CSX (CSX) 10-K risk factor changes: FY2019 vs FY2018

The risks set forth in the following risk factors could have a [removed: materially] [added: material] adverse effect on the Company's financial condition, results of operations or liquidity, and could cause those results to differ materially from those expressed or implied in the Company's forward-looking statements.

[removed: New] [added: New] legislation or regulatory changes could impact the Company's earnings or restrict its ability to independently negotiate [removed: prices.][added: prices.]

In addition, statutes [added: or regulations] imposing price constraints or affecting rail-to-rail competition could adversely affect the Company's profitability.

[removed: Government] [added: Government] regulation and compliance risks may adversely affect the Company's operations and financial [removed: results.][added: results.]

New or modified rules or regulations by these agencies could increase the Company's operating [removed: costs] [added: costs, adversely impact revenue] or reduce operating efficiencies and [removed: impact] [added: affect] service performance.

For example, the RSIA, as amended, mandated that the installation of PTC hardware be completed by December 31, [removed: 2018] [added: 2018,] 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.

[removed: CSXT,] [added: CSXT,] as a common carrier by rail, is required by law to transport hazardous materials, which could expose the Company to significant costs and [removed: claims.][added: claims.]

[removed: Network] [added: Network] constraints could have a negative impact on service and operating [removed: efficiency.][added: efficiency.]

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 activities; or (vi) regulatory changes impacting where and how fast CSXT can transport freight or maintain routes, which could [removed: have a negative effect on] [added: impact] CSXT's operational fluidity, leading to deterioration of service, asset utilization and overall efficiency.

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART I][added: PART I]

[removed: Global] [added: Global] economic conditions could negatively affect demand for commodities and other [removed: freight.][added: freight.]

For example, [removed: if the rate] [added: slower rates] of economic growth in [removed: Asia slows,] [added: Asia, contraction of] European [removed: economies contract, or if] [added: economies, and changes in] the global supply of seaborne coal or price of seaborne coal [removed: changes from its current levels,] [added: have adverse impacts on] U.S. export coal volume [removed: could be adversely impacted resulting] [added: and result] in lower [added: coal] revenue for CSX.

[removed: Changing] [added: Changing] dynamics in the U.S. and global energy markets could negatively impact [removed: profitability.][added: profitability.]

[removed: The] [added: The] Company relies on the security, stability and availability of its technology systems to operate its [removed: business.][added: business.]

[removed: The] [added: The] Company is subject to environmental laws and regulations that may result in significant [removed: costs.][added: costs.]

[removed: Disruption of the supply chain] [added: Disruption to a key railroad industry supplier] could negatively affect operating efficiency and increase [removed: costs.][added: costs.]

The capital intensive [removed: nature] and [removed: sophistication] [added: unique nature] of core rail equipment (including rolling stock equipment, locomotives, rail, and ties) limits the number of railroad equipment suppliers.

[removed: The] [added: The] Company faces competition from other transportation [removed: providers.][added: providers.]

[removed: Future] [added: Future] acts of terrorism, war or regulatory changes to combat the risk of terrorism may cause significant disruptions in the Company's [removed: operations.][added: operations.]

[removed: Severe] [added: Severe] weather or other natural occurrences could result in significant business interruptions and expenditures in excess of available insurance [removed: coverage.][added: coverage.]

[removed: The] [added: The] Company may be subject to various claims and lawsuits that could result in significant [removed: expenditures.][added: expenditures.]

[removed: Failure] [added: Failure] to complete negotiations on collective bargaining agreements could result in strikes and/or work [removed: stoppages.][added: stoppages.]

[removed: Approximately 70 percent of these] [added: Such] agreements are [removed: bargained for nationally by the National Carriers Conference Committee and] negotiated over the course of several years and previously have not resulted in any extended work stoppages.

[removed: The] [added: The] unavailability of critical resources could adversely affect the Company’s operational efficiency and ability to meet [removed: demand.][added: demand.]

Although the Company believes that it has adequate [added: resources and] personnel for the current business environment, unpredictable increases in demand for rail services or extreme weather conditions may exacerbate such risks, which could have a negative impact on the Company’s operational efficiency and otherwise have a material adverse effect on the Company’s financial condition, results of operations, or liquidity in a particular period.

[removed: Weaknesses] [added: Weaknesses] in the capital and credit markets could negatively impact the Company’s access to [removed: capital.][added: capital.]

Instability or disruptions of the capital markets, including credit markets, or the deterioration of the Company’s financial condition due to internal or external factors, could restrict or prohibit access and could increase [removed: the cost of] financing [removed: sources.][added: costs.]

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

The Company’s operations and financial results could be negatively impacted by climate change and regulatory and legislative responses to climate change.

There is potential for operational impacts from changing weather patterns or rising sea levels in the Company's operational territory, which could impact the Company's network or other assets.

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

These agreements are either bargained for nationally by the National Carriers Conference Committee or locally between CSX and the union.

Climate change and other emissions-related laws and regulations could adversely affect the Company's operations and financial results.

Additionally, from time to time, the Company enters into CSX-specific, or “local”, bargaining agreements which could also be critical to the Company.

[removed: TERMS] [added: TERMS] USED BY [removed: CSX][added: CSX]

[removed: Car hire] [added: Car hire] - A charge paid by one railroad for its use of cars belonging to another railroad or car owner.

[removed: Class] [added: Class] I freight [removed: railroad] [added: railroad] - One of the largest line haul freight railroads as determined based on operating revenue; the exact revenue required to be in each class is periodically adjusted for inflation by the Surface Transportation Board.

[removed: Common] [added: Common] carrier [removed: mandate] [added: mandate] - A federal mandate that requires U.S. railroads to accommodate reasonable requests from shippers to carry any freight, including hazardous materials.

[removed: Demurrage] [added: Demurrage] - A charge assessed by railroads for the use of rail cars by shippers or receivers of freight beyond a specified free time.

[removed: Department] [added: Department] of Transportation [removed: ("DOT")] [added: ("DOT")] - A U.S. government agency with jurisdiction over matters of all modes of transportation.

[removed: Depreciation study] [added: Depreciation study] - [removed: A] [added: Conducted by a third-party specialist and analyzed by management, a] periodic statistical analysis of fixed asset service lives, salvage values, accumulated depreciation, and other factors for group assets along with a comparison of similar asset groups at other [removed: companies conducted by a third-party specialist.][added: companies.]

[removed: Double-stack] [added: Double-stack] - Stacking containers two-high on specially equipped cars.

[removed: Drayage] [added: Drayage] \- The pickup or delivery of intermodal shipments by truck.

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

[removed: Federal] [added: Federal] Railroad Administration [removed: ("FRA")] [added: ("FRA")] - The branch of the DOT that is responsible for developing and enforcing railroad safety regulations, including safety standards for rail infrastructure and equipment.

[removed: Free] [added: Free] cash [removed: flow] [added: flow] - The calculation of a non-GAAP measure by using net cash provided by operating activities and adjusting for property additions and certain other investing activities.

[removed: Group-life method] [added: Group-life depreciation] \- A type of depreciation in which assets with similar useful lives and characteristics are aggregated into groups.

Instead of calculating depreciation for individual assets, depreciation is calculated [added: as a whole] for each group.

[removed: Incidental revenue] [added: Incidental revenue] - Revenue for switching, demurrage, storage, etc.

[removed: Intermodal] [added: Intermodal] - A flexible way of transporting freight over [removed: water, highway and] [added: highway,] rail [added: and water] without being removed from the original transportation equipment, namely a container or trailer.

[removed: Mainline] [added: Mainline] - The main track thoroughfare, exclusive of terminals, yards, sidings and turnouts.

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART II][added: PART II]

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

[removed: Positive] [added: Positive] Train Control [removed: ("PTC")] [added: ("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.

[removed: Revenue adequacy] [added: Revenue adequacy] - The achievement of a rate of return on investment at least equal to the [added: industry] cost of investment capital, as measured by the STB.

[removed: Shipper] [added: Shipper] - A customer shipping freight via rail.

[removed: Siding] [added: Siding] - Track adjacent to the mainline used for passing trains.

[removed: Staggers] [added: Staggers] Act of [removed: 1980] [added: 1980] - Congressional law which significantly deregulated the rail industry, replacing the regulatory structure in existence since the 1887 Interstate Commerce Act.

[removed: Surface] [added: Surface] Transportation Board [removed: ("STB")] [added: ("STB")] - An independent governmental adjudicatory body administratively housed within the DOT, responsible for the economic regulation of interstate surface transportation within the United States.

[removed: Switching] [added: Switching] - Putting cars in a specific order, placing cars for loading, retrieving empty cars or adding or removing cars from a train at an intermediate point.

[removed: Terminal] [added: Terminal] - A facility, typically owned by a railroad, for the handling of freight and for the breaking up, making up, forwarding and servicing of trains.

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

[removed: TTX] [added: TTX] Company [removed: ("TTX")] [added: ("TTX")] - A company that provides its owner-railroads with standardized fleets of intermodal, automotive and general use railcars at time and mileage rates.

[removed: Turnout] [added: Turnout] - A track that diverts trains from one track to another.

[removed: Yard] [added: Yard] - A system of tracks, other than main tracks and sidings, used for making up trains, storing cars and other purposes.

- Revenue of [removed: $12.3] [added: $11.9] billion [removed: increased $842] [added: decreased $313] million or [removed: 7%] [added: 3%] versus the prior year.

- Expenses of [removed: $7.4] [added: $7.0] billion decreased [removed: $307] [added: $409] million or [removed: 4%] [added: 6%] year over year.

- Operating income of [removed: $4.9] [added: $5.0] billion increased [removed: $1.1 billion] [added: $96 million] or [removed: 31%] [added: 2%] year over year.

- Operating ratio of [removed: 60.3 percent] [added: 58.4%] improved [removed: 710] [added: 190] basis points from [removed: 67.4%.][added: 60.3%.]

[removed: Operating ratio in 2017 was affected by] [added: The impact of tax reform and] the restructuring charge [removed: and tax reform benefit described above.][added: on 2017 operating results are shown in the following table.]

- Earnings per diluted share of [removed: $3.84 decreased $2.15] [added: $4.17 increased $0.33] or [removed: 36%] [added: 9%] year over year.

[removed: RESULTS] [added: RESULTS] OF [removed: OPERATIONS][added: OPERATIONS]

22

CSX 2019 Form 10-K p.

CSX CORPORATION

PART II

2019 HIGHLIGHTS

| Revenue | $ | 11,937 | | | $ | 12,250 | | | *$* | *(313* | *)* | | *(3* | *)%* | |

| Fuel | 906 | | | | 1,046 | | | | *140* | | | | *13* | | |

CSX 2019 Form 10-K p.

CSX CORPORATION

PART II

CSX 2019 Form 10-K p.

CSX CORPORATION

PART II

In 2019, revenue decreased $313 million, or 3%, when compared to the previous year due to volume declines, lower other revenue and decreases in fuel recovery.

These decreases were partially offset by merchandise and intermodal pricing gains and favorable mix.

Chemicals - Declined due to reduced natural gas liquids and fly ash shipments, partially offset by growth in crude oil as well as industrial and municipal waste.

Agricultural and Food Products - Increased due to gains in feed grain and ingredients, ethanol, as well as sweeteners and oils.

Automotive - Declined due to lower passenger car shipments, partially offset by higher shipments of trucks and SUVs.

Forest Products - Increased due to higher demand for wood pulp and other fiber products as well as lumber, partially offset by reduced pulpboard shipments.

Metals and Equipment - Declined due to reduced metals shipments, primarily in the steel, construction and scrap markets.

Fertilizers - Declined due to unfavorable weather conditions throughout the year that impacted fertilizer applications.

Domestic coal declined primarily due to lower shipments of utility coal as a result of continued competition from natural gas, partially offset by stronger shipments for coke, iron ore and other coal.

Export coal declined due to lower international shipments of both thermal and metallurgical coal as global benchmark prices declined.

Domestic and international intermodal declined primarily due to rationalization of low-density lanes.

These decreases were partially offset by a favorable contract settlement with a customer.

CSX 2019 Form 10-K p.

CSX CORPORATION

PART II

| • | Efficiency and volume savings of $157 million primarily resulted from lower headcount and reduced crew starts. |

| • | Incentive compensation decreased $12 million primarily due to lower expected annual incentive payouts, partially offset by the acceleration of stock compensation expense for certain retirement-eligible employees. |

| • | All other costs increased $15 million primarily due to inflation and favorable adjustments to casualty reserves in 2018, partially offset by other items. |

Depreciation expense increased $18 million due to a larger asset base and a 2019 equipment depreciation study that resulted in $10 million of additional expense, partially offset by other non-significant items.

Fuel expense decreased $140 million primarily due to an 8% price decrease that drove savings of $74 million, a 4% improvement in fuel efficiency and volume savings.

CSX 2019 Form 10-K p.

CSX CORPORATION

PART II

Income Tax Expense decreased $10 million primarily due to tax benefits from the impacts of stock option exercises and the vesting of other equity awards as well as the resolution of certain state tax matters, partially offset by benefits in 2018 related to state legislative changes and a federal deferred tax adjustment.

Net Earnings and Earnings per Diluted Share

See discussion of 2018 results of operations compared to 2017 results of operations in Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

CSX 2019 Form 10-K p.

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

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.

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.

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

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

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

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

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

(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.

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

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

In 2018, revenue increased $842 million when compared to the previous year, primarily due to increases in fuel recovery as a result of the increase in fuel price, price increases, higher other revenue, volume growth in most markets and favorable mix.

Chemicals - Volume was relatively flat as stronger energy, industrial chemicals and waste shipments were mostly offset by reduced fly ash and sand shipments.

Automotive - Volume increased due to higher North American vehicle production of trucks and SUVs.

Agricultural and Food Products - Volume declined due to losses in the ethanol market, which were partially offset by gains in the domestic and export grain markets.

Forest Products - Volume increased due to e-commerce driven pulpboard demand, strength in building products and truck conversions to rail.

Metals and Equipment - Volume increased due to stronger steel production, including demand for construction and pipe, as well as truck conversions to rail.

Fertilizers - Volume declined primarily due to the closure of a customer facility in late 2017 that previously moved short-haul rail shipments.

Domestic utility coal volume declined reflecting strong competition from natural gas.

Domestic coke, iron ore and other volume increased primarily driven by stronger domestic steel production.

Export volume increased as global supply levels and elevated global benchmark prices supported continued demand for U.S. coal.

Domestic volume was relatively flat as rationalization of low-density lanes was mostly offset by growth with existing customers due to tight truck conditions.

International volume increased driven by new customers and strong performance with existing customers, which more than offset losses from the rationalization of low-density lanes.

Descriptions of each expense category as well as significant year-over-year changes are described below.

Labor and Fringe expenses include employee wages and related payroll taxes, health and welfare costs, pension, other post-retirement benefits and incentive compensation.

| | |

| --- | --- |

| • | Costs decreased $198 million driven by lower headcount and crew starts, partially offset by higher inflation and volume. |

| • | Incentive compensation increased $26 million due to higher projected payouts. |

| • | Other costs decreased $36 million due to the recognition of railroad retirement tax refunds related to past share-based compensation awards and several other items, none of which were individually significant. |

| • | Costs decreased $49 million as a result of lower operating support costs, partially offset by inflation. |

| • | Favorable judgments related to previously condemned properties resulted in prior year gains of $73 million. |

| • | Other costs decreased $34 million primarily driven by a reduction in personal injury expense resulting from a decline the severity of injuries and other items, none of which were individually significant. |

As of December [removed: 2018,] [added: 2019,] 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.

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 [removed: $472] [added: $498] million as of December 31, [removed: 2018] [added: 2019] and [removed: $403] [added: $472] million as of December 31, [removed: 2017.][added: 2018.]

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART II][added: PART II]

[removed: Item] [added: Item] 8.

Financial Statements and Supplementary [removed: Data][added: Data]

| [removed: INDEX] [added: INDEX] TO CONSOLIDATED FINANCIAL [removed: STATEMENTS] [added: STATEMENTS] | | |

| | | [removed: Page] [added: Page] |

[removed: | Report of Independent Registered Public Accounting Firm | | [53](#s1744035D07915C1D892B793895B1D91D) |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]

| [removed: CSX Corporation] [added: CSX Corporation] | | |

| Consolidated Income Statements for the Fiscal Years Ended: | | [removed: [54](#sBED6B31DF5E85E2EAF1854849A7F2636)] [added: [47](#s5F827309BA005B18A7B594F29DA95DD3)] |

| | [added: December | | | |] December [removed: 31, 2017] | | [added: |]

| [removed: | December] [added: December] 30, [removed: 2016] [added: 2016] | [added: $] | [added: 229 | | | $ | 95 | | | $ | 50 | | | $ | 374 | |]

| Consolidated Comprehensive Income Statements for the Fiscal Years Ended: | | [removed: [55](#sCB5CE1EC084352D68A1A768DF9B29C5C)] [added: [48](#s360A33CC495157E2B035507992287C56)] |

[removed: | Consolidated Balance Sheets as of: | | [56](#sB804FDA346E256EAAB60F7A14B0A84DC) |][added: CONSOLIDATED BALANCE SHEETS]

| Consolidated Cash Flow Statements for Fiscal Years Ended: | | [removed: [57](#s8D157A5F34A25C3A927D105F3FB48359)] [added: [50](#sDF3D33E3BEA554DCA90716A80042A082)] |

| Consolidated Statements of Changes in Shareholders' Equity: | | [removed: [58](#s2CBA629F4A12529DB10F383805EAA3A8)] [added: [51](#s4B1F5B4328215AB3B845D77EEC0BC9F1)] |

[removed: | Notes to Consolidated Financial Statements | | [59](#s890E260818DB51C79078737C2D768E28) |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

[removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM][added: | Report of Independent Registered Public Accounting Firm | | [45](#s4FFB6A845AB258BE8EC7B75C8ED0DCBF) |]

[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance sheets of CSX Corporation (the Company) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of income, comprehensive income, cash flows, and changes in shareholders’ equity for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] 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: 2018,] [added: 2019,] 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: 6, 2019] [added: 12, 2020] expressed an unqualified opinion thereon.

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

[removed: CONSOLIDATED] [added: CONSOLIDATED] INCOME [removed: STATEMENTS][added: STATEMENTS]

[removed: (Dollars] [added: *(Dollars] in Millions, Except Per Share [removed: Amounts)][added: Amounts)*]

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

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| [removed: Revenue] [added: Revenue] | [removed: $] [added: $] | [removed: 12,250] [added: 11,937] | | | $ | [removed: 11,408] [added: 12,250] | | | $ | [removed: 11,069] [added: 11,408] | |

| [removed: Expense] [added: Expense] | | | | | | | | | | | |

| Labor and Fringe | [removed: 2,738] [added: 2,616] | | | | [removed: 2,946] [added: 2,738] | | | | [removed: 3,135] [added: 2,946] | | |

| Materials, Supplies and Other | [removed: 1,967] [added: 1,784] | | | | [removed: 2,113] [added: 1,967] | | | | [removed: 2,092] [added: 2,113] | | |

| Depreciation | [removed: 1,331] [added: 1,349] | | | | [removed: 1,315] [added: 1,331] | | | | [removed: 1,301] [added: 1,315] | | |

| Fuel | [removed: 1,046] [added: 906] | | | | [removed: 864] [added: 1,046] | | | | [removed: 713] [added: 864] | | |

| Equipment and Other Rents | [removed: 395] [added: 408] | | | | [removed: 429] [added: 395] | | | | [removed: 465] [added: 429] | | |

| Restructuring Charge (Note 1) | [removed: —] [added: —] | | | | [removed: 240] [added: —] | | | | [removed: —] [added: 240] | | |

| Equity Earnings of Affiliates | [removed: (96] [added: (91] | | [removed: )] [added: )] | | [removed: (219] [added: (96] | | ) | | [removed: (50] [added: (219] | | ) |

| [removed: Total Expense] [added: Total Expense] | [removed: 7,381] [added: 6,972] | | | | [removed: 7,688] [added: 7,381] | | | | [removed: 7,656] [added: 7,688] | | |

| [removed: Operating Income] [added: Operating Income] | [removed: 4,869] [added: 4,965] | | | | [removed: 3,720] [added: 4,869] | | | | [removed: 3,413] [added: 3,720] | | |

43

CSX 2019 Form 10-K p.

44

CSX CORPORATION

PART II

Item 8.

Financial Statements and Supplementary Data

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.

CSX 2019 Form 10-K p.

45

CSX CORPORATION

PART II

Item 8.

Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, *continued*

| | Depreciation Policies for Assets Utilizing the Group-Life Method | | |

| *Description of the Matter* | At December 31, 2019, assets depreciated under the group-life method comprised 87% of total gross fixed assets of $45 billion. As discussed in Note 6 of the consolidated financial statements, the group-life method aggregates assets with similar lives and characteristics into groups and depreciates each of these groups as a whole. When using the group-life method, an underlying assumption is that each group of assets, as a whole, is used and depreciated to the end of the group’s recoverable life. The Company utilizes different depreciable asset categories to account for depreciation expense for the railroad assets that are depreciated under the group-life method. Under the group-life method, depreciation studies are completed to review asset service lives, salvage values, accumulated depreciation and other factors related to group assets. Depreciation studies are performed every three years for equipment assets and every six years for road and track assets. A depreciation study was performed in 2019 for equipment assets and 2014 for road and track assets. The most recent depreciation studies are reviewed by management each year to determine if there have been significant factors that result in changes to the group-life method key assumptions. Auditing depreciation expense for assets subject to the group-life method was complex and required the involvement of specialists due to the nature of the methods used in the depreciation studies to determine the useful service lives and salvage values of the Company’s assets. These methods have a significant effect on depreciation expense. | | |

| *How We Addressed the Matter in Our Audit* | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process related to the assessment of periodic depreciation studies of its group-life assets. For example, we tested controls over management’s review of the depreciation study for equipment assets and review of depreciation expense and useful lives. We also tested controls over management’s review of asset activity and assumptions that could impact the most recent depreciation study of road and track assets. To test the estimated useful lives and salvage values of the Company’s group-life assets, we performed audit procedures that included, among others: obtaining the periodic depreciation studies provided by the Company’s third-party specialist and subsequent updates by management; assessing the completeness and accuracy of the data provided to the third-party specialist and used by management; and including a specialist on our team to evaluate the methods used by the third-party specialist and management in determining the average service lives and salvage values of assets to perform the depreciation studies. We compared the significant methods used by management to those used throughout the industry and within other useful life studies. We also assessed the historical accuracy of management’s estimates via retrospective review and independently calculated a sample of the annual depreciation rates. | | |

CSX 2019 Form 10-K p.

46

CSX CORPORATION

PART II

Item 8.

Financial Statements and Supplementary Data

CSX 2019 Form 10-K p.

47

CSX CORPORATION

PART II

Item 8.

Financial Statements and Supplementary Data

CSX 2019 Form 10-K p.

48

CSX CORPORATION

PART II

Item 8.

Financial Statements and Supplementary Data

| | 2019 | | | | 2018 | | |

| Right of Use Lease Asset (Note 7) | 532 | | | | — | | |

| | | |

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

February 6, 2019

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

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

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

| Cash Dividends Paid Per Common Share | $ | 0.88 | | | $ | 0.78 | | | $ | 0.72 | |

| Contributions to Qualified Pension Plans (Note 8) | — | | | | — | | | | (250 | | ) |

| December 25, 2015 | 965,514 | | $ | 1,079 | | $ | 11,238 | | $ | (665 | ) | $ | 16 | | $ | 11,668 | |

| Share Repurchases | (38,379 | ) | | (38 | ) | (1,018 | | ) | — | | | — | | | (1,056 | | ) |

| Bond Conversions | 94 | | | 1 | | — | | | — | | | — | | | 1 | | |

In addition, as substantially all real estate sales, leasing, acquisition and management and development activities are focused on supporting railroad operations, all results of these activities are included in operating income beginning in 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 prior periods presented.

| | |

| --- | --- |

Related to the change in the fiscal calendar:

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

| – | 2017 contained 366 days (December 31, 2016 through December 31, 2017) |

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

| • | First quarter: |

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

| – | 2017 contained 91 days (December 31, 2016 through March 31, 2017) |

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

| • | Second quarter: |

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

| – | 2017 contained 91 days (April 1, 2017 through June 30, 2017) |

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

| • | Third quarter: |

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

| – | 2017 contained 92 days (July 1, 2017 through September 30, 2017) |

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

| • | Fourth quarter: |

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

| – | 2017 contained 92 days (October 1, 2017 through December 31, 2017) |

| – | 2016 contained 98 days (September 24, 2016 through December 30, 2016) |

Pronouncements adopted in 2018

Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income.

The Company adopted this standard update in first quarter 2018 and applied it prospectively.

Adoption resulted in the reclassification of $107 million in tax effects related to employee benefit plans from accumulated other comprehensive loss, increasing retained earnings by the same amount.

In March 2017, the FASB issued ASU Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires that only the service cost component of net periodic benefit costs be recorded as compensation cost in operating expense on the consolidated income statement.

CSX Corporation [removed: (“CSX”), and] together with its subsidiaries [removed: (the] [added: ("CSX" or the] “Company”), based in Jacksonville, Florida, is one of the nation's leading transportation companies.

[removed: CSX] [added: *CSX] Transportation, [removed: Inc.][added: Inc.*]

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

CSXT also serves thousands of production and distribution facilities through track connections with other Class I railroads and [removed: approximately] [added: more than] 230 short-line and regional railroads.

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

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART I][added: PART I]

[removed: Lines] [added: *Lines] of [removed: Business][added: Business*]

During [removed: 2018,] [added: 2019,] the Company's services generated [removed: $12.3] [added: $11.9] billion of revenue and served three primary lines of business: merchandise, coal and intermodal.

| • | The merchandise business shipped 2.7 million carloads [removed: (41] [added: (43] percent of volume) and generated [removed: 61] [added: 64] percent of revenue in [removed: 2018.] [added: 2019.] 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: 887] [added: 843] thousand carloads (14 percent of volume) and generated [removed: 18] [added: 17] percent of revenue in [removed: 2018.] [added: 2019.] 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 shipped [removed: 2.9] [added: 2.7] million units [removed: (45] [added: (43] percent of volume) and generated [removed: 16] [added: 15] percent of revenue in [removed: 2018.] [added: 2019.] The intermodal business combines the superior economics of rail transportation with the [removed: short-haul] flexibility of trucks and offers a cost [added: and environmental] advantage over long-haul trucking. Through a network of [removed: more than] [added: approximately] 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: 5] [added: 4] percent of the Company’s total revenue in [removed: 2018.][added: 2019.]

This category includes revenue from regional subsidiary railroads, demurrage, [added: storage at intermodal facilities,] revenue for customer volume commitments not met, switching, other incidental charges and adjustments to revenue reserves.

Switching [removed: revenue is primarily generated] [added: represents charges assessed] when [removed: CSXT] [added: a railroad] switches cars for a customer or another railroad.

[removed: Other Entities][added: *Other Entities*]

[removed: Employees][added: *Employees*]

The Company's number of employees was [removed: approximately 22,500] [added: nearly 21,000] as of December [removed: 2018,] [added: 2019,] which includes approximately [removed: 18,500] [added: 17,000] union employees.

[removed: In 2018, the] [added: The] Company [removed: 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.

[removed: Financial Information][added: Financial Information]

[removed: Company History][added: Company History]

CSX [added: Corporation] was incorporated in 1978 under Virginia law.

[removed: Competition][added: Competition]

[removed: Regulatory Environment][added: Regulatory Environment]

[removed: Positive] [added: *Positive] Train [removed: Control][added: Control*]

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

Total PTC investment through [removed: 2018] [added: 2019] was [removed: $2.2] [added: $2.3] billion.

[removed: New] [added: Any new] rules [added: from the STB] regarding, among other things, competitive access or revenue adequacy could have a material adverse effect on the Company's financial condition, results of operations and liquidity as well as its ability to invest in enhancing and maintaining vital infrastructure.

[removed: Other Information][added: Other Information]

For additional information concerning business conducted by the Company during [removed: 2018,] [added: 2019,] see Item 7.

Substantially all of these activities are focused on supporting railroad operations.

*Operating Model*

When this operating model is executed effectively, customer service is improved, enabling the Company to better compete for an increased share of the U.S. freight market.

Further, this model leads to reduced costs and strong free cash flow generation.

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

*Risk Factors*.

The PTC system is now required to be fully operational by December 31, 2020.

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

In addition, as substantially all real estate sales, leasing, acquisition and management and development activities are focused on supporting railroad operations, all results of these activities are included in operating income beginning in 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 prior periods presented.

Scheduled Railroading

When the operating model is executed effectively, customer service is improved, costs are reduced and free cash flow is generated, allowing financial growth.

The Company's leadership team includes James M.

Foote, Chief Executive Officer, as well as several other leaders with extensive scheduled railroading experience.

Risk Factors.

STB Proceedings

For further details, please refer to Note [removed: 7.][added: 8.]

Environmental Proceedings That Could Result in Fines Above $100,000

In connection with a CSXT train derailment in Mount Carbon, West Virginia in February 2015, the Company paid a penalty of $1.2 million to the United States federal government and a penalty of $1.5 million to the State of West Virginia in January 2019 related to the release of product into the environment.

[removed: FORM 10-K][added: FORM 10-K]

[removed: (X)] [added: (☒)] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, [removed: 2018][added: 2019]

[removed: ( )] [added: (☐)] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[removed: |] Commission File Number 1-8022 [removed: | | | | |]

[removed: ][added: ]

[removed: | CSX CORPORATION | | | | |][added: CSX CORPORATION]

| (Exact name of registrant as specified in its charter) | | | | | [added: | | | | | |]

| [removed: Virginia] [added: Virginia] | | | | [removed: 62-1051971] | [added: | | | | 62-1051971 | |]

| [removed: (State or other jurisdiction of incorporation or organization)] | | | | [removed: (I.R.S.] [added: | | | | | *(I.R.S.] Employer Identification [removed: No.)] [added: No.)*] | [added: |]

| [removed: 500] [added: 500] Water [removed: Street, 15th Floor, Jacksonville, FL] [added: Street] | [added: 15th Floor] | [removed: 32202] [added: Jacksonville] | [added: FL] | [removed: (904) 359-3200] | [added: | | 32202 | | 904 | 359-3200 |]

| [removed: (Address] [added: *(Address] of principal executive [removed: offices)] [added: offices)*] | | [removed: (Zip Code)] | | [removed: (Telephone] [added: | | | *(Zip Code)* | | *(Telephone] number, including area [removed: code)] [added: code)*] | [added: |]

| Securities registered pursuant to Section 12(b) of the Act: | | | | | [added: | | | | | |]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | | [removed: Name] [added: | | | Trading Symbol(s) | | | | Name] of exchange on which [removed: registered |] [added: registered] | |

| Common Stock, $1 Par Value | | [added: | | | CSX | | | |] Nasdaq Global Select Market | | [removed: |]

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Yes [removed: ( )] [added: (☐)] No (X)

Large Accelerated Filer (X) Accelerated Filer ( ) Non-accelerated Filer ( ) Smaller reporting company [removed: ( )][added: (☐)]

Emerging growth company [removed: ( )][added: (☐)]

On June 30, [removed: 2018] [added: 2019] (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: $46] [added: $59] billion (based on the close price as reported on the NASDAQ National Market System on such date).

There were [removed: 815,630,366] [added: 773,825,565] shares of Common Stock outstanding on January 31, [removed: 2019] [added: 2020] (the latest practicable date that is closest to the filing date).

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

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: 2019] [added: 2020] annual meeting of shareholders.

CSX [removed: 2018] [added: 2019] Form 10-K p.

| [removed: FORM 10-K] [added: FORM 10-K] | | | | |

| [removed: TABLE] [added: TABLE] OF [removed: CONTENTS] [added: CONTENTS] | | | | |

| [removed: PART I] [added: PART I] | | | | |

| | [1A. Risk [removed: Factors](#s29697A7AD11F5727BE8E5FF3547D7113)] [added: Factors](#sB6668F32A3015006A5F9C03A128CD352)] | | | [removed: [7](#s29697A7AD11F5727BE8E5FF3547D7113)] [added: [7](#sB6668F32A3015006A5F9C03A128CD352)] |

| | [1B. Unresolved Staff [removed: Comments](#sCEEB48815DE851AEAF0A753913F93947)] [added: Comments](#s8B21686345E15A25AE71D06FFDA9E55A)] | | | [removed: [11](#sCEEB48815DE851AEAF0A753913F93947)] [added: [11](#s8B21686345E15A25AE71D06FFDA9E55A)] |

| 3. | [Legal [removed: Proceedings](#s495F48E583FA572299BBBD369228B74B)] [added: Proceedings](#sAC6F2CC98C995C42BCB4240BCBFEBFDA)] | | | [removed: [16](#s495F48E583FA572299BBBD369228B74B)] [added: [16](#sAC6F2CC98C995C42BCB4240BCBFEBFDA)] |

| 4. | [Mine Safety [removed: Disclosures](#sA293BAD87E3750C485BC917F31F5D9E3)] [added: Disclosures](#s3EB39E7451745217A7C57C873AF2DF25)] | | | [removed: [16](#sA293BAD87E3750C485BC917F31F5D9E3)] [added: [16](#s3EB39E7451745217A7C57C873AF2DF25)] |

| | [Executive Officers of the [removed: Registrant](#s7475F3269E3F5DFEBA06F0D00E6BAE00)] [added: Registrant](#s6D11D9571F995BCAB9AFB4F85D44FFC0)] | | | [removed: [17](#s7475F3269E3F5DFEBA06F0D00E6BAE00)] [added: [17](#s6D11D9571F995BCAB9AFB4F85D44FFC0)] |

| [removed: PART II] [added: PART II] | | | | |

| 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s34E673709D8E5378A7B4761917DB2972)] [added: Securities](#s062DEA1997E45011AA329FD8E8429D7F)] | | | [removed: [19](#s34E673709D8E5378A7B4761917DB2972)] [added: [19](#s062DEA1997E45011AA329FD8E8429D7F)] |

| 6. | [Selected Financial [removed: Data](#sB2CD96DCC883542886253A405993BF6D)] [added: Data](#sBAF047C83DFC53CAB2864564D2497BEF)] | | | [removed: [22](#sB2CD96DCC883542886253A405993BF6D)] [added: [21](#sBAF047C83DFC53CAB2864564D2497BEF)] |

| 7. | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s3F9EB549714A519C969A42B59F4FE0C8)] [added: Operations](#s248DC15AFD0C550C9A8FE80197E09B73)] | | | [removed: [23](#s3F9EB549714A519C969A42B59F4FE0C8)] [added: [22](#s248DC15AFD0C550C9A8FE80197E09B73)] |

| | | | · Terms Used by CSX | [removed: [23](#s6EAF122D64385E93B23376459CCD8DF2)] [added: [22](#sE5270E81930A567F91C0E3F5568CFE91)] |

| | | | · [Results of [removed: Operations](#sB5008AAB406654B2A73B86E46CF1A8DB)] [added: Operations](#s9675D777D4E45EEBB8DB6151EB30BBCA)] | [removed: [25](#sB5008AAB406654B2A73B86E46CF1A8DB)] [added: [24](#s9675D777D4E45EEBB8DB6151EB30BBCA)] |

| | | | · [Liquidity and Capital [removed: Resources](#s3B67301E55E2581FAF159C24E014987F)] [added: Resources](#s21459D5D4D355CB299E66CA216DC1188)] | [removed: [39](#s3B67301E55E2581FAF159C24E014987F)] [added: [32](#s21459D5D4D355CB299E66CA216DC1188)] |

| | | | · [Schedule of Contractual Obligations and Commercial [removed: Commitments](#sE569BD90011F568D959AAB71B1EE6E8B)] [added: Commitments](#s64EB306797D458EC9040E18452FA1A61)] | [removed: [42](#sE569BD90011F568D959AAB71B1EE6E8B)] [added: [35](#s64EB306797D458EC9040E18452FA1A61)] |

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

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

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

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

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

| 1. | [Business](#sA07C3B3427B55C338805B4258C34D414) | | | [3](#sA07C3B3427B55C338805B4258C34D414) |

| 2. | [Properties](#s4E839C5F17C35DD39BC9B8F02B526DD9) | | | [12](#s4E839C5F17C35DD39BC9B8F02B526DD9) |

| | | | · 2019 Highlights | [24](#s3BE0B9363A13542698EA554A19013E89) |

| | | | · Labor Agreements | [36](#s4BD3E81ED8FC52298AC1A425371CCE38) |

| [Signatures](#sAFA7C8ADECF452AC9F7EC06ACD3EEED0) | | | | [116](#sAFA7C8ADECF452AC9F7EC06ACD3EEED0) |

CSX 2019 Form 10-K p.

CSX CORPORATION

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

| | | | | |

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

(X)

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

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

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

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

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART I][added: PART I]

[removed: Track] [added: *Track] and [removed: Infrastructure][added: Infrastructure*]

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: 20,500] [added: 20,000] route miles.

At December [removed: 2018,] [added: 2019,] the breakdown of track miles was as follows:

| | [removed: Track] [added: Track] | |

| | [removed: Miles] [added: Miles] | |

| Mainline track | [removed: 26,286] [added: 25,793] | |

| Terminals and switching yards | [removed: 9,350] [added: 9,316] | |

The Company’s largest yards and terminals based on [removed: 2018] [added: 2019] volume (number of railcars or intermodal containers processed) are listed below.

| [removed: Yards] [added: Yards] and [removed: Terminals] [added: Terminals] | [added: Annual Volume | |]

| Bedford Park Intermodal Terminal - Chicago, IL | [added: 820,362 | |]

| Avon, IN (Indianapolis) | [added: 609,468 | |]

| Walbridge, OH (Toledo) | [added: 323,672 | |]

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART I][added: PART I]

[removed: Network Geography][added: *Network Geography*]

The domestic coal market has declined significantly over the [removed: past several years] [added: last decade] and export coal remains subject to a high degree of volatility.

[removed: CSX] [added: CSX] Rail [removed: Network][added: Network]

[removed: ][added: ]

[removed: Locomotives][added: *Locomotives*]

At December [removed: 2018,] [added: 2019,] CSXT’s fleet of owned locomotives consisted of the following types:

| | [removed: Locomotives] [added: Locomotives] | | | [removed: %] [added: %] | | | [removed: Average Age (years)] [added: Average Age *(years)*] | |

| Auxiliary Units | [removed: 204] [added: 179] | | | 5 | % | | [removed: 24] [added: 27] | |

| Total | [removed: 3,898] [added: 3,561] | | | 100 | % | | 21 | |

[removed: Equipment][added: *Equipment*]

At December [removed: 2018,] [added: 2019,] the Company’s owned and long-term leased equipment consisted of the following:

| [removed: Equipment] [added: Equipment] | [removed: Number] [added: Number] of [removed: Units] [added: Units] | | | [removed: %] [added: %] | |

| Multi-level flat cars | [removed: 11,476] [added: 11,172] | | | 22 | % |

| Covered hoppers | [removed: 8,570] [added: 8,346] | | | 16 | % |

| Open-top hoppers | [removed: 8,273] [added: 7,405] | | | [removed: 16] [added: 14] | % |

| Box cars | [removed: 4,873] [added: 4,509] | | | 9 | % |

| Flat cars | [removed: 533] [added: 702] | | | 1 | % |

| Other cars | [removed: 266] [added: 262] | | | [removed: —] [added: 1] | % |

| Subtotal freight cars | [removed: 53,379] [added: 51,498] | | | 100 | % |

| [removed: Total equipment] [added: Total equipment] | [removed: 71,430] [added: 69,479] | | | | |

| Total | 36,030 | |

| | | |

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

| | | |

| Waycross, GA | 874,474 | |

| Nashville, TN | 648,311 | |

| Selkirk, NY | 642,869 | |

| Cincinnati, OH | 567,582 | |

| Louisville, KY | 397,246 | |

| Fairburn, GA Intermodal Terminal | 377,736 | |

| Chicago, IL | 308,653 | |

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

At December 2019, CSXT owned more than 3,500 locomotives.

Of owned locomotives, approximately 65% were in active service as of December 31, 2019, and the remainder were in storage to be utilized as needed.

Storing locomotives and equipment allows the Company to quickly adjust its active fleet based on demand and other factors while avoiding delays due to supply limitations or excessive lead times to acquire additional equipment.

| Freight | 3,162 | | | 89 | % | | 20 | |

| Switching | 220 | | | 6 | % | | 42 | |

The Company owns or long-term leases equipment, including several types of freight cars and intermodal containers.

Of total owned and long-term leased equipment, approximately 65% was in active service on December 31, 2019, and the remainder was in storage to be utilized as needed.

| Gondolas | 19,102 | | | 37 | % |

| Containers | 17,981 | | | | |

CSX 2019 Form 10-K p.

CSX CORPORATION

PART I

| Total | 36,557 | |

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.

| |

| --- |

| Waycross, GA |

| Selkirk, NY |

| Cincinnati, OH |

| Nashville, TN |

| Louisville, KY |

| Rocky Mount, NC |

| Chicago, IL |

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 [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART I][added: PART I]

[removed: Executive] [added: Executive] Officers of the [removed: Registrant][added: Registrant]

| [removed: Name] [added: Name] and [removed: Age] [added: Age] | [removed: Business] [added: Business] Experience During Past Five [removed: Years] [added: Years] |

| James M. Foote, [removed: 65 President] [added: 66 *President] and Chief Executive [removed: Officer] [added: 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. |

| Edmond L. Harris, [removed: 69 Executive] [added: 70 *Executive] Vice [removed: President of Operations] [added: President*] | Harris has served as [removed: CSX's] [added: an] Executive Vice President of [removed: Operations] [added: CSX] since [removed: January 2018.] [added: October 2019.] In this role, he is responsible for [removed: mechanical, engineering, transportation] [added: safety, performance metrics, operational planning,] and [removed: network operations.] [added: facilities. In 2018, he joined CSXT as Executive Vice President of Operations.] Mr. Harris has more than 40 years of railroad industry [removed: experience. Most recently, Mr. Harris served] [added: experience, including service] as a senior adviser to Global Infrastructure Partners, an independent fund that invests in infrastructure assets worldwide; Chairman of Omnitrax Rail Network; and [removed: Board Director] [added: a member of the board of directors] 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: 61 Executive] [added: 62 *Executive] Vice President and Chief Legal [removed: Officer, Corporate Secretary] [added: Officer*] | Goldman has served as Executive Vice President and Chief Legal Officer, and Corporate Secretary of CSX since [removed: October] [added: November] 2017. In this [removed: role] [added: role,] he directs the [removed: company’s] [added: Company’s] legal affairs, government relations, [added: corporate communications,] risk management, public safety, environmental, and audit functions. During his [removed: 15] [added: 16] 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. |

| Diana B. Sorfleet, [removed: 54 Executive] [added: 55 *Executive] Vice President and Chief Administrative [removed: Officer] [added: Officer*] | Sorfleet was named Executive Vice President and Chief Administrative Officer in July 2018. In this role, her responsibilities include human resources, [added: information technology,] labor relations, people systems and analytics, [removed: information technology,] total rewards and aviation. During her [removed: 7] [added: 8] 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. |

| Mark K. Wallace, [removed: 49 Executive] [added: 50 *Executive] Vice President [removed: of Sales] and [added: Chief Sales &] Marketing [added: Officer*] | Wallace has served as Executive Vice President of Sales and Marketing since July 2018. In his current role, Mr. Wallace is responsible for the commercial [removed: organization, as well as real estate and facilities functions.] [added: organization.] He joined the Company in March 2017 and previously served as Executive Vice President and Chief Administrative Officer and Executive Vice President of Corporate Affairs and Chief of Staff to the CEO. 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. |

| Angela C. Williams, [removed: 44 Vice] [added: 45 *Vice] President and [removed: Controller] [added: Chief Accounting Officer*] | Williams has served as Vice President and [removed: Controller] [added: Chief Accounting Officer] of CSX since March 2018. She is responsible for financial and regulatory reporting, freight billing and collections, payroll, accounts payable and various other accounting processes. During her [removed: 15] [added: 16] years with the Company, she previously served as Assistant Vice President - Assistant Controller and 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. |

[removed: PART II][added: PART I]

| Kevin S. Boone, 42 *Executive Vice President and Chief Financial Officer* | Boone was named Executive Vice President and Chief Financial Officer in October 2019 after serving as Interim Chief Financial Officer since May 2019. In this role, he is responsible for all financial aspects of the Company's business including financial and economic analysis, accounting, tax, treasury, real estate and purchasing activities. Mr. Boone has more than 18 years of experience in finance, accounting, mergers and acquisitions, and transportation performance analysis. He joined CSX in September 2017 as Vice President of Corporate Affairs and Chief Investor Relations Officer and was later named Vice President, Marketing and Strategy leading research and data analysis to advance growth strategies for CSX. Before joining CSX in 2017, Mr. Boone worked as a Senior Equity Research Analyst at Janus Capital. He also served as a Vice President at Morgan Stanley in equity research and an associate at Merrill Lynch in the mergers and acquisitions group. |

| Jamie J. Boychuk, 42 *Executive Vice President of Operations* | Boychuk has served as CSXT's Executive Vice President of Operations since October 2019. In this role, he is responsible for mechanical, engineering, transportation and network operations, including terminals. Since joining CSXT in 2017, he has held the positions of Senior Vice President of Network, Engineering, Mechanical and Intermodal Operations; Vice President of Scheduled Railroading; and Assistant Vice President of Transportation Support. Mr. Boychuk previously worked at Canadian National Railway, where he served for 20 years in various operational roles of increasing responsibility, including sub-region General Manager. |

CSX 2019 Form 10-K p.

CSX CORPORATION

| Name and Age | Business Experience During Past Five Years |

CSX 2019 Form 10-K p.

CSX CORPORATION

PART II

| Frank A. Lonegro, 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 18 years with CSX, Mr. Lonegro has also served as Vice President Service Design, President of CSX Technology, Vice President Mechanical, and Vice President Internal Audit. |

[removed: Market Information][added: Market Information]

[removed: Description] [added: Description] of Common and Preferred [removed: Stock][added: Stock]

A total of 1.8 billion shares of common stock are authorized, of which [removed: 818,179,988] [added: 773,470,825] shares were outstanding as of December 31, [removed: 2018.][added: 2019.]

There are no [removed: pre-emptive] [added: preemptive] rights, which are privileges extended to select shareholders that would allow them to purchase additional shares before other members of the general public in the event of an offering.

At January 31, [removed: 2019,] [added: 2020,] the latest practicable date that is closest to the filing date, there were [removed: 26,281] [added: 25,127] 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: 861] [added: 798] million as of December 31, [removed: 2018.][added: 2019.]

The following table sets forth, for the quarters indicated, the dividends declared [removed: and the high and low share prices of] [added: on] CSX common stock.

| | [removed: Quarter] [added: Quarter] | | | | | | | | | | | | | | | | | | |

| | [removed: 1st] [added: 1st] | | | | [removed: 2nd] [added: 2nd] | | | | [removed: 3rd] [added: 3rd] | | | | [removed: 4th] [added: 4th] | | | | [removed: Year] [added: Year] | | |

| [removed: Dividends] [added: 2018] | $ | 0.22 | | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.88 | |

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART II][added: PART II]

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

The cumulative shareholder returns, assuming reinvestment of dividends, on $100 invested at December 31, [removed: 2013] [added: 2014] are illustrated on the graph below.

[removed: ][added: ]

[removed: CSX] [added: CSX] Purchases of Equity [removed: Securities][added: Securities]

Share repurchase activity of [removed: $1.9 billion] [added: $606 million] for the fourth quarter [removed: 2018] [added: 2019] was as follows:

| [removed: CSX] [added: CSX] Purchases of Equity Securities for the [removed: Quarter] [added: Quarter] | | | | | | | | | | | | |

| [removed: Fourth Quarter] [added: Fourth Quarter] | [removed: Total] [added: Total] Number of Shares [removed: Purchased] [added: Purchased] | | | [removed: Average] [added: Average] Price Paid per [removed: Share] [added: Share] | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs(a)] [added: Programs(a)] | | | [removed: Approximate] [added: Approximate] Dollar Value of Shares that May Yet Be Purchased Under the Plans or [removed: Programs] [added: Programs] | | |

[removed: (a)] [added: *(a)] The difference [removed: of 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" [added: of* *18,930* *shares] for the quarter represents shares purchased to fund the Company's contribution to a 401(k) plan that covers certain union [removed: employees.][added: employees.*]

| 2019 | $ | 0.24 | | | $ | 0.24 | | | $ | 0.24 | | | $ | 0.24 | | | $ | 0.96 | |

The Company continues to repurchase shares under the $5 billion program announced in January 2019.

For more information about share repurchases, see Note 2 Earnings Per Share.

| Beginning Balance | | | | | | | | | | $ | 2,362,512,464 | |

| October 1 - October 31, 2019 | 7,738,077 | | | $ | 67.74 | | 7,719,147 | | | | 1,839,693,245 | |

| November 1 - November 30, 2019 | 1,191,270 | | | | 70.42 | | 1,191,270 | | | | 1,755,803,734 | |

| December 1 - December 31, 2019 | — | | | | — | | — | | | | 1,755,803,734 | |

| Ending Balance | 8,929,347 | | | $ | 68.10 | | 8,910,417 | | | $ | 1,755,803,734 | |

CSX 2019 Form 10-K p.

CSX CORPORATION

PART II

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

| Common Stock Price | | | | | | | | | | | | | | | | | | | |

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

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

| 2017 | | | | | | | | | | | | | | | | | | | |

| Dividends | $ | 0.18 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.78 | |

| High | $ | 50.31 | | | $ | 55.06 | | | $ | 55.48 | | | $ | 58.35 | | | $ | 58.35 | |

| Low | $ | 35.59 | | | $ | 46.04 | | | $ | 47.99 | | | $ | 48.26 | | | $ | 35.59 | |

CSX purchases its own shares for two primary reasons: (1) to further its goals under its share repurchase 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.

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.

During 2018, 2017, and 2016, CSX repurchased the following shares:

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

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

| | Fiscal Years | | | | | | | | | | |

| | 2018 | | | | 2017 | | | | 2016 | | |

| Shares Repurchased (Units in Millions) | 72 | | | | 39 | | | | 38 | | |

| Cost of Shares (Dollars in Millions) | $ | 4,671 | | | $ | 1,970 | | | $ | 1,056 | |

| 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.

Management's assessment of market conditions and other factors guide the timing and volume of repurchases.

Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances.

Shares are retired immediately upon repurchase.

In accordance with the Equity Topic in the Accounting Standards Codification ("ASC"), the excess of repurchase price over par value is recorded in retained earnings.

Generally, retained earnings are only otherwise impacted by net earnings and dividends.

| 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 | |

21

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

| [removed: (Dollars] [added: *(Dollars] and Shares in Millions, Except Per Share [removed: Amounts)] [added: Amounts)*] | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [removed: Financial Performance] [added: Financial Performance] | | | | | | | | | | | | | | | | | | | | |

| | Revenue | $ | [removed: 12,250] [added: 11,937] | | | $ | [removed: 11,408] [added: 12,250] | | | $ | [removed: 11,069] [added: 11,408] | | | $ | [removed: 11,811] [added: 11,069] | | | $ | [removed: 12,669] [added: 11,811] | |

| | Expense | [removed: 7,381] [added: 6,972] | | | | [removed: 7,688] [added: 7,381] | | | | [removed: 7,656] [added: 7,688] | | | | [removed: 8,183] [added: 7,656] | | | | [removed: 8,991] [added: 8,183] | | |

| | [removed: Operating Income] [added: Operating Income] | [removed: $] [added: $] | [removed: 4,869] [added: 4,965] | | | [removed: $] [added: $] | [removed: 3,720] [added: 4,869] | | | [removed: $] [added: $] | [removed: 3,413] [added: 3,720] | | | [removed: $] [added: $] | [removed: 3,628] [added: 3,413] | | | [removed: $] [added: $] | [removed: 3,678] [added: 3,628] | |

| | Adjusted Operating Income(a) | [removed: 4,869] [added: 4,965] | | | | [removed: 3,818] [added: 4,869] | | | | [removed: 3,413] [added: 3,818] | | | | [removed: 3,628] [added: 3,413] | | | | [removed: 3,678] [added: 3,628] | | |

| [removed: Net] [added: Net] Earnings from Continuing [removed: Operations] [added: Operations] | | [removed: $] [added: $] | [removed: 3,309] [added: 3,331] | | | [removed: $] [added: $] | [removed: 5,471] [added: 3,309] | | | [removed: $] [added: $] | [removed: 1,714] [added: 5,471] | | | [removed: $] [added: $] | [removed: 1,968] [added: 1,714] | | | [removed: $] [added: $] | [removed: 1,927] [added: 1,968] | |

| Adjusted Net Earnings from Continuing Operations(a) | | [removed: 3,309] [added: 3,331] | | | | [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: Operating Ratio] [added: Operating Ratio] | [removed: 60.3] [added: 58.4] | | [removed: %] [added: %] | | [removed: 67.4] [added: 60.3] | | [removed: %] [added: %] | | [removed: 69.2] [added: 67.4] | | [removed: %] [added: %] | | [removed: 69.3] [added: 69.2] | | [removed: %] [added: %] | | [removed: 71.0] [added: 69.3] | | [removed: %] [added: %] |

| | Adjusted Operating Ratio(a) | [removed: 60.3] [added: 58.4] | | % | | [removed: 66.5] [added: 60.3] | | % | | [removed: 69.2] [added: 66.5] | | % | | [removed: 69.3] [added: 69.2] | | % | | [removed: 71.0] [added: 69.3] | | % |

| | From Continuing Operations, Basic | $ | [removed: 3.86] [added: 4.18] | | | $ | [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: From] [added: From] Continuing Operations, Assuming [removed: Dilution] [added: Dilution] | [removed: 3.84] [added: 4.17] | | | | [removed: 5.99] [added: 3.84] | | | | [removed: 1.81] [added: 5.99] | | | | [removed: 2.00] [added: 1.81] | | | | [removed: 1.92] [added: 2.00] | | |

| | Adjusted From Continuing Operations, Assuming Dilution(a) | [removed: 3.84] [added: 4.17] | | | | [removed: 2.30] [added: 3.84] | | | | [removed: 1.81] [added: 2.30] | | | | [removed: 2.00] [added: 1.81] | | | | [removed: 1.92] [added: 2.00] | | |

| | Basic | [removed: 857] [added: 796] | | | | [removed: 911] [added: 857] | | | | [removed: 947] [added: 911] | | | | [removed: 983] [added: 947] | | | | [removed: 1,001] [added: 983] | | |

| | Assuming Dilution | [removed: 861] [added: 798] | | | | [removed: 914] [added: 861] | | | | [removed: 948] [added: 914] | | | | [removed: 984] [added: 948] | | | | [removed: 1,002] [added: 984] | | |

| [removed: Financial Position] [added: Financial Position] | | | | | | | | | | | | | | | | | | | | |

| | Cash, Cash Equivalents and Short-term Investments | $ | [removed: 1,111] [added: 1,954] | | | $ | [removed: 419] [added: 1,111] | | | $ | [removed: 1,020] [added: 419] | | | $ | [removed: 1,438] [added: 1,020] | | | $ | [removed: 961] [added: 1,438] | |

| | Total Assets | [removed: 36,729] [added: 38,257] | | | | [removed: 35,739] [added: 36,729] | | | | [removed: 35,414] [added: 35,739] | | | | [removed: 34,745] [added: 35,414] | | | | [removed: 32,747] [added: 34,745] | | |

| | Long-term Debt | [removed: 14,739] [added: 15,993] | | | | [removed: 11,790] [added: 14,739] | | | | [removed: 10,962] [added: 11,790] | | | | [removed: 10,515] [added: 10,962] | | | | [removed: 9,349] [added: 10,515] | | |

| | Shareholders' Equity | [removed: 12,580] [added: 11,863] | | | | [removed: 14,721] [added: 12,580] | | | | [removed: 11,694] [added: 14,721] | | | | [removed: 11,668] [added: 11,694] | | | | [removed: 11,176] [added: 11,668] | | |

| | Dividend Per Share | $ | [removed: 0.88] [added: 0.96] | | | $ | [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: Additional Data] [added: Additional Data] | | | | | | | | | | | | | | | | | | | | |

| | Capital Expenditures | $ | [removed: 1,745] [added: 1,657] | | | $ | [removed: 2,040] [added: 1,745] | | | $ | [removed: 2,705] [added: 2,040] | | | $ | [removed: 2,562] [added: 2,705] | | | $ | [removed: 2,449] [added: 2,562] | |

| | Employees -- Annual Averages [removed: (estimated)] [added: *(estimated)*] | [removed: 22,901] [added: 21,561] | | | | [removed: 25,230] [added: 22,901] | | | | [removed: 27,350] [added: 25,230] | | | | [removed: 31,285] [added: 27,350] | | | | [removed: 31,511] [added: 31,285] | | |

| | Employees -- Year-end Count [removed: (estimated)] [added: *(estimated)*] | [removed: 22,475] [added: 20,908] | | | | [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: (a)] [added: *(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.

Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations.][added: Operations.*]

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART II][added: PART II]

21

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

22

Summarized Consolidating Financial [removed: Data, continued][added: Data, *continued*]

[removed: Consolidating] [added: Consolidating] Balance [removed: Sheets][added: Sheets]

[removed: (Dollars] [added: *(Dollars] in [removed: Millions)][added: Millions)*]

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

| [removed: ASSETS] [added: ASSETS] | | | | | | | | | | | | | | | |

| [removed: Current Assets:] [added: Current Assets:] | | | | | | | | | | | | | | | |

| [removed: Total] [added: Total] Current [removed: Assets] [added: Assets] | 2,050 | | | | 6,714 | | | | (6,199 | | ) | | 2,565 | | |

| [removed: Properties] [added: Properties] - [removed: Net] [added: Net] | — | | | | 30,703 | | | | 1,295 | | | | 31,998 | | |

| [removed: Total Assets] [added: Total Assets] | $ | 34,046 | | | $ | 38,874 | | | $ | (36,191 | ) | | $ | 36,729 | |

| [removed: LIABILITIES] [added: LIABILITIES] AND SHAREHOLDERS' [removed: EQUITY] [added: EQUITY] | | | | | | | | | | | | | | | |

| [removed: Current Liabilities:] [added: Current Liabilities:] | | | | | | | | | | | | | | | |

| [removed: Total] [added: Total] Current [removed: Liabilities] [added: Liabilities] | 6,867 | | | | 2,507 | | | | (7,459 | | ) | | 1,915 | | |

| [removed: Total Liabilities] [added: Total Liabilities] | 21,483 | | | | 10,205 | | | | (7,539 | | ) | | 24,149 | | |

| [removed: Shareholders' Equity:] [added: Shareholders' Equity:] | | | | | | | | | | | | | | | |

| [removed: Total] [added: Total] Shareholders' [removed: Equity] [added: Equity] | 12,563 | | | | 28,669 | | | | (28,652 | | ) | | 12,580 | | |

| [removed: Total] [added: Total] Liabilities and Shareholders' [removed: Equity] [added: Equity] | $ | 34,046 | | | $ | 38,874 | | | $ | (36,191 | ) | | $ | 36,729 | |

CSX [removed: 2018] [added: 2019] Form 10-K p.

[removed: CSX CORPORATION][added: CSX CORPORATION]

[removed: PART II][added: PART II]

[removed: Item] [added: Item] 8.

Financial Statements and Supplementary [removed: Data][added: Data]

| [removed: As] [added: As] of December 31, [removed: 2017] [added: 2019] | [removed: CSX Corporation] [added: CSX Corporation] | | | | [removed: CSX Transportation] [added: CSX Transportation] | | | | [removed: Eliminations] [added: Eliminations] and [removed: Other] [added: Other] | | | | [removed: CSX Consolidated] [added: CSX Consolidated] | | |