Cover and table of contents

23K 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, 2022

(☐) 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 2,102,408,729 shares of common stock outstanding on September 30, 2022 (the latest practicable date that is closest to the filing date).

CSX Q3 2022 Form 10-Q p.1

CSX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

INDEX


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

	Consolidated Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2022 and September 30, 2021	3

	Condensed Consolidated Comprehensive Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2022 and September 30, 2021	3

	Consolidated Balance Sheets - At September 30, 2022 (Unaudited) and December 31, 2021	4

	Consolidated Cash Flow Statements (Unaudited) - Nine Months Ended September 30, 2022 and September 30, 2021	5

	Consolidated Statement of Changes in Shareholders' Equity (Unaudited) - Quarters and Nine Months Ended September 30, 2022 and September 30, 2021	6

	Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45

Item 4.	Controls and Procedures	45

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	CSX Purchases of Equity Securities	46

Item 3.	D efaults Upon Senior Securities	46

Item 4.	M ine Safety Disclosures	46

Item 5.	O ther Information	46

Item 6.	Exhibits	47

Signature		48

CSX Q3 2022 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
	2022		2021		2022		2021

Revenue	$	3,895	$	3,292	$	11,123	$	9,095
Expense
Labor and Fringe	759		631		2,135		1,847
Purchased Services and Other	664		577		1,986		1,490
Fuel	438		247		1,215		631
Depreciation and Amortization	378		367		1,107		1,060
Equipment and Other Rents	104		94		299		269
Gains on Property Dispositions	(27)		(60)		(183)		(430)
Total Expense	2,316		1,856		6,559		4,867

Operating Income	1,579		1,436		4,564		4,228

Interest Expense	(193)		(177)		(543)		(542)
Other Income - Net	37		20		89		60
Earnings Before Income Taxes	1,423		1,279		4,110		3,746

Income Tax Expense	(312)		(311)		(962)		(899)
Net Earnings	$	1,111	$	968	$	3,148	$	2,847

Per Common Share (Note 2)
Net Earnings Per Share, Basic	$	0.52	$	0.43	$	1.46	$	1.26
Net Earnings Per Share, Assuming Dilution	$	0.52	$	0.43	$	1.46	$	1.26


Average Shares Outstanding (In millions)	2,122		2,237		2,156		2,263
Average Shares Outstanding, Assuming Dilution (In millions)	2,126		2,242		2,161		2,268

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited)

(Dollars in millions)


	Third Quarters				Nine Months
	2022		2021		2022		2021
Total Comprehensive Earnings (Note 10)	$	1,129	$	985	$	3,236	$	2,911

See accompanying notes to consolidated financial statements.

CSX Q3 2022 Form 10-Q p.3

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Dollars in millions)


	(Unaudited)
	September 30, 2022		December 31, 2021
ASSETS
Current Assets:
Cash and Cash Equivalents	$	2,311	$	2,239
Short-term Investments	88		77
Accounts Receivable - Net (Note 8)	1,467		1,148
Materials and Supplies	365		339

Other Current Assets	79		70
Total Current Assets	4,310		3,873

Properties	47,734		46,505
Accumulated Depreciation	(13,778)		(13,490)
Properties - Net	33,956		33,015

Investment in Affiliates and Other Companies	2,289		2,099
Right-of-Use Lease Asset	506		501
Goodwill and Other Intangible Assets - Net	537		451
Other Long-term Assets	644		592
Total Assets	$	42,242	$	40,531

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	1,152	$	963
Labor and Fringe Benefits Payable	727		630
Casualty, Environmental and Other Reserves (Note 4)	113		118

Current Maturities of Long-term Debt (Note 7)	155		181
Income and Other Taxes Payable	156		134
Other Current Liabilities	205		207
Total Current Liabilities	2,508		2,233

Casualty, Environmental and Other Reserves (Note 4)	317		250
Long-term Debt (Note 7)	17,895		16,185
Deferred Income Taxes - Net	7,632		7,383
Long-term Lease Liability	487		478
Other Long-term Liabilities	520		502
Total Liabilities	29,359		27,031

Shareholders' Equity:
Common Stock, $1 Par Value	2,102		2,202
Other Capital	555		66
Retained Earnings	10,537		11,630
Accumulated Other Comprehensive Loss (Note 10)	(320)		(408)
Non-controlling Minority Interest	9		10
Total Shareholders' Equity	12,883		13,500
Total Liabilities and Shareholders' Equity	$	42,242	$	40,531

See accompanying notes to consolidated financial statements.

CSX Q3 2022 Form 10-Q p.4

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)

(Dollars in millions)


	Nine Months
	2022		2021

OPERATING ACTIVITIES
Net Earnings	$	3,148	$	2,847
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization	1,107		1,060
Deferred Income Taxes	125		109
Gains on Property Dispositions	(183)		(430)




Other Operating Activities	(52)		10
Changes in Operating Assets and Liabilities:
Accounts Receivable	(143)		(153)
Other Current Assets	(32)		(4)
Accounts Payable	166		132
Income and Other Taxes Payable	22		174
Other Current Liabilities	97		74
Net Cash Provided by Operating Activities	4,255		3,819

INVESTING ACTIVITIES
Property Additions	(1,437)		(1,220)
Purchases of Short-term Investments	(19)		—
Proceeds from Sales of Short-term Investments	9		3
Proceeds and Advances from Property Dispositions	51		297
Business Acquisition, Net of Cash Acquired	(223)		(543)
Other Investing Activities	(25)		—
Net Cash Used In Investing Activities	(1,644)		(1,463)

FINANCING ACTIVITIES
Long-term Debt Issued (Note 7)	2,000		—
Long-term Debt Repaid (Note 7)	(178)		(390)
Dividends Paid	(645)		(633)
Shares Repurchased	(3,710)		(2,316)



Other Financing Activities	(6)		33
Net Cash Used in Financing Activities	(2,539)		(3,306)

Net Increase/(Decrease) in Cash and Cash Equivalents	72		(950)

CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period	2,239		3,129
Cash and Cash Equivalents at End of Period	$	2,311	$	2,179

SUPPLEMENTAL CASH FLOW INFORMATION
Issuance of Common Stock as Consideration for Acquisition	$	422	$	—

See accompanying notes to consolidated financial statements.

CSX Q3 2022 Form 10-Q p.5

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS' EQUITY (Unaudited)

(Dollars in millions)


Nine Months 2022	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, 2021	2,201,787	$	2,268	$	11,630	$	(408)	$	10	$	13,500
Comprehensive Earnings:
Net Earnings	—	—		859		—		—		859
Other Comprehensive Income	—	—		—		31		—		31
Total Comprehensive Earnings										890

Common stock dividends, $0.10 per share	—	—		(218)		—		—		(218)
Share Repurchases	(29,365)	(29)		(987)		—		—		(1,016)

Stock Option Exercises and Other	1,831	38		—		—		1		39
Balance March 31, 2022	2,174,253	$	2,277	$	11,284	$	(377)	$	11	$	13,195
Comprehensive Earnings:
Net Earnings	—	—		1,178		—		—		1,178
Other Comprehensive Income	—	—		—		39		—		39
Total Comprehensive Earnings										1,217

Common stock dividends, $0.10 per share	—	—		(215)		—		—		(215)
Share Repurchases	(46,508)	(47)		(1,452)		—		—		(1,499)
Issuance of common stock for acquisition of Pan Am Systems, Inc.	13,173	422		—		—		—		422
Stock Option Exercises and Other	314	23		(1)		—		(1)		21
Balance June 30, 2022	2,141,232	$	2,675	$	10,794	$	(338)	$	10	$	13,141
Comprehensive Earnings:
Net Earnings	—	—		1,111		—		—		1,111
Other Comprehensive Income (Note 10)	—	—		—		18		—		18
Total Comprehensive Earnings										1,129

Common stock dividends, $0.10 per share	—	—		(212)		—		—		(212)
Share Repurchases	(39,924)	(40)		(1,155)		—		—		(1,195)

Stock Option Exercises and Other	514	22		(1)		—		(1)		20
Balance September 30, 2022	2,101,822	$	2,657	$	10,537	$	(320)	$	9	$	12,883

(a) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $107 million as of December 31, 2021; $99 million as of March 31, 2022; $88 million as of June 30, 2022; and $85 million as of September 30, 2022. For additional information, see Note 10, Other Comprehensive Income.

See accompanying notes to consolidated financial statements.

CSX Q3 2022 Form 10-Q p.6

CSX CORPORATION

Next: Item 1. FINANCIAL STATEMENTS