
|
|
$
|
3,037
|
|
|
$
|
11,069
|
|
Operating Income
|
704
|
|
|
840
|
|
|
841
|
|
|
1,004
|
|
|
3,389
|
|
|||||
Net Earnings
|
356
|
|
|
445
|
|
|
455
|
|
|
458
|
|
|
1,714
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings Per Share, Basic
|
$
|
0.37
|
|
|
$
|
0.47
|
|
|
$
|
0.48
|
|
|
$
|
0.49
|
|
|
$
|
1.81
|
|
Earnings Per Share, Assuming Dilution
|
0.37
|
|
|
0.47
|
|
|
0.48
|
|
|
0.49
|
|
|
1.81
|
|
Fiscal Year Ended December 2017
|
CSX
Corporation
|
|
CSX
Transportation
|
|
Eliminations and Other
|
|
CSX
Consolidated
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
11,334
|
|
|
$
|
74
|
|
|
$
|
11,408
|
|
Expense
|
(158
|
)
|
|
8,070
|
|
|
(171
|
)
|
|
7,741
|
|
||||
Operating Income
|
158
|
|
|
3,264
|
|
|
245
|
|
|
3,667
|
|
||||
Equity in Earnings of Subsidiaries
|
5,810
|
|
|
—
|
|
|
(5,810
|
)
|
|
—
|
|
||||
Interest Expense
|
(582
|
)
|
|
(29
|
)
|
|
65
|
|
|
(546
|
)
|
||||
Other Income - Net
|
7
|
|
|
42
|
|
|
(28
|
)
|
|
21
|
|
||||
Earnings Before Income Taxes
|
5,393
|
|
|
3,277
|
|
|
(5,528
|
)
|
|
3,142
|
|
||||
Income Tax Benefit
|
78
|
|
|
2,247
|
|
|
4
|
|
|
2,329
|
|
||||
Net Earnings
|
$
|
5,471
|
|
|
$
|
5,524
|
|
|
$
|
(5,524
|
)
|
|
$
|
5,471
|
|
|
|
|
|
|
|
|
|
||||||||
Total Comprehensive Earnings
|
$
|
5,625
|
|
|
$
|
5,538
|
|
|
$
|
(5,538
|
)
|
|
$
|
5,625
|
|
|
|
|
|
|
|
|
|
||||||||
Fiscal Year Ended December 2016
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
10,991
|
|
|
$
|
78
|
|
|
$
|
11,069
|
|
Expense
|
(265
|
)
|
|
8,100
|
|
|
(155
|
)
|
|
7,680
|
|
||||
Operating Income
|
265
|
|
|
2,891
|
|
|
233
|
|
|
3,389
|
|
||||
Equity in Earnings of Subsidiaries
|
1,997
|
|
|
2
|
|
|
(1,999
|
)
|
|
—
|
|
||||
Interest Expense
|
(583
|
)
|
|
(35
|
)
|
|
39
|
|
|
(579
|
)
|
||||
Other Income - Net
|
(112
|
)
|
|
44
|
|
|
(1
|
)
|
|
(69
|
)
|
||||
Earnings Before Income Taxes
|
1,567
|
|
|
2,902
|
|
|
(1,728
|
)
|
|
2,741
|
|
||||
Income Tax Benefit (Expense)
|
147
|
|
|
(1,081
|
)
|
|
(93
|
)
|
|
(1,027
|
)
|
||||
Net Earnings
|
$
|
1,714
|
|
|
$
|
1,821
|
|
|
$
|
(1,821
|
)
|
|
$
|
1,714
|
|
|
|
|
|
|
|
|
|
||||||||
Total Comprehensive Earnings
|
$
|
1,739
|
|
|
$
|
1,833
|
|
|
$
|
(1,833
|
)
|
|
$
|
1,739
|
|
|
|
|
|
|
|
|
|
||||||||
Fiscal Year Ended December 2015
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
11,733
|
|
|
$
|
78
|
|
|
$
|
11,811
|
|
Expense
|
(589
|
)
|
|
8,922
|
|
|
(106
|
)
|
|
8,227
|
|
||||
Operating Income
|
589
|
|
|
2,811
|
|
|
184
|
|
|
3,584
|
|
||||
Equity in Earnings of Subsidiaries
|
1,949
|
|
|
—
|
|
|
(1,949
|
)
|
|
—
|
|
||||
Interest Expense
|
(539
|
)
|
|
(33
|
)
|
|
28
|
|
|
(544
|
)
|
||||
Other Income - Net
|
(4
|
)
|
|
111
|
|
|
(9
|
)
|
|
98
|
|
||||
Earnings Before Income Taxes
|
1,995
|
|
|
2,889
|
|
|
(1,746
|
)
|
|
3,138
|
|
||||
Income Tax Expense
|
(27
|
)
|
|
(1,083
|
)
|
|
(60
|
)
|
|
(1,170
|
)
|
||||
Net Earnings
|
$
|
1,968
|
|
|
$
|
1,806
|
|
|
$
|
(1,806
|
)
|
|
$
|
1,968
|
|
|
|
|
|
|
|
|
|
||||||||
Total Comprehensive Earnings
|
$
|
1,969
|
|
|
$
|
1,806
|
|
|
$
|
(1,806
|
)
|
|
$
|
1,969
|
|
As of December 31, 2017
|
CSX
Corporation
|
|
CSX
Transportation
|
|
Eliminations and Other
|
|
CSX
Consolidated |
||||||||
ASSETS
|
|
||||||||||||||
Current Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and Cash Equivalents
|
$
|
274
|
|
|
$
|
121
|
|
|
$
|
6
|
|
|
$
|
401
|
|
Short-term Investments
|
—
|
|
|
—
|
|
|
18
|
|
|
18
|
|
||||
Accounts Receivable - Net
|
(1
|
)
|
|
301
|
|
|
670
|
|
|
970
|
|
||||
Receivable from Affiliates
|
1,226
|
|
|
3,517
|
|
|
(4,743
|
)
|
|
—
|
|
||||
Materials and Supplies
|
—
|
|
|
372
|
|
|
—
|
|
|
372
|
|
||||
Other Current Assets
|
(1
|
)
|
|
145
|
|
|
10
|
|
|
154
|
|
||||
Total Current Assets
|
1,498
|
|
|
4,456
|
|
|
(4,039
|
)
|
|
1,915
|
|
||||
Properties
|
1
|
|
|
41,479
|
|
|
2,844
|
|
|
44,324
|
|
||||
Accumulated Depreciation
|
(1
|
)
|
|
(11,017
|
)
|
|
(1,542
|
)
|
|
(12,560
|
)
|
||||
Properties - Net
|
—
|
|
|
30,462
|
|
|
1,302
|
|
|
31,764
|
|
||||
Investments in Conrail
|
—
|
|
|
—
|
|
|
907
|
|
|
907
|
|
||||
Affiliates and Other Companies
|
(39
|
)
|
|
800
|
|
|
18
|
|
|
779
|
|
||||
Investment in Consolidated Subsidiaries
|
29,405
|
|
|
—
|
|
|
(29,405
|
)
|
|
—
|
|
||||
Other Long-term Assets
|
39
|
|
|
596
|
|
|
(261
|
)
|
|
374
|
|
||||
Total Assets
|
$
|
30,903
|
|
|
$
|
36,314
|
|
|
$
|
(31,478
|
)
|
|
$
|
35,739
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
||||||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts Payable
|
$
|
105
|
|
|
$
|
708
|
|
|
$
|
34
|
|
|
$
|
847
|
|
Labor and Fringe Benefits Payable
|
52
|
|
|
494
|
|
|
56
|
|
|
602
|
|
||||
Payable to Affiliates
|
4,792
|
|
|
552
|
|
|
(5,344
|
)
|
|
—
|
|
||||
Casualty, Environmental and Other Reserves
|
—
|
|
|
95
|
|
|
13
|
|
|
108
|
|
||||
Current Maturities of Long-term Debt
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
||||
Income and Other Taxes Payable
|
(326
|
)
|
|
455
|
|
|
28
|
|
|
157
|
|
||||
Other Current Liabilities
|
5
|
|
|
153
|
|
|
3
|
|
|
161
|
|
||||
Total Current Liabilities
|
4,628
|
|
|
2,476
|
|
|
(5,210
|
)
|
|
1,894
|
|
||||
Casualty, Environmental and Other Reserves
|
—
|
|
|
222
|
|
|
44
|
|
|
266
|
|
||||
Long-term Debt
|
11,056
|
|
|
733
|
|
|
1
|
|
|
11,790
|
|
||||
Deferred Income Taxes - Net
|
(130
|
)
|
|
6,342
|
|
|
206
|
|
|
6,418
|
|
||||
Other Long-term Liabilities
|
644
|
|
|
320
|
|
|
(314
|
)
|
|
650
|
|
||||
Total Liabilities
|
16,198
|
|
|
10,093
|
|
|
(5,273
|
)
|
|
21,018
|
|
||||
Shareholders' Equity:
|
|
|
|
|
|
|
|
||||||||
Common Stock, $1 Par Value
|
890
|
|
|
181
|
|
|
(181
|
)
|
|
890
|
|
||||
Other Capital
|
217
|
|
|
5,096
|
|
|
(5,096
|
)
|
|
217
|
|
||||
Retained Earnings
|
14,084
|
|
|
20,933
|
|
|
(20,933
|
)
|
|
14,084
|
|
||||
Accumulated Other Comprehensive Loss
|
(486
|
)
|
|
(5
|
)
|
|
5
|
|
|
(486
|
)
|
||||
Noncontrolling Minority Interest
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Total Shareholders' Equity
|
14,705
|
|
|
26,221
|
|
|
(26,205
|
)
|
|
14,721
|
|
||||
Total Liabilities and Shareholders' Equity
|
$
|
30,903
|
|
|
$
|
36,314
|
|
|
$
|
(31,478
|
)
|
|
$
|
35,739
|
|
As of December 30, 2016
|
CSX Corporation
|
|
CSX Transportation
|
|
Eliminations and Other
|
|
CSX
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
|
|
Fiscal Year Ended December 2017
|
CSX Corporation
|
|
CSX Transportation
|
|
Eliminations and Other
|
|
CSX
Consolidated |
||||||||
Operating Activities
|
|
|
|
|
|
|
|
||||||||
Net Cash Provided by (Used in) Operating Activities
|
$
|
1,719
|
|
|
$
|
2,112
|
|
|
$
|
(359
|
)
|
|
$
|
3,472
|
|
|
|
|
|
|
|
|
|
||||||||
Investing Activities
|
|
|
|
|
|
|
|
||||||||
Property Additions
|
—
|
|
|
(1,848
|
)
|
|
(192
|
)
|
|
(2,040
|
)
|
||||
Purchases of Short-term Investments
|
(774
|
)
|
|
—
|
|
|
(8
|
)
|
|
(782
|
)
|
||||
Proceeds from Sales of Short-term Investments
|
1,190
|
|
|
—
|
|
|
3
|
|
|
1,193
|
|
||||
Proceeds from Property Dispositions
|
—
|
|
|
97
|
|
|
—
|
|
|
97
|
|
||||
Other Investing Activities
|
(2
|
)
|
|
94
|
|
|
(55
|
)
|
|
37
|
|
||||
Net Cash Provided by (Used in) Investing Activities
|
414
|
|
|
(1,657
|
)
|
|
(252
|
)
|
|
(1,495
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Financing Activities
|
|
|
|
|
|
|
|
||||||||
Long-term Debt Issued
|
850
|
|
|
—
|
|
|
—
|
|
|
850
|
|
||||
Long-term Debt Repaid
|
(313
|
)
|
|
(20
|
)
|
|
—
|
|
|
(333
|
)
|
||||
Dividends Paid
|
(708
|
)
|
|
(600
|
)
|
|
600
|
|
|
(708
|
)
|
||||
Shares Repurchased
|
(1,970
|
)
|
|
—
|
|
|
—
|
|
|
(1,970
|
)
|
||||
Other Financing Activities
|
(23
|
)
|
|
5
|
|
|
—
|
|
|
(18
|
)
|
||||
Net Cash Provided by (Used in) Financing Activities
|
(2,164
|
)
|
|
(615
|
)
|
|
600
|
|
|
(2,179
|
)
|
||||
Net Decrease in Cash and Cash Equivalents
|
(31
|
)
|
|
(160
|
)
|
|
(11
|
)
|
|
(202
|
)
|
||||
Cash and Cash Equivalents at Beginning of Period
|
305
|
|
|
281
|
|
|
17
|
|
|
603
|
|
||||
Cash and Cash Equivalents at End of Period
|
$
|
274
|
|
|
$
|
121
|
|
|
$
|
6
|
|
|
$
|
401
|
|
Fiscal Year Ended December 2016
|
CSX Corporation
|
|
CSX Transportation
|
|
Eliminations and Other
|
|
CSX
Consolidated |
||||||||
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Cash Provided by (Used in) Operating Activities
|
$
|
453
|
|
|
$
|
2,950
|
|
|
$
|
(362
|
)
|
|
$
|
3,041
|
|
|
|
|
|
|
|
|
|
||||||||
Investing Activities
|
|
|
|
|
|
|
|
||||||||
Property Additions
|
—
|
|
|
(2,208
|
)
|
|
(190
|
)
|
|
(2,398
|
)
|
||||
Purchases of Short-term Investments
|
(929
|
)
|
|
—
|
|
|
—
|
|
|
(929
|
)
|
||||
Proceeds from Sales of Short-term Investments
|
1,325
|
|
|
—
|
|
|
—
|
|
|
1,325
|
|
||||
Proceeds from Property Dispositions
|
—
|
|
|
195
|
|
|
—
|
|
|
195
|
|
||||
Other Investing Activities
|
(41
|
)
|
|
91
|
|
|
(41
|
)
|
|
9
|
|
||||
Net Cash Provided by (Used in) Investing Activities
|
355
|
|
|
(1,922
|
)
|
|
(231
|
)
|
|
(1,798
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Financing Activities
|
|
|
|
|
|
|
|
||||||||
Long-term Debt Issued
|
2,200
|
|
|
—
|
|
|
—
|
|
|
2,200
|
|
||||
Long-term Debt Repaid
|
(1,400
|
)
|
|
(19
|
)
|
|
—
|
|
|
(1,419
|
)
|
||||
Dividends Paid
|
(680
|
)
|
|
(600
|
)
|
|
600
|
|
|
(680
|
)
|
||||
Shares Repurchased
|
(1,056
|
)
|
|
—
|
|
|
—
|
|
|
(1,056
|
)
|
||||
Other Financing Activities
|
(11
|
)
|
|
(303
|
)
|
|
1
|
|
|
(313
|
)
|
||||
Net Cash Provided by (Used in) Financing Activities
|
(947
|
)
|
|
(922
|
)
|
|
601
|
|
|
(1,268
|
)
|
||||
Net (Decrease) Increase in
Cash and Cash Equivalents
|
(139
|
)
|
|
106
|
|
|
8
|
|
|
(25
|
)
|
||||
Cash and Cash Equivalents at Beginning of Period
|
444
|
|
|
175
|
|
|
9
|
|
|
628
|
|
||||
Cash and Cash Equivalents at End of Period
|
$
|
305
|
|
|
$
|
281
|
|
|
$
|
17
|
|
|
$
|
603
|
|
Fiscal Year Ended December 2015
|
CSX Corporation
|
|
CSX Transportation
|
|
Eliminations and Other
|
|
CSX
Consolidated |
||||||||
Operating Activities
|
|
|
|
|
|
|
|
||||||||
Net Cash Provided by (Used in) Operating Activities
|
$
|
983
|
|
|
$
|
2,974
|
|
|
$
|
(587
|
)
|
|
$
|
3,370
|
|
|
|
|
|
|
|
|
|
||||||||
Investing Activities
|
|
|
|
|
|
|
|
||||||||
Property Additions
|
—
|
|
|
(2,400
|
)
|
|
(162
|
)
|
|
(2,562
|
)
|
||||
Purchases of Short-term Investments
|
(1,734
|
)
|
|
—
|
|
|
(5
|
)
|
|
(1,739
|
)
|
||||
Proceeds from Sales of Short-term Investments
|
1,175
|
|
|
—
|
|
|
50
|
|
|
1,225
|
|
||||
Proceeds from Property Dispositions
|
—
|
|
|
147
|
|
|
—
|
|
|
147
|
|
||||
Other Investing Activities
|
(10
|
)
|
|
132
|
|
|
(85
|
)
|
|
37
|
|
||||
Net Cash Provided by (Used in) Investing Activities
|
(569
|
)
|
|
(2,121
|
)
|
|
(202
|
)
|
|
(2,892
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Financing Activities
|
|
|
|
|
|
|
|
||||||||
Long-term Debt Issued
|
1,200
|
|
|
—
|
|
|
—
|
|
|
1,200
|
|
||||
Long-term Debt Repaid
|
(200
|
)
|
|
(29
|
)
|
|
—
|
|
|
(229
|
)
|
||||
Dividends Paid
|
(686
|
)
|
|
(750
|
)
|
|
750
|
|
|
(686
|
)
|
||||
Shares Repurchased
|
(804
|
)
|
|
—
|
|
|
—
|
|
|
(804
|
)
|
||||
Other Financing Activities
|
10
|
|
|
1
|
|
|
(11
|
)
|
|
—
|
|
||||
Net Cash Provided by (Used in) Financing Activities
|
(480
|
)
|
|
(778
|
)
|
|
739
|
|
|
(519
|
)
|
||||
Net (Decrease) Increase in
Cash and Cash Equivalents
|
(66
|
)
|
|
75
|
|
|
(50
|
)
|
|
(41
|
)
|
||||
Cash and Cash Equivalents at Beginning of Period
|
510
|
|
|
100
|
|
|
59
|
|
|
669
|
|
||||
Cash and Cash Equivalents at End of Period
|
$
|
444
|
|
|
$
|
175
|
|
|
$
|
9
|
|
|
$
|
628
|
|
See Index to Consolidated Financial Statements on page
|
54
.
|
Exhibit designation
|
Nature of exhibit
|
Previously filed
as exhibit to
|
10.18
|
September 2, 2004,
Exhibit 10.2, Form 8-K
|
|
10.19
|
|
May 28, 2015,
Exhibit 10.1, Form 8-K
|
10.20**
|
February 13, 2015,
Exhibit 10.1, Form 8-K
|
|
10.21**
|
May 7, 2010,
Exhibit 10.1, Form 8-K
|
|
10.22**
|
February 16, 2016,
Exhibit 10.1, Form 8-K
|
|
10.23**
|
February 16, 2016,
Exhibit 10.2, Form 8-K
|
|
10.24**
|
February 16, 2016,
Exhibit 10.3, Form 8-K
|
|
10.25**
|
February 16, 2016,
Exhibit 10.5, Form 8-K
|
|
10.26**
|
October 12, 2016,
Exhibit 10.1, Form 10-Q
|
|
10.27**
|
February 27, 2017
Exhibit 10.1, Form 8-K
|
|
10.28**
|
February 27, 2017
Exhibit 10.4, Form 8-K
|
|
10.29**
|
February 27, 2017
Exhibit 10.2, Form 8-K
|
|
10.30**
|
February 27, 2017
Exhibit 10.3, Form 8-K
|
|
10.31
|
March 7, 2017
Exhibit 10.1, Form 8-K
|
|
10.32
|
April 3, 2017
Exhibit 10.1, Form 8-K
|
|
10.33**
|
April 20, 2017
Exhibit 10.09, Form 10-Q
|
|
10.34**
|
April 20, 2017
Exhibit 10.08, Form 10-Q
|
|
10.35**
|
April 20, 2017
Exhibit 10.07, Form 10-Q
|
|
10.36**
|
June 16, 2017
Exhibit 10.1, Form 8-K
|
|
10.37**
|
November 15, 2017
Exhibit 10.1, Form 8-K
|
Signature
|
|
Title
|
|
|
|
/s/ JAMES M. FOOTE
|
|
Chief Executive Officer and Director
|
James M. Foote
|
|
(Principal Executive Officer)
|
|
|
|
/s/ FRANK A. LONEGRO
|
|
Executive Vice President and Chief Financial
|
Frank A. Lonegro
|
|
Officer (Principal Financial Officer)
|
|
|
|
/s/ ANDREW L. GLASSMAN
|
|
Vice President and Controller
|
Andrew L. Glassman
|
|
(Principal Accounting Officer)
|
|
|
|
/s/ NATHAN D. GOLDMAN
|
|
Executive Vice President and Chief Legal Officer, Corporate Secretary
|
Nathan D. Goldman
|
|
*Attorney-in-Fact
|
|
|
|
Signature
|
|
Title
|
|
|
|
*
|
|
Chairman of the Board and Director
|
Edward J. Kelly, III
|
|
|
|
|
|
*
|
|
Director
|
Donna M. Alvarado
|
|
|
|
|
|
*
|
|
Director
|
John B. Breaux
|
|
|
|
|
|
*
|
|
Director
|
Pamela L. Carter
|
|
|
|
|
|
*
|
|
Director
|
James M. Foote
|
|
|
|
|
|
*
|
|
Director
|
Steven T. Halverson
|
|
|
|
|
|
*
|
|
Director
|
Paul C. Hilal
|
|
|
|
|
|
*
|
|
Director
|
John D. McPherson
|
|
|
|
|
|
*
|
|
Director
|
David M. Moffett
|
|
|
|
|
|
*
|
|
Director
|
Dennis H. Reilley
|
|
|
|
|
|
*
|
|
Director
|
Linda H. Riefler
|
|
|
|
|
|
*
|
|
Director
|
J. Steven Whisler
|
|
|
|
|
|
*
|
|
Director
|
John J. Zillmer
|
|
|
|
|
|
Registration Statement (Form S-8 No. 333-221052)
|
|
|
|
Registration Statement (Form S-3ASR No. 333-209541)
|
|
|
|
Registration Statement (Form S-8 No. 333-110589)
|
|
|
|
Registration Statement (Form S-8 No. 333-160650)
|
|
|
|
Registration Statement (Form S-8 No. 333-160652)
|
|
|
|
Registration Statement (Form S-8 No. 333-166769)
|
|
|
|
Registration Statement (Form S-8 No. 333-193785)
|
|
|
|
Registration Statement (Form S-8 No. 333-201172)
|
|
|
|
Registration Statement (Form S-8 No. 333-201167)
|
|
|
|
/s/ DONNA M. ALVARADO
|
|
/s/ JOHN D. MCPHERSON
|
Donna M. Alvarado
|
|
John D. McPherson
|
February 7, 2018
|
|
February 7, 2018
|
|
|
|
/s/ JOHN B. BREAUX
|
|
/s/ DAVID M. MOFFETT
|
John B. Breaux
|
|
David M. Moffett
|
February 7, 2018
|
|
February 7, 2018
|
|
|
|
/s/ PAMELA L. CARTER
|
|
/s/ DENNIS H. REILLEY
|
Pamela L. Carter
|
|
Dennis H. Reilley
|
February 7, 2018
|
|
February 7, 2018
|
|
|
|
/s/ JAMES M. FOOTE
|
|
/s/ LINDA H. RIEFLER
|
James M. Foote
|
|
Linda H. Riefler
|
February 7, 2018
|
|
February 7, 2018
|
|
|
|
/s/ STEVEN T. HALVERSON
|
|
/s/ J. STEVEN WHISLER
|
Steven T. Halverson
|
|
J. Steven Whisler
|
February 7, 2018
|
|
February 7, 2018
|
|
|
|
/s/ PAUL C. HILAL
|
|
/s/ JOHN J. ZILLMER
|
Paul C. Hilal
|
|
John J. Zillmer
|
February 7, 2018
|
|
February 7, 2018
|
|
|
|
/s/ EDWARD J. KELLY, III
|
|
|
Edward J. Kelly, III
|
|
|
February 7, 2018
|
|
|
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of CSX Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this Annual Report on Form 10-K of CSX Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
|
Re:
|
Promotion to Chief Executive Officer
|