Cover and table of contents

24K characters. Original on sec.gov · Markdown

Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(☒) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

(☐) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-8022

CSX CORPORATION


(Exact name of registrant as specified in its charter)
Virginia						62-1051971
						(I.R.S. Employer Identification No.)

500 Water Street	15th Floor	Jacksonville	FL		32202	904	359-3200
(Address of principal executive offices)					(Zip Code)	(Telephone number, including area code)

				No Change
(Former name, former address and former fiscal year, if changed since last report.)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes (X) No ( )

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes (X) No ( )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company (as defined in Exchange Act Rule 12b-2).

Large Accelerated Filer (X) Accelerated Filer ( ) Non-accelerated Filer ( ) Smaller Reporting Company (☐) Emerging growth company (☐)

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

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes (☐) No (X)

There were 2,217,983,411 shares of common stock outstanding on September 30, 2021 (the latest practicable date that is closest to the filing date).

CSX Q3 2021 Form 10-Q p.1

CSX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

INDEX


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3

	Consolidated Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2021 and September 30, 2020	3

	Condensed Consolidated Comprehensive Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2021 and September 30, 2020	3

	Consolidated Balance Sheets - At September 30, 2021 (Unaudited) and December 31, 2020	4

	Consolidated Cash Flow Statements (Unaudited) - Nine Months Ended September 30, 2021 and September 30, 2020	5

	Consolidated Statement of Changes in Shareholders' Equity (Unaudited) - Quarters and Nine Months Ended September 30, 2021 and September 30, 2020	6

	Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44

Item 4.	Controls and Procedures	44

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 2.	CSX Purchases of Equity Securities	45

Item 3.	Defaults upon Senior Securities	45

Item 4.	Mine Safety Disclosures	45

Item 5.	Other Information	45

Item 6.	Exhibits	46

Signature		47

CSX Q3 2021 Form 10-Q p.2

CSX CORPORATION

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENTS (Unaudited)

(Dollars in millions, except per share amounts)


	Third Quarters				Nine Months
	2021		2020		2021		2020

Revenue	$	3,292	$	2,648	$	9,095	$	7,758
Expense
Labor and Fringe	631		574		1,847		1,687
Purchased Services and Other	577		382		1,490		1,272
Depreciation	367		348		1,060		1,036
Fuel	247		119		631		402
Equipment and Other Rents	94		88		269		247
Gains on Property Dispositions	(60)		(4)		(430)		(33)
Total Expense	1,856		1,507		4,867		4,611

Operating Income	1,436		1,141		4,228		3,147

Interest Expense	(177)		(187)		(542)		(565)
Other Income - Net	20		14		60		51
Earnings Before Income Taxes	1,279		968		3,746		2,633

Income Tax Expense	(311)		(232)		(899)		(628)
Net Earnings	$	968	$	736	$	2,847	$	2,005

Per Common Share (Note 2)
Net Earnings Per Share, Basic	$	0.43	$	0.32	$	1.26	$	0.87
Net Earnings Per Share, Assuming Dilution	$	0.43	$	0.32	$	1.26	$	0.87


Average Shares Outstanding (In millions)	2,237		2,295		2,263		2,302
Average Shares Outstanding, Assuming Dilution (In millions)	2,242		2,300		2,268		2,307

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.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited)

(Dollars in millions)


	Third Quarters				Nine Months
	2021		2020		2021		2020
Total Comprehensive Earnings (Note 11)	$	985	$	770	$	2,911	$	2,062

See accompanying notes to consolidated financial statements.

CSX Q3 2021 Form 10-Q p.3

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Dollars in millions)


	(Unaudited)
	September 30, 2021		December 31, 2020
ASSETS
Current Assets:
Cash and Cash Equivalents	$	2,179	$	3,129

Accounts Receivable - Net (Note 8)	1,326		912
Materials and Supplies	303		302

Other Current Assets	89		98
Total Current Assets	3,897		4,441

Properties	46,226		45,530
Accumulated Depreciation	(13,412)		(13,086)
Properties - Net	32,814		32,444

Investment in Affiliates and Other Companies	2,059		1,985
Right-of-Use Lease Asset	508		472
Goodwill and Other Intangible Assets - Net	451		63
Other Long-term Assets	400		388
Total Assets	$	40,129	$	39,793

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	972	$	809
Labor and Fringe Benefits Payable	548		482
Casualty, Environmental and Other Reserves (Note 4)	117		90

Current Maturities of Long-term Debt (Note 7)	211		401
Income and Other Taxes Payable	238		73
Other Current Liabilities	182		164
Total Current Liabilities	2,268		2,019

Casualty, Environmental and Other Reserves (Note 4)	252		224
Long-term Debt (Note 7)	16,182		16,304
Deferred Income Taxes - Net	7,298		7,168
Long-term Lease Liability	482		455
Other Long-term Liabilities	475		513
Total Liabilities	26,957		26,683

Shareholders' Equity:
Common Stock, $1 Par Value	2,218		2,288
Other Capital	24		152
Retained Earnings	11,455		11,259
Accumulated Other Comprehensive Loss (Note 11)	(534)		(598)
Non-controlling Minority Interest	9		9
Total Shareholders' Equity	13,172		13,110
Total Liabilities and Shareholders' Equity	$	40,129	$	39,793

Certain prior year data has been retroactively adjusted to reflect the stock split effective June 28, 2021 or reclassified to conform to the current presentation. See accompanying notes to consolidated financial statements.

CSX Q3 2021 Form 10-Q p.4

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)

(Dollars in millions)


	Nine Months
	2021		2020

OPERATING ACTIVITIES
Net Earnings	$	2,847	$	2,005
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation	1,060		1,036
Deferred Income Taxes	109		117
Gains on Property Dispositions	(430)		(33)




Other Operating Activities	10		(30)
Changes in Operating Assets and Liabilities:
Accounts Receivable	(153)		12
Other Current Assets	(4)		(37)
Accounts Payable	132		(6)
Income and Other Taxes Payable	174		98
Other Current Liabilities	74		(34)
Net Cash Provided by Operating Activities	3,819		3,128

INVESTING ACTIVITIES
Property Additions	(1,220)		(1,209)
Proceeds from Property Dispositions	297		51
Purchases of Short-term Investments	—		(426)
Proceeds from Sales of Short-term Investments	3		1,423
Business Acquisition, Net of Cash Acquired	(543)		—
Other Investing Activities	—		(32)
Net Cash Used In Investing Activities	(1,463)		(193)

FINANCING ACTIVITIES

Shares Repurchased	(2,316)		(664)
Dividends Paid	(633)		(599)
Long-term Debt Repaid (Note 7)	(390)		(245)

Long-term Debt Issued (Note 7)	—		500

Other Financing Activities	33		13
Net Cash Used in Financing Activities	(3,306)		(995)

Net (Decrease)/Increase in Cash and Cash Equivalents	(950)		1,940

CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period	3,129		958
Cash and Cash Equivalents at End of Period	$	2,179	$	2,898

See accompanying notes to consolidated financial statements.

CSX Q3 2021 Form 10-Q p.5

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS' EQUITY (Unaudited)

(Dollars in millions)


Nine Months 2021	Common Shares Outstanding (Thousands)	Common Stock and Other Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)(a)		Non-controlling Minority Interest		Total Shareholders' Equity

Balance December 31, 2020	2,287,587	$	2,440	$	11,259	$	(598)	$	9	$	13,110
Comprehensive Earnings:
Net Earnings	—	—		706		—		—		706
Other Comprehensive Income	—	—		—		68		—		68
Total Comprehensive Earnings										774

Common stock dividends, $0.093 per share	—	—		(213)		—		—		(213)
Share Repurchases	(18,389)	(18)		(533)		—		—		(551)

Stock Option Exercises and Other	3,003	37		3		—		—		40
Balance March 31, 2021	2,272,201	$	2,459	$	11,222	$	(530)	$	9	$	13,160
Comprehensive Earnings:
Net Earnings		—		1,173		—		—		1,173
Other Comprehensive Loss		—		—		(21)		—		(21)
Total Comprehensive Earnings										1,152

Common stock dividends, $0.093 per share		—		(212)		—		—		(212)
Share Repurchases	(18,345)	(19)		(682)		—		—		(701)
Bond Conversions		—		—		—		—		—
Stock Option Exercises and Other	640	(186)		222		—		(1)		35
Balance June 30, 2021	2,254,496	$	2,254	$	11,723	$	(551)	$	8	$	13,434
Comprehensive Earnings:
Net Earnings	—	—		968		—		—		968
Other Comprehensive Income (Note 11)	—	—		—		17		—		17
Total Comprehensive Earnings										985

Common stock dividends, $0.093 per share	—	—		(209)		—		—		(209)
Share Repurchases	(37,217)	(37)		(1,027)		—		—		(1,064)
Bond Conversions	—	—		—		—		—		—
Stock Option Exercises and Other	704	25		—		—		1		26
Balance September 30, 2021	2,217,983	$	2,242	$	11,455	$	(534)	$	9	$	13,172

a) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $137 million, $142 million, and $136 million as of first, second, and third quarters 2021, respectively. For additional information, see Note 11, Other Comprehensive Income.

All prior period share and per share data along with certain other prior period data has been retroactively adjusted to reflect the stock split effective June 28, 2021. See accompanying notes to consolidated financial statements.

CSX Q3 2021 Form 10-Q p.6

CSX CORPORATION

Next: Item 1. FINANCIAL STATEMENTS