CSX (CSX) 10-K risk factor changes: FY2022 vs FY2021

CSX [removed: 2021] [added: 2022] Form 10-K p.7

An epidemic or [removed: pandemic, including the ongoing COVID-19 pandemic,] [added: pandemic] and the initiatives to reduce its transmission could adversely affect the Company's business.

[removed: However,] [added: During a health crisis, policies and initiatives may be instituted by the] public and private sector [removed: policies and initiatives] to reduce [removed: the transmission of COVID-19,] [added: transmission,] such as closures of businesses and manufacturing facilities, the promotion of social distancing, the adoption of working from home by companies and institutions, and travel [removed: restrictions could continue to adversely affect demand for the commodities and products that the Company transports, including import and export volume.][added: restrictions.]

In addition, [removed: COVID-19 and the related] initiatives to reduce transmission [removed: have resulted] [added: could result] in [removed: greater] supply chain [removed: disruption,] [added: disruptions,] which could [removed: continue to] impact volumes and make it more difficult for the Company to serve its customers.

To the extent [removed: COVID-19] [added: a public health crisis] adversely affects the Company's business and financial results, it may also have the effect of heightening many of the other risks described herein.

CSX [removed: 2021] [added: 2022] Form 10-K p.8

[removed: The ongoing COVID-19 pandemic] [added: A public health crisis could] also [removed: increases] [added: increase] the risk that the Company or its third-party vendors may experience cybersecurity incidents as a result of employees, third-party vendors and other third parties with which they interact working remotely on less secure systems and environments.

CSXT could experience rail network difficulties related to: (i) [removed: unpredictable increases in demand; (ii)] locomotive or crew shortages; [removed: (iii)] [added: (ii)] labor shortages or other service disruptions in the supply chain affecting trucking, ports, handling facilities, customer facilities or other railroads; [removed: (iv) reductions] [added: (iii) unpredictable increases] in [removed: availability of pooled equipment, including chassis; (v)] [added: demand; (iv)] extreme weather conditions; [removed: (vi) impacts from changes in yard capacity, or network structure or composition, including train routes; (vii) increased passenger activities; or (viii)] [added: (v)] regulatory changes resulting in forced access or impacting where and how fast CSXT can transport freight or maintain [removed: routes,] [added: routes; (vi) reductions in availability of pooled equipment, including chassis; (vii) impacts from changes in network capacity or structure; or (viii) increased passenger activities,] which could impact CSXT's operational fluidity, leading to deterioration of service, asset utilization and overall efficiency.

CSX [removed: 2021] [added: 2022] Form 10-K p.9

The Company's operations may be affected by external factors such as severe weather and other natural occurrences, including floods, [removed: fires, hurricanes] [added: hurricanes, fires] and earthquakes.

If the Company experiences significant declines in demand for its transportation services with respect to one or more commodities and [removed: products,] [added: products or continues to experience] the [added: impacts of inflation, the] Company may experience reduced revenue and increased operating costs, workforce adjustments, and other related activities, which could have a material adverse effect on the Company's financial condition, results of operations and liquidity.

CSX [removed: 2021] [added: 2022] Form 10-K p.10

Over time, changing dynamics in the U.S. and global energy [removed: markets] [added: markets, including the impacts of regulation and alternative fuel sources,] have resulted in lower energy production from coal-fired power plants in CSX's service territory.

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

CSX [removed: 2021] [added: 2022] Form 10-K p.11

These policies or initiatives could adversely affect demand for the commodities and products that the Company transports, including import and export volume.

Additionally, if CSX is unable to acquire, develop or implement new technology, it may suffer a competitive disadvantage within the rail industry and with companies providing other modes of transportation service.

Hurricanes as well as storm and flooding events have impacted the Company's network in the past, leading to interrupted service and damage to track and equipment.

Changes in weather patterns caused by climate change are expected to increase the frequency, severity or duration of certain adverse weather conditions.

As COVID-19 and its variant strains have spread globally, including significant impacts in the United States, CSX continues to take a variety of measures to ensure the availability of its transportation services, promote the safety and security of its employees and support the communities in which it operates.

The extent to which COVID-19 continues to impact operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, its effects on demand for the Company’s transportation services and the supply chain, as well as the effect of governmental regulations imposed in response to the pandemic.

The duration of the pandemic is dependent on several factors, including the impacts of virus variants and case resurgences across the country.

CSX [removed: 2021] [added: 2022] Form 10-K p.22

CSX [removed: 2021] [added: 2022] Form 10-K p.23

- Revenue of [removed: $12.5] [added: $14.9] billion increased [removed: $1.9] [added: $2.3] billion or [removed: 18%] [added: 19%] versus the prior year.

- Expenses of [removed: $6.9] [added: $8.8] billion increased [removed: $707 million] [added: $1.9 billion] or [removed: 11%] [added: 27%] year over year.

- Operating income of [removed: $5.6] [added: $6.0] billion increased [removed: $1.2 billion] [added: $429 million] or [removed: 28%] [added: 8%] year over year.

- Earnings per diluted share of [removed: $1.68] [added: $1.95] increased [removed: $0.48] [added: $0.27] or [removed: 40%] [added: 16%] year over year.

The following section generally discusses the Company's results of operations and financial condition for the year ended December 31, [removed: 2021,] [added: 2022,] compared to the year ended December 31, [removed: 2020.][added: 2021.]

A discussion regarding results of operations and financial condition for the year ended December 31, [removed: 2020,] [added: 2021,] compared to the year ended December 31, [removed: 2019, except as provided herein,] [added: 2020,] can be found in Part II, Item 7 of CSX's Annual Report on Form 10-K for [removed: fiscal] [added: the] year [removed: 2020,] [added: ended 2021,] filed with the Securities and Exchange Commission on February [removed: 10, 2021.][added: 16, 2022.]

[removed: 2021] [added: 2022] vs. [removed: 2020] [added: 2021] Results of Operations

| | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | *$ Change* | | | | | | *% Change* | | | | | |

| Labor and Fringe | | | [removed: 2,550] [added: 2,861] | | | | | | [removed: 2,275] [added: 2,550] | | | | | | [removed: *(275)*] [added: *(311)*] | | | | | | *(12)* | | | | | |

| Purchased Services and [removed: Other*(a)*] [added: Other] | | | [removed: 2,135] [added: 2,685] | | | | | | [removed: 1,719] [added: 2,135] | | | | | | [removed: *(416)*] [added: *(550)*] | | | | | | [removed: *(24)*] [added: *(26)*] | | | | | |

| Equipment and Other Rents | | | [removed: 364] [added: 396] | | | | | | [removed: 338] [added: 364] | | | | | | [removed: *(26)*] [added: *(32)*] | | | | | | [removed: *(8)*] [added: *(9)*] | | | | | |

| Gains on Property Dispositions | | | [removed: (454)] [added: (238)] | | | | | | [removed: (35)] [added: (454)] | | | | | | [removed: *419*] [added: *(216)*] | | | | | | [removed: *NM*] [added: *(48)*] | | | | | |

| Total Expense | | | [removed: 6,928] [added: 8,830] | | | | | | [removed: 6,221] [added: 6,928] | | | | | | [removed: *(707)*] [added: *(1,902)*] | | | | | | [removed: *(11)*] [added: *(27)*] | | | | | |

| Operating Income | | | [removed: 5,594] [added: 6,023] | | | | | | [removed: 4,362] [added: 5,594] | | | | | | [removed: *1,232*] [added: *429*] | | | | | | [removed: *28*] [added: *8*] | | | | | |

| Interest Expense | | | [removed: (722)] [added: (742)] | | | | | | [removed: (754)] [added: (722)] | | | | | | [removed: *32*] [added: *(20)*] | | | | | | [removed: *4*] [added: *(3)*] | | | | | |

| Other Income - Net | | | [removed: 79] [added: 133] | | | | | | [removed: 19] [added: 79] | | | | | | [removed: *60*] [added: *54*] | | | | | | [removed: *316*] [added: *68*] | | | | | |

| Income Tax Expense | | | [removed: (1,170)] [added: (1,248)] | | | | | | [removed: (862)] [added: (1,170)] | | | | | | [removed: *(308)*] [added: *(78)*] | | | | | | [removed: *(36)*] [added: *(7)*] | | | | | |

| Net Earnings | | | $ | [removed: 3,781] [added: 4,166] | | | | | $ | [removed: 2,765] [added: 3,781] | | | | | *$* | [removed: *1,016*] [added: *385*] | | | | | [removed: *37*] [added: *10*] | | | | | |

| Earnings Per Diluted [removed: Share*(b)*] [added: Share] | | | $ | [removed: 1.68] [added: 1.95] | | | | | $ | [removed: 1.20] [added: 1.68] | | | | | *$* | [removed: *0.48*] [added: *0.27*] | | | | | [removed: *40*] [added: *16*] | | *%* | | | |

| Operating Ratio | | | [removed: 55.3] [added: 59.5] | | % | | | | [removed: 58.8] [added: 55.3] | | % | | | | | | | | | | [removed: *350*] [added: *(420)*] | | | bps | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.24

On July 1, 2021, CSX acquired Quality Carriers, Inc. [removed: from Quality Distribution, Inc.] for a purchase price of $544 million in [removed: cash, which is presented on the statement of cash flows net of $3 million cash acquired.][added: cash.]

CSX [removed: 2021] [added: 2022] Form 10-K p.25

| | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | *% Change* | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | *% Change* | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | *% Change* | | |

| *Chemicals* | | | [removed: 659] [added: 641] | | | | | | [removed: 664] [added: 659] | | | | | | [removed: (1)] [added: (3)] | | % | | | | $ | [removed: 2,421] [added: 2,584] | | | | | $ | [removed: 2,309] [added: 2,421] | | | | | [removed: 5] [added: 7] | | % | | | | $ | [removed: 3,674] [added: 4,031] | | | | | $ | [removed: 3,477] [added: 3,674] | | | | | [removed: 6] [added: 10] | | % |

| *Agricultural and Food Products* | | | [removed: 467] [added: 481] | | | | | | [removed: 463] [added: 467] | | | | | | [removed: 1] [added: 3] | | % | | | | [removed: 1,461] [added: 1,664] | | | | | | [removed: 1,386] [added: 1,461] | | | | | | [removed: 5] [added: 14] | | % | | | | [removed: 3,128] [added: 3,459] | | | | | | [removed: 2,994] [added: 3,128] | | | | | | [removed: 4] [added: 11] | | % |

| *Minerals* | | | [removed: 325] [added: 337] | | | | | | [removed: 321] [added: 325] | | | | | | [removed: 1] [added: 4] | | % | | | | [removed: 587] [added: 658] | | | | | | [removed: 538] [added: 587] | | | | | | [removed: 9] [added: 12] | | % | | | | [removed: 1,806] [added: 1,953] | | | | | | [removed: 1,676] [added: 1,806] | | | | | | 8 | | % |

| *Automotive* | | | [removed: 318] [added: 338] | | | | | | [removed: 344] [added: 318] | | | | | | [removed: (8)] [added: 6] | | % | | | | [removed: 886] [added: 1,054] | | | | | | [removed: 920] [added: 886] | | | | | | [removed: (4)] [added: 19] | | % | | | | [removed: 2,786] [added: 3,118] | | | | | | [removed: 2,674] [added: 2,786] | | | | | | [removed: 4] [added: 12] | | % |

| *Forest Products* [removed: *(a)*] | | | [removed: 296] [added: 291] | | | | | | [removed: 278] [added: 296] | | | | | | [removed: 6] [added: (2)] | | % | | | | [removed: 918] [added: 996] | | | | | | [removed: 834] [added: 918] | | | | | | [removed: 10] [added: 8] | | % | | | | [removed: 3,101] [added: 3,423] | | | | | | [removed: 3,000] [added: 3,101] | | | | | | [removed: 3] [added: 10] | | % |

| *Metals and Equipment* | | | [removed: 277] [added: 267] | | | | | | [removed: 239] [added: 277] | | | | | | [removed: 16] [added: (4)] | | % | | | | [removed: 796] [added: 828] | | | | | | [removed: 675] [added: 796] | | | | | | [removed: 18] [added: 4] | | % | | | | [removed: 2,874] [added: 3,101] | | | | | | [removed: 2,824] [added: 2,874] | | | | | | [removed: 2] [added: 8] | | % |

| *Fertilizers* [removed: *(a)*] | | | [removed: 229] [added: 203] | | | | | | [removed: 226] [added: 229] | | | | | | [removed: 1] [added: (11)] | | % | | | | [removed: 470] [added: 455] | | | | | | [removed: 414] [added: 470] | | | | | | [removed: 14] [added: (3)] | | % | | | | [removed: 2,052] [added: 2,241] | | | | | | [removed: 1,832] [added: 2,052] | | | | | | [removed: 12] [added: 9] | | % |

| Total Merchandise | | | [removed: 2,571] [added: 2,558] | | | | | | [removed: 2,535] [added: 2,571] | | | | | | [removed: 1] [added: (1)] | | % | | | | [removed: 7,539] [added: 8,239] | | | | | | [removed: 7,076] [added: 7,539] | | | | | | [removed: 7] [added: 9] | | % | | | | [removed: 2,932] [added: 3,221] | | | | | | [removed: 2,791] [added: 2,932] | | | | | | [removed: 5] [added: 10] | | % |

| Intermodal | | | [removed: 2,976] [added: 2,963] | | | | | | [removed: 2,720] [added: 2,976] | | | | | | [removed: 9] [added: —] | | % | | | | [removed: 2,039] [added: 2,306] | | | | | | [removed: 1,702] [added: 2,039] | | | | | | [removed: 20] [added: 13] | | % | | | | [removed: 685] [added: 778] | | | | | | [removed: 626] [added: 685] | | | | | | [removed: 9] [added: 14] | | % |

| Coal | | | [removed: 706] [added: 697] | | | | | | [removed: 637] [added: 706] | | | | | | [removed: 11] [added: (1)] | | % | | | | [removed: 1,790] [added: 2,434] | | | | | | [removed: 1,397] [added: 1,790] | | | | | | [removed: 28] [added: 36] | | % | | | | [removed: 2,535] [added: 3,492] | | | | | | [removed: 2,193] [added: 2,535] | | | | | | [removed: 16] [added: 38] | | % |

| Trucking [removed: (b)] [added: (a)] | | | — | | | | | | — | | | | | | — | | % | | | | [removed: 410] [added: 966] | | | | | | [removed: —] [added: 410] | | | | | | [removed: *NM*] [added: 136] | | [added: %] | | | | — | | | | | | — | | | | | | — | | % |

| Other | | | — | | | | | | — | | | | | | — | | % | | | | [removed: 744] [added: 908] | | | | | | [removed: 408] [added: 744] | | | | | | [removed: 82] [added: 22] | | % | | | | — | | | | | | — | | | | | | — | | % |

| Total | | | [removed: 6,253] [added: 6,218] | | | | | | [removed: 5,892] [added: 6,253] | | | | | | [removed: *6*] [added: *(1)*] | | *%* | | | | $ | [removed: 12,522] [added: 14,853] | | | | | $ | [removed: 10,583] [added: 12,522] | | | | | [removed: *18*] [added: *19*] | | *%* | | | | $ | [removed: 2,003] [added: 2,389] | | | | | $ | [removed: 1,796] [added: 2,003] | | | | | [removed: *12*] [added: *19*] | | *%* |

[removed: *(b)] [added: *(a)] Effective third quarter 2021, Trucking revenue is comprised of revenue from the operations of Quality Carriers, which was acquired by CSX effective July 1, 2021.*

2022 HIGHLIGHTS

- Operating ratio of 59.5% increased 420 basis points from 55.3%.

| | | | Years Ended | | | | | | | | | | | | | | | | | | | | | | | |

| Revenue | | | $ | 14,853 | | | | | $ | 12,522 | | | | | *$* | *2,331* | | | | | *19* | | *%* | | | |

| Fuel | | | 1,626 | | | | | | 913 | | | | | | *(713)* | | | | | | *(78)* | | | | | |

| Depreciation and Amortization | | | 1,500 | | | | | | 1,420 | | | | | | *(80)* | | | | | | *(6)* | | | | | |

*Appointment of New Chief Executive Officer*

On September 15, 2022, CSX announced that, as part of a planned succession process, its Board of Directors appointed Joseph R.

Hinrichs as the Company’s new President and Chief Executive Officer and as a member of the Board of Directors, effective September 26, 2022.

On June 1, 2022, CSX acquired Pan Am for a purchase price of $600 million funded through a combination of common stock valued at $422 million and cash totaling $178 million.

Accordingly, the consolidated 2022 results include the results of Pan Am's operations after the acquisition date.

Automotive - Increased due to higher North American vehicle production as semiconductor availability has improved.

Minerals - Increased due to higher shipments of aggregates driven by construction demand.

Metals and Equipment - Decreased primarily due to lower steel shipments, partially offset by higher scrap shipments and equipment moves.

Lower domestic shipments due to continued supply-side constraints, more subdued seasonal demand than prior year and a softening truck market were mostly offset by increased international shipments.

Export coal decreased due to lower shipments of thermal coal, partially driven by reduced capacity at Curtis Bay coal pier due to an outage at a portion of the facility.

The facility is now back at full capacity.

- The impacts of agreements reached with labor unions as well as inflation totaled $199 million.

Of the total, $32 million relates to labor and benefits in prior years.

- The inclusion of Quality Carriers' operations for the full year in 2022 versus a portion of the year in 2021 resulted in increased costs of $74 million.

- Incentive compensation costs decreased $29 million primarily due to the impact of accelerated expense for eligible employees in the prior year.

- Other costs increased $67 million primarily due to hiring and retention costs, the inclusion of Pan Am's operations and other non-significant items.

- Adjustments to environmental reserves resulted in $21 million higher expense.

Car hire costs increased due to higher days per load and inflation, partially offset by lower volume.

Gains on Property Dispositions decreased to $238 million in 2022 from $454 million in 2021 primarily due to lower gains from the sale of property rights to the Commonwealth of Virginia.

Related to this transaction, CSX recognized gains of $144 million in 2022 and $349 million in 2021.

Interest expense increased $20 million primarily as a result of higher average debt balances, partially offset by increased capitalized interest.

These decreases were partially offset by higher net cash provided by operating activities.

| | | | Years Ended | | | | | | | | | | | | | | |

| | | | 2022 | | | | | | 2021 | | | | | | | | |

| Proceeds and Advances from Property Dispositions | | | 246 | | | | | | 529 | | | | | | | | |

*(a) Effective first quarter 2022, the results of other investing activities are no longer included in free cash flow.

Prior year has not been restated as the change is immaterial.*

The methodology for calculating train velocity, dwell, cars online and trip plan performance differs from that used by the Surface Transportation Board.

*(a) These metrics do not include results from the network acquired from Pan Am.

These metrics will be updated to include the Pan Am network results as data becomes available.*

CSX has seen an improvement in service metrics in the last quarter of 2022 and expects that trend to continue in 2023.

In 2022, CSX issued $2.0 billion of long-term debt.

| | | | Years Ended | | | | | | | | | | | | | | |

The increase in total assets was primarily due to a $1.2 billion increase in net properties and a $193 million increase in investments in affiliates and other companies, partially offset by a reduction in cash of $281 million.

CSX CORPORATION

PART II

2021 HIGHLIGHTS

- Operating ratio of 55.3% improved 350 basis points from 58.8%.

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

| Revenue | | | $ | 12,522 | | | | | $ | 10,583 | | | | | *$* | *1,939* | | | | | *18* | | *%* | | | |

| Depreciation | | | 1,420 | | | | | | 1,383 | | | | | | *(37)* | | | | | | *(3)* | | | | | |

| Fuel | | | 913 | | | | | | 541 | | | | | | *(372)* | | | | | | *(69)* | | | | | |

*(a) Beginning third quarter 2021, the Company changed the name of Materials, Supplies and Other expense to Purchased Services and Other, which better describes the composition of this expense amount.

This change in naming convention does not impact previously reported results.*

*(b) All prior period share and per share data has been retroactively adjusted to reflect the stock split effective June 28, 2021.

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

*Acquisition of Quality Carriers, Inc.*

This transaction was funded by cash on hand.

*COVID-19 Update*

Demand for rail services has improved from steep declines in the first half of 2020, but the effects of the disruption of global manufacturing, supply chains and consumer spending as a result of the COVID-19 global pandemic are ongoing.

Future impacts of the pandemic on the Company’s financial and operating results will be determined by its duration, effects on the demand for the Company’s transportation services and the supply chain, as well as the effect of governmental regulations imposed and legislative stimulus packages passed in response to the pandemic.

The duration of the pandemic is dependent on several factors, including the impacts of virus mutations and case resurgences across the country.

CSX employees that provide efficient and reliable rail service are essential to keeping supply chains fluid in response to this challenge.

Accordingly, business operations have been modified to ensure the safety of employees across the network while continuing to provide a high level of service to customers.

The Company is strongly encouraging employees to get vaccinated.

A cross-functional task force continues to monitor and coordinate the Company’s response to COVID-19.

*NM - not meaningful*

*(a) Effective first quarter 2021, changes were made in the categorization of certain lines of business, impacting Forest Products and Fertilizers.

The impacts were not material and prior periods have been reclassified to conform to the current presentation.*

Minerals - Increased as a result of higher shipments of cement, lime and limestone.

Automotive - Decreased due to lower vehicle production at plants served by CSX, which were impacted by shortages of semiconductors and other parts.

Metals and Equipment - Increased as growth across the metals markets was partially offset by reduced equipment shipments.

Increases in both domestic and international shipments resulted from strong demand, tight truck capacity, inventory replenishments and growth in rail volumes from east coast ports.

The increase in export coal was driven by higher international shipments of both thermal coal and metallurgical coal.

Expense

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.

- Inflation and higher volume resulted in $133 million of increased expenses.

- Incentive compensation increased $123 million primarily due to higher expected payouts in the current year, including accelerated expense for certain employees.

- The acquisition of Quality Carriers resulted in increased costs of $61 million.

- Other costs decreased $42 million primarily due to efficiency savings, lower severance expenses and other non-significant items, partially offset by expenses related to increased hiring and new retention programs of $38 million.

This category also includes costs related to materials, travel, casualty claims, environmental remediation, train accidents, property and sales tax, utilities and other items.

Depreciation expense primarily relates to recognizing the costs of capital assets, such as locomotives, railcars and track structure, over their respective useful lives, which are reviewed periodically as part of depreciation studies.

This expense is impacted primarily by the capital expenditures made each year.

[removed: On both April 29, 2020, and July 9,] [added: In] 2020, the Company executed [removed: a] [added: two] forward starting interest rate [removed: swap] [added: swaps] with a notional value of $250 million for an aggregate notional value of $500 million.

The Company recognized an unrealized gain of [removed: $8] [added: $80] million and [removed: $62] [added: $8] million net of tax during the years ended December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] respectively, in the consolidated statements of comprehensive income with the related asset on the balance sheet as of December 31, [removed: 2021.][added: 2022.]

Upon [added: final] settlement of the swaps, which expire in 2027, the unrealized gain or loss in AOCI will be recognized in earnings as an adjustment to interest expense over the same period during which the hedged transaction affects earnings.

As of December 31, [removed: 2021,] [added: 2022,] the potential change in fair value resulting from a hypothetical 10% change in interest rates would not be material.

As of December 31, [removed: 2021,] [added: 2022,] CSX has no floating rate [removed: debt obligations] [added: notes] outstanding.

The potential decrease in fair value of the Company's fixed rate long-term debt resulting from a hypothetical 10% increase in U.S. Treasury rates, or approximately [removed: 15] [added: 40] basis points, is estimated to be [removed: $448] [added: $709] million as of December 31, [removed: 2021] [added: 2022,] and [removed: $428] [added: $448] million as of December 31, [removed: 2020.][added: 2021.]

CSX [removed: 2021] [added: 2022] Form 10-K p.47

| Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) | | | | | | [removed: [49](#i185e3defd4a34a279067a06c09b5e07a_79)] [added: [46](#i40071d158dbf4c538fc6bcfb987a65d1_76)] | | |

| Consolidated Income Statements for the [removed: Fiscal] Years Ended: | | | | | | [removed: [51](#i185e3defd4a34a279067a06c09b5e07a_82)] [added: [48](#i40071d158dbf4c538fc6bcfb987a65d1_79)] | | |

| Consolidated Comprehensive Income Statements for the [removed: Fiscal] Years Ended: | | | | | | [removed: [52](#i185e3defd4a34a279067a06c09b5e07a_85)] [added: [49](#i40071d158dbf4c538fc6bcfb987a65d1_82)] | | |

| Consolidated Balance Sheets as of: | | | | | | [removed: [53](#i185e3defd4a34a279067a06c09b5e07a_88)] [added: [50](#i40071d158dbf4c538fc6bcfb987a65d1_85)] | | |

| Consolidated Cash Flow Statements for [removed: Fiscal] Years Ended: | | | | | | [removed: [54](#i185e3defd4a34a279067a06c09b5e07a_91)] [added: [51](#i40071d158dbf4c538fc6bcfb987a65d1_88)] | | |

| Consolidated Statements of Changes in Shareholders' Equity: | | | | | | [removed: [55](#i185e3defd4a34a279067a06c09b5e07a_94)] [added: [52](#i40071d158dbf4c538fc6bcfb987a65d1_91)] | | |

| Notes to Consolidated Financial Statements | | | | | | [removed: [56](#i185e3defd4a34a279067a06c09b5e07a_97)] [added: [53](#i40071d158dbf4c538fc6bcfb987a65d1_94)] | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.48

We have audited the accompanying consolidated balance sheets of CSX Corporation (the Company) as of December 31, [removed: 2021 and 2020,] [added: 2022] and [added: 2021,] 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: 2021,] [added: 2022,] 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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: 16, 2022] [added: 15, 2023] expressed an unqualified opinion thereon.

Critical Audit [removed: Matters][added: Matter]

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, [removed: subjective,] [added: 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 [removed: below] [added: below,] providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.

CSX [removed: 2021] [added: 2022] Form 10-K p.49

| *Description of the Matter* | | | [removed: At] [added: As of] December 31, [removed: 2021,] [added: 2022,] assets depreciated under the group-life method comprised [removed: 86%] [added: 84%] of total gross fixed assets of [removed: $46.5] [added: $48.1] 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 [removed: completed] [added: conducted by a third-party specialist and analyzed by the Company’s management] 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. [added: In years when depreciation studies are not performed, annual data reviews are conducted by a third-party specialist and analyzed by the Company’s management to review the asset service lives.] A depreciation study was performed in [removed: 2019] [added: 2022] for equipment [removed: assets and 2020 for] [added: assets. For] road and track [removed: assets. The] [added: assets, the] most recent depreciation [removed: studies are reviewed by management each] [added: study was performed in 2020 and was evaluated in the current] year through an annual data [removed: review to determine if there have been significant factors that result in changes to the group-life method key assumptions.] [added: review.] 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 and annual data reviews of its group-life assets. For example, we tested controls over management’s review of [added: the depreciation study for equipment assets and review of depreciation expense and estimated useful lives. We also tested controls over management’s annual data review of] asset activity and assumptions that could impact the [added: estimated useful lives determined in the] most recent depreciation study of [removed: equipment and] 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 and annual data reviews [removed: provided] [added: performed] by the Company’s third-party [removed: specialist;] [added: specialist and reviewed by management;] assessing the completeness and accuracy of the data provided by management to the third-party specialist; and including a specialist on our team to evaluate the methods used by the third-party specialist and [added: reviewed by] management in determining the [removed: average service] [added: estimated useful] lives and salvage values of assets [removed: to perform] [added: resulting from] the depreciation studies and any changes to the [removed: service] [added: estimated useful] lives and salvage values, if any, resulting from the annual data reviews. We compared the [removed: significant] methods used by management to those used throughout the industry and within other depreciation studies. We assessed the historical accuracy of management’s estimates via retrospective review and independently calculated the current year depreciation rates. | | | | | | | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.50

| | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Revenue | | | $ | [removed: 12,522] [added: 14,853] | | | | | $ | [removed: 10,583] [added: 12,522] | | | | | $ | [removed: 11,937] [added: 10,583] | |

| Labor and Fringe | | | [removed: 2,550] [added: 2,861] | | | | | | [removed: 2,275] [added: 2,550] | | | | | | [removed: 2,616] [added: 2,275] | | |

| Purchased Services and Other | | | [removed: 2,135] [added: 2,685] | | | | | | [removed: 1,719] [added: 2,135] | | | | | | [removed: 1,900] [added: 1,719] | | |

| Depreciation [added: and Amortization] | | | [removed: 1,420] [added: 1,500] | | | | | | [removed: 1,383] [added: 1,420] | | | | | | [removed: 1,349] [added: 1,383] | | |

| Fuel | | | [removed: 913] [added: 1,626] | | | | | | [removed: 541] [added: 913] | | | | | | [removed: 906] [added: 541] | | |

| Equipment and Other Rents | | | [removed: 364] [added: 396] | | | | | | [removed: 338] [added: 364] | | | | | | [removed: 352] [added: 338] | | |

| Gains on Property Dispositions | | | [removed: (454)] [added: (238)] | | | | | | [removed: (35)] [added: (454)] | | | | | | [removed: (151)] [added: (35)] | | |

| Total Expense | | | [removed: 6,928] [added: 8,830] | | | | | | [removed: 6,221] [added: 6,928] | | | | | | [removed: 6,972] [added: 6,221] | | |

| Operating Income | | | [removed: 5,594] [added: 6,023] | | | | | | [removed: 4,362] [added: 5,594] | | | | | | [removed: 4,965] [added: 4,362] | | |

| Interest Expense | | | [removed: (722)] [added: (742)] | | | | | | [removed: (754)] [added: (722)] | | | | | | [removed: (737)] [added: (754)] | | |

| Other Income - Net (Note 14) | | | [removed: 79] [added: 133] | | | | | | [removed: 19] [added: 79] | | | | | | [removed: 88] [added: 19] | | |

| Earnings Before Income Taxes | | | [removed: 4,951] [added: 5,414] | | | | | | [removed: 3,627] [added: 4,951] | | | | | | [removed: 4,316] [added: 3,627] | | |

| Income Tax Expense (Note 12) | | | [removed: (1,170)] [added: (1,248)] | | | | | | [removed: (862)] [added: (1,170)] | | | | | | [removed: (985)] [added: (862)] | | |

| Net Earnings | | | $ | [removed: 3,781] [added: 4,166] | | | | | $ | [removed: 2,765] [added: 3,781] | | | | | $ | [removed: 3,331] [added: 2,765] | |

In fourth quarter 2022, CSX settled a portion equal to $160 million notional value of the aggregate $500 million cash flow hedges, which resulted in CSX receiving a cash payment of $52 million.

The gain associated with the settled portion of the hedges will continue to be classified in accumulated other comprehensive income (“AOCI”) until the associated debt instrument is issued in the future.

Changes in interest rates could impact the fair value of the Company's fixed-to-floating interest rate swaps.

In 2022, CSX entered into five separate fixed-to-floating interest rate swaps classified as fair value hedges.

The swaps are designed to hedge 10 years of interest rate risk associated with market fluctuations attributable to the Secured Overnight Financing Rate on a cumulative $800 million of fixed rate outstanding notes, which are due between 2036 and 2040.

As of December 31, 2022, the cumulative fair value of these swaps was a $118 million liability, which is included in other long-term liabilities on the consolidated balance sheet.

The associated cumulative adjustment to the hedged notes is included in long-term debt.

Gains and losses resulting from changes in fair value of the interest rate swaps offset changes in the fair value of the hedged portion of the underlying debt with no gain or loss recognized due to hedge ineffectiveness.

The difference in the net fixed-to-float interest settlement on the derivatives is recognized in interest expense and was not material for the year ending at December 31, 2022.

The swaps will expire in 2032.

If settled early, the remaining liability or asset will be amortized over the remaining life of the associated notes.

As of December 31, 2022, the potential change in fair value resulting from a hypothetical 10% change in interest rates would not be material.

CSX 2022 Form 10-K p.44

| | | | December 31, 2022 | | | | | |

| | | | December 31, 2022 | | | | | |

| | | | December 31, 2022 | | | | | |

CSX 2022 Form 10-K p.45

CSX 2022 Form 10-K p.46

| | | | 2022 | | | | | | 2021 | | |

CSX CORPORATION

PART II

Item 8.

Financial Statements and Supplementary Data

| | | | | | | | | |

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

| | | | December 31, 2020 | | | | | |

| | | | December 31, 2019 | | | | | |

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

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

February 16, 2022

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

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

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

Beginning third quarter 2021, the Company changed the name of *Materials, Supplies and Other* expense to *Purchased Services and Other*, which better describes the composition of this expense amount.

This change in naming convention does not impact previously reported results.

All prior period share and per share data has been retroactively adjusted to reflect the stock split effective June 28, 2021.

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

See accompanying Notes to Consolidated Financial Statements.

CSX 2021 Form 10-K p.51

*(Dollars in Millions)*

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

CSX 2021 Form 10-K p.52

| | | | 2021 | | | | | | 2020 | | |

Certain prior year data has been retroactively adjusted to reflect the stock split effective June 28, 2021 and reclassified to conform to the current presentation.

CSX 2021 Form 10-K p.53

CONSOLIDATED CASH FLOW STATEMENTS

| OPERATING ACTIVITIES | | | | | | | | | | | | | | | | | |

| Net Earnings | | | $ | 3,781 | | | | | $ | 2,765 | | | | | $ | 3,331 | |

| Adjustments to Reconcile Net Earnings to Net Cash | | | | | | | | | | | | | | | | | |

| Provided by Operating Activities: | | | | | | | | | | | | | | | | | |

| Deferred Income Taxes | | | 167 | | | | | | 180 | | | | | | 273 | | |

| Other Operating Activities | | | 12 | | | | | | (32) | | | | | | (69) | | |

| Changes in Operating Assets and Liabilities: | | | | | | | | | | | | | | | | | |

| Accounts Receivable | | | (141) | | | | | | 83 | | | | | | 45 | | |

| Other Current Assets | | | (25) | | | | | | (75) | | | | | | 68 | | |

| Accounts Payable | | | 128 | | | | | | (20) | | | | | | 98 | | |

| Income and Other Taxes Payable | | | 72 | | | | | | 39 | | | | | | 2 | | |

| Other Current Liabilities | | | 139 | | | | | | (25) | | | | | | (96) | | |

| Net Cash Provided by Operating Activities | | | 5,099 | | | | | | 4,263 | | | | | | 4,850 | | |

CSX’s principal operating subsidiary, CSX Transportation, Inc. (“CSXT”), provides an important link to the transportation supply chain through its approximately [removed: 19,500] [added: 20,000] route-mile rail [removed: network, which] [added: network and] serves major population centers in [removed: 23] [added: 26] 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 more than [removed: 230] [added: 240] short-line and regional railroads.

Effective July 1, 2021, CSX acquired Quality Carriers, the largest provider of bulk liquid chemicals truck transportation in North [removed: America, from Quality Distribution, Inc. For further details, refer to Note 17, *Business Combinations*.][added: America.]

The Company is focused on developing and strictly maintaining a scheduled service plan with an emphasis on [added: improving customer service,] optimizing [removed: assets.][added: assets and increasing employee engagement.]

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

CSX [removed: 2021] [added: 2022] Form 10-K p.3

During [removed: 2021,] [added: 2022,] the Company's services generated [removed: $12.5] [added: $14.9] billion of revenue and served four primary lines of business: merchandise, intermodal, coal and trucking.

- The merchandise business shipped 2.6 million carloads (41% of volume) and generated [removed: 60% of] [added: $8.2 billion in] revenue [added: (55% of revenue)] in [removed: 2021.][added: 2022.]

- The intermodal business shipped 3.0 million units (48% of volume) and generated [removed: 16% of] [added: $2.3 billion in] revenue [added: (16% of revenue)] in [removed: 2021.][added: 2022.]

- The coal business shipped [removed: 706] [added: 697] thousand carloads (11% of volume) and generated [removed: 14% of] [added: $2.4 billion in] revenue [added: (16% of revenue)] in [removed: 2021.][added: 2022.]

[removed: Approximately one-quarter] [added: Most] of [added: the] export coal [removed: and] the [added: Company transports is used for steelmaking, while the] majority of [removed: the] domestic coal [removed: that] the Company [removed: transports] [added: ships] is used for [removed: generating] electricity [removed: or industrial purposes.][added: generation.]

- The trucking business generated [removed: 3%] [added: $966 million, or 7%,] of revenue in [removed: 2021.][added: 2022.]

Other revenue accounted for [removed: 7%] [added: 6%] of the Company’s total revenue in [removed: 2021.][added: 2022.]

The Company had more than [removed: 20,900] [added: 22,500] employees as of December [removed: 2021,] [added: 2022,] which includes approximately [removed: 16,500] [added: 17,100] employees that are members of a [added: rail] labor union.

The FRA Personal Injury Frequency Index, a measure of the number of FRA-reportable injuries per 200,000 man-hours, was [removed: 0.92] [added: 0.96] in [removed: 2021] [added: both 2022] and [removed: 0.82 in 2020, representing a 12% increase] [added: 2021, remaining flat] year over year.

CSX [removed: 2021] [added: 2022] Form 10-K p.4

As of December 31, [removed: 2021,] [added: 2022,] approximately [removed: 20%] [added: 21%] of CSX's overall workforce and [removed: 37%] [added: 36%] of management was diverse, calculated as the percentage of males of color and all females.

In [removed: 2021,] [added: 2022,] CSX was recognized as a “Best Place to Work for Disability Inclusion” by Disability:IN and the American Association of People with Disabilities for a [removed: third] [added: fourth] consecutive year after receiving a top score on their disability equality index.

A leader in freight rail transportation for [removed: more than 190] [added: nearly 200] years, the Company’s heritage dates back to the early nineteenth century when The Baltimore and Ohio Railroad Company (“B&O”), the nation’s first common carrier, was chartered in 1827.

This current rail [added: network, which now includes the] network [added: acquired from Pan Am,] allows the Company to directly serve every major market in the eastern United States with safe, dependable, environmentally responsible and fuel efficient freight transportation and intermodal service.

CSX [removed: 2021] [added: 2022] Form 10-K p.5

For additional information concerning business conducted by the Company during [removed: 2021,] [added: 2022,] see Item 7.

CSX [removed: 2021] [added: 2022] Form 10-K p.6

On June 1, 2022, CSX completed its acquisition of Pan Am Systems, Inc. (“Pan Am”) which is the parent company of Pan Am Railways, Inc. This acquisition expands CSXT’s reach in the Northeastern United States.

For further details, refer to Note 17, *Business Combinations*.

For further details, refer to Note 17, *Business Combinations*.

As of December 2, 2022, all 12 rail unions at CSX that participated in national bargaining were covered by national agreements with the Class I railroads and CSX-specific agreements that will remain in effect through December 31, 2024.

In the face of supply chain disruption and a tight labor market, CSX continues to focus on ensuring the hiring pipeline for frontline railroaders is adequate to meet customer needs and has implemented new recruiting and staffing measures.

For the 13 rail unions that participate in national bargaining, a round of negotiations for benefits, wages and work rules is underway.

Typically, these negotiations take several years.

Current agreements remain in place until modified by new agreements.

In response to the novel coronavirus ("COVID-19") pandemic, additional policies and procedures were developed to protect the health and safety of employees.

A cross-functional task force continues to monitor the situation to ensure that appropriate safety measures are being taken.

For the fiscal year ended December 31, [removed: 2021][added: 2022]

[removed: ][added: ]

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

On June 30, [removed: 2021] [added: 2022] (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: $72] [added: $62] billion (based on the close price as reported on the NASDAQ National Market System on such date).

There were [removed: 2,193,389,444] [added: 2,062,605,434] shares of Common Stock outstanding on January 31, [removed: 2022] [added: 2023] (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: 2020] [added: 2023] annual meeting of shareholders.

CSX [removed: 2021] [added: 2022] Form 10-K p.1

| | | | [1A. Risk [removed: Factors](#i185e3defd4a34a279067a06c09b5e07a_13)] [added: Factors](#i40071d158dbf4c538fc6bcfb987a65d1_13)] | | | | | | | | | [removed: [7](#i185e3defd4a34a279067a06c09b5e07a_13)] [added: [7](#i40071d158dbf4c538fc6bcfb987a65d1_13)] | | |

| | | | [1B. Unresolved Staff [removed: Comments](#i185e3defd4a34a279067a06c09b5e07a_16)] [added: Comments](#i40071d158dbf4c538fc6bcfb987a65d1_16)] | | | | | | | | | [removed: [12](#i185e3defd4a34a279067a06c09b5e07a_16)] [added: [12](#i40071d158dbf4c538fc6bcfb987a65d1_16)] | | |

| 3. | | | [Legal [removed: Proceedings](#i185e3defd4a34a279067a06c09b5e07a_22)] [added: Proceedings](#i40071d158dbf4c538fc6bcfb987a65d1_22)] | | | | | | | | | [removed: [17](#i185e3defd4a34a279067a06c09b5e07a_22)] [added: [17](#i40071d158dbf4c538fc6bcfb987a65d1_22)] | | |

| 4. | | | [Mine Safety [removed: Disclosures](#i185e3defd4a34a279067a06c09b5e07a_25)] [added: Disclosures](#i40071d158dbf4c538fc6bcfb987a65d1_25)] | | | | | | | | | [removed: [17](#i185e3defd4a34a279067a06c09b5e07a_25)] [added: [17](#i40071d158dbf4c538fc6bcfb987a65d1_25)] | | |

| | | | [Executive Officers of the [removed: Registrant](#i185e3defd4a34a279067a06c09b5e07a_28)] [added: Registrant](#i40071d158dbf4c538fc6bcfb987a65d1_28)] | | | | | | | | | [removed: [18](#i185e3defd4a34a279067a06c09b5e07a_28)] [added: [18](#i40071d158dbf4c538fc6bcfb987a65d1_28)] | | |

| 5. | | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i185e3defd4a34a279067a06c09b5e07a_31)] [added: Securities](#i40071d158dbf4c538fc6bcfb987a65d1_31)] | | | | | | | | | [removed: [20](#i185e3defd4a34a279067a06c09b5e07a_31)] [added: [20](#i40071d158dbf4c538fc6bcfb987a65d1_31)] | | |

| 7. | | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i185e3defd4a34a279067a06c09b5e07a_37)] [added: Operations](#i40071d158dbf4c538fc6bcfb987a65d1_37)] | | | | | | | | | [removed: [22](#i185e3defd4a34a279067a06c09b5e07a_37)] [added: [22](#i40071d158dbf4c538fc6bcfb987a65d1_37)] | | |

| | | | | | | | | | [· Terms Used by [removed: CSX](#i185e3defd4a34a279067a06c09b5e07a_40)] [added: CSX](#i40071d158dbf4c538fc6bcfb987a65d1_40)] | | | [removed: [22](#i185e3defd4a34a279067a06c09b5e07a_40)] [added: [22](#i40071d158dbf4c538fc6bcfb987a65d1_40)] | | |

| | | | | | | | | | · [Results of [removed: Operations](#i185e3defd4a34a279067a06c09b5e07a_46)] [added: Operations](#i40071d158dbf4c538fc6bcfb987a65d1_46)] | | | [removed: [24](#i185e3defd4a34a279067a06c09b5e07a_46)] [added: [24](#i40071d158dbf4c538fc6bcfb987a65d1_46)] | | |

| | | | | | | | | | · [Liquidity and Capital [removed: Resources](#i185e3defd4a34a279067a06c09b5e07a_55)] [added: Resources](#i40071d158dbf4c538fc6bcfb987a65d1_55)] | | | [removed: [34](#i185e3defd4a34a279067a06c09b5e07a_55)] [added: [31](#i40071d158dbf4c538fc6bcfb987a65d1_55)] | | |

| | | | | | | | | | [removed: [·](#i185e3defd4a34a279067a06c09b5e07a_58) [Contractual] [added: [· Contractual] Obligations, Other Commitments and Off-Balance Sheet [removed: Arrangements](#i185e3defd4a34a279067a06c09b5e07a_58)] [added: Arrangements](#i40071d158dbf4c538fc6bcfb987a65d1_58)] | | | [removed: [39](#i185e3defd4a34a279067a06c09b5e07a_58)] [added: [36](#i40071d158dbf4c538fc6bcfb987a65d1_58)] | | |

| | | | | | | | | | [· Labor [removed: Agreements](#i185e3defd4a34a279067a06c09b5e07a_64)] [added: Agreements](#i40071d158dbf4c538fc6bcfb987a65d1_61)] | | | [removed: [40](#i185e3defd4a34a279067a06c09b5e07a_64)] [added: [36](#i40071d158dbf4c538fc6bcfb987a65d1_61)] | | |

| | | | | | | | | | [· Critical Accounting [removed: Estimates](#i185e3defd4a34a279067a06c09b5e07a_67)] [added: Estimates](#i40071d158dbf4c538fc6bcfb987a65d1_64)] | | | [removed: [40](#i185e3defd4a34a279067a06c09b5e07a_67)] [added: [37](#i40071d158dbf4c538fc6bcfb987a65d1_64)] | | |

| | | | | | | | | | [· Forward-Looking [removed: Statements](#i185e3defd4a34a279067a06c09b5e07a_70)] [added: Statements](#i40071d158dbf4c538fc6bcfb987a65d1_67)] | | | [removed: [45](#i185e3defd4a34a279067a06c09b5e07a_70)] [added: [42](#i40071d158dbf4c538fc6bcfb987a65d1_67)] | | |

| 7A. | | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#i185e3defd4a34a279067a06c09b5e07a_73)] [added: Risk](#i40071d158dbf4c538fc6bcfb987a65d1_70)] | | | | | | | | | [removed: [47](#i185e3defd4a34a279067a06c09b5e07a_73)] [added: [44](#i40071d158dbf4c538fc6bcfb987a65d1_70)] | | |

| 8. | | | [Financial Statements and Supplementary [removed: Data](#i185e3defd4a34a279067a06c09b5e07a_76)] [added: Data](#i40071d158dbf4c538fc6bcfb987a65d1_73)] | | | | | | | | | [removed: [48](#i185e3defd4a34a279067a06c09b5e07a_76)] [added: [45](#i40071d158dbf4c538fc6bcfb987a65d1_73)] | | |

| 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i185e3defd4a34a279067a06c09b5e07a_157)] [added: Disclosure](#i40071d158dbf4c538fc6bcfb987a65d1_160)] | | | | | | | | | [removed: [110](#i185e3defd4a34a279067a06c09b5e07a_157)] [added: [111](#i40071d158dbf4c538fc6bcfb987a65d1_160)] | | |

| 9A. | | | [Controls and [removed: Procedures](#i185e3defd4a34a279067a06c09b5e07a_160)] [added: Procedures](#i40071d158dbf4c538fc6bcfb987a65d1_163)] | | | | | | | | | [removed: [110](#i185e3defd4a34a279067a06c09b5e07a_160)] [added: [111](#i40071d158dbf4c538fc6bcfb987a65d1_163)] | | |

| 9C. | | | [removed: [D](#i185e3defd4a34a279067a06c09b5e07a_1726)[isclosure](#i185e3defd4a34a279067a06c09b5e07a_1726) [Regarding] [added: [Disclosure Regarding] Foreign Jurisdictions that Prevent [removed: Inspections](#i185e3defd4a34a279067a06c09b5e07a_1726)] [added: Inspections](#i40071d158dbf4c538fc6bcfb987a65d1_169)] | | | | | | | | | [removed: [113](#i185e3defd4a34a279067a06c09b5e07a_1726)] [added: [114](#i40071d158dbf4c538fc6bcfb987a65d1_169)] | | |

| 10. | | | [Directors, Executive Officers of the Registrant and Corporate [removed: Governance](#i185e3defd4a34a279067a06c09b5e07a_166)] [added: Governance](#i40071d158dbf4c538fc6bcfb987a65d1_172)] | | | | | | | | | [removed: [113](#i185e3defd4a34a279067a06c09b5e07a_166)] [added: [114](#i40071d158dbf4c538fc6bcfb987a65d1_172)] | | |

| 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i185e3defd4a34a279067a06c09b5e07a_172)] [added: Matters](#i40071d158dbf4c538fc6bcfb987a65d1_178)] | | | | | | | | | [removed: [113](#i185e3defd4a34a279067a06c09b5e07a_172)] [added: [114](#i40071d158dbf4c538fc6bcfb987a65d1_178)] | | |

| 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i185e3defd4a34a279067a06c09b5e07a_175)] [added: Independence](#i40071d158dbf4c538fc6bcfb987a65d1_181)] | | | | | | | | | [removed: [113](#i185e3defd4a34a279067a06c09b5e07a_175)] [added: [114](#i40071d158dbf4c538fc6bcfb987a65d1_181)] | | |

| 14. | | | [Principal Accounting Fees and [removed: Services](#i185e3defd4a34a279067a06c09b5e07a_178)] [added: Services](#i40071d158dbf4c538fc6bcfb987a65d1_184)] | | | | | | | | | [removed: [113](#i185e3defd4a34a279067a06c09b5e07a_178)] [added: [114](#i40071d158dbf4c538fc6bcfb987a65d1_184)] | | |

| 15. | | | [Exhibits, Financial Statement [removed: Schedules](#i185e3defd4a34a279067a06c09b5e07a_181)] [added: Schedules](#i40071d158dbf4c538fc6bcfb987a65d1_187)] | | | | | | | | | [removed: [114](#i185e3defd4a34a279067a06c09b5e07a_181)] [added: [115](#i40071d158dbf4c538fc6bcfb987a65d1_187)] | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.2

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

(□)

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).

(□)

| 1. | | | [Business](#i40071d158dbf4c538fc6bcfb987a65d1_10) | | | | | | | | | [3](#i40071d158dbf4c538fc6bcfb987a65d1_10) | | |

| 2. | | | [Properties](#i40071d158dbf4c538fc6bcfb987a65d1_19) | | | | | | | | | [13](#i40071d158dbf4c538fc6bcfb987a65d1_19) | | |

| 6. | | | [Reserved](#i40071d158dbf4c538fc6bcfb987a65d1_34) | | | | | | | | | [21](#i40071d158dbf4c538fc6bcfb987a65d1_34) | | |

| | | | | | | | | | [· 2022 Highlights](#i40071d158dbf4c538fc6bcfb987a65d1_43) | | | [24](#i40071d158dbf4c538fc6bcfb987a65d1_43) | | |

| 9B. | | | [Other Information](#i40071d158dbf4c538fc6bcfb987a65d1_166) | | | | | | | | | [114](#i40071d158dbf4c538fc6bcfb987a65d1_166) | | |

| 11. | | | [Executive Compensation](#i40071d158dbf4c538fc6bcfb987a65d1_175) | | | | | | | | | [114](#i40071d158dbf4c538fc6bcfb987a65d1_175) | | |

| [Signatures](#i40071d158dbf4c538fc6bcfb987a65d1_190) | | | | | | | | | | | | [119](#i40071d158dbf4c538fc6bcfb987a65d1_190) | | |

| 1. | | | [Business](#i185e3defd4a34a279067a06c09b5e07a_10) | | | | | | | | | [3](#i185e3defd4a34a279067a06c09b5e07a_10) | | |

| 2. | | | [Properties](#i185e3defd4a34a279067a06c09b5e07a_19) | | | | | | | | | [13](#i185e3defd4a34a279067a06c09b5e07a_19) | | |

| 6. | | | [Reserved](#i185e3defd4a34a279067a06c09b5e07a_34) | | | | | | | | | [21](#i185e3defd4a34a279067a06c09b5e07a_34) | | |

| | | | | | | | | | [· 202](#i185e3defd4a34a279067a06c09b5e07a_43)[1](#i185e3defd4a34a279067a06c09b5e07a_43) [Highlights](#i185e3defd4a34a279067a06c09b5e07a_43) | | | [24](#i185e3defd4a34a279067a06c09b5e07a_43) | | |

| 9B. | | | [Other Information](#i185e3defd4a34a279067a06c09b5e07a_163) | | | | | | | | | [113](#i185e3defd4a34a279067a06c09b5e07a_163) | | |

| 11. | | | [Executive Compensation](#i185e3defd4a34a279067a06c09b5e07a_169) | | | | | | | | | [113](#i185e3defd4a34a279067a06c09b5e07a_169) | | |

| [Signatures](#i185e3defd4a34a279067a06c09b5e07a_184) | | | | | | | | | | | | [118](#i185e3defd4a34a279067a06c09b5e07a_184) | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.12

Serving [removed: 23] [added: 26] 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 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: 19,500] [added: 20,000] route miles.

At December [removed: 2021,] [added: 2022,] the breakdown of track miles was as follows:

| Single [removed: mainline track] [added: Mainline Track] | | | [removed: 19,433] [added: 19,879] | | |

| Other [removed: mainline track] [added: Mainline Track] | | | [removed: 5,707] [added: 5,662] | | |

| Terminals and [removed: switching yards] [added: Switching Yards] | | | [removed: 9,278] [added: 9,308] | | |

| Passing [removed: sidings] [added: Sidings] and [removed: turnouts] [added: Turnouts] | | | [removed: 887] [added: 901] | | |

The Company’s largest yards and terminals based on [removed: 2021] [added: 2022] volume (number of railcars or intermodal containers processed) are listed below.

| Bedford Park Intermodal Terminal (Chicago) | | | [removed: 916,805] [added: 886,636] | | |

| Fairburn, GA Intermodal Terminal (Atlanta) | | | [removed: 392,688] [added: 358,416] | | |

| Chicago 59th St. Intermodal Terminal | | | [removed: 313,870] [added: 308,421] | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.13

This route carries goods from all three of the Company’s major [added: rail] markets – merchandise, intermodal and coal.

CSXT’s coal network remains well positioned to supply utility markets in both the Northeast and Southeast and to transport coal shipments for export outside of the U.S. [removed: Approximately one-quarter] [added: Most] of [added: the] export coal [removed: and] the [added: Company transports is used for steelmaking, while the] majority of [removed: the] domestic coal [removed: that] the Company [removed: transports] [added: ships] is used for [removed: generating] electricity [removed: or industrial purposes.][added: generation.]

CSX [removed: 2021] [added: 2022] Form 10-K p.14

[removed: ][added: ]

CSX [removed: 2021] [added: 2022] Form 10-K p.15

As of December [removed: 2021,] [added: 2022,] CSXT owns or long-term leases more than [removed: 3,500] [added: 3,600] locomotives.

Of owned locomotives, approximately 68% were in active service as of December 31, [removed: 2021,] [added: 2022,] and the remainder were in storage to be utilized as needed.

As of December [removed: 2021,] [added: 2022,] CSXT’s fleet of owned or long-term leased locomotives consisted of the following types:

| Auxiliary [removed: units] [added: Units] | | | [removed: 178] [added: 177] | | | | | | 5 | | % | | | | 29 | | |

| Total locomotives | | | [removed: 3,516] [added: 3,608] | | | | | | 100 | | % | | | | [removed: 22] [added: 25] | | |

Of total owned and long-term leased equipment, approximately [removed: 87%] [added: 91%] was in active service as of December 31, [removed: 2021,] [added: 2022,] and the remainder were in storage to be utilized as needed.

As of December [removed: 2021,] [added: 2022,] the Company’s owned and long-term leased equipment consisted of the following:

| Multi-level [removed: flat cars] [added: Flat Cars] | | | [removed: 10,910] [added: 10,736] | | | | | | 23 | | % |

| Covered [removed: hoppers] [added: Hoppers] | | | [removed: 7,187] [added: 6,366] | | | | | | [removed: 15] [added: 13] | | % |

| Open-top [removed: hoppers] [added: Hoppers] | | | [removed: 6,610] [added: 6,403] | | | | | | 14 | | % |

| Box [removed: cars] [added: Cars] | | | [removed: 3,926] [added: 3,745] | | | | | | 8 | | % |

| Flat [removed: cars] [added: Cars] | | | [removed: 622] [added: 565] | | | | | | 1 | | % |

| Other [removed: cars] [added: Cars] | | | [removed: 384] [added: 596] | | | | | | 1 | | % |

| Subtotal [removed: freight cars] [added: Freight Cars] | | | [removed: 48,033] [added: 47,024] | | | | | | 100 | | % |

| Total [removed: equipment] [added: Equipment] | | | [removed: 65,180] [added: 66,429] | | | | | | | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.16

Containers – Weather-proof boxes used for bulk shipment of [removed: freight.][added: freight, primarily in intermodal service.]

| Total | | | 35,750 | | |

| Waycross, GA | | | 931,488 | | |

| Selkirk, NY | | | 636,750 | | |

| Nashville, TN | | | 627,868 | | |

| Cincinnati, OH | | | 622,906 | | |

| Avon, IN (Indianapolis) | | | 574,775 | | |

| Walbridge, OH (Toledo) | | | 372,880 | | |

| Louisville, KY | | | 352,029 | | |

| Freight | | | 3,194 | | | | | | 89 | | % | | | | 23 | | |

| Switching | | | 237 | | | | | | 6 | | % | | | | 45 | | |

| Gondolas | | | 18,613 | | | | | | 40 | | % |

| Containers | | | 19,405 | | | | | | | | |

| Total | | | 35,305 | | |

| Waycross, GA | | | 930,621 | | |

| Avon, IN (Indianapolis) | | | 671,856 | | |

| Nashville, TN | | | 660,424 | | |

| Cincinnati, OH | | | 644,679 | | |

| Selkirk, NY | | | 620,526 | | |

| Walbridge, OH (Toledo) | | | 407,205 | | |

| Louisville, KY | | | 336,211 | | |

| Freight | | | 3,126 | | | | | | 89 | | % | | | | 22 | | |

| Switching | | | 212 | | | | | | 6 | | % | | | | 43 | | |

| Gondolas | | | 18,394 | | | | | | 38 | | % |

| Containers | | | 17,147 | | | | | | | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.17

| Sean R. Pelkey, [removed: 42] [added: 43] *Executive Vice President and Chief Financial Officer* | | | Pelkey was named Executive Vice President and Chief Financial Officer in January 2022 after serving as Vice President and Acting Chief Financial Officer since June 2021. Prior to these roles, Pelkey held the role of Vice President Finance & Treasury since 2017. In his current 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. Prior to 2017, he has held the positions of AVP Capital Markets and Director Performance Analysis. During his [removed: 16] [added: 17] years with CSX, Mr. Pelkey has held a variety of other roles, including financial planning and technology finance. | | |

| Kevin S. Boone, [removed: 44] [added: 45] *Executive Vice President and Chief Sales & Marketing Officer* | | | Boone was named Executive Vice President and Chief Sales & Marketing Officer in June 2021 after serving as Chief Financial Officer since May 2019. In his current role, he is responsible for the commercial organization. Mr. Boone has more than 20 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, [removed: 44] [added: 45] *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 [removed: mechanical, engineering, transportation and] [added: transportation,] network [removed: operations,] [added: operations] including [removed: terminals.] [added: terminals, mechanical, engineering and labor relations.] 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 [removed: 2021] [added: 2022] Form 10-K p.18

| Nathan D. Goldman, [removed: 64] [added: 65] *Executive Vice President and Chief Legal Officer* | | | Goldman has served as Executive Vice President and Chief Legal Officer, and Corporate Secretary of CSX since November 2017. In this role, he directs the Company’s legal affairs, government relations, [removed: corporate communications,] risk management, public safety, environmental, and audit functions. During his [removed: 18] [added: 19] 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: 57] [added: 58] *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, [removed: information technology, labor relations,] people systems and analytics, total [removed: rewards] [added: rewards, facilities] and aviation. During her [removed: 10] [added: 11] 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. | | |

| Angela C. Williams, [removed: 47] [added: 48] *Vice President and Chief Accounting Officer* | | | Williams has served as Vice President and 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: 18] [added: 19] years with the Company, she previously served as Assistant Vice President - Assistant Controller and in other various accounting roles. With more than [removed: 24] [added: 25] years of experience, Williams held various accounting and auditing positions prior to joining CSX. Ms. Williams is a Certified Public [removed: Accountant.] [added: Accountant in the state of Florida.] | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.19

| Joseph R. Hinrichs, 56 *President and Chief Executive Officer* | | | Hinrichs, a leader with more than 30 years of experience in the global automotive, manufacturing, and energy sectors, was named President and Chief Executive Officer in September 2022. Hinrichs previously worked at Ford Motor Company from 2000 to 2020, most recently serving as President of Ford's global automotive business. In that role, he led the company’s automotive operations, overseeing Ford’s global business units and the Ford and Lincoln brands. He also led Ford’s automotive skill teams, overseeing product development, purchasing, manufacturing, labor affairs, marketing and sales, government affairs, information technology, sustainability, safety and environmental engineering. Other positions he held at Ford include President of Global Operations, President of the Americas, President of Asia Pacific and Africa, Chairman and CEO of Ford China, and Chairman & CEO of Ford Canada. Over the past four years, Hinrichs has also served in multiple advisory and board roles of various companies. | | |

| Stephen Fortune, 53 *Executive Vice President and Chief Digital and Technology Officer* | | | Fortune was named CSX's Executive Vice President and Chief Digital and Technology Officer in April 2022. In this role, he is responsible for leading the Company's technology strategy development and all aspects of CSX's information technology systems operations, including cybersecurity. Prior to joining CSX with nearly 20 years of information technology experience, he spent 30 years at BP, most recently as Chief Information Officer of the global BP group. | | |

| James M. Foote, 68 *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. | | |

A total of 5.4 billion shares of common stock are authorized, of which [removed: 2,201,787,404] [added: 2,066,350,050] shares were outstanding as of December 31, [removed: 2021.][added: 2022.]

At January 31, [removed: 2022,] [added: 2023,] the latest practicable date that is closest to the filing date, there were [removed: 23,137] [added: 22,453] 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: 2,255] [added: 2,141] million as of December 31, [removed: 2021.][added: 2022.]

| [removed: 2021] [added: 2021] | | | [removed: $] [added: $] | [removed: 0.093] [added: 0.093] | | | | | [removed: $] [added: $] | [removed: 0.093] [added: 0.093] | | | | | [removed: $] [added: $] | [removed: 0.093] [added: 0.093] | | | | | [removed: $] [added: $] | [removed: 0.093] [added: 0.093] | | | | | [removed: $] [added: $] | [removed: 0.372] [added: 0.372] | |

The cumulative shareholder returns, assuming reinvestment of dividends, on $100 invested at December 31, [removed: 2016] [added: 2017] are illustrated on the graph below.

[removed: ][added: ]

CSX [removed: 2021] [added: 2022] Form 10-K p.20

The Company continues to repurchase shares under the $5 billion program announced in [removed: October 2020.][added: July 2022.]

Total repurchase authority remaining as of December 31, [removed: 2021] [added: 2022] was [removed: $3.0] [added: $3.3] billion.

Share repurchase activity of [removed: $570 million] [added: $1.0 billion] for the fourth quarter [removed: 2021] [added: 2022] was as follows:

| 2022 | | | $ | 0.100 | | | | | $ | 0.100 | | | | | $ | 0.100 | | | | | $ | 0.100 | | | | | $ | 0.400 | |

| Beginning Balance | | | | | | | | | | | | | | | | | | | | | $ | | | 4,292,997,017 | | |

| October 1 - October 31, 2022 | | | 22,101,430 | | | | | | $ | | | 27.50 | | | 22,101,430 | | | | | | | | | 3,685,141,410 | | |

| November 1 - November 30, 2022 | | | 6,810,351 | | | | | | | | | 29.80 | | | 6,810,351 | | | | | | | | | 3,482,205,188 | | |

| December 1 - December 31, 2022 | | | 6,710,050 | | | | | | | | | 31.33 | | | 6,710,050 | | | | | | | | | 3,271,977,916 | | |

| Ending Balance | | | 35,621,831 | | | | | | $ | | | 28.66 | | | 35,621,831 | | | | | | $ | | | 3,271,977,916 | | |

| 2020 | | | $ | 0.087 | | | | | $ | 0.087 | | | | | $ | 0.087 | | | | | $ | 0.087 | | | | | $ | 0.348 | |

| Beginning Balance | | | | | | | | | | | | | | | | | | | | | $ | | | 3,572,838,310 | | |

| October 1 - October 31, 2021 | | | 5,194,579 | | | | | | $ | | | 31.56 | | | 5,194,579 | | | | | | | | | 3,408,904,138 | | |

| November 1 - November 30, 2021 | | | 4,300,579 | | | | | | | | | 35.60 | | | 4,300,579 | | | | | | | | | 3,255,785,536 | | |

| December 1 - December 31, 2021 | | | 6,984,577 | | | | | | | | | 36.17 | | | 6,984,577 | | | | | | | | | 3,003,170,964 | | |

| Ending Balance | | | 16,479,735 | | | | | | $ | | | 34.57 | | | 16,479,735 | | | | | | $ | | | 3,003,170,964 | | |

CSX [removed: 2021] [added: 2022] Form 10-K p.21

The pension plan assets at fair value by level, within the fair value hierarchy, as of calendar plan years [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] are shown in the table below.

| [removed: | | | Fiscal Years | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |] [added: 1 - 5 years] | | | [added: 24] | | | | | | [added: 28] | | |

| | | | [removed: 2021 | | | | | |] [added: 2022] | | | | | | [added: 2021] | | | | | | 2020 | | | [removed: | | | | | | | | | | | | | | | | | | | | | | | |]

| Common Stock | | | $ | [removed: 487] [added: 335] | | | | | $ | — | | | | | | | | | | | $ | [removed: 487] [added: 335] | | | | | $ | [removed: 337] [added: 487] | | | | | $ | — | | | | | | | | | | | $ | [removed: 337] [added: 487] | |

| Mutual [removed: funds] [added: Funds] | | | [removed: 14] [added: 29] | | | | | | — | | | | | | | | | | | | [removed: 14] [added: 29] | | | | | | [removed: 21] [added: 14] | | | | | | — | | | | | | | | | | | | [removed: 21] [added: 14] | | |

| Cash and [removed: cash equivalents] [added: Cash Equivalents] | | | [removed: 108] [added: 157] | | | | | | — | | | | | | | | | | | | [removed: 108] [added: 157] | | | | | | [removed: 387] [added: 108] | | | | | | — | | | | | | | | | | | | [removed: 387] [added: 108] | | |

| Corporate [removed: bonds] [added: Bonds] | | | — | | | | | | [removed: 1,013] [added: 647] | | | | | | | | | | | | [removed: 1,013] [added: 647] | | | | | | — | | | | | | [removed: 1,026] [added: 1,013] | | | | | | | | | | | | [removed: 1,026] [added: 1,013] | | |

| Government [removed: securities] [added: Securities] | | | — | | | | | | [removed: 173] [added: 88] | | | | | | | | | | | | [removed: 173] [added: 88] | | | | | | — | | | | | | [removed: 164] [added: 173] | | | | | | | | | | | | [removed: 164] [added: 173] | | |

| Asset-backed [removed: securities, derivatives] [added: Securities, Derivatives] and [removed: other] [added: Other] | | | — | | | | | | [removed: 98] [added: 9] | | | | | | | | | | | | [removed: 98] [added: 9] | | | | | | — | | | | | | [removed: 85] [added: 98] | | | | | | | | | | | | [removed: 85] [added: 98] | | |

| Total [removed: investments] [added: Investments] in the [removed: fair value hierarchy] [added: Fair Value Hierarchy] | | | $ | [removed: 609] [added: 521] | | | | | $ | [removed: 1,284] [added: 744] | | | | | | | | | | | $ | [removed: 1,893] [added: 1,265] | | | | | $ | [removed: 745] [added: 609] | | | | | $ | [removed: 1,275] [added: 1,284] | | | | | | | | | | | $ | [removed: 2,020] [added: 1,893] | |

| Investments [removed: measured] [added: Measured] at [removed: net asset value] [added: Net Asset Value] *(a)* | | | n/a | | | | | | n/a | | | | | | | | | | | | $ | [removed: 1,123] [added: 1,062] | | | | | n/a | | | | | | n/a | | | | | | | | | | | | $ | [removed: 980] [added: 1,123] | |

| Investments at [removed: fair value] [added: Fair Value] | | | $ | [removed: 609] [added: 521] | | | | | $ | [removed: 1,284] [added: 744] | | | | | | | | | | | $ | [removed: 3,016] [added: 2,327] | | | | | $ | [removed: 745] [added: 609] | | | | | $ | [removed: 1,275] [added: 1,284] | | | | | | | | | | | $ | [removed: 3,000] [added: 3,016] | |

For discussion of the drivers of changes in net periodic pension and post-retirement benefit credit from [removed: 2020 to] 2021 [added: to 2022] and from [removed: 2019] [added: 2020] to [removed: 2020,] [added: 2021,] refer to Note 9, *Employee Benefit Plans*.

Debt repurchase expense [removed: increased] [added: decreased] from [removed: 2019 to] 2020 [added: to 2021] primarily as a result of long-term debt being redeemed earlier relative to maturity [removed: date.][added: date in 2020.]

| [removed: | | | Fiscal Years | | |] [added: 5 - 10 years] | | | [added: 10] | | | | | | [added: 12] | | |

| *(Dollars in Millions)* | | | [removed: 2021] [added: 2022] | | | [added: 2021] | | | 2020 | | | [removed: | | | 2019 | | |]

| Net Periodic Pension and Post-retirement Benefit Credit *(a)* | | | $ | [removed: 64] [added: 79] | | | | | $ | [removed: 42] [added: 64] | | | | | $ | [removed: 43] [added: 42] | |

| Interest Income | | | [removed: 7] [added: 42] | | | | | | [removed: 17] [added: 7] | | | | | | [removed: 48] [added: 17] | | |

| Debt Repurchase Expense | | | — | | | | | | [removed: (48)] [added: —] | | | | | | [removed: (10)] [added: (48)] | | |

| Miscellaneous Income | | | [removed: 8] [added: 12] | | | | | | 8 | | | | | | [removed: 7] [added: 8] | | |

| Total [added: Income Included in] Other Income - Net | | | $ | [removed: 79] [added: (74)] | | | | | $ | [removed: 19] [added: (58)] | | | | | $ | [removed: 88] [added: (40)] | |

CSX [removed: 2021] [added: 2022] Form 10-K p.101

| *(Dollars in Millions)* | | | [removed: 2021] [added: 2022] | | | [added: 2021] | | | 2020 | | |

| Conrail | | | $ | [removed: 1,083] [added: 1,124] | | | | | $ | [removed: 1,025] [added: 1,083] | |

| TTX | | | [removed: 849] [added: 914] | | | | | | [removed: 796] [added: 849] | | |

| Other [added: *(a)*] | | | [removed: 167] [added: 254] | | | | | | [removed: 164] [added: 167] | | |

| Total | | | $ | [removed: 2,099] [added: 2,292] | | | | | $ | [removed: 1,985] [added: 2,099] | |

| 2023 | | | [removed: 31] [added: $] | [added: 71] | |

| 2024 | | | [removed: 23] [added: 62] | | |

| 2025 | | | [removed: —] [added: 55] | | |

| 2026 | | | [removed: —] [added: 41] | | |

| Thereafter | | | [removed: —] [added: 44] | | |

| Total | | | [removed: $] [added: 17,813] | [removed: 85] | |

Also, included in equity earnings of affiliates are CSX’s [removed: 42 percent] [added: 42%] share of Conrail’s income and its amortization of the fair value write-up arising from the acquisition of Conrail and certain other adjustments.

This write-up of fixed assets resulted in a difference between CSX's investment in Conrail and its share of Conrail's underlying net equity, which is [removed: $331] [added: $327] million as of December [removed: 2021.][added: 2022.]

CSX [removed: 2021] [added: 2022] Form 10-K p.102

| Rents, [removed: fees] [added: Fees] and [removed: services] [added: Services] | | | $ | [removed: 128] [added: 130] | | | | | $ | [removed: 126] [added: 128] | | | | | $ | [removed: 119] [added: 126] | |

| Equity [removed: earnings] [added: Earnings] of Conrail | | | (44) | | | | | | [removed: (49)] [added: (44)] | | | | | | [removed: (42)] [added: (49)] | | |

| Total Conrail Expense | | | $ | [removed: 88] [added: 90] | | | | | $ | [removed: 81] [added: 88] | | | | | $ | 81 | |

Interest expense from these promissory notes was $6 million in each [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019.][added: 2020.]

CONSOLIDATED CASH FLOW STATEMENTS

*(Dollars in Millions)*

| | | | Years Ended | | | | | | | | | | | | | | |

| OPERATING ACTIVITIES | | | | | | | | | | | | | | | | | |

| Net Earnings | | | $ | 4,166 | | | | | $ | 3,781 | | | | | $ | 2,765 | |

| Adjustments to Reconcile Net Earnings to Net Cash | | | | | | | | | | | | | | | | | |

| Provided by Operating Activities: | | | | | | | | | | | | | | | | | |

| Depreciation and Amortization | | | 1,500 | | | | | | 1,420 | | | | | | 1,383 | | |

| Deferred Income Taxes | | | 117 | | | | | | 167 | | | | | | 180 | | |

| Gains on Property Dispositions | | | (238) | | | | | | (454) | | | | | | (35) | | |

| Other Operating Activities | | | (17) | | | | | | 12 | | | | | | (32) | | |

| Changes in Operating Assets and Liabilities: | | | | | | | | | | | | | | | | | |

| Accounts Receivable | | | (101) | | | | | | (141) | | | | | | 83 | | |

| Other Current Assets | | | (22) | | | | | | (25) | | | | | | (75) | | |

| Accounts Payable | | | 140 | | | | | | 128 | | | | | | (20) | | |

| Income and Other Taxes Payable | | | (39) | | | | | | 72 | | | | | | 39 | | |

| Other Current Liabilities | | | 113 | | | | | | 139 | | | | | | (25) | | |

| Net Cash Provided by Operating Activities | | | 5,619 | | | | | | 5,099 | | | | | | 4,263 | | |

| INVESTING ACTIVITIES | | | | | | | | | | | | | | | | | |

| Property Additions | | | (2,133) | | | | | | (1,791) | | | | | | (1,626) | | |

| Purchases of Short-term Investments | | | (59) | | | | | | (75) | | | | | | (426) | | |

| Proceeds from Sales of Short-term Investments | | | 9 | | | | | | 5 | | | | | | 1,424 | | |

| Proceeds and Advances from Property Dispositions | | | 246 | | | | | | 529 | | | | | | 56 | | |

| Business Acquisition, Net of Cash Acquired (Note 17) | | | (227) | | | | | | (541) | | | | | | — | | |

| Other Investing Activities | | | 33 | | | | | | (4) | | | | | | (77) | | |

| Net Cash Used in Investing Activities | | | (2,131) | | | | | | (1,877) | | | | | | (649) | | |

| FINANCING ACTIVITIES | | | | | | | | | | | | | | | | | |

| Shares Repurchased | | | (4,731) | | | | | | (2,886) | | | | | | (867) | | |

| Dividends Paid | | | (852) | | | | | | (839) | | | | | | (797) | | |

| Long-term Debt Repaid | | | (186) | | | | | | (426) | | | | | | (745) | | |

| Long-term Debt Issued (Note 10) | | | 2,000 | | | | | | — | | | | | | 1,000 | | |

| Other Financing Activities | | | — | | | | | | 39 | | | | | | (34) | | |

| Net Cash Used in Financing Activities | | | (3,769) | | | | | | (4,112) | | | | | | (1,443) | | |

| Net (Decrease) Increase in Cash and Cash Equivalents | | | (281) | | | | | | (890) | | | | | | 2,171 | | |

| CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | | | | | |

| Cash and Cash Equivalents at Beginning of Period | | | 2,239 | | | | | | 3,129 | | | | | | 958 | | |

| Cash and Cash Equivalents at End of Period | | | $ | 1,958 | | | | | $ | 2,239 | | | | | $ | 3,129 | |

| SUPPLEMENTAL CASH FLOW INFORMATION | | | | | | | | | | | | | | | | | |

| Issuance of Common Stock as Consideration for Acquisition | | | $ | 422 | | | | | — | | | | | | — | | |

| Interest Paid - Net of Amounts Capitalized | | | $ | 729 | | | | | $ | 718 | | | | | $ | 750 | |

| 2022 | | | $ | 31 | |

Other Related Party Transactions

On October 17, 2019, the Company repurchased 14.1 million (split-adjusted) shares for $319 million from MR Argent Advisor LLC, a CSX shareholder on behalf of certain limited partners of its affiliated funds.

| Balance December 31, 2021 - Net of Tax | | | $ | (431) | | $ | 70 | | $ | (47) | | $ | (408) | |

On February 25, 2021, the Company began the process of seeking approval from the STB.

On January 13 and 14, 2022, the Company participated in a hearing before the STB to discuss the proposed transaction and a decision is expected by mid-April 2022.

In fourth quarter 2021, CSX performed its annual evaluation of each reporting unit's goodwill and intangible assets for impairment.

Quarterly Financial Data (Unaudited)

The following selected quarterly financial data has been adjusted for the three-for-one stock split effective June 28, 2021.

| Fiscal Year Ended December 2021 | | | Quarters | | | | | | | | | | | | | | |

| *(Dollars in Millions, Except Per Share Amounts)* | | | 1st | | | 2nd | | | 3rd | | | 4th | | | Full Year | | |

| Revenue | | | $ | 2,813 | | $ | 2,990 | | $ | 3,292 | | $ | 3,427 | | $ | 12,522 | |

| Operating Income | | | 1,101 | | | 1,691 | | | 1,436 | | | 1,366 | | | 5,594 | | |

| Revenue | | | $ | 2,855 | | $ | 2,255 | | $ | 2,648 | | $ | 2,825 | | $ | 10,583 | |

| Operating Income | | | 1,178 | | | 828 | | | 1,141 | | | 1,215 | | | 4,362 | | |

| Net Earnings Per Share, Basic | | | $ | 0.33 | | $ | 0.22 | | $ | 0.32 | | $ | 0.33 | | $ | 1.20 | |

| Net Earnings Per Share, Assuming Dilution | | | $ | 0.33 | | $ | 0.22 | | $ | 0.32 | | $ | 0.33 | | $ | 1.20 | |

As of December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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: 2021] [added: 2022] based on the 2013 framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway 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: 2021.][added: 2022.]

The Company’s internal control over financial reporting as of December 31, [removed: 2021] [added: 2022] has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included elsewhere herein.

We have audited CSX Corporation’s internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] 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: 2021,] [added: 2022,] and the related notes of the Company and our report dated February [removed: 16, 2022] [added: 15, 2023] expressed an unqualified opinion thereon.

CSX [removed: 2021] [added: 2022] Form 10-K p.111

CSX [removed: 2021] [added: 2022] Form 10-K p.112

February 15, 2023