0000277948false00002779482020-10-212020-10-21

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
CSX-20201021_G1.JPG

Date of Report (Date of earliest event reported): October 21, 2020
CSX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 1-8022 62-1051971
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation)   Identification No.)
500 Water Street, C900, Jacksonville, FL 32202
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:
(904) 359-3200

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

_☐_ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

_☐_ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

_☐_ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

_☐_ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol(s) 		Name of each exchange
on which registered
Common Stock, $1 Par Value CSX NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company _☐_

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. __


Item 2.02.    Results of Operations and Financial Condition

On October 21, 2020, CSX Corporation issued a press release and its CSX Quarterly Financial Report on financial and operating results for the quarter ended September 30, 2020. A copy of the press release is attached as Exhibit 99.1 and a copy of the CSX Quarterly Financial Report is attached as Exhibit 99.2, each of which is incorporated by reference herein. These documents are available on the Company's website, www.csx.com.*

The information contained in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, has been “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. The information in this Current Report shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

Item 8.01.    Other Events

On October 20, 2020 the Board of Directors authorized a new share repurchase program, providing $5 billion of incremental authority to the approximately $1.1 billion remaining under the existing share repurchase program.

The repurchases may be made through a variety of methods including, but not limited to, open market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and negotiated block purchases. The timing of share repurchases depends upon marketplace conditions and other factors, and the program remains subject to the discretion of the Board of Directors.

Item 9.01.    Exhibits

(d)    The following exhibits are being furnished herewith:

99.1 Press Release dated October 21, 2020 from CSX Corporation
99.2 CSX Quarterly Financial Report

* Internet addresses are provided for informational purposes only and are not intended to be hyperlinks.



Signature

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


CSX CORPORATION

By: /s/ ANGELA C. WILLIAMS
Angela C. Williams
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
                                            
Date: October 21, 2020


Exhibit 99.1

PRESSRELEASEBANNERQ1201.JPG

CSX Corp. Announces Third Quarter 2020 Financial Results,
Authorizes Additional $5 Billion Share Buyback

JACKSONVILLE, Fla. – October 21, 2020 – CSX Corp. (NASDAQ: CSX) today announced third quarter 2020 net earnings of $736 million, or $0.96 per share, versus $856 million, or $1.08 per share in the same period last year. Despite lower economic activity resulting from the COVID-19 pandemic, CSX’s operating ratio of 56.9 percent remained in line with the prior year’s record results.

“I am incredibly proud of how CSX’s exceptional team of railroaders continues to deliver against the challenges this year has presented,” said James M. Foote, president and chief executive officer. “Their hard work allowed CSX to efficiently absorb the record rebound in volume while maintaining high levels of customer service.”

Revenue for the third quarter decreased 11 percent from the prior year to $2.65 billion, as intermodal volume growth was more than offset by declines in coal and merchandise volumes as well as lower fuel surcharge revenue. Expenses decreased 11 percent year over year to $1.51 billion, driven by continued efficiency gains and volume-related reductions. Operating income declined 11 percent for the quarter to $1.14 billion compared to $1.29 billion in the same period last year.

CSX also announced the Board authorized a new share repurchase program, providing $5 billion of incremental authority to the approximately $1.1 billion remaining under the existing share repurchase program. This new program affirms CSX’s commitment to continued return of capital to shareholders.
CSX executives will conduct a conference call with the investment community this afternoon, October 21, at 4:30 p.m. Eastern Time. Investors, media and the public may listen to the conference call by dialing 1-866-324-3683. For callers outside the U.S., dial 1-509-844-0959. Participants should dial in 10 minutes prior to the call and enter in 6621759 as the passcode.

In conjunction with the call, a live webcast will be accessible and presentation materials will be posted on the company's website at http://investors.csx.com. Following the earnings call, a webcast replay of the presentation will be archived on the company website.

This earnings announcement, as well as additional detailed financial information, is contained in the CSX Quarterly Financial Report available through the company’s website at http://investors.csx.com and on Form 8-K with the Securities and Exchange Commission.




About CSX and its Disclosures
CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural, and consumer products. For nearly 200 years, CSX has played a critical role in the nation's economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation's population resides. It also links more than 230 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike.

This announcement, as well as additional financial information, is available on the company's website at http://investors.csx.com. CSX also uses social media channels to communicate information about the company. Although social media channels are not intended to be the primary method of disclosure for material information, it is possible that certain information CSX posts on social media could be deemed to be material. Therefore, we encourage investors, the media, and others interested in the company to review the information we post on Twitter (http://twitter.com/CSX) and on Facebook (http://www.facebook.com/OfficialCSX). The social media channels used by CSX may be updated from time to time. More information about CSX Corporation and its subsidiaries is available at www.csx.com.

Non-GAAP Disclosure
CSX reports its financial results in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). CSX also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior reported results. Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP. Therefore, CSX’s non-GAAP measures are unlikely to be comparable to similar measures presented by other companies. The presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with GAAP.

Forward-looking Statements
This information and other statements by the company may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes, liquidity, capital expenditures, dividends, share repurchases or other financial items, statements of management's plans, strategies and objectives for future operations, and management's expectations as to future performance and operations and the time by which objectives will be achieved, statements concerning proposed new services, and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking statement. If the company updates any forward-looking statement, no inference should be drawn that the company will make additional updates with respect to that statement or any other forward-looking statements.

Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any forward- looking statements include, among others; (i) the company's success in implementing its financial and operational initiatives; (ii) 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); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with projecting economic and business conditions.

Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the company's SEC reports, accessible on the SEC's website at www.sec.gov and the company's website at www.csx.com.


Contact:
Bill Slater, Investor Relations
904-359-1334
Bryan Tucker, Corporate Communications
855-955-6397

Exhibit 99.2

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QFRBANNERQ12019A0711.JPG
CSX Corp. Announces Third Quarter 2020 Financial Results,
Authorizes Additional $5 Billion Share Buyback


JACKSONVILLE, Fla. – October 21, 2020 – CSX Corp. (NASDAQ: CSX) today announced third quarter 2020 net earnings of $736 million, or $0.96 per share, versus $856 million, or $1.08 per share in the same period last year. Despite lower economic activity resulting from the COVID-19 pandemic, CSX’s operating ratio of 56.9 percent remained in line with the prior year’s record results.

“I am incredibly proud of how CSX’s exceptional team of railroaders continues to deliver against the challenges this year has presented,” said James M. Foote, president and chief executive officer. “Their hard work allowed CSX to efficiently absorb the record rebound in volume while maintaining high levels of customer service.”

Revenue for the third quarter decreased 11 percent from the prior year to $2.65 billion, as intermodal volume growth was more than offset by declines in coal and merchandise volumes as well as lower fuel surcharge revenue. Expenses decreased 11 percent year over year to $1.51 billion, driven by continued efficiency gains and volume-related reductions. Operating income declined 11 percent for the quarter to $1.14 billion compared to $1.29 billion in the same period last year.

CSX also announced the Board authorized a new share repurchase program, providing $5 billion of incremental authority to the approximately $1.1 billion remaining under the existing share repurchase program. This new program affirms CSX’s commitment to continued return of capital to shareholders.

CSX executives will conduct a conference call with the investment community this afternoon, October 21, at 4:30 p.m. Eastern Time. Investors, media and the public may listen to the conference call by dialing 1-866-324-3683. For callers outside the U.S., dial 1-509-844-0959. Participants should dial in 10 minutes prior to the call and enter in 6621759 as the passcode.

In conjunction with the call, a live webcast will be accessible and presentation materials will be posted on the company's website at http://investors.csx.com. Following the earnings call, a webcast replay of the presentation will be archived on the company website.

This earnings announcement, as well as additional detailed financial information, is contained in the CSX Quarterly Financial Report available through the company’s website at http://investors.csx.com and on Form 8-K with the Securities and Exchange Commission.







Table of Contents The accompanying unaudited CSX CORPORATION CONTACTS:
financial information should be 500 Water Street, C900 INVESTOR RELATIONS
read in conjunction with the Jacksonville, FL 32202 Bill Slater
Company’s most recent www.csx.com (904) 359-1334
Annual Report on Form 10-K, MEDIA
Quarterly Reports on Form 10-Q, and Bryan Tucker
any Current Reports on Form 8-K. (855) 955-6397
1

QFRBANNERQ12019A0711.JPG

About CSX and its Disclosures
CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural, and consumer products. For nearly 200 years, CSX has played a critical role in the nation's economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation's population resides. It also links more than 230 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike.

This announcement, as well as additional financial information, is available on the company's website at http://investors.csx.com. CSX also uses social media channels to communicate information about the company. Although social media channels are not intended to be the primary method of disclosure for material information, it is possible that certain information CSX posts on social media could be deemed to be material. Therefore, we encourage investors, the media, and others interested in the company to review the information we post on Twitter (http://twitter.com/CSX) and on Facebook (http://www.facebook.com/OfficialCSX). The social media channels used by CSX may be updated from time to time. More information about CSX Corporation and its subsidiaries is available at www.csx.com.

Non-GAAP Disclosure
CSX reports its financial results in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). CSX also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior reported results. Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP. Therefore, CSX’s non-GAAP measures are unlikely to be comparable to similar measures presented by other companies. The presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with GAAP.

Forward-looking Statements
This information and other statements by the company may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes, liquidity, capital expenditures, dividends, share repurchases or other financial items, statements of management's plans, strategies and objectives for future operations, and management's expectations as to future performance and operations and the time by which objectives will be achieved, statements concerning proposed new services, and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking statement. If the company updates any forward-looking statement, no inference should be drawn that the company will make additional updates with respect to that statement or any other forward-looking statements.

Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any forward- looking statements include, among others; (i) the company's success in implementing its financial and operational initiatives; (ii) 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); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with projecting economic and business conditions.

Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the company's SEC reports, accessible on the SEC's website at www.sec.gov and the company's website at www.csx.com.
2
CSX Corporation

CONSOLIDATED INCOME STATEMENTS (Unaudited)
(Dollars in millions, except per share amounts)

Quarters Ended Nine Months Ended
Sep. 30, 2020 Sep. 30, 2019 $ Change % Change Sep. 30, 2020 Sep. 30, 2019 $ Change % Change
Revenue $ 2,648  $ 2,978  $ (330) (11) % $ 7,758  $ 9,052  $ (1,294) (14) %
Expense
Labor and Fringe 574  638  64  10  1,687  1,958  271  14 
Materials, Supplies and Other 378  407  29  7  1,239  1,323  84  6 
Depreciation 348  338  (10) (3) 1,036  1,005  (31) (3)
Fuel 119  223  104  47  402  690  288  42 
Equipment and Other Rents 88  85  (3) (4) 247  265  18  7 
Total Expense 1,507  1,691  184  11  4,611  5,241  630  12 
Operating Income 1,141  1,287  (146) (11) 3,147  3,811  (664) (17)
Interest Expense (187) (186) (1) (1) (565) (548) (17) (3)
Other Income - Net 14  24  (10) (42) 51  72  (21) (29)
Earnings Before Income Taxes 968  1,125  (157) (14) 2,633  3,335  (702) (21)
Income Tax Expense (232) (269) 37  14  (628) (775) 147  19 
Net Earnings $ 736  $ 856  $ (120) (14) % $ 2,005  $ 2,560  $ (555) (22) %
Operating Ratio 56.9  % 56.8  % 59.4  % 57.9  %
Per Common Share
Net Earnings Per Share, Assuming Dilution $ 0.96  $ 1.08  $ (0.12) (11) % $ 2.61  $ 3.18  $ (0.57) (18) %
Average Shares Outstanding, Assuming Dilution (Millions)
767  792  769  805 
Certain prior year data has been reclassified to conform to the current presentation.

3
CSX Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)

(Unaudited)
Sep. 30, 2020 Dec. 31, 2019
ASSETS
Cash and Cash Equivalents $ 2,898  $ 958 
Short-Term Investments 1  996 
Other Current Assets 1,329  1,324 
Properties - Net 32,381  32,168 
Investment in Affiliates and Other Companies 1,949  1,879 
Other Long-Term Assets 885  932 
Total Assets $ 39,443  $ 38,257 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Maturities of Long-Term Debt $ 371  $ 245 
Other Current Liabilities 1,923  1,906 
Long-Term Debt 16,121  15,993 
Deferred Income Taxes - Net 7,087  6,961 
Other Long-Term Liabilities 1,214  1,289 
Total Liabilities 26,716  26,394 
Total Shareholders' Equity 12,727  11,863 
Total Liabilities and Shareholders' Equity $ 39,443  $ 38,257 

4
CSX Corporation
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)
(Dollars in millions)

Nine Months Ended
Sep. 30, 2020 Sep. 30, 2019
OPERATING ACTIVITIES
Net Earnings $ 2,005  $ 2,560 
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
     Depreciation 1,036  1,005 
     Deferred Income Tax Expense 117  186 
     Gains on Property Dispositions (33) (129)
     Other Operating Activities - Net 3  115 
Net Cash Provided by Operating Activities 3,128  3,737 
INVESTING ACTIVITIES
Property Additions (1,209) (1,191)
Proceeds from Property Dispositions 51  218 
Purchases of Short-Term Investments (426) (2,255)
Proceeds from Sales of Short-Term Investments 1,423  1,480 
Other Investing Activities (32) 19 
Net Cash Used in Investing Activities (193) (1,729)
FINANCING ACTIVITIES
Long-term Debt Issued 500  2,000 
Long-term Debt Repaid (245) (18)
Dividends Paid (599) (577)
Shares Repurchased (a)
(664) (2,767)
Other Financing Activities 13  17 
Net Cash Used in Financing Activities (995) (1,345)
Net Increase in Cash and Cash Equivalents 1,940  663 
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period 958  858 
Cash and Cash Equivalents at End of Period $ 2,898  $ 1,521 
Certain prior year data has been reclassified to conform to the current presentation.

5
CSX Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

a)Shares Repurchased: During third quarters and nine months ended 2020 and 2019, the Company engaged in the following repurchase activities:
Quarters Ended Nine Months Ended
Sep. 30, 2020 Sep. 30, 2019 Sep. 30, 2020 Sep. 30, 2019
Shares Repurchased (Millions)
1  16  10  39 
Cost of Shares (Dollars in millions)
$ 48  $ 1,111  $ 664  $ 2,767 
Average Cost per Share Repurchased $ 67.99  $ 68.94  $ 65.12  $ 71.11 

6
CSX Corporation
VOLUME AND REVENUE (Unaudited)
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Quarters Ended September 30, 2020 and September 30, 2019
Volume Revenue Revenue Per Unit
2020 2019 % Change 2020 2019 % Change 2020 2019 % Change
Chemicals(a)
165  166  (1) % $ 566  590  (4) % $ 3,430  $ 3,554  (3) %
Agricultural and Food Products 115  119  (3) 335  354  (5) 2,913  2,975  (2)
Automotive 102  110  (7) 271  297  (9) 2,657  2,700  (2)
Minerals(a)
86  90  (4) 144  147  (2) 1,674  1,633  3 
Forest Products(a)
67  73  (8) 206  222  (7) 3,075  3,041  1 
Metals and Equipment(a)
58  65  (11) 159  195  (18) 2,741  3,000  (9)
Fertilizers 57  60  (5) 96  101  (5) 1,684  1,683  — 
Total Merchandise 650  683  (5) 1,777  1,906  (7) 2,734  2,791  (2)
Coal 155  213  (27) 330  516  (36) 2,129  2,423  (12)
Intermodal 717  673  7  445  447  —  621  664  (6)
Other —  —  —  96  109  (12) —  —  — 
Total 1,522  1,569  (3) % $ 2,648  $ 2,978  (11) % $ 1,740  $ 1,898  (8) %
Nine Months Ended September 30, 2020 and September 30, 2019
Volume Revenue Revenue Per Unit
2020 2019 % Change 2020 2019 % Change 2020 2019 % Change
Chemicals(a)
495  506  (2) % $ 1,723  1,770  (3) % $ 3,481  $ 3,498  —  %
Agricultural and Food Products 338  351  (4) 1,011  1,056  (4) 2,991  3,009  (1)
Automotive 241  346  (30) 645  937  (31) 2,676  2,708  (1)
Minerals(a)
243  250  (3) 405  419  (3) 1,667  1,676  (1)
Forest Products(a)
202  214  (6) 617  652  (5) 3,054  3,047  — 
Metals and Equipment(a)
173  192  (10) 500  572  (13) 2,890  2,979  (3)
Fertilizers 175  183  (4) 311  323  (4) 1,777  1,765  1 
Total Merchandise 1,867  2,042  (9) 5,212  5,729  (9) 2,792  2,806  — 
Coal 463  651  (29) 1,022  1,611  (37) 2,207  2,475  (11)
Intermodal 1,963  1,988  (1) 1,226  1,311  (6) 625  659  (5)
Other —  —  —  298  401  (26) —  —  — 
Total 4,293  4,681  (8) % $ 7,758  $ 9,052  (14) % $ 1,807  $ 1,934  (7) %
(a) In first quarter 2020, changes were made in the categorization of certain lines of business, impacting Chemicals, Minerals, Forest Products, and Metals and Equipment. The impacts were not material and prior periods have been reclassified to conform to the current presentation.


7
CSX Corporation
VOLUME AND REVENUE
The COVID-19 pandemic continued to impact volumes during the quarter. Total revenue decreased 11% in third quarter 2020 when compared to third quarter 2019 due to volume declines in merchandise and coal, decreases in fuel recovery and declines in coal pricing resulting from lower global benchmark prices. These decreases were partially offset by pricing gains in merchandise and intermodal as well as intermodal volume growth.
Fuel Surcharge
Fuel surcharge revenue is included in the individual markets. Fuel lag is the estimated difference between highway diesel prices in the quarter and the prices used for fuel surcharge, which are generally on a two month lag.
Quarters Ended Nine Months Ended
(Dollars in millions) Sep. 30, 2020 Sep. 30, 2019 Sep. 30, 2020 Sep. 30, 2019
Fuel Surcharge Revenue $ 70  $ 154  $ 293  $ 464 
Fuel Lag (Expense) Benefit $ (1) $ 8  $ 34  $ 15 
Merchandise Volume
Chemicals - Declined due to lower shipments of frac sand and other industrial chemicals, partially offset by increases in crude oil and plastics shipments.

Agricultural and Food Products - Declined due to lower shipments of grain and feed, partially offset by increases in ethanol shipments.

Automotive - Declined as a result of lower vehicle production at plants served by CSX.

Minerals - Decreased due to lower shipments of aggregates and other minerals.

Forest Products - Declined due to lower shipments of printing paper, wood pulp and building products.

Metals and Equipment - Declined as a result of reduced equipment shipments as well as reduced sheet steel and pipe shipments.

Fertilizers - Decreased due to lower shipments of phosphate and sulfur.

Coal Volume
The decline in domestic coal was driven by lower shipments of utility coal as a result of continued competition from natural gas and reduced electrical demand, as well as lower steel and industrial shipments due to lower industrial production. Export coal declined due to reduced international shipments of thermal and metallurgical coal as a result of lower global benchmark prices.
Quarters Ended Nine Months Ended
(Millions of tons) Sep. 30, 2020 Sep. 30, 2019 Change Sep. 30, 2020 Sep. 30, 2019 Change
Coal Tonnage
Domestic 10.3  15.3  (33) % 29.6  43.3  (32) %
Export 7.2  8.8  (18) 22.3  29.9  (25)
Total Coal 17.5  24.1  (27) % 51.9  73.2  (29) %
Intermodal Volume
Increases in both domestic and international shipments resulted from tightening truck capacity, inventory replenishments and growth in rail volumes from east coast ports.
Other Revenue
Other revenue decreased $13 million versus prior year primarily due to lower affiliate revenue and declines in demurrage.
8
CSX Corporation
EXPENSE
Expenses of $1.5 billion decreased $184 million, or 11%, in third quarter 2020 when compared to third quarter 2019 primarily driven by efficiency and volume savings as well as lower fuel prices, partially offset by lower gains from real estate sales.
Labor and Fringe expense decreased $64 million due to the following:
•Efficiency and volume savings of $71 million primarily resulted from reduced crew starts and lower headcount.
•Other costs increased $7 million primarily due to inflation.
Materials, Supplies and Other expense decreased $29 million due to the following:
•Efficiency and volume savings of $58 million primarily resulted from lower operating support costs, lower terminal costs and reduced equipment maintenance expenses.
•Other costs decreased $33 million primarily due to a $22 million non-railroad asset impairment in the prior year related to an intermodal terminal sale agreement and other non-significant items.
•Partially offsetting these decreases, gains from real estate sales of $3 million in 2020 were lower than gains of $65 million in 2019.
Depreciation expense increased $10 million primarily due to the results of a 2019 equipment depreciation study.
Fuel expense decreased $104 million driven by a 36% price decrease, lower volumes and record fuel efficiency in the current year as well as a $15 million net expense in prior year related to state fuel tax matters.
Equipment and Other Rents expense increased $3 million primarily resulting from higher intermodal volumes and inflation.
Employee Counts (Estimated)
Quarters Ended Nine Months Ended
Sep. 30, 2020 Sep. 30, 2019 Change Sep. 30, 2020 Sep. 30, 2019 Change
Average 19,313 21,331 (2,018)
 19,760(a)
21,777 (2,017)
Ending 19,300 21,158 (1,858) 19,300 21,158 (1,858)
(a) During second quarter 2020, there were on average 307 employees on temporary emergency reserve boards who are included in the average employee count for nine months ended September 30, 2020 in the above table. Employees on these boards received 7 days of guarantee pay in each 28-day cycle and were eligible, if qualified, for Railroad Retirement Board unemployment benefits for the other 21 days during which they were considered furloughed. Excluding these employees, average headcount for the nine months ended September 30, 2020 would be 19,658. There were no employees on temporary emergency reserve boards during third quarter 2020.
Fuel Expense
Quarters Ended Nine Months Ended
(Dollars and gallons in millions, except price per gallon) Sep. 30, 2020 Sep. 30, 2019 Sep. 30, 2020 Sep. 30, 2019
Estimated Locomotive Fuel Consumption (Gallons)
84.3  94.7  254.9  298.1 
Price per Gallon (Dollars)
$ 1.32  $ 2.05  $ 1.44  $ 2.09 
Total Locomotive Fuel Expense $ 111  $ 194  $ 367  $ 623 
Non-locomotive Fuel Expense 8  29  35  67 
Total Fuel Expense $ 119  $ 223  $ 402  $ 690 
Fuel Efficiency (Gallons of locomotive fuel per 1,000 GTMs)
0.93  0.98  0.97  1.01 

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CSX Corporation
OPERATING STATISTICS (Estimated)
In third quarter 2020, train velocity decreased by 3% and car dwell increased 9% relative to the prior year period. The Company remains focused on executing the operating plan to deliver improved reliability, faster transit times and increased asset utilization while continuing to control costs.

From a safety perspective, CSX saw a third quarter record low number of FRA reportable injuries as well as a third quarter record low number of FRA reportable train accidents. The personal injury frequency index of 0.77 improved 9% versus the prior year, representing a new third quarter record low level. The FRA train accident rate of 2.66 increased 12% compared to the third quarter of 2019. Despite a reduction in the number of incident versus third quarter 2019, the reduction of accidents did not offset the reduction in train miles. The Company is committed to safety improvement and remains focused on reducing risk and enhancing the overall safety of its employees, customers and communities in which the Company operates.

Quarters Ended Nine Months Ended
Sep. 30, 2020 Sep. 30, 2019 Improvement / (Deterioration) Sep. 30, 2020 Sep. 30, 2019 Improvement / (Deterioration)
Operations Performance
Train Velocity (Miles per hour) (a)
19.6  20.3  (3) % 20.7  20.2  2  %
Dwell (Hours) (a)
9.7  8.9  (9) % 9.0  8.7  (3) %
Cars Online (a)
115,823  118,787  2  % 108,437  119,564  9  %
Revenue Ton-Miles (Billions)
Merchandise 31.0  32.1  (3) % 91.9  96.7  (5) %
Coal 7.1  10.3  (31) % 21.7  31.7  (32) %
Intermodal 7.4  6.7  10  % 20.3  20.0  2  %
Total Revenue Ton-Miles 45.5  49.1  (7) % 133.9  148.4  (10) %
Total Gross Ton-Miles (Billions)
90.3  97.1  (7) % 262.6  293.7  (11) %
On-Time Originations 85  % 93  % (9) % 88  % 88  % —  %
On-Time Arrivals 71  % 79  % (10) % 80  % 77  % 4  %
Safety
FRA Personal Injury Frequency Index 0.77  0.85  9  % 0.82  0.82  —  %
FRA Train Accident Rate 2.66  2.37  (12) % 2.47  2.43  (2) %

Certain operating statistics are estimated and can continue to be updated as actuals settle.

(a) The methodology for calculating train velocity, dwell and cars online differs from that prescribed by the Surface Transportation Board. The Company will continue to report these metrics to the Surface Transportation Board using the prescribed methodology. See additional discussion on the Company's website.

Key Performance Measures Definitions
Train Velocity - Average train speed between origin and destination in miles per hour (does not include locals, yard jobs, work trains or passenger trains). Train velocity measures the profiled schedule of trains (from departure to arrival and all interim time), and train profiles are periodically updated to align with a changing operation.
Dwell - Average amount of time in hours between car arrival to and departure from the yard.
Cars Online - Average number of active freight rail cars on lines operated by CSX, excluding rail cars that are being repaired, in storage, those that have been sold, or private cars dwelling at a customer location more than one day.
Revenue Ton-Miles (RTM's) - The movement of one revenue-producing ton of freight over a distance of one mile.
Gross Ton-Miles (GTM's) - The movement of one ton of train weight over one mile. GTM's are calculated by multiplying total train weight by distance the train moved. Total train weight is comprised of the weight of the freight cars and their contents.
On-Time Originations - Percent of scheduled road trains that depart the origin yard on-time or ahead of schedule.
On-Time Arrivals - Percent of scheduled road trains that arrive at the destination yard on-time to within two hours of scheduled arrival.
FRA Personal Injury Frequency Index - Number of FRA-reportable injuries per 200,000 man-hours.
FRA Train Accident Rate - Number of FRA-reportable train accidents per million train-miles.


10
CSX Corporation
NON-GAAP MEASURES (Unaudited)
The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior reported results. Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP. Therefore, the Company’s non-GAAP measures are unlikely to be comparable to similar measures presented by other companies. The presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with GAAP. Reconciliations of non-GAAP measures to corresponding GAAP measures are below.

Free Cash Flow
Management believes that free cash flow is supplemental information useful to investors as it is important in evaluating the Company’s financial performance. More specifically, free cash flow measures cash generated by the business after reinvestment. This measure represents cash available for both equity and bond investors to be used for dividends, share repurchases or principal reduction on outstanding debt. Free cash flow is calculated by using net cash from operations and adjusting for property additions and certain other investing activities, which includes proceeds from property dispositions. Free cash flow should be considered in addition to, rather than a substitute for, cash provided by operating activities. The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow, before dividends (non-GAAP measure).
Nine Months Ended
(Dollars in millions) Sep. 30, 2020 Sep. 30, 2019
Net Cash Provided by Operating Activities $ 3,128  $ 3,737 
Property Additions (1,209) (1,191)
Other Investing Activities 19  237 
Free Cash Flow (before payment of dividends) $ 1,938  $ 2,783 
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