Item 8. Financial Statements and Supplementary Data

NOTE 13. Fair Value Measurements, continued

	Fiscal Years
	2015																2014
(Dollars in Millions)	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Common Stock	$	738			$	—			$	—			$	738			$	787			$	—			$	—			$	787
Mutual funds	15				—				—				15				20				—				—				20
Cash equivalents	8				—				—				8				1				—				—				1
Corporate bonds	—				480				—				480				—				539				—				539
Government securities	—				132				—				132				—				164				—				164
Asset-backed securities	—				14				—				14				—				15				—				15
Derivatives and other	—				6				—				6				—				2				—				2
Total investments in the fair value hierarchy	$	761			$	632			$	—			$	1,393			$	808			$	720			$	—			$	1,528
Investments measured at net asset value (a)	n/a				n/a				n/a				$	916			n/a				n/a				n/a				$	976
Investments at fair value	$	761			$	632			$	—			$	2,309			$	808			$	720			$	—			$	2,504

(a) Investments measured at net asset value represent certain investments that have been measured at net asset value per share (or its equivalent) and are thus are not classified in the fair value hierarchy. In accordance with ASC 820, Fair Value Measurements, the fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the pension assets disclosed in Note 8, Employee Benefit Plans.

NOTE 14. Other Comprehensive Income / (Loss)

CSX reports comprehensive earnings or loss in accordance with the Comprehensive Income Topic in the ASC in the Consolidated Comprehensive Income Statement. Total comprehensive earnings are defined as all changes in shareholders' equity during a period, other than those resulting from investments by and distributions to shareholders (e.g. issuance of equity securities and dividends). Generally, for CSX, total comprehensive earnings equal net earnings plus or minus adjustments for pension and other post-retirement liabilities. Total comprehensive earnings represent the activity for a period net of tax and were $2.0 billion, $1.8 billion and $2.3 billion for 2015, 2014 and 2013, respectively.

While total comprehensive earnings is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income, net of tax, as of the balance sheet date. For CSX, AOCI is primarily the cumulative balance related to pension and other post-retirement benefit adjustments and CSX's share of AOCI of equity method investees.

Changes in the AOCI balance by component are shown in the table below. Amounts reclassified in pension and other post-employment benefits to net earnings relate to the amortization of actuarial losses and are included in labor and fringe on the consolidated income statements. See Note 8. Employee Benefit Plans for further information. Other primarily represents CSX's share of AOCI of equity method investees. Amounts reclassified in other to net earnings are included in materials, supplies and other on the consolidated income statements.

CSX CORPORATION

PART II

Item 8. Financial Statements and Supplementary Data

NOTE 14. Other Comprehensive Income / (Loss), continued

	Pension and Other Post-Employment Benefits			Other			Accumulated Other Comprehensive Income (Loss)
(Dollars in millions)
Balance December 28, 2012 - Net of Tax	$	(851	)	$	(85	)	$	(936	)
Other Comprehensive Income
Income Before Reclassifications	510			24			534
Amounts Reclassified to Net Earnings	111			(2		)	109
Tax (Expense) Benefit	(232		)	2			(230		)
Total Other Comprehensive Income	389			24			413
Balance December 27, 2013 - Net of Tax	(462		)	(61		)	(523		)
Other Comprehensive (Loss) Income
(Loss) Income Before Reclassifications	(297		)	4			(293		)
Amounts Reclassified to Net Earnings	60			2			62
Tax Benefit	88			—			88
Total Other Comprehensive (Loss) Income	(149		)	6			(143		)
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 Income (Loss)	10			(9		)	1
Balance December 25, 2015 - Net of Tax	$	(601	)	$	(64	)	$	(665	)

CSX CORPORATION

PART II

Item 8. Financial Statements and Supplementary Data

NOTE 15. Quarterly Financial Data (Unaudited)

Pursuant to Article 3 of the SEC’s Regulation S-X, the following are selected quarterly financial data:

Fiscal Year Ended December 2015	Quarters
(Dollars in Millions, Except Per Share Amounts)	1st				2nd				3rd				4th				Full Year
Revenue	$	3,027			$	3,064			$	2,939			$	2,781			$	11,811
Operating Income	843				1,017				933				791				3,584
Net Earnings	442				553				507				466				1,968
Earnings Per Share, Basic	$	0.45			$	0.56			$	0.52			$	0.48			$	2.00
Earnings Per Share, Assuming Dilution	0.45				0.56				0.52				0.48				2.00
Fiscal Year Ended December 2014
Revenue	$	3,012			$	3,244			$	3,221			$	3,192			$	12,669
Operating Income	739				997				976				901				3,613
Net Earnings	398				529				509				491				1,927
Earnings Per Share, Basic	$	0.40			$	0.53			$	0.51			$	0.49			$	1.93
Earnings Per Share, Assuming Dilution	0.40				0.53				0.51				0.49				1.92

NOTE 16. Summarized Consolidating Financial Data

In 2007, CSXT, a wholly-owned subsidiary of CSX Corporation, sold secured equipment notes maturing in 2023 in a registered public offering. CSX has fully and unconditionally guaranteed the notes. In connection with the notes, the Company is providing the following condensed consolidating financial information in accordance with SEC disclosure requirements. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation and the allocation of certain expenses of CSX incurred for the benefit of its subsidiaries. Condensed consolidating financial information for the obligor, CSXT, and parent guarantor, CSX, is shown in the tables below.

CSX CORPORATION

PART II

Item 8. Financial Statements and Supplementary Data

NOTE 16. Summarized Consolidating Financial Data, continued

Consolidating Income Statements

(Dollars in Millions)

Fiscal Year Ended December 2015	CSX Corporation				CSX Transportation				Eliminations and Other				CSX Consolidated
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
Fiscal Year Ended December 2014
Revenue	$	—			$	12,590			$	79			$	12,669
Expense	(427		)		9,585				(102		)		9,056
Operating Income	427				3,005				181				3,613
Equity in Earnings of Subsidiaries	1,996				1				(1,997		)		—
Interest Expense	(520		)		(46		)		21				(545		)
Other Income - Net	(19		)		(4		)		(1		)		(24		)
Earnings Before Income Taxes	1,884				2,956				(1,796		)		3,044
Income Tax Benefit (Expense)	43				(1,093		)		(67		)		(1,117		)
Net Earnings	$	1,927			$	1,863			$	(1,863	)		$	1,927
Total Comprehensive Earnings	$	1,784			$	1,875			$	(1,875	)		$	1,784
Fiscal Year Ended December 2013
Revenue	$	—			$	11,950			$	76			$	12,026
Expense	(371		)		9,091				(167		)		8,553
Operating Income	371				2,859				243				3,473
Equity in Earnings of Subsidiaries	1,964				(1		)		(1,963		)		—
Interest Expense	(516		)		(62		)		16				(562		)
Other Income - Net	(7		)		(2		)		20				11
Earnings Before Income Taxes	1,812				2,794				(1,684		)		2,922
Income Tax Benefit (Expense)	52				(1,028		)		(82		)		(1,058		)
Net Earnings	$	1,864			$	1,766			$	(1,766	)		$	1,864
Total Comprehensive Earnings	$	2,277			$	1,825			$	(1,825	)		$	2,277

CSX CORPORATION

PART II

Item 8. Financial Statements and Supplementary Data

NOTE 16. Summarized Consolidating Financial Data, continued

Consolidating Balance Sheets

(Dollars in Millions)

As of December 25, 2015	CSX Corporation				CSX Transportation				Eliminations and Other				CSX Consolidated
ASSETS
Current Assets:
Cash and Cash Equivalents	$	444			$	175			$	9			$	628
Short-term Investments	810				—				—				810
Accounts Receivable - Net	1				198				783				982
Receivable from Affiliates	1,092				2,038				(3,130		)		—
Materials and Supplies	—				350				—				350
Deferred Income Taxes	10				117				(1		)		126
Other Current Assets	(59		)		120				9				70
Total Current Assets	2,298				2,998				(2,330		)		2,966
Properties	1				38,964				2,609				41,574
Accumulated Depreciation	(1		)		(10,016		)		(1,383		)		(11,400		)
Properties - Net	—				28,948				1,226				30,174
Investments in Conrail	—				—				803				803
Affiliates and Other Companies	(39		)		658				(28		)		591
Investment in Consolidated Subsidiaries	22,755				—				(22,755		)		—
Other Long-term Assets	176				399				(70		)		505
Total Assets	$	25,190			$	33,003			$	(23,154	)		$	35,039
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	108			$	626			$	30			$	764
Labor and Fringe Benefits Payable	36				407				47				490
Payable to Affiliates	2,954				437				(3,391		)		—
Casualty, Environmental and Other Reserves	—				115				16				131
Current Maturities of Long-term Debt	1				19				—				20
Income and Other Taxes Payable	(87		)		183				12				108
Other Current Liabilities	—				437				2				439
Total Current Liabilities	3,012				2,224				(3,284		)		1,952
Casualty, Environmental and Other Reserves	—				219				50				269
Long-term Debt	9,900				783				—				10,683
Deferred Income Taxes	(178		)		9,258				225				9,305
Other Long-term Liabilities	804				484				(126		)		1,162
Total Liabilities	13,538				12,968				(3,135		)		23,371
Shareholders' Equity:
Common Stock, $1 Par Value	966				181				(181		)		966
Other Capital	113				5,091				(5,091		)		113
Retained Earnings	11,238				14,774				(14,774		)		11,238
Accumulated Other Comprehensive Loss	(665		)		(31		)		31				(665		)
Noncontrolling Minority Interest	—				20				(4		)		16
Total Shareholders' Equity	11,652				20,035				(20,019		)		11,668
Total Liabilities and Shareholders' Equity	$	25,190			$	33,003			$	(23,154	)		$	35,039

CSX CORPORATION

PART II

Item 8. Financial Statements and Supplementary Data

NOTE 16. Summarized Consolidating Financial Data, continued

Consolidating Balance Sheets

(Dollars in Millions)

As of December 26, 2014	CSX Corporation				CSX Transportation				Eliminations and Other				CSX Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	510			$	100			$	59			$	669
Short-term Investments	250				—				42				292
Accounts Receivable - Net	2				206				921				1,129
Receivable from Affiliates	1,211				2,418				(3,629		)		—
Materials and Supplies	—				272				1				273
Deferred Income Taxes	3				139				(1		)		141
Other Current Assets	—				61				7				68
Total Current Assets	1,976				3,196				(2,600		)		2,572
Properties	1				36,888				2,454				39,343
Accumulated Depreciation	(1		)		(9,516		)		(1,242		)		(10,759		)
Properties - Net	—				27,372				1,212				28,584
Investments in Conrail	—				—				779				779
Affiliates and Other Companies	(39		)		644				(28		)		577
Investment in Consolidated Subsidiaries	21,570				—				(21,570		)		—
Other Long-term Assets	178				387				(24		)		541
Total Assets	$	23,685			$	31,599			$	(22,231	)		$	33,053
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	106			$	707			$	32			$	845
Labor and Fringe Benefits Payable	38				511				64				613
Payable to Affiliates	3,053				514				(3,567		)		—
Casualty, Environmental and Other Reserves	—				126				16				142
Current Maturities of Long-term Debt	200				29				(1		)		228
Income and Other Taxes Payable	(150		)		293				20				163
Other Current Liabilities	—				111				5				116
Total Current Liabilities	3,247				2,291				(3,431		)		2,107
Casualty, Environmental and Other Reserves	—				213				63				276
Long-term Debt	8,705				809				—				9,514
Deferred Income Taxes	(172		)		8,827				203				8,858
Other Long-term Liabilities	753				487				(118		)		1,122
Total Liabilities	12,533				12,627				(3,283		)		21,877
Shareholders' Equity
Common Stock, $1 Par Value	992				181				(181		)		992
Other Capital	92				5,077				(5,077		)		92
Retained Earnings	10,734				13,717				(13,717		)		10,734
Accumulated Other Comprehensive Loss	(666		)		(31		)		31				(666		)
Noncontrolling Minority Interest	—				28				(4		)		24
Total Shareholders' Equity	11,152				18,972				(18,948		)		11,176
Total Liabilities and Shareholders' Equity	$	23,685			$	31,599			$	(22,231	)		$	33,053

CSX CORPORATION

PART II

Item 8. Financial Statements and Supplementary Data

NOTE 16. Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements

(Dollars in Millions)

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		)
Stock Options Exercised	—				—				—				—
Shares Repurchased	(804		)		—				—				(804		)
Other Financing Activities	10				1				(11		)		—
Net Cash Provided by (Used in) Financing Activities	(480		)		(778		)		739				(519		)
Net Decrease 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

CSX CORPORATION

PART II

Item 8. Financial Statements and Supplementary Data

NOTE 16. Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements

(Dollars in Millions)

Fiscal Year Ended December 2014	CSX Corporation				CSX Transportation				Eliminations and Other				CSX Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	583			$	3,278			$	(518	)		$	3,343
Investing Activities
Property Additions	—				(2,192		)		(257		)		(2,449		)
Purchases of Short-term Investments	(1,419		)		—				(14		)		(1,433		)
Proceeds from Sales of Short-term Investments	1,642				—				32				1,674
Proceeds from Property Dispositions	—				62				—				62
Other Investing Activities	—				(128		)		91				(37		)
Net Cash Provided by (Used in) Investing Activities	223				(2,258		)		(148		)		(2,183		)
Financing Activities
Long-term Debt Issued	1,000				—				—				1,000
Long-term Debt Repaid	(600		)		(333		)		—				(933		)
Dividends Paid	(629		)		(660		)		660				(629		)
Stock Options Exercised	—				—				—				—
Shares Repurchased	(517		)		—				—				(517		)
Other Financing Activities	11				(18		)		3				(4		)
Net Cash Provided by (Used in) Financing Activities	(735		)		(1,011		)		663				(1,083		)
Net (Decrease) Increase in Cash and Cash Equivalents	71				9				(3		)		77
Cash and Cash Equivalents at Beginning of Period	439				91				62				592
Cash and Cash Equivalents at End of Period	$	510			$	100			$	59			$	669

CSX CORPORATION

PART II

Item 8. Financial Statements and Supplementary Data

NOTE 16. Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements

(Dollars in Millions)

Fiscal Year Ended December 2013	CSX Corporation				CSX Transportation				Eliminations and Other				CSX Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	1,004			$	3,005			$	(742	)		$	3,267
Investing Activities
Property Additions	—				(2,053		)		(260		)		(2,313		)
Purchases of Short-term Investments	(1,251		)		—				(5		)		(1,256		)
Proceeds from Sales of Short-term Investments	1,335				—				66				1,401
Proceeds from Property Dispositions	—				53				—				53
Other Investing Activities	(134		)		(315		)		337				(112		)
Net Cash Provided by (Used in) Investing Activities	(50		)		(2,315		)		138				(2,227		)
Financing Activities
Long-term Debt Issued	500				—				—				500
Long-term Debt Repaid	(700		)		(80		)		—				(780		)
Dividends Paid	(600		)		(730		)		730				(600		)
Stock Options Exercised	9				—				—				9
Shares Repurchased	(353		)		—				—				(353		)
Other Financing Activities	148				(24		)		(132		)		(8		)
Net Cash Provided by (Used in) Financing Activities	(996		)		(834		)		598				(1,232		)
Net (Decrease) Increase in Cash and Cash Equivalents	(42		)		(144		)		(6		)		(192		)
Cash and Cash Equivalents at Beginning of Period	481				235				68				784
Cash and Cash Equivalents at End of Period	$	439			$	91			$	62			$	592

CSX CORPORATION

PART II