CSX (CSX) 10-K risk factor changes: FY2018 vs FY2017

For example, the [removed: RSIA mandates] [added: RSIA, as amended, mandated] that the installation of PTC hardware be completed by December 31, 2018 [removed: and, assuming certain conditions are met,] [added: and] requires that the PTC system be fully operational by December 31, 2020 on main lines that carry certain hazardous materials and on lines that have commuter or passenger operations.

Under the Railway Labor Act's procedures (which include mediation, cooling-off periods and the possibility of an intervention [added: by the President] of the [removed: U.S. President),] [added: United States),] during negotiations neither party may take action until the procedures are exhausted.

If, however, CSX is unable to negotiate acceptable agreements, [removed: or if terms of existing agreements are disputed,] the employees covered by the Railway Labor Act could strike, which could result in loss of business and increased operating costs as a result of higher wages or benefits paid to union members.

Additionally, from time to time, the Company enters into CSX-specific, or “local”, bargaining agreements which could also be critical to the [removed: Company and its new business strategies.][added: Company.]

CSX [removed: 2017] [added: 2018] Form 10-K p.

CSXT could experience rail network difficulties related to: (i) increased volume; (ii) locomotive or crew shortages; (iii) extreme weather conditions; (iv) impacts from changes in yard capacity, or network structure or composition, including train routes; (v) increased passenger [removed: activities, including high-speed rail;] [added: activities;] or (vi) regulatory changes impacting where and how fast CSXT can transport freight or maintain routes, which could have a negative effect on CSXT's operational fluidity, leading to deterioration of service, asset utilization and overall efficiency.

[removed: Over the past few years,] [added: Increases in] production and source locations of natural gas in the U.S. have [removed: also increased dramatically, which has] resulted in lower natural gas prices in CSX’s service territory.

Additionally, crude oil prices combined with increased pipeline activity have resulted in volatility in domestic crude oil production, which has [removed: adversely] affected crude oil volumes for CSX.

[removed: Due to the significant capital expenditures required to operate and maintain a safe and efficient railroad, the] [added: The] Company regularly relies on capital markets for the issuance of long-term debt [removed: instruments as well as on] [added: instruments, commercial paper and] bank financing from time to time.

CSX 2018 Form 10-K p.

CSX 2018 Form 10-K p.

CSX 2018 Form 10-K p.

For instance, several of the proposals under consideration by the STB could have a significant negative impact on the Company's ability to negotiate prices for the value of rail services provided and meet service standards, which could force a reduction in capital spending.

The Company’s business strategies may not achieve the anticipated objectives.

The implementation of the Company’s business strategies could result in operational disruptions, loss of existing customers, regulatory issues and other adverse consequences.

If these strategies fail to achieve the anticipated benefits or take longer to implement than expected, the Company’s operations and financial results may be adversely affected.

11

Scheduled railroading - An operating [removed: model] [added: plan] focused on developing and strictly maintaining a scheduled service plan [added: to deliver further service gains and improve transit times,] with an emphasis on [removed: optimizing assets.][added: driving asset utilization while controlling costs.]

CSX [removed: 2017] [added: 2018] Form 10-K p.

- Revenue of [removed: $11.4] [added: $12.3] billion increased [removed: $339] [added: $842] million or [removed: three percent] [added: 7%] versus the prior year.

- Expenses of [removed: $7.7] [added: $7.4] billion [removed: increased $61] [added: decreased $307] million or [removed: one percent] [added: 4%] year over year.

- Operating income of [removed: $3.7] [added: $4.9] billion increased [removed: $278 million] [added: $1.1 billion] or [removed: eight percent] [added: 31%] year over year.

- Operating ratio of [removed: 67.9] [added: 60.3] percent improved [removed: 150] [added: 710] basis points from [removed: 69.4 percent.][added: 67.4%.]

[removed: | • |] [added: -] Earnings per diluted share of [removed: $5.99 increased $4.18] [added: $3.84 decreased $2.15] or [removed: 231 percent] [added: 36%] year over year. [removed: |]

[removed: The Company's] [added: Income Tax Benefit (Expense) decreased $3.4 billion from an expense of $1.0 billion in 2016 to a benefit of $2.3 billion in] 2017 [removed: financial results included] [added: primarily due to] a $3.5 [removed: billion, or $3.81 per share,] [added: billion] non-cash reduction in income tax [removed: expense, primarily] [added: mostly] resulting from [removed: revaluing] the [added: revaluation of the] Company's net deferred tax liabilities to reflect the [removed: recently enacted lower] [added: reduction of the federal corporate] tax rate [removed: effective January 1, 2018.][added: to 21 percent as part of tax reform.]

[added: |] Restructuring Charge [added: | — | | | | 240 | | | | 240 | | | | 100 | | |]

[removed: The total restructuring charge] [added: Restructuring Charge] of [removed: $325] [added: $240] million [removed: in 2017] includes costs related to [added: restructuring activities in 2017, including] the management workforce reduction, executive retirements, reimbursement arrangements, the proration of equity awards and other advisory costs related to the leadership [removed: transition during the year.][added: transition.]

2017 vs. 2016 Results of [removed: Operations (a)][added: Operations(a)]

| Restructuring Charge | [removed: 325] [added: 240] | | | | — | | | | [removed: (325] [added: (240] | | ) | | [removed: —] [added: (100] | [added: )] | |

| Debt Repurchase Expense | — | | | | (115 | | ) | | 115 | | | | [removed: (100] [added: 100] | [removed: )] | |

| Other Income - Net | [removed: 21] [added: 74] | | | | [removed: 46] [added: 53] | | | | [removed: (25] [added: 21] | | [removed: )] | | [removed: (54] [added: 40] | [removed: )] | |

| Volume and Revenue (Unaudited) [removed: (a)] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Chemicals | 672 | | | 700 | | | (4 | )% | | [removed: $ |] 2,210 | | | [removed: $] | 2,191 | | | [added: |] 1 | % | | [removed: $ |] 3,289 | | | [removed: $] | 3,130 | | | [added: |] 5 | % |

| Automotive | 457 | | | 482 | | | (5 | [removed: )%] [added: )] | | 1,195 | | | | 1,261 | | | | (5 | [removed: )%] [added: )] | | 2,615 | | | | 2,616 | | | | — | % |

| Agricultural and Food Products | 454 | | | 477 | | | (5 | [removed: )%] [added: )] | | 1,262 | | | | 1,286 | | | | (2 | [removed: )%] [added: )] | | 2,780 | | | | 2,696 | | | | 3 | % |

| Minerals | 308 | | | 310 | | | (1 | [removed: )%] [added: )] | | 477 | | | | 464 | | | | 3 | [removed: %] | | 1,549 | | | | 1,497 | | | | 3 | % |

| Fertilizers | 291 | | | 300 | | | (3 | [removed: )%] [added: )] | | 466 | | | | 463 | | | | 1 | [removed: %] | | 1,601 | | | | 1,543 | | | | 4 | % |

| Forest Products | 264 | | | 274 | | | (4 | [removed: )%] [added: )] | | 755 | | | | 773 | | | | (2 | [removed: )%] [added: )] | | 2,860 | | | | 2,821 | | | | 1 | % |

| Metals and Equipment | 256 | | | 259 | | | (1 | [removed: )%] [added: )] | | 703 | | | | 704 | | | | — | [removed: %] | | 2,746 | | | | 2,718 | | | | 1 | % |

| Total Merchandise | 2,702 | | | 2,802 | | | (4 | [removed: )%] [added: )] | | 7,068 | | | | 7,142 | | | | (1 | [removed: )%] [added: )] | | 2,616 | | | | 2,549 | | | | 3 | % |

| Coal | 855 | | | 838 | | | 2 | [removed: %] | | 2,107 | | | | 1,833 | | | | 15 | [removed: %] | | 2,464 | | | | 2,187 | | | | 13 | % |

| Intermodal | 2,843 | | | 2,811 | | | 1 | [removed: %] | | 1,799 | | | | 1,726 | | | | 4 | [removed: %] | | 633 | | | | 614 | | | | 3 | % |

| Other | — | | | — | | | — | [removed: %] | | 434 | | | | 368 | | | | 18 | [removed: %] | | — | | | | — | | | | — | % |

Chemicals [removed: -] [added: \-] Volume declined, primarily due to sustained challenges in the Eastern crude-by-rail market.

Automotive [removed: -] [added: \-] Volume declined as North American vehicle production fell.

Minerals [removed: -] [added: \-] Volume slightly declined as short-term competitive losses were mostly offset by growth in construction project activity.

Fertilizers [removed: -] [added: \-] Volume declined, primarily driven by the closure of a customer facility as well as Hurricane Irma’s impact on Central Florida phosphate operations.

Forest Products [removed: -] [added: \-] Volume declined as the decrease in shipments of paper products as a result of mill closures and truck competition was partially offset by strong pulp board volumes driven by [removed: e-commerce] [added: e- commerce] demand.

Metals and Equipment [removed: -] [added: \-] Volume slightly declined as a nonrecurring 2016 benefit from large pipe projects was partially offset by increases in equipment moves.

Domestic [removed: - Utility] [added: utility] coal volume declined 12 percent as the competitive loss of short-haul interchange traffic more than offset underlying growth at other utilities.

[removed: Coke, Iron Ore] [added: Domestic coke, iron ore] and [removed: Other] [added: other] volume declined 13 percent, primarily in iron ore shipments, as a large customer temporarily halted its production.

Export [removed: - Volume] [added: volume] increased 42 percent as global supply levels and pricing conditions supported strong growth in U.S. coal exports.

Domestic [removed: - Volume] [added: volume] declined 2 percent as rationalization of low-density lanes and competitive losses more than offset growth with existing customers.

International [removed: - Volume] [added: volume] was up 7 percent driven by competitive gains and strong performance with existing customers as eastern port volumes increased.

[removed: Other revenue increased $66 million versus prior year primarily due to a $58 million settlement in] 2017 related to a customer that did not meet historical volume commitments and higher incidental charges.

In 2017, total expenses increased [removed: $61] [added: $32] million, or [added: less than] one percent, compared to prior year.

These expenses decreased [removed: $245] [added: $208] million due to the following items:

Environmental Protection Agency (“EPA”) - A U.S. government agency that has regulatory authority with respect to environmental law.

23

Pipeline and Hazardous Materials Safety Administration (“PHMSA”) - An agency within the DOT that, together with the FRA, has broad jurisdiction over railroad operating standards and practices, including hazardous materials requirements.

Positive Train Control ("PTC") \- An interoperable train control system designed to prevent train-to-train collisions, over-speed derailments, incursions into established work-zone limits, and train diversions onto another set of tracks.

Transportation Security Administration (“TSA”) - A component of the Department of Homeland Security with broad authority over railroad operating practices that may have homeland security implications.

CSX 2018 Form 10-K p.

2018 HIGHLIGHTS

Operating income in 2017 included a pre-tax $240 million restructuring charge and a pre-tax tax reform benefit of $142 million.

Adjusting for these items, operating income increased $1.1 billion or 28% year over year.

Operating ratio in 2017 was affected by the restructuring charge and tax reform benefit described above.

Adjusting for these items, operating ratio of 60.3 percent in 2018 improved 620 basis points.

Net income in 2017 included a restructuring charge and a restructuring charge - non-operating with a combined $203 million after-tax impact and a total after-tax reform benefit of $3.6 billion.

Adjusting for these items, earnings per diluted share improved $1.54 per share or 67% year over year.

Adjusted operating income, adjusted operating ratio and adjusted earnings per diluted share are non-GAAP measures.

See reconciliation of GAAP measures to non-GAAP measures in Non-GAAP Measures - Unaudited following the discussion of the results of operations.

| | 2018 | | | | 2017(a) | | | | $ Change | | | | % Change | | |

| Revenue | $ | 12,250 | | | $ | 11,408 | | | $ | 842 | | | 7 | % | |

| Labor and Fringe | 2,738 | | | | 2,946 | | | | 208 | | | | 7 | | |

| Depreciation | 1,331 | | | | 1,315 | | | | (16 | | ) | | (1 | ) | |

| Fuel | 1,046 | | | | 864 | | | | (182 | | ) | | (21 | ) | |

| Total Expense | 7,381 | | | | 7,688 | | | | 307 | | | | 4 | | |

| Operating Income | 4,869 | | | | 3,720 | | | | 1,149 | | | | 31 | | |

| Interest Expense | (639 | | ) | | (546 | | ) | | (93 | | ) | | (17 | ) | |

| Restructuring Charge - Non-Operating | — | | | | (85 | | ) | | 85 | | | | 100 | | |

| Income Tax (Expense) Benefit | (995 | | ) | | 2,329 | | | | (3,324 | | ) | | (143 | ) | |

| Net Earnings | $ | 3,309 | | | $ | 5,471 | | | $ | (2,162 | ) | | (40 | ) | |

| Net Earnings | $ | 3.84 | | | $ | 5.99 | | | $ | (2.15 | ) | | (36 | )% | |

| Operating Ratio | 60.3 | | % | | 67.4 | | % | | | | | | 710 | | bps |

(a) Certain prior year data has been reclassified to conform to the current presentation.

See further discussion of reclassification of all components of net periodic benefit cost except service cost from labor and fringe expense to other income - net in Note 1.

CSX 2018 Form 10-K p.

| | 2018 | | | 2017 | | | % Change | | | 2018 | | | | 2017 | | | | % Change | | | 2018 | | | | 2017 | | | | % Change | |

| Chemicals | 675 | | | 672 | | | — | % | | $ | 2,339 | | | $ | 2,210 | | | 6 | % | | $ | 3,465 | | | $ | 3,289 | | | 5 | % |

| Automotive | 463 | | | 457 | | | 1 | % | | 1,267 | | | | 1,195 | | | | 6 | % | | 2,737 | | | | 2,615 | | | | 5 | % |

| Agricultural and Food Products | 447 | | | 454 | | | (2 | )% | | 1,306 | | | | 1,262 | | | | 3 | % | | 2,922 | | | | 2,780 | | | | 5 | % |

| Minerals | 315 | | | 308 | | | 2 | % | | 518 | | | | 477 | | | | 9 | % | | 1,644 | | | | 1,549 | | | | 6 | % |

| Forest Products | 285 | | | 264 | | | 8 | % | | 850 | | | | 755 | | | | 13 | % | | 2,982 | | | | 2,860 | | | | 4 | % |

| Metals and Equipment | 267 | | | 256 | | | 4 | % | | 769 | | | | 703 | | | | 9 | % | | 2,880 | | | | 2,746 | | | | 5 | % |

| Fertilizers | 248 | | | 291 | | | (15 | )% | | 442 | | | | 466 | | | | (5 | )% | | 1,782 | | | | 1,601 | | | | 11 | % |

| Total Merchandise | 2,700 | | | 2,702 | | | — | % | | 7,491 | | | | 7,068 | | | | 6 | % | | 2,774 | | | | 2,616 | | | | 6 | % |

CSX CORPORATION

PART II

2017 HIGHLIGHTS

| | |

| --- | --- |

Tax Reform

With the enactment of the Tax Cuts and Jobs Act (the "Act") on December 22, 2017, the federal corporate income tax rate was reduced from 35% to 21% effective January 1, 2018.

Beginning in 2018, CSX expects its effective federal and state income tax rate to be approximately 25%.

The Company's affiliates also revalued their deferred tax liabilities to reflect the lower federal corporate tax rate, which resulted in the Company recognizing a benefit of $142 million, or $0.10 per share after-tax, in equity earnings of affiliates, which is included in operating income.

(See additional discussion over income taxes in Note 11, Income Taxes and equity earnings of affiliates in Note 12, Related Parties and Affiliates.)

The Company expects estimated pre-tax savings on both future earnings and cash flows resulting from this program to be approximately $200 million per year.

(See additional discussion over the restructuring charge in Note 1, Nature of Operations and Significant Accounting Policies.)

| | | | | | | | | | | | | | | | |

| Labor and Fringe | 2,914 | | | | 3,159 | | | | 245 | | | | 8 | | |

| Total Expense | 7,741 | | | | 7,680 | | | | (61 | | ) | | (1 | ) | |

| Operating Income | 3,667 | | | | 3,389 | | | | 278 | | | | 8 | | |

| Operating Ratio | 67.9 | | % | | 69.4 | | % | | | | | | 150 | | bps |

(a) Prior to third quarter 2017, CSX followed a 52/53 week fiscal reporting calendar and 2016 included 53 weeks.

All 2016 information presented in Results of Operations is on a 53-week basis, under GAAP.

Restructuring Charge of $325 million includes costs related to restructuring activities in 2017, including the management workforce reduction, executive retirements, reimbursement arrangements, the proration of equity awards and other advisory costs related to the leadership transition.

Debt Repurchase Expense includes costs associated with the extinguishment of debt.

These costs

decreased $115 million due to the repurchase of notes in 2016 that did not repeat in the current year.

Other income decreased $25 million to $21 million primarily due to the reclassification of real estate activities from other non-operating to operating income in 2017.

| | 2016 | | | | 2015 | | | | $ Change | | | | % Change | | |

| Revenue | $ | 11,069 | | | $ | 11,811 | | | $ | (742 | ) | | (6 | )% | |

| Labor and Fringe | 3,159 | | | | 3,290 | | | | 131 | | | | 4 | | |

| Depreciation | 1,301 | | | | 1,208 | | | | (93 | | ) | | (8 | ) | |

| Fuel | 713 | | | | 957 | | | | 244 | | | | 25 | | |

| Total Expense | 7,680 | | | | 8,227 | | | | 547 | | | | 7 | | |

| Operating Income | 3,389 | | | | 3,584 | | | | (195 | | ) | | (5 | ) | |

| Debt Repurchase Expense | (115 | | ) | | — | | | | (115 | | ) | | — | | |

| Operating Ratio | 69.4 | | % | | 69.7 | | % | | | | | | 30 | | bps |

Fiscal year 2016 included 53 weeks and fiscal year 2015 included 52 weeks.

| | 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 | )% |

As of December [removed: 2017,] [added: 2018,] CSX does not have a material amount of floating rate debt obligations outstanding, and therefore fluctuations in the interest rate would not have a material impact on the Company's financial condition, results of operations or liquidity.

CSX [removed: 2017] [added: 2018] Form 10-K p.

| Report of Independent Registered Public Accounting Firm | | [removed: [55](#s41A2E0734BA851ED94150266C7787CDB)] [added: [53](#s1744035D07915C1D892B793895B1D91D)] |

| Consolidated Income Statements for the Fiscal Years Ended: | | [removed: [56](#s8BCB4D96D45257D294C43563D19B1EC9)] [added: [54](#sBED6B31DF5E85E2EAF1854849A7F2636)] |

| [removed: |] December 25, 2015 | [added: $] | [added: 269 | | | $ | 82 | | | $ | 49 | | | $ | 400 | |]

| Consolidated Comprehensive Income Statements for the Fiscal Years Ended: | | [removed: [57](#sE785BD3D26F653C691022FDAE521698A)] [added: [55](#sCB5CE1EC084352D68A1A768DF9B29C5C)] |

| Consolidated Balance Sheets as of: | | [removed: [58](#sE225AA61EFA2597A9D6E883BDABE4BB8)] [added: [56](#sB804FDA346E256EAAB60F7A14B0A84DC)] |

| Consolidated Cash Flow Statements for Fiscal Years Ended: | | [removed: [59](#sB615406B4C21578BA8BAFE0E66917B92)] [added: [57](#s8D157A5F34A25C3A927D105F3FB48359)] |

| Consolidated Statements of Changes in Shareholders' Equity: | | [removed: [60](#s8562AB703CFC5854ABE3B840F50D324E)] [added: [58](#s2CBA629F4A12529DB10F383805EAA3A8)] |

| Notes to Consolidated Financial Statements | | [removed: [61](#s3FEA959122B3561691DA604E6A09BAC2)] [added: [59](#s890E260818DB51C79078737C2D768E28)] |

To the Shareholders and [added: the] Board of Directors of CSX Corporation

We have audited the accompanying consolidated balance sheets of CSX Corporation (the Company) as of December 31, [removed: 2017] [added: 2018] and [removed: December 30, 2016,] [added: 2017,] and the related consolidated statements of income, comprehensive income, cash flows, and changes in shareholders’ equity for each of the three [removed: fiscal] years in the period ended December 31, [removed: 2017,] [added: 2018,] and the related notes (collectively referred to as the [removed: “financial] [added: “consolidated financial] statements”).

In our opinion, the [added: consolidated] financial statements present fairly, in all material respects, the [removed: consolidated] financial position of the Company at December 31, [removed: 2017] [added: 2018] and [removed: December 30, 2016,] [added: 2017,] and the [removed: consolidated] results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2017,] [added: 2018,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February [removed: 7, 2018] [added: 6, 2019] expressed an unqualified opinion thereon.

[removed: |] /s/ Ernst & Young LLP [removed: |]

| | Fiscal Years | | | | | | | | | [removed: | |]

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Revenue | $ | [removed: 11,408] [added: 12,250] | | | $ | [removed: 11,069] [added: 11,408] | | | $ | [removed: 11,811] [added: 11,069] | |

| Labor and Fringe | [added: $ |] 2,914 | | [added: $] | [added: 32] | [added: | $ | 2,946 | | | $ |] 3,159 | | [added: $] | [added: (24] | [removed: 3,290] [added: )] | [added: $] | [added: 3,135] | [added: |]

| Materials, Supplies and Other | [removed: 2,113] [added: 1,967] | | | | [removed: 2,092] [added: 2,113] | | | | [removed: 2,356] [added: 2,092] | | |

| Depreciation | [removed: 1,315] [added: 1,331] | | | | [removed: 1,301] [added: 1,315] | | | | [removed: 1,208] [added: 1,301] | | |

| Fuel | [removed: 864] [added: 1,046] | | | | [removed: 713] [added: 864] | | | | [removed: 957] [added: 713] | | |

| Equipment and Other Rents | [removed: 429] [added: 395] | | | | [removed: 465] [added: 429] | | | | [removed: 456] [added: 465] | | |

| Restructuring [removed: Charges] [added: Charge] (Note 1) | [removed: 325] [added: —] | | | | [removed: —] [added: 325] | | | | — | | |

| Equity Earnings of Affiliates | [removed: (219] [added: (96] | | ) | | [removed: (50] [added: (219] | | ) | | [removed: (40] [added: (50] | | ) |

| Interest Expense | [removed: (546] [added: (639] | | ) | | [removed: (579] [added: (546] | | ) | | [removed: (544] [added: (579] | | ) |

| Debt Repurchase Expense | — | | | | [removed: (115] [added: —] | | [removed: )] | | [removed: —] [added: (115] | | [added: )] |

| Other Income [removed: (Expense)] - Net (Note 10) | [removed: 21] [added: 74] | | | | [removed: 46] [added: 53] | | | | [removed: 98] [added: 22] | | |

| Earnings Before Income Taxes | [removed: 3,142] [added: 4,304] | | | | [removed: 2,741] [added: 3,142] | | | | [removed: 3,138] [added: 2,741] | | |

| Income Tax [removed: Benefit] (Expense) [added: Benefit] (Note 11) | [removed: 2,329] [added: (995] | | [added: )] | | [removed: (1,027] [added: 2,329] | | [removed: )] | | [removed: (1,170] [added: (1,027] | | ) |

| Net Earnings | $ | [removed: 5,471] [added: 3,309] | | | $ | [removed: 1,714] [added: 5,471] | | | $ | [removed: 1,968] [added: 1,714] | |

| Basic | $ | [removed: 6.01] [added: 3.86] | | | $ | [removed: 1.81] [added: 6.01] | | | $ | [removed: 2.00] [added: 1.81] | |

| Assuming Dilution | $ | [removed: 5.99] [added: 3.84] | | | $ | [removed: 1.81] [added: 5.99] | | | $ | [removed: 2.00] [added: 1.81] | |

| Basic | [removed: 911] [added: 857] | | | | [removed: 947] [added: 911] | | | | [removed: 983] [added: 947] | | |

| Assuming Dilution | [removed: 914] [added: 861] | | | | [removed: 948] [added: 914] | | | | [removed: 984] [added: 948] | | |

| Cash Dividends Paid Per Common Share | $ | [removed: 0.78] [added: 0.88] | | | $ | [removed: 0.72] [added: 0.78] | | | $ | [removed: 0.70] [added: 0.72] | |

[added: |] (Dollars in Millions) [added: | Maturities at | | |]

| | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | |

| Net Earnings | $ | [removed: 5,471] [added: 3,309] | | $ | [removed: 1,714] [added: 5,471] | | $ | [removed: 1,968] [added: 1,714] | |

| Other Comprehensive [removed: Income] (Loss) [added: Income] - Net of Tax: | | | | | | | | | |

Changes in interest rates could impact the fair value of the Company's fixed rate long-term debt.

The potential decrease in fair value of the Company's fixed rate long-term debt resulting from a hypothetical 10% increase in interest rates, or approximately 25 basis points, is estimated to be $472 million as of December 31, 2018 and $403 million as of December 31, 2017.

The underlying fair values of our long-term debt were estimated based on quoted market prices or on the current rates offered for debt with similar terms and maturities.

51

| | December 31, 2018 | |

| | December 31, 2018 | |

CSX 2018 Form 10-K p.

52

CSX 2018 Form 10-K p.

| Labor and Fringe | 2,738 | | | | 2,946 | | | | 3,135 | | |

| Total Expense | 7,381 | | | | 7,688 | | | | 7,656 | | |

| Operating Income | 4,869 | | | | 3,720 | | | | 3,413 | | |

| Restructuring Charge - Non-Operating (Note 1) | — | | | | (85 | | ) | | — | | |

CSX 2018 Form 10-K p.

CSX 2018 Form 10-K p.

CSX 2018 Form 10-K p.

| Net Earnings | $ | 3,309 | | | $ | 5,471 | | | $ | 1,714 | |

| Depreciation | 1,331 | | | | 1,315 | | | | 1,301 | | |

CSX 2018 Form 10-K p.

| Share Repurchases | (72,264 | ) | | (72 | ) | (4,599 | | ) | — | | | — | | | (4,671 | | ) |

| Other | 593 | | | 32 | | 114 | | | — | | | 1 | | | 147 | | |

| December 31, 2018 | 818,180 | | $ | 1,067 | | $ | 12,157 | | $ | (661 | ) | $ | 17 | | $ | 12,580 | |

CSX 2018 Form 10-K p.

CSX 2018 Form 10-K p.

Employees

CSX 2018 Form 10-K p.

| • | Year: |

| – | 2018 contained 365 days (January 1, 2018 through December 31, 2018) |

| – | 2016 contained 371 days (December 26, 2015 through December 30, 2016) |

| • | First quarter: |

| – | 2018 contained 90 days (January 1, 2018 through March 31, 2018) |

| – | 2016 contained 91 days (December 26, 2015 through March 25, 2016) |

| • | Second quarter: |

| – | 2018 contained 91 days (April 1, 2018 through June 30, 2018) |

| – | 2016 contained 91 days (March 26, 2016 through June 24, 2016) |

| • | Third quarter: |

| – | 2018 contained 92 days (July 1, 2018 through September 30, 2018) |

| – | 2016 contained 91 days (June 25, 2016 through September 23, 2016) |

| • | Fourth quarter: |

| – | 2018 contained 92 days (October 1, 2018 through December 31, 2018) |

| | December 30, 2016 | |

| |

| --- |

| Certified Public Accountants |

February 7, 2018

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total Expense | 7,741 | | | | 7,680 | | | | 8,227 | | |

| Operating Income | 3,667 | | | | 3,389 | | | | 3,584 | | |

| Seller Financed Assets | $ | — | | | $ | — | | | $ | 307 | |

| December 26, 2014 | 991,591 | | $ | 1,084 | | $ | 10,734 | | $ | (666 | ) | $ | 24 | | $ | 11,176 | |

| Share Repurchases | (26,359 | ) | | (26 | ) | (778 | | ) | — | | | — | | | (804 | | ) |

| Bond Conversions | 13 | | | — | | — | | | — | | | — | | | — | | |

The 52/53 week calendar allowed for every quarter and year to be of equal duration, 13 weeks and 52 weeks, respectively.

To maintain this calendar, every fifth or sixth year, an extra week was added to the fourth quarter and year, making the reporting periods 14 weeks and 53 weeks, respectively.

In 2016, the fourth quarter and fiscal year included this extra week.

The Company maintains an allowance for doubtful accounts on uncollectible amounts related to freight receivables, government reimbursement receivables, claims for damages and other various receivables.

Uncollectible amounts are charged against the allowance account.

Allowance for doubtful accounts of $26 million and $33 million is included in the consolidated balance sheets as of December 2017 and December 2016, respectively.

Goodwill

Goodwill represents purchase price in excess of fair value and is related to affiliates of CSXT, primarily P&L Transportation, Inc. Goodwill of $63 million is recorded in other long-term assets in the consolidated balance sheets as of December 2017 and December 2016, respectively.

The Company recognizes freight revenue using Free-On-Board Origin pursuant to the Revenue Recognition Topic in the Accounting Standards Codification ("ASC").

Accounting guidance in this topic provides for the allocation of revenue between reporting periods based on relative transit time in each reporting period.

Expenses are recognized as incurred.

The Company regularly updates the estimates described above based on historical experience and current conditions.

All other revenue, such as demurrage, switching and other incidental charges are recorded upon completion of the service.

In May 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") Compensation - Stock Compensation: Scope of Modification Accounting, which provides clarity on what changes to share-based awards are considered substantive and require modification accounting to be applied.

This update is required beginning with first quarter 2018 and should be applied prospectively to award modifications after the effective date.

The Company early adopted this standard update in second quarter 2017 and will apply it prospectively to any award modifications after the adoption date.

The Company does not regularly modify the terms and conditions of share-based awards and does not believe this standard update will have a material effect on its financial condition, results of operations or liquidity.

The Company does not believe this standard update will have a material effect on its financial condition, results of operations or liquidity.

The Company currently records service costs and net benefit costs within labor and fringe expense.

In 2017, pension and other post-retirement benefit charges and pension settlement charges totaling $85 million were included in the restructuring charge.

The retrospective impact of adoption will be an increase in operating income for the prior years presented as the other components were a net expense.

The impact of adoption is projected to be a decrease in operating income for 2018.

In March 2017, the FASB issued ASU Simplifying the Test for Goodwill Impairment, which eliminates step two, the calculation of the implied fair value of goodwill, from the goodwill impairment test.

Impairment will be quantified in step one of the test as the amount by which the carrying amount exceeds the fair value.

This standard update is effective beginning first quarter 2020 and must be applied prospectively.

Companies will need to use more judgment and estimates than under the guidance currently in effect, including estimating the amount of variable revenue to recognize over each identified performance obligation.

Additional disclosures will be required to help users of financial statements understand the nature, amount and timing of revenue and cash flows arising from contracts.

The [removed: Company’s] [added: Company's] number of employees was approximately [removed: 24,000] [added: 22,500] as of December [removed: 2017,] [added: 2018,] which includes approximately [removed: 20,000] [added: 18,500] union employees.

CSX’s principal operating subsidiary, CSX Transportation, Inc. (“CSXT”), provides an important link to the transportation supply chain through its approximately [removed: 21,000] [added: 20,500] route mile rail network, which serves major population centers in 23 states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec.

CSXT is [removed: now] [added: also] responsible for the Company's real estate sales, leasing, acquisition and management and development activities after a merger with CSX Real Property, Inc., a former wholly-owned CSX subsidiary, on July 1, 2017.

Previously, the results of these activities were classified as operating or non-operating based on the nature of the activity and were not material for any [added: prior] periods presented.

CSX [removed: 2017] [added: 2018] Form 10-K p.

During [removed: 2017,] [added: 2018,] the Company's services generated [removed: $11.4] [added: $12.3] billion of revenue and served three primary lines of business: merchandise, coal and intermodal.

| • | The merchandise business shipped 2.7 million carloads [removed: and generated 62] [added: (41] percent of [removed: revenue] [added: volume)] and [removed: 42] [added: generated 61] percent of [removed: volume] [added: revenue] in [removed: 2017.] [added: 2018.] 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 [removed: 855] [added: 887] thousand carloads [removed: and accounted for 18] [added: (14] percent of [removed: revenue] [added: volume)] and [removed: 13] [added: generated 18] percent of [removed: volume] [added: revenue] in [removed: 2017.] [added: 2018.] 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 [removed: accounted for 16] [added: shipped 2.9 million units (45] percent of [removed: revenue] [added: volume)] and [removed: 44] [added: generated 16] percent of [removed: volume] [added: revenue] in [removed: 2017.] [added: 2018.] 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 [removed: 40] [added: 30] 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. |

Other revenue accounted for [removed: 4] [added: 5] percent of the Company’s total revenue in [removed: 2017.][added: 2018.]

In [removed: 2017,] [added: 2018,] the Company [removed: began transitioning] [added: continued transforming] its operating model to scheduled railroading, which is focused on developing and strictly maintaining a scheduled service plan with an emphasis on optimizing assets.

Foote, [removed: a railroad executive] [added: Chief Executive Officer, as well as several other leaders] with extensive scheduled railroading [removed: experience, as Chief Operating Officer.][added: experience.]

[removed: Similarly, the] [added: The] Transportation Security Administration (“TSA”), a component of the Department of Homeland Security, has broad authority over railroad operating practices that may have homeland security implications.

The Company expects to continue incurring [removed: significant] capital costs in connection with the implementation of PTC as well as related ongoing operating expenses.

Total PTC investment through [removed: 2017] [added: 2018] was [removed: $2] [added: $2.2] billion.

For additional information concerning business conducted by the Company during [removed: 2017,] [added: 2018,] see Item 7.

Employees

The Company's leadership team includes James M.

CSX 2018 Form 10-K p.

CSX 2018 Form 10-K p.

In accordance with this Act, the Company completed installation of all PTC hardware by December 31, 2018.

As the Company has met all criteria required by the Act and been approved for an extension by the FRA, the PTC system is now required to be fully operational by December 31, 2020.

CSX remains on track to meet this regulatory requirement.

CSX 2018 Form 10-K p.

CSX CORPORATION

PART I

E.

Hunter Harrison created and refined the model during his decades of railroad leadership experience, successfully implementing it at three different railroads prior to being named CEO of CSX in March 2017.

In October 2017, the Company hired James M.

Upon Mr. Harrison's death in December 2017, Foote was appointed CEO by the Board of Directors to continue driving CSX's transformation under the new operating model.

Additionally, Edmond L.

Harris was named Executive Vice President of Operations in January 2018, further strengthening the scheduled railroading experience of the leadership team.

The EPA is considering regulatory action directed towards the railroad industry governing the disposal of creosote cross-ties and seeking to increase air emission regulations that may impact our operations or increase costs.

This Act requires the installation of all PTC hardware be completed by December 31, 2018, and, assuming certain conditions are met, requires that the PTC system be fully operational by December 31, 2020.

In 2012, the STB announced it would accept comments on a proposal by the National Industrial Transportation League that would require Class I railroads to provide a form of "competitive access" to customers served solely by one railroad.

Under this proposal, CSX would be required to allow a competing railroad to access certain customers that are currently solely served by CSX's network.

In early 2013, shippers, railroads and other parties submitted comments on the proposal, and the STB held a hearing in March 2014 to receive further input from participating parties.

Since the hearing, the STB has taken no further action in the proceeding.

In April 2014, the STB announced it would receive comments to explore its methodology for determining railroad revenue adequacy.

The revenue adequacy standard represents the level of profitability for a healthy carrier.

Shippers, railroads and other parties filed comments in late 2014.

The STB held a hearing in July 2015 to receive further input from participating parties.

CSX participated in a public listening session on October 11, 2017 at the STB in response to service complaints.

During the session, the Company addressed customer concerns and detailed the Company’s service recovery plans at that time.

At the STB's request, CSX is providing additional operating measures on a weekly basis that are available on the Company's website.

In connection with a CSXT train derailment in Mount Carbon, West Virginia in February 2015, the Company [removed: has entered into discussions with the U.S. Department] [added: paid a penalty] of [removed: Justice and] [added: $1.2 million to] the [removed: U.S. Environmental Protection Agency concerning] [added: United States federal government and] a [removed: regulatory] penalty [added: of $1.5 million to the State of West Virginia in January 2019] related to [removed: a] [added: the] release of product into the environment.

Although final resolution of this matter is subject to further discussions and potential litigation, the Company does not believe that the outcome will have a material adverse effect on its financial position, results of operations or liquidity.

For the fiscal year ended December 31, [removed: 2017][added: 2018]

[removed: ][added: ]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

On June 30, [removed: 2017] [added: 2018] (which is the last day of the second quarter and the required date to use), the aggregate market value of the Registrant’s voting stock held by non-affiliates was approximately [removed: $47] [added: $46] billion (based on the close price as reported on the NASDAQ National Market System on such date).

There were [removed: 887,236,080] [added: 815,630,366] shares of Common Stock outstanding on January 31, [removed: 2018] [added: 2019] (the latest practicable date that is closest to the filing date).

Portions of the Registrant’s Definitive Proxy Statement (the “Proxy Statement”) to be filed no later than 120 days after the end of the fiscal year with respect to its [removed: 2018] [added: 2019] annual meeting of shareholders.

CSX [removed: 2017] [added: 2018] Form 10-K p.

| | [1A. Risk [removed: Factors](#sC5555EC654375A46A3A7B5A9C26355BA)] [added: Factors](#s29697A7AD11F5727BE8E5FF3547D7113)] | | | [removed: [8](#sC5555EC654375A46A3A7B5A9C26355BA)] [added: [7](#s29697A7AD11F5727BE8E5FF3547D7113)] |

| | [1B. Unresolved Staff [removed: Comments](#s55131BA5CA1D52AA83B13B98578FCA7E)] [added: Comments](#sCEEB48815DE851AEAF0A753913F93947)] | | | [removed: [12](#s55131BA5CA1D52AA83B13B98578FCA7E)] [added: [11](#sCEEB48815DE851AEAF0A753913F93947)] |

| 3. | [Legal [removed: Proceedings](#s2F2ABE1B75BC57A0840AEE59724D62F0)] [added: Proceedings](#s495F48E583FA572299BBBD369228B74B)] | | | [removed: [17](#s2F2ABE1B75BC57A0840AEE59724D62F0)] [added: [16](#s495F48E583FA572299BBBD369228B74B)] |

| 4. | [Mine Safety [removed: Disclosures](#s7888F1A8B994518BB43122D79E5384C6)] [added: Disclosures](#sA293BAD87E3750C485BC917F31F5D9E3)] | | | [removed: [17](#s7888F1A8B994518BB43122D79E5384C6)] [added: [16](#sA293BAD87E3750C485BC917F31F5D9E3)] |

| | [Executive Officers of the [removed: Registrant](#s1BA39830CD915D378F9D2EF197E98ABC)] [added: Registrant](#s7475F3269E3F5DFEBA06F0D00E6BAE00)] | | | [removed: [18](#s1BA39830CD915D378F9D2EF197E98ABC)] [added: [17](#s7475F3269E3F5DFEBA06F0D00E6BAE00)] |

| 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s2F19F48214B15A479A1E23A68FE46409)] [added: Securities](#s34E673709D8E5378A7B4761917DB2972)] | | | [removed: [20](#s2F19F48214B15A479A1E23A68FE46409)] [added: [19](#s34E673709D8E5378A7B4761917DB2972)] |

| 6. | [Selected Financial [removed: Data](#sB087A2E5F68C5262AA07B59E4B21B16A)] [added: Data](#sB2CD96DCC883542886253A405993BF6D)] | | | [removed: [23](#sB087A2E5F68C5262AA07B59E4B21B16A)] [added: [22](#sB2CD96DCC883542886253A405993BF6D)] |

| 7. | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sAEDDFB1A72BC5C75925C5C677364E3FB)] [added: Operations](#s3F9EB549714A519C969A42B59F4FE0C8)] | | | [removed: [24](#sAEDDFB1A72BC5C75925C5C677364E3FB)] [added: [23](#s3F9EB549714A519C969A42B59F4FE0C8)] |

| | | | · Terms Used by CSX | [removed: [24](#s0D61A383E25457DF9337F44FAA917656)] [added: [23](#s6EAF122D64385E93B23376459CCD8DF2)] |

| | | | · [Results of [removed: Operations](#s323F0D64223E53A988740E6F1C75742C)] [added: Operations](#sB5008AAB406654B2A73B86E46CF1A8DB)] | [removed: [27](#s323F0D64223E53A988740E6F1C75742C)] [added: [25](#sB5008AAB406654B2A73B86E46CF1A8DB)] |

| | | | · [Liquidity and Capital [removed: Resources](#s34322652F5FD56D6A72377641C692A17)] [added: Resources](#s3B67301E55E2581FAF159C24E014987F)] | [removed: [41](#s34322652F5FD56D6A72377641C692A17)] [added: [39](#s3B67301E55E2581FAF159C24E014987F)] |

| | | | · [Schedule of Contractual Obligations and Commercial [removed: Commitments](#s292B7FF419C259F8A5F224C73B8C1086)] [added: Commitments](#sE569BD90011F568D959AAB71B1EE6E8B)] | [removed: [45](#s292B7FF419C259F8A5F224C73B8C1086)] [added: [42](#sE569BD90011F568D959AAB71B1EE6E8B)] |

| | | | · [Off-Balance Sheet [removed: Arrangements](#s9D403C5BB0B6558497F9AE02A9070875)] [added: Arrangements](#sCD38BCD3D6C05F06B502BACFC2C9FC96)] | [removed: [45](#s9D403C5BB0B6558497F9AE02A9070875)] [added: [43](#sCD38BCD3D6C05F06B502BACFC2C9FC96)] |

| | | | · Critical Accounting Estimates | [removed: [46](#s55C12FEC0F4F5B839D6AA9A72EB2BEF1)] [added: [43](#sD9978F797D3354988CCBEAA24C071453)] |

| | | | · Forward-Looking Statements | [removed: [51](#sFA0FA5D377D5537F87BDA219C9DE2A33)] [added: [49](#s1A1FFFC9EC0555C280CB5281EABB0CD5)] |

| 7A. | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s56430343406054C18E203EE51896EC23)] [added: Risk](#s94F417E836D35A89B8DE7933289C551B)] | | | [removed: [53](#s56430343406054C18E203EE51896EC23)] [added: [51](#s94F417E836D35A89B8DE7933289C551B)] |

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| 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s20F35A5DE7A750CB98076557D56140CE)] [added: Disclosure](#sBB12DBA89F9F5EF5BA885615DCE1549B)] | | | [removed: [116](#s20F35A5DE7A750CB98076557D56140CE)] [added: [115](#sBB12DBA89F9F5EF5BA885615DCE1549B)] |

| 9A. | [Controls and [removed: Procedures](#sC2662FB8195D567689566E323A1B73F5)] [added: Procedures](#s7A8E286A014E5DDDB2B789FAD43C95AE)] | | | [removed: [116](#sC2662FB8195D567689566E323A1B73F5)] [added: [115](#s7A8E286A014E5DDDB2B789FAD43C95AE)] |

| 9B. | [Other [removed: Information](#sA5F1BE6E80C15DCEB77BA86F810792D2)] [added: Information](#sC545BDD787D75973BF9DA2AA2C1149E0)] | | | [removed: [119](#sA5F1BE6E80C15DCEB77BA86F810792D2)] [added: [118](#sC545BDD787D75973BF9DA2AA2C1149E0)] |

| 10. | [Directors, Executive [removed: Officers](#s204D46234FD05C69B645438AC9D0E474)] [added: Officers](#sEA90BC19898352B193E1905661B6BE25)] of the Registrant and Corporate Governance | | | [removed: [119](#s204D46234FD05C69B645438AC9D0E474)] [added: [118](#sEA90BC19898352B193E1905661B6BE25)] |

| 11. | [Executive [removed: Compensation](#s0A1FAF557C47566C85DC6446A7E8BFB2)] [added: Compensation](#s4E495D52C9175D88A47AAE24B6365BF5)] | | | [removed: [119](#s0A1FAF557C47566C85DC6446A7E8BFB2)] [added: [118](#s4E495D52C9175D88A47AAE24B6365BF5)] |

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| 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s3A461461406557EF9AFC489C88910E4B)] [added: Independence](#sABEA062A8E795E75A00C61C477167B71)] | | | [removed: [119](#s3A461461406557EF9AFC489C88910E4B)] [added: [118](#sABEA062A8E795E75A00C61C477167B71)] |

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| 15. | [Exhibits, Financial Statement [removed: Schedules](#sC5241C20E959587EB199214B60479CE4)] [added: Schedules](#s8693E8911B45521C9CC491441DFFCF0C)] | | | [removed: [119](#sC5241C20E959587EB199214B60479CE4)] [added: [118](#s8693E8911B45521C9CC491441DFFCF0C)] |

10-K 1 csx-12312018x10k.htm 10-K

| 1. | [Business](#s764CC3C01DC154D2A6491AD920DCF58A) | | | [3](#s764CC3C01DC154D2A6491AD920DCF58A) |

| 2. | [Properties](#s49E38077B49F5CF1821A346A973DF60A) | | | [12](#s49E38077B49F5CF1821A346A973DF60A) |

| | | | · 2018 Highlights | [25](#sA801BE6534415E45A0A9D857CEEB8E58) |

| [Signatures](#s988354722E0B505E8AB6026B10E1B48E) | | | | [123](#s988354722E0B505E8AB6026B10E1B48E) |

CSX 2018 Form 10-K p.

10-K 1 csx-12312017x10k.htm 10-K

| 1. | [Business](#s0A2A014D05115493940C3E6F8B7649E9) | | | [3](#s0A2A014D05115493940C3E6F8B7649E9) |

| 2. | [Properties](#s25F9808EDE08590F9B5A076723713570) | | | [13](#s25F9808EDE08590F9B5A076723713570) |

| | | | · 2017 Highlights | [26](#sCF794BE944795158BE2BE1089EEA4587) |

| [Signatures](#sBC2E242C80B15F0A9B5426993E8A31BD) | | | | [124](#sBC2E242C80B15F0A9B5426993E8A31BD) |

CSX [removed: 2017] [added: 2018] Form 10-K p.

11

12

Serving 23 states, the District of Columbia, and the Canadian provinces of Ontario and Quebec, the CSXT rail network serves, among other markets, New York, Philadelphia and Boston in the Northeast and Mid-Atlantic, the southeast markets of Atlanta, Miami and New Orleans, and the midwestern [removed: cities] [added: markets] of St. Louis, Memphis and Chicago.

Total track miles, which reflect the size of CSXT’s network that connects markets, customers and western railroads, are greater than CSXT’s approximately [removed: 21,000] [added: 20,500] route miles.

At December [removed: 2017,] [added: 2018,] the breakdown of track miles was as follows:

| Mainline track | [removed: 26,500] [added: 26,286] | |

| Terminals and switching yards | [removed: 9,348] [added: 9,350] | |

| Passing sidings and turnouts | [removed: 920] [added: 921] | |

[removed: In 2017,] [added: As part of the transition to scheduled railroading,] CSX converted a number of hump yards to flat switching operations which allows for less intermediate processing and the opportunity to improve transit time.

The Company’s largest yards and terminals based on [removed: 2017] [added: 2018] volume (number of railcars or intermodal containers processed) are listed below.

| [removed: Chicago, IL -] Bedford Park Intermodal Terminal [added: - Chicago, IL] |

CSX [removed: 2017] [added: 2018] Form 10-K p.

[removed: ][added: ]

At December [removed: 2017,] [added: 2018,] CSXT’s fleet of owned locomotives consisted of the following types:

| Auxiliary Units | [removed: 208] [added: 204] | | | 5 | % | | 24 | |

| Total | [removed: 4,166] [added: 3,898] | | | 100 | % | | [removed: 20] [added: 21] | |

Examples of these include railcars owned by other railroads (which are utilized by CSXT), shipper-furnished or private cars (which are generally used only in that shipper’s service), multi-level railcars used to transport automobiles (which are shared between railroads) and [removed: doublestack] [added: double-stack] railcars, or well cars (which are industry pooled), that allow for two intermodal containers to be loaded one above the other.

At December [removed: 2017,] [added: 2018,] the Company’s owned and long-term leased equipment consisted of the following:

| Multi-level flat cars | [removed: 11,686] [added: 11,476] | | | [removed: 19] [added: 22] | % |

| Open-top hoppers | [removed: 10,298] [added: 8,273] | | | [removed: 17] [added: 16] | % |

| Covered hoppers | [removed: 9,623] [added: 8,570] | | | 16 | % |

| Box cars | [removed: 6,374] [added: 4,873] | | | [removed: 11] [added: 9] | % |

| Flat cars | [removed: 624] [added: 533] | | | 1 | % |

| Other cars | [removed: 337] [added: 266] | | | — | % |

| Subtotal freight cars | [removed: 60,151] [added: 53,379] | | | 100 | % |

| Total equipment | [removed: 78,239] [added: 71,430] | | | | |

| Total | 36,557 | |

| Walbridge, OH (Toledo) |

| Rocky Mount, NC |

| Chicago, IL |

12

Also included on the map, CSX Operating Agreement indicates areas within which CSX can operate through trackage rights beyond the CSX network.

CSX 2018 Form 10-K p.

CSX 2018 Form 10-K p.

At December 2018, CSXT owned nearly 3,900 locomotives.

| Freight | 3,440 | | | 88 | % | | 20 | |

| Switching | 254 | | | 7 | % | | 37 | |

| Gondolas | 19,388 | | | 36 | % |

| Containers | 18,051 | | | | |

CSX 2018 Form 10-K p.

| Total | 36,768 | |

| North Baltimore, OH - Northwest Ohio Intermodal Terminal |

| Willard, OH |

| Hamlet, NC |

At December 2017, CSXT owned more than 4,000 locomotives.

| Freight | 3,659 | | | 88 | % | | 20 | |

| Switching | 299 | | | 7 | % | | 37 | |

| Gondolas | 21,209 | | | 35 | % |

| Containers | 18,088 | | | | |

16

CSX [removed: 2017] [added: 2018] Form 10-K p.

| James M. Foote, [removed: 64] [added: 65] President and Chief Executive Officer | 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. |

| Frank A. Lonegro, [removed: 49] [added: 50] Executive Vice President and Chief Financial Officer | 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 [removed: 17] [added: 18] years with CSX, Mr. Lonegro has also served as Vice President [removed: Internal Audit,] [added: Service Design,] President of CSX Technology, Vice President [removed: Mechanical] [added: Mechanical,] and Vice President [removed: 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.] [added: Internal Audit.] |

| Edmond L. Harris, [removed: 68] [added: 69] Executive Vice President of Operations | 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 [removed: advisor] [added: adviser] 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. |

| Nathan D. Goldman, [removed: 60] [added: 61] Executive Vice President and Chief Legal Officer, Corporate Secretary | Goldman has served as Executive Vice President and Chief Legal Officer, and Corporate Secretary of CSX since October 2017. In this role he directs the company’s legal affairs, government relations, risk management, public safety, environmental, and audit functions. During his [removed: nearly] 15 years with the Company, Mr. Goldman has previously served as Vice President of Risk Compliance and General Counsel and has overseen work in compliance, risk management and safety programs. |

| Mark K. Wallace, [removed: 48] [added: 49] Executive Vice President [added: of Sales] and [removed: Chief Administrative Officer] [added: Marketing] | Wallace has served as Executive Vice President [added: of Sales] and [removed: Chief Administrative Officer] [added: Marketing] since [removed: January 2018, after having] [added: July 2018. In his current role, Mr. Wallace is responsible for the commercial organization, as well as real estate and facilities functions. He] joined the Company in March 2017 [added: and previously served] as Executive Vice President [added: and Chief Administrative Officer and Executive Vice President] of Corporate Affairs and Chief of Staff to the CEO. [removed: In his current role, Mr. Wallace is responsible for human resources, labor relations, information technology, corporate communications, investor relations and the real estate and facilities functions.] Prior to joining CSX, he served as the Vice President of Corporate Affairs at Canadian Pacific Railway Limited with responsibility for the corporate communications and public affairs, investor relations, facilities and real estate functions. Prior to his time at Canadian Pacific, Mr. Wallace spent more than 15 years in various senior management positions with Canadian National Railway Company. |

| [removed: Andrew L. Glassman, 48] [added: Angela C. Williams, 44] Vice President and Controller | [removed: Glassman] [added: Williams] has served as Vice President and Controller of CSX since [removed: May 2017. He] [added: March 2018. She] is responsible for financial and regulatory reporting, [removed: tax,] freight billing and collections, payroll, accounts payable and various other accounting processes. During [removed: his 14-year tenure] [added: her 15 years] with the Company, [removed: Mr. Glassman] [added: she] previously served as [removed: Vice President of Strategic Planning, Vice President of Commercial Finance, Vice President of Operations Finance,] Assistant Vice President [removed: of Intermodal Marketing and] [added: -] Assistant [removed: Vice President of Financial Planning] [added: Controller] and [removed: Analysis.] [added: in other various accounting roles. Prior to joining CSX, she held various accounting and auditing positions for over 6 years. Ms. Williams is a Certified Public Accountant.] |

16

CSX 2018 Form 10-K p.

| Diana B. Sorfleet, 54 Executive Vice President and Chief Administrative Officer | Sorfleet was named Executive Vice President and Chief Administrative Officer in July 2018. In this role, her responsibilities include human resources, labor relations, people systems and analytics, information technology, total rewards and aviation. During her 7 years with the Company, Ms. Sorfleet has previously served as Chief Human Resources Officer. Prior to joining CSX, she worked in human resources for 20 years. |

CSX 2018 Form 10-K p.

19

A total of 1.8 billion shares of common stock are authorized, of which [removed: 889,851,090] [added: 818,179,988] shares were outstanding as of December 31, [removed: 2017.][added: 2018.]

At January 31, [removed: 2018,] [added: 2019,] the latest practicable date that is closest to the filing date, there were [removed: 27,624] [added: 26,281] common stock shareholders of record.

The weighted average of common shares outstanding, which was used in the calculation of diluted earnings per share, was [removed: 914] [added: 861] million as of December 31, [removed: 2017.][added: 2018.]

CSX [removed: 2017] [added: 2018] Form 10-K p.

The cumulative shareholder returns, assuming reinvestment of dividends, on $100 invested at December 31, [removed: 2012] [added: 2013] are illustrated on the graph below.

[removed: ][added: ]

CSX purchases its own shares for two primary reasons: (1) to further its goals under its share repurchase [removed: program] [added: programs] and (2) to fund the Company’s contribution required to be paid in CSX common stock under a 401(k) plan that covers certain union employees.

During [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] CSX repurchased the following shares:

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Shares Repurchased (Units in Millions) | [removed: 39] [added: 72] | | | | [removed: 38] [added: 39] | | | | [removed: 26] [added: 38] | | |

| Cost of Shares (Dollars in Millions) | $ | [removed: 1,970] [added: 4,671] | | | $ | [removed: 1,056] [added: 1,970] | | | $ | [removed: 804] [added: 1,056] | |

Share repurchase activity of [removed: $207 million] [added: $1.9 billion] for the fourth quarter [removed: 2017] [added: 2018] was as follows:

(a) The difference of [removed: 94,859] [added: 20,860] shares between the "Total Number of Shares Purchased" and the "Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs" for the quarter represents shares purchased to fund the Company's contribution to a 401(k) plan that covers certain union employees.

| 2018 | | | | | | | | | | | | | | | | | | | |

| Dividends | $ | 0.22 | | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.88 | |

| High | $ | 60.04 | | | $ | 67.69 | | | $ | 76.24 | | | $ | 75.66 | | | $ | 76.24 | |

| Low | $ | 48.43 | | | $ | 53.53 | | | $ | 63.23 | | | $ | 58.47 | | | $ | 48.43 | |

19

CSX 2018 Form 10-K p.

In February 2018, the Company announced an increase to the $1.5 billion share repurchase program first announced in October 2017, bringing the total authorized to $5 billion.

This program was completed on January 16, 2019.

Also on January 16, 2019, the Company announced a new $5 billion 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.

| Average Price Paid per Share | $ | 64.64 | | | $ | 50.80 | | | $ | 27.52 | |

During 2018, the Company entered into four accelerated share repurchase agreements to repurchase shares of the Company’s common stock.

Under these agreements, the Company paid $1.5 billion and received approximately 22 million total shares, which are included in the table above.

| Beginning Balance | | | | | | | | | | $ | 1,983,650,599 | |

| October 1 - October 31, 2018 | 11,715,179 | | | $ | 70.89 | | 11,694,469 | | | | 1,154,480,380 | |

| November 1 - November 30, 2018 | 9,619,372 | | | | 69.43 | | 9,619,222 | | | | 486,661,734 | |

| December 1 - December 31, 2018 | 5,257,087 | | | | 68.01 | | 5,257,087 | | | | 129,128,793 | |

| Ending Balance | 26,591,638 | | | $ | 69.79 | | 26,570,778 | | | $ | 129,128,793 | |

CSX 2018 Form 10-K p.

| 2016 | | | | | | | | | | | | | | | | | | | |

| Dividends | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.72 | |

| High | $ | 27.27 | | | $ | 27.97 | | | $ | 30.11 | | | $ | 37.42 | | | $ | 37.42 | |

| Low | $ | 21.33 | | | $ | 24.36 | | | $ | 24.43 | | | $ | 29.39 | | | $ | 21.33 | |

Share repurchases under the $2 billion program announced in April 2015 were completed in April 2017.

The Company subsequently announced a $1 billion share repurchase program in April 2017, with additional authority of $500 million added in July 2017.

Repurchases under that program were completed on October 2, 2017, and the Company announced a new $1.5 billion share repurchase program on October 25, 2017.

| Beginning Balance | | | | | | | | | | $ | 7,696,097 | |

| October 1 - October 31, 2017 | 165,307 | | | $ | 53.59 | | 142,982 | | | | 1,500,000,000 | |

| November 1 - November 30, 2017 | 1,560,559 | | | | 50.17 | | 1,560,559 | | | | 1,421,712,580 | |

| December 1 - December 31, 2017 | 2,261,847 | | | | 55.64 | | 2,189,313 | | | | 1,299,953,624 | |

| Ending Balance | 3,987,713 | | | $ | 53.41 | | 3,892,854 | | | $ | 1,299,953,624 | |

22

| (Dollars and Shares in Millions, Except Per Share Amounts) | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| | Revenue | $ | [removed: 11,408] [added: 12,250] | | | $ | [removed: 11,069] [added: 11,408] | | | $ | [removed: 11,811] [added: 11,069] | | | $ | [removed: 12,669] [added: 11,811] | | | $ | [removed: 12,026] [added: 12,669] | |

| Net Earnings from Continuing [removed: Operations(b)] [added: Operations] | | [removed: 5,471] [added: $] | [added: 3,309] | | | [removed: 1,714] [added: $] | [added: 5,471] | | | [removed: 1,968] [added: $] | [added: 1,714] | | | [removed: 1,927] [added: $] | [added: 1,968] | | | [removed: 1,864] [added: $] | [added: 1,927] | |

| Adjusted Net Earnings from Continuing Operations(a) | | [removed: 2,097] [added: 3,309] | | | | [removed: 1,714] [added: 2,097] | | | | [removed: 1,968] [added: 1,714] | | | | [removed: 1,927] [added: 1,968] | | | | [removed: 1,864] [added: 1,927] | | |

| | From Continuing Operations, [removed: Basic(b)] [added: Basic] | $ | [removed: 6.01] [added: 3.86] | | | $ | [removed: 1.81] [added: 6.01] | | | $ | [removed: 2.00] [added: 1.81] | | | $ | [removed: 1.93] [added: 2.00] | | | $ | [removed: 1.83] [added: 1.93] | |

| | From Continuing Operations, Assuming [removed: Dilution(b)] [added: Dilution] | [removed: 5.99] [added: 3.84] | | | | [removed: 1.81] [added: 5.99] | | | | [removed: 2.00] [added: 1.81] | | | | [removed: 1.92] [added: 2.00] | | | | [removed: 1.83] [added: 1.92] | | |

| | Adjusted From Continuing Operations, Assuming Dilution(a) | [removed: 2.30] [added: 3.84] | | | | [removed: 1.81] [added: 2.30] | | | | [removed: 2.00] [added: 1.81] | | | | [removed: 1.92] [added: 2.00] | | | | [removed: 1.83] [added: 1.92] | | |

| | Basic | [removed: 911] [added: 857] | | | | [removed: 947] [added: 911] | | | | [removed: 983] [added: 947] | | | | [removed: 1,001] [added: 983] | | | | [removed: 1,019] [added: 1,001] | | |

| | Assuming Dilution | [removed: 914] [added: 861] | | | | [removed: 948] [added: 914] | | | | [removed: 984] [added: 948] | | | | [removed: 1,002] [added: 984] | | | | [removed: 1,019] [added: 1,002] | | |

| | Cash, Cash Equivalents and Short-term Investments | $ | [removed: 419] [added: 1,111] | | | $ | [removed: 1,020] [added: 419] | | | $ | [removed: 1,438] [added: 1,020] | | | $ | [removed: 961] [added: 1,438] | | | $ | [removed: 1,079] [added: 961] | |

| | Total Assets | [removed: 35,739] [added: 36,729] | | | | [removed: 35,414] [added: 35,739] | | | | [removed: 34,745] [added: 35,414] | | | | [removed: 32,747] [added: 34,745] | | | | [removed: 31,462] [added: 32,747] | | |

| | Long-term Debt | [removed: 11,790] [added: 14,739] | | | | [removed: 10,962] [added: 11,790] | | | | [removed: 10,515] [added: 10,962] | | | | [removed: 9,349] [added: 10,515] | | | | [removed: 8,857] [added: 9,349] | | |

| | Shareholders' Equity | [removed: 14,721] [added: 12,580] | | | | [removed: 11,694] [added: 14,721] | | | | [removed: 11,668] [added: 11,694] | | | | [removed: 11,176] [added: 11,668] | | | | [removed: 10,504] [added: 11,176] | | |

| | Dividend Per Share | $ | [removed: 0.78] [added: 0.88] | | | $ | [removed: 0.72] [added: 0.78] | | | $ | [removed: 0.70] [added: 0.72] | | | $ | [removed: 0.63] [added: 0.70] | | | $ | [removed: 0.59] [added: 0.63] | |

| | Capital Expenditures | $ | [removed: 2,040] [added: 1,745] | | | $ | [removed: 2,705] [added: 2,040] | | | $ | [removed: 2,562] [added: 2,705] | | | $ | [removed: 2,449] [added: 2,562] | | | $ | [removed: 2,313] [added: 2,449] | |

| | Employees -- Annual Averages (estimated) | [removed: 25,230] [added: 22,901] | | | | [removed: 27,350] [added: 25,230] | | | | [removed: 31,285] [added: 27,350] | | | | [removed: 31,511] [added: 31,285] | | | | [removed: 31,254] [added: 31,511] | | |

| | Employees -- Year-end Count (estimated) | [removed: 24,006] [added: 22,475] | | | | [removed: 26,628] [added: 24,006] | | | | [removed: 29,410] [added: 26,628] | | | | [removed: 32,287] [added: 29,410] | | | | [removed: 31,413] [added: 32,287] | | |

[removed: (a) CSX’s] [added: These] non-GAAP measures are unlikely to be comparable to similar measures presented by other companies.

CSX [removed: 2017] [added: 2018] Form 10-K p.

| | Expense | 7,381 | | | | 7,688 | | | | 7,656 | | | | 8,183 | | | | 8,991 | | |

| | Operating Income | $ | 4,869 | | | $ | 3,720 | | | $ | 3,413 | | | $ | 3,628 | | | $ | 3,678 | |

| | Adjusted Operating Income(a) | 4,869 | | | | 3,818 | | | | 3,413 | | | | 3,628 | | | | 3,678 | | |

| | Operating Ratio | 60.3 | | % | | 67.4 | | % | | 69.2 | | % | | 69.3 | | % | | 71.0 | | % |

| | Adjusted Operating Ratio(a) | 60.3 | | % | | 66.5 | | % | | 69.2 | | % | | 69.3 | | % | | 71.0 | | % |

(a) Adjusted operating income, adjusted net earnings and adjusted earnings per share assuming dilution are non-GAAP measures that exclude the impacts of tax reform and restructuring activities in 2017.

22

| | 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 | |

| | 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 | | % |

(b) These results include a $3.6 billion, or $3.91 per share, net tax reform benefit.

See further discussion in Note 11, Income Taxes.

23

| As of December [removed: 30, 2016] [added: 31, 2018] | CSX Corporation | | | | CSX Transportation | | | | Eliminations and Other | | | | CSX Consolidated | | |

| Short-term Investments | [removed: 415] [added: —] | | | | — | | | | [removed: 2] [added: 18] | | | | [removed: 417] [added: 18] | | |

| Materials and Supplies | — | | | | [removed: 407] [added: 263] | | | | — | | | | [removed: 407] [added: 263] | | |

| Other Current Assets | [removed: —] [added: 63] | | | | [removed: 106] [added: 104] | | | | [removed: 16] [added: 14] | | | | [removed: 122] [added: 181] | | |

| Investments in Conrail | — | | | | — | | | | [removed: 840] [added: 943] | | | | [removed: 840] [added: 943] | | |

| Affiliates and Other Companies | (39 | | ) | | [removed: 643] [added: 859] | | | | [removed: 15] [added: 16] | | | | [removed: 619] [added: 836] | | |

| Investment in Consolidated Subsidiaries | [removed: 24,179] [added: 32,033] | | | | — | | | | [removed: (24,179] [added: (32,033] | | ) | | — | | |

| Other Long-term Assets | 2 | | | | [removed: 607] [added: 598] | | | | [removed: (291] [added: (213] | | ) | | [removed: 318] [added: 387] | | |

| Labor and Fringe Benefits Payable | [removed: 40] [added: 41] | | | | 440 | | | | [removed: 65] [added: 69] | | | | [removed: 545] [added: 550] | | |

| Casualty, Environmental and Other Reserves | — | | | | [removed: 102] [added: 99] | | | | [removed: 13] [added: 14] | | | | [removed: 115] [added: 113] | | |

| Current Maturities of Long-term Debt | [removed: 313] [added: —] | | | | [removed: 19] [added: 18] | | | | [removed: (1] [added: —] | | [removed: )] | | [removed: 331] [added: 18] | | |

| Income and Other Taxes Payable | [removed: (346] [added: (290] | | ) | | [removed: 459] [added: 392] | | | | [removed: 16] [added: 4] | | | | [removed: 129] [added: 106] | | |

| Other Current Liabilities | [removed: —] [added: 11] | | | | [removed: 112] [added: 162] | | | | [removed: 2] [added: 6] | | | | [removed: 114] [added: 179] | | |

| Casualty, Environmental and Other Reserves | — | | | | [removed: 208] [added: 95] | | | | [removed: 51] [added: 13] | | | | [removed: 259] [added: 108] | | |

| Long-term Debt [added: Repaid] | [removed: 10,203] [added: —] | | | | [removed: 759] [added: (19] | | [added: )] | | — | | | | [removed: 10,962] [added: (19] | | [added: )] |

| Common Stock, $1 Par Value | [removed: 928] [added: 818] | | | | 181 | | | | (181 | | ) | | [removed: 928] [added: 818] | | |

| Accumulated Other Comprehensive Loss | [removed: (640] [added: (661] | | ) | | [removed: (19] [added: 53] | | [removed: )] | | [removed: 19] [added: (53] | | [added: )] | | [removed: (640] [added: (661] | | ) |

| Noncontrolling Minority Interest | — | | | | [removed: 15] [added: 17] | | | | — | | | | [removed: 15] [added: 17] | | |

| [removed: Total Liabilities and Shareholders' Equity] [added: LIABILITIES AND SHAREHOLDERS' EQUITY] | [removed: $] | [removed: 26,021] | | | [removed: $] | [removed: 34,494] | | | [removed: $] | [removed: (25,101] | [removed: )] | | [removed: $] | [removed: 35,414] | |

CSX [removed: 2017] [added: 2018] Form 10-K p.

| Net Cash [removed: Provided by] (Used in) [added: Provided by] Financing Activities | (2,164 | | ) | | (615 | | ) | | 600 | | | | (2,179 | | ) |

| Net Cash [removed: Provided by] (Used in) [added: Provided by] Financing Activities | (947 | | ) | | (922 | | ) | | 601 | | | | (1,268 | | ) |

| Fiscal Year Ended December [removed: 2015] [added: 2018] | CSX Corporation | | | | CSX Transportation | | | | Eliminations and Other | | | | CSX Consolidated | | |

| Net Cash Provided by (Used in) Operating Activities | $ | [removed: 983] [added: 3,182] | | | $ | [removed: 2,974] [added: 1,657] | | | $ | [removed: (587] [added: (198] | ) | | $ | [removed: 3,370] [added: 4,641] | |

| Purchases of Short-term Investments | [removed: (1,734] [added: (734] | | ) | | — | | | | [removed: (5] [added: (2] | | ) | | [removed: (1,739] [added: (736] | | ) |

| Proceeds from Sales of Short-term Investments | [removed: 1,175] [added: 485] | | | | — | | | | [removed: 50] [added: 20] | | | | [removed: 1,225] [added: 505] | | |

| Proceeds from Property Dispositions | — | | | | [removed: 147] [added: 319] | | | | — | | | | [removed: 147] [added: 319] | | |

| Other Investing Activities | [removed: (10] [added: (4] | | ) | | [removed: 132] [added: 638] | | | | [removed: (85] [added: (661] | | ) | | [removed: 37] [added: (27] | | [added: )] |

| Long-term Debt Issued | [removed: 1,200] [added: 3,000] | | | | — | | | | — | | | | [removed: 1,200] [added: 3,000] | | |

| Shares Repurchased | [removed: (804] [added: (4,671] | | ) | | — | | | | — | | | | [removed: (804] [added: (4,671] | | ) |

| Other Financing Activities | [removed: 10] [added: (65] | | [added: )] | | [removed: 1] [added: (6] | | [added: )] | | [removed: (11] [added: 12] | | [removed: )] | | [removed: —] [added: (59] | | [added: )] |

| Net Cash [removed: Provided by] (Used in) [added: Provided by] Financing Activities | [removed: (480] [added: (2,487] | | ) | | [removed: (778] [added: (1,025] | | ) | | [removed: 739] [added: 1,012] | | | | [removed: (519] [added: (2,500] | | ) |

| Net [removed: (Decrease)] Increase in Cash and Cash Equivalents | [removed: (66] [added: 442] | | [removed: )] | | [removed: 75] [added: 9] | | | | [removed: (50] [added: 6] | | [removed: )] | | [removed: (41] [added: 457] | | [removed: )] |

| Cash and Cash Equivalents at Beginning of Period | [removed: 510] [added: 274] | | | | [removed: 100] [added: 121] | | | | [removed: 59] [added: 6] | | | | [removed: 669] [added: 401] | | |

| Cash and Cash Equivalents at End of Period | $ | [removed: 444] [added: 716] | | | $ | [removed: 175] [added: 130] | | | $ | [removed: 9] [added: 12] | | | $ | [removed: 628] [added: 858] | |

NOTE 17.

| Current Assets: | | | | | | | | | | | | | | | |

| Cash and Cash Equivalents | $ | 716 | | | $ | 130 | | | $ | 12 | | | $ | 858 | |

| Short-term Investments | 250 | | | | — | | | | 3 | | | | 253 | | |

| Accounts Receivable - Net | 1 | | | | 1,003 | | | | 6 | | | | 1,010 | | |

| Receivable from Affiliates | 1,020 | | | | 5,214 | | | | (6,234 | | ) | | — | | |

| Total Current Assets | 2,050 | | | | 6,714 | | | | (6,199 | | ) | | 2,565 | | |

| Properties | 1 | | | | 41,897 | | | | 2,907 | | | | 44,805 | | |

| Accumulated Depreciation | (1 | | ) | | (11,194 | | ) | | (1,612 | | ) | | (12,807 | | ) |

| Properties - Net | — | | | | 30,703 | | | | 1,295 | | | | 31,998 | | |

| Total Assets | $ | 34,046 | | | $ | 38,874 | | | $ | (36,191 | ) | | $ | 36,729 | |

| Current Liabilities: | | | | | | | | | | | | | | | |

| Accounts Payable | $ | 132 | | | $ | 763 | | | $ | 54 | | | $ | 949 | |

| Payable to Affiliates | 6,973 | | | | 633 | | | | (7,606 | | ) | | — | | |

| Total Current Liabilities | 6,867 | | | | 2,507 | | | | (7,459 | | ) | | 1,915 | | |

| Casualty, Environmental and Other Reserves | — | | | | 176 | | | | 35 | | | | 211 | | |

| Long-term Debt | 14,029 | | | | 710 | | | | — | | | | 14,739 | | |

| Deferred Income Taxes - Net | (134 | | ) | | 6,601 | | | | 223 | | | | 6,690 | | |

| Other Long-term Liabilities | 721 | | | | 211 | | | | (338 | | ) | | 594 | | |

| Total Liabilities | 21,483 | | | | 10,205 | | | | (7,539 | | ) | | 24,149 | | |

| Shareholders' Equity: | | | | | | | | | | | | | | | |

| Other Capital | 249 | | | | 5,096 | | | | (5,096 | | ) | | 249 | | |

| Retained Earnings | 12,157 | | | | 23,322 | | | | (23,322 | | ) | | 12,157 | | |

| Total Shareholders' Equity | 12,563 | | | | 28,669 | | | | (28,652 | | ) | | 12,580 | | |

| Total Liabilities and Shareholders' Equity | $ | 34,046 | | | $ | 38,874 | | | $ | (36,191 | ) | | $ | 36,729 | |

110

NOTE 17.

Consolidating Balance Sheets

| As of December 31, 2017 | CSX Corporation | | | | CSX Transportation | | | | Eliminations and Other | | | | CSX Consolidated | | |

| ASSETS | | | | | | | | | | | | | | | |

| Cash and Cash Equivalents | $ | 274 | | | $ | 121 | | | $ | 6 | | | $ | 401 | |

| 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 | | |

NOTE 16.

| Cash and Cash Equivalents | $ | 305 | | | $ | 281 | | | $ | 17 | | | $ | 603 | |

| Accounts Receivable - Net | 2 | | | | 215 | | | | 721 | | | | 938 | | |

| Receivable from Affiliates | 1,157 | | | | 2,351 | | | | (3,508 | | ) | | — | | |

| 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 | | |

| Total Assets | $ | 26,021 | | | $ | 34,494 | | | $ | (25,101 | ) | | $ | 35,414 | |

| Accounts Payable | $ | 95 | | | $ | 678 | | | $ | 33 | | | $ | 806 | |

| Payable to Affiliates | 3,457 | | | | 500 | | | | (3,957 | | ) | | — | | |

| Total Current Liabilities | 3,559 | | | | 2,310 | | | | (3,829 | | ) | | 2,040 | | |

| 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 | | |

| Other Capital | 138 | | | | 5,095 | | | | (5,095 | | ) | | 138 | | |

| Retained Earnings | 11,253 | | | | 15,994 | | | | (15,994 | | ) | | 11,253 | | |

| Total Shareholders' Equity | 11,679 | | | | 21,266 | | | | (21,251 | | ) | | 11,694 | | |

Certain prior year data has been reclassified to conform to the current presentation.

| Property Additions | — | | | | (2,400 | | ) | | (162 | | ) | | (2,562 | | ) |

| Net Cash Provided by (Used in) Investing Activities | (569 | | ) | | (2,121 | | ) | | (202 | | ) | | (2,892 | | ) |

| Long-term Debt Repaid | (200 | | ) | | (29 | | ) | | — | | | | (229 | | ) |

| Dividends Paid | (686 | | ) | | (750 | | ) | | 750 | | | | (686 | | ) |

115

As of December 31, [removed: 2017,] [added: 2018,] under the supervision and with the participation of CSX's Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures.

Based on that evaluation, the CEO and CFO concluded that, as of December 31, [removed: 2017,] [added: 2018,] the Company's disclosure controls and procedures were effective at the reasonable assurance level in timely alerting them to material information required to be included in CSX’s periodic SEC reports.

Under the supervision and with the participation of the management of CSX, including CSX’s CEO and CFO, CSX conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2017] [added: 2018] based on the 2013 framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission] [added: Commission,] which is also referred to as COSO.

Based on that evaluation, management of CSX concluded that the Company’s internal control over financial reporting was effective as of December 31, [removed: 2017.][added: 2018.]

The Company’s internal control over financial reporting as of December 31, [removed: 2017] [added: 2018] has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included elsewhere herein.

CSX [removed: 2017] [added: 2018] Form 10-K p.

We have audited CSX Corporation’s internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, CSX Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of CSX Corporation as of December 31, [removed: 2017] [added: 2018] and [removed: December 30, 2016,] [added: 2017,] and the related consolidated statements of income, comprehensive income, cash flows, and changes in shareholders’ equity for each of the three [removed: fiscal] years in the period ended December 31, [removed: 2017,] [added: 2018,] and the related notes [removed: (collectively referred to as the “financial statements”)] of the Company and our report dated February [removed: 7, 2018] [added: 6, 2019] expressed an unqualified opinion thereon.

115

CSX 2018 Form 10-K p.

February 6, 2019

CSX 2018 Form 10-K p.

Certified Public Accountants

February 7, 2018

118

The Proxy Statement will be filed not later than April 30, [removed: 2018] [added: 2019] with respect to [removed: its 2018] [added: the 2019] annual meeting of shareholders, except for the information regarding the executive officers of the Company.

PART IV

| See Index to Consolidated Financial Statements on page | [removed: [54](#s67CAFE238B095615AF0DE5FEE5070B2E).] [added: [52](#sB6C059D61AC05E6DBF3C6CEA914C4421).] |

CSX [removed: 2017] [added: 2018] Form 10-K p.

| [removed: 10.8] [added: 10.7] | [Transaction Agreement, dated as of June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation and CRR Holdings LLC, with certain schedules thereto](http://www.sec.gov/Archives/edgar/data/277948/0000277948-97-000017.txt) | July 8, 1997, Exhibit 10, Form 8-K |

| [removed: 10.9] [added: 10.8] | [Amendment No. 1, dated as of August 22, 1998, to the Transaction Agreement, dated as of June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation and CRR Holdings, LLC](http://www.sec.gov/Archives/edgar/data/277948/000027794899000008/0000277948-99-000008.txt) | June 11, 1999, Exhibit 10.1, Form 8-K |

| [removed: 10.10] [added: 10.9] | [Amendment No. 2, dated as of June 1, 1999, to the Transaction Agreement, dated as of June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation and CRR Holdings, LLC](http://www.sec.gov/Archives/edgar/data/277948/000027794899000008/0000277948-99-000008.txt) | June 11, 1999, Exhibit 10.2, Form 8-K |

| [removed: 10.11] [added: 10.10] | [Amendment No. 3, dated as of August 1, 2000, to the Transaction Agreement by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation, and CRR Holdings, LLC.](http://www.sec.gov/Archives/edgar/data/277948/000102140801001422/0001021408-01-001422-0008.txt) | March 1, 2001, Exhibit 10.34, Form 10-K |

| [removed: 10.12] [added: 10.11] | [Amendment No. 4, dated and effective as of June 1, 1999, and executed in April 2004, to the Transaction Agreement, dated as of June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation and CRR Holdings, LLC](http://www.sec.gov/Archives/edgar/data/277948/000119312504134444/dex991.htm) | August 6, 2004, Exhibit 99.1, Form 8-K |

| [removed: 10.13] [added: 10.12] | [Amendment No. 5, dated as of August 27, 2004, to the Transaction Agreement, dated as of June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation and CRR Holdings LLC](http://www.sec.gov/Archives/edgar/data/88128/000095012304010597/y01612bexv10w1.txt) | September 2, 2004, Exhibit 10.1, Form 8-K |

| [removed: 10.14] [added: 10.13] | [Shared Assets Area Operating Agreement for Detroit, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc. and Norfolk Southern Railway Corporation, with exhibit thereto](http://www.sec.gov/Archives/edgar/data/277948/000027794899000008/0000277948-99-000008.txt) | June 11, 1999, Exhibit 10.6, Form 8-K, |

| [removed: 10.15] [added: 10.14] | [Shared Assets Area Operating Agreement for North Jersey, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc. and Norfolk Southern Railway Company, with exhibit thereto](http://www.sec.gov/Archives/edgar/data/277948/000027794899000008/0000277948-99-000008.txt) | June 11, 1999, Exhibit 10.4, Form 8-K |

| [removed: 10.16] [added: 10.15] | [Shared Assets Area Operating Agreement for South Jersey/Philadelphia, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc. and Norfolk Southern Railway Company, with exhibit thereto](http://www.sec.gov/Archives/edgar/data/277948/000027794899000008/0000277948-99-000008.txt) | June 11, 1999, Exhibit 10.5, Form 8-K |

| [removed: 10.17] [added: 10.16] | [Monongahela Usage Agreement, dated as of June 1, 1999, by and among CSX Transportation, Inc., Norfolk Southern Railway Company, Pennsylvania Lines LLC and New York Central Lines LLC, with exhibit thereto](http://www.sec.gov/Archives/edgar/data/277948/000027794899000008/0000277948-99-000008.txt) | June 11, 1999, Exhibit 10.7, Form 8-K |

| [removed: 10.18] [added: 10.17] | [Tax Allocation Agreement, dated as of August 27, 2004, by and among CSX Corporation, Norfolk Southern Corporation, Green Acquisition Corp., Conrail Inc., Consolidated Rail Corporation, New York Central Lines LLC and Pennsylvania Lines LLC](http://www.sec.gov/Archives/edgar/data/88128/000095012304010597/y01612bexv10w2.txt) | September 2, 2004, Exhibit 10.2, Form 8-K |

| [removed: 10.19] [added: 10.18] | [Revolving Credit Agreement, dated May 21, 2015](http://www.sec.gov/Archives/edgar/data/277948/000095010315004202/dp56544_ex1001.htm) | May 28, 2015, Exhibit 10.1, Form 8-K |

| 10.20 | [Long-term Incentive Plan, dated February [removed: 11, 2015](http://www.sec.gov/Archives/edgar/data/277948/000119312515049663/d873537dex101.htm)] [added: 10, 2016](http://www.sec.gov/Archives/edgar/data/277948/000119312516465737/d144118dex101.htm)] | February [removed: 13, 2015,] [added: 16, 2016,] Exhibit 10.1, Form 8-K |

| [removed: 10.21] [added: 10.19] | [CSX Stock and Incentive Award Plan](http://www.sec.gov/Archives/edgar/data/277948/000095012310046366/g23356exv10w1.htm) | May 7, 2010, Exhibit 10.1, Form 8-K |

| [removed: 10.22] [added: 10.39] | [removed: [Long-term] [added: [CSX 2018-2020 Long-Term] Incentive [removed: Plan, dated February 10, 2016](http://www.sec.gov/Archives/edgar/data/277948/000119312516465737/d144118dex101.htm)] [added: Plan](http://www.sec.gov/Archives/edgar/data/277948/000119312518040384/d532941dex101.htm)] | February [removed: 16, 2016,] [added: 12, 2018] Exhibit 10.1, Form 8-K |

| [removed: 10.23] [added: 10.21] | [Form of Restricted Stock Unit Agreement](http://www.sec.gov/Archives/edgar/data/277948/000119312516465737/d144118dex102.htm) | February 16, 2016, Exhibit 10.2, Form 8-K |

| [removed: 10.24] [added: 10.22] | [Form of Stock Option Agreement](http://www.sec.gov/Archives/edgar/data/277948/000119312516465737/d144118dex103.htm) | February 16, 2016, Exhibit 10.3, Form 8-K |

| [removed: 10.25] [added: 10.23] | [Restricted Stock Award Agreement with Frank A. Lonegro](http://www.sec.gov/Archives/edgar/data/277948/000119312516465737/d144118dex105.htm) | February 16, 2016, Exhibit 10.5, Form 8-K |

| [removed: 10.26] [added: 10.24] | [CSX Executives' Deferred Compensation Plan (as amended and restated effective January 1, 2017)](http://www.sec.gov/Archives/edgar/data/277948/000027794816000082/csxexecutivesdeferredcompe.htm) | October 12, 2016, Exhibit 10.1, Form 10-Q |

| [removed: 10.27] [added: 10.25] | [CSX 2017-2019 Long Term Incentive Plan, effective as of February 22, 2017](http://www.sec.gov/Archives/edgar/data/277948/000119312517059310/d356673dex101.htm) | February 27, 2017 Exhibit 10.1, Form 8-K |

| [removed: 10.28] [added: 10.26] | [CSX Section 16 Officer Severance Benefit Plan, effective as of February 22, 2017](http://www.sec.gov/Archives/edgar/data/277948/000119312517059310/d356673dex104.htm) | February 27, 2017 Exhibit 10.4, Form 8-K |

| [removed: 10.29] [added: 10.27] | [Separation Agreement, effective February 27, 2017, between Michael J. Ward and CSX Corporation](http://www.sec.gov/Archives/edgar/data/277948/000119312517059310/d356673dex102.htm) | February 27, 2017 Exhibit 10.2, Form 8-K |