CSX Corp. Files Q3 2024 10-Q Report

TL;DR

**CSX Q3 2024 10-Q FILED: All the deets on rail ops & financials.**

AI Summary

CSX Corp. reported its third-quarter results for the period ending September 30, 2024. The company's filing covers financial performance and operational details for the quarter and year-to-date. Specific financial figures and operational metrics are detailed within the report, providing stakeholders with a comprehensive overview of the company's standing.

Why It Matters

This 10-Q filing provides investors and analysts with crucial financial and operational data for CSX Corp. during the third quarter of 2024, enabling informed investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing (10-Q) and does not inherently present new risks.

Key Numbers

• 2024-09-30 — Reporting Period End Date (Indicates the end of the fiscal quarter covered by the report.)
• 2024-07-01 — Q3 Start Date (Marks the beginning of the third fiscal quarter.)
• 2023-09-30 — Prior Year Q3 End Date (Provides a comparative point for the same quarter in the previous year.)
• 2024-01-01 — Year-to-Date Start Date (Indicates the beginning of the fiscal year for year-to-date calculations.)
• 2023-12-31 — Prior Year End Date (Represents the end of the previous fiscal year.)

Key Players & Entities

• CSX CORP (company) — Filer of the 10-Q report
• 20240930 (date) — Conformed period of report
• 20241017 (date) — Filed as of date
• 9043593200 (dollar_amount) — Business phone number

FAQ

Key Financial Figures

• $1 — ange on which registered Common Stock, $1 Par Value CSX Nasdaq Global Select Mark

Filing Documents

• csx-20240930.htm (10-Q) — 1963KB
• csx09302024ex31.htm (EX-31) — 19KB
• csx09302024ex32.htm (EX-32) — 7KB
• csx-20240930_g1.jpg (GRAPHIC) — 126KB
• csx-20240930_g2.jpg (GRAPHIC) — 24KB
• csx-20240930_g3.jpg (GRAPHIC) — 24KB
• csx-20240930_g4.jpg (GRAPHIC) — 24KB
• 0000277948-24-000054.txt ( ) — 11153KB
• csx-20240930.xsd (EX-101.SCH) — 47KB
• csx-20240930_cal.xml (EX-101.CAL) — 63KB
• csx-20240930_def.xml (EX-101.DEF) — 272KB
• csx-20240930_lab.xml (EX-101.LAB) — 560KB
• csx-20240930_pre.xml (EX-101.PRE) — 462KB
• csx-20240930_htm.xml (XML) — 2450KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 3 Consolidated Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2024 and September 30, 2023 3 Condensed Consolidated Comprehensive Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2024 and September 30, 2023 3 Consolidated Balance Sheets (Unaudited) - At September 30, 2024 and December 31, 2023 4 Consolidated Cash Flow Statements (Unaudited) - Nine Months Ended September 30, 2024 and September 30, 2023 5 Consolidated Statement of Changes in Shareholders' Equity (Unaudited) - Quarters and Nine Months Ended September 30, 2024 and September 30, 2023 6

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 33

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 48

Controls and Procedures

Item 4. Controls and Procedures 48

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 49

Risk Factors

Item 1A. Risk Factors 49

CSX Purchases of Equity Securities

Item 2. CSX Purchases of Equity Securities 49

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 50

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 50

Other Information

Item 5. Other Information 50

Exhibits

Item 6. Exhibits 51 Signature 52 CSX Q3 2024 Form 10-Q p.2 Table of Contents CSX CORPORATION

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENTS (Unaudited) (Dollars in Millions, Except Per Share Amounts) Third Quarters Nine Months 2024 2023 (a) 2024 (a) 2023 (a) Revenue $ 3,619 $ 3,572 $ 11,001 $ 10,977 Expense Labor and Fringe 806 761 2,377 2,238 Purchased Services and Other 675 700 2,095 2,088 Depreciation and Amortization 416 403 1,236 1,202 Fuel 276 349 902 1,025 Equipment and Other Rents 91 94 260 266 Losses (Gains) on Property Dispositions 1 ( 6 ) ( 8 ) ( 26 ) Total Expense 2,265 2,301 6,862 6,793 Operating Income 1,354 1,271 4,139 4,184 Interest Expense ( 206 ) ( 203 ) ( 625 ) ( 605 ) Other Income - Net 36 34 105 106 Earnings Before Income Taxes 1,184 1,102 3,619 3,685 Income Tax Expense ( 290 ) ( 274 ) ( 882 ) ( 899 ) Net Earnings $ 894 $ 828 $ 2,737 $ 2,786 Per Common Share (Note 2) Net Earnings Per Share, Basic $ 0.46 $ 0.42 $ 1.41 $ 1.38 Net Earnings Per Share, Assuming Dilution $ 0.46 $ 0.41 $ 1.40 $ 1.37 Average Shares Outstanding (In Millions) 1,936 1,994 1,946 2,022 Average Shares Outstanding, Assuming Dilution (In Millions) 1,940 1,999 1,950 2,027 CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited) (Dollars in Millions) Third Quarters Nine Months 2024 2023 (a) 2024 (a) 2023 (a) Total Comprehensive Earnings (Note 10) $ 895 $ 846 $ 2,747 $ 2,802 (a) See Note 11, Revision of Prior Period Financial Statements. See accompanying notes to consolidated financial statements. CSX Q3 2024 Form 10-Q p.3 Table of Contents CSX CORPORATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in Millions) September 30, 2024 December 31, 2023 (a) ASSETS Current Assets: Cash and Cash Equivalents $ 1,644 $ 1,353 Short-term Investments (Note 9) 12 83 Accounts Receivable - Net (Note 8) 1,413 1,393 Materials and Supplies 415 440 Other Current Assets 93 90 Total Current Assets 3,577 3,359 Properties 51,503 50,281 Accumulated Depreciation ( 16,333 ) ( 15,560 ) Properties - Net 35,170 34,721 Investment in Affiliates and Other Companies 2,485 2,397 Right-of-Use Lease Asset 498 498 Goodwill and Other Intangible Assets - Net 544 506 Other Long-term Assets 795 731 Total Assets $ 43,069 $ 42,212 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 1,301 $ 1,237 Labor and Fringe Benefits Payable 470 517 Casualty, Environmental and Other Reserves (Note 4) 147 144 Current Maturities of Long-term Debt (Note 7) 6 558 Income and Other Taxes Payable 379 524 Other Current Liabilities 266 243 Total Current Liabilities 2,569 3,223 Casualty, Environmental and Other Reserves (Note 4) 309 296 Long-term Debt (Note 7) 18,535 17,975 Deferred Income Taxes - Net 7,721 7,699 Long-term Lease Liability 494 491 Other Long-term Liabilities 505 543 Total Liabilities 30,133 30,227 Shareholders' Equity: Common Stock, $ 1 Par Value 1,928 1,959 Other Capital 815 691 Retained Earnings 10,457 9,609 Accumulated Other Comprehensive Loss (Note 10) ( 269 ) ( 279 ) Non-controlling Minority Interest 5 5 Total Shareholders' Equity 12,936 11,985 Total Liabilities and Shareholders' Equity $ 43,069 $ 42,212 (a) See Note 11, Revision of Prior Period Financial Statements. See accompanying notes to consolidated financial statements. CSX Q3 2024 Form 10-Q p.4 Table of Contents CSX CORPORATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CASH FLOW STATEMENTS (Unaudited) (Dollars in Millions) Nine Months 2024 (a) 2023 (a) OPERATING ACTIVITIES Net Earnings $ 2,737 $ 2,786 Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities: Depreciation and Amortization 1,236 1,202 Deferred Income Taxes 19 97 Gains on Property Dispositions ( 8 ) ( 26 ) Other Operating Activities ( 35 ) 67 Changes in Operating Assets and Liabilities: Accounts Receivable 7 ( 65 ) Other Current Assets 27 ( 84 ) Accounts Payable 57 52 Income and Other Taxes Payable ( 148 ) 267 Other Current Liabilities ( 33 ) ( 271 ) Net Cash Provided by Operating Activities 3,859 4,025 INVESTING ACTIVITIES Property Additions ( 1,691 ) ( 1,571 ) Purchases of Short-term Investments — ( 103 ) Proceeds from Sales of Short-term Investments 81 153 Proceeds and Advances from Property Dispositions 50 65 Business Acquisition, Net of Cash Acquired ( 68 ) ( 31 ) Other Investing Activities ( 94 ) ( 19 ) Net Cash Used In Investing Activities ( 1,722 ) ( 1,506 ) FINANCING ACTIVITIES Shares Repurchased ( 1,212 ) ( 2,901 ) Dividends Paid ( 700 ) ( 666 ) Long-term Debt Repaid (Note 7) ( 556 ) ( 150 ) Long-term Debt Issued (Note 7) 550 600 Other Financing Activities 72 25 Net Cash Used in Financing Activities ( 1,846 ) ( 3,092 ) Net Increase (Decrease) in Cash and Cash Equivalents 291 ( 573 ) CASH AND CASH EQUIVALENTS Cash and Cash Equivalents at Beginning of Period 1,353 1,933 Cash and Cash Equivalents at End of Period $ 1,644 $ 1,360 (a) See Note 11, Revision of Prior Period Financial Statements. See accompanying notes to consolidated financial statements. CSX Q3 2024 Form 10-Q p.5 Table of Contents CSX CORPORATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Dollars in Millions) Nine Months 2024 Common Shares Outstanding (Thousands) Common Stock and Other Capital Retained Earnings (a) Accumulated Other Comprehensive (Loss) Income (a,b) Non-controlling Minority Interest Total Shareholders' Equity (a) Balance December 31, 2023 1,958,757 $ 2,650 $ 9,609 $ ( 279 ) $ 5 $ 11,985 Comprehensive Earnings: Net Earnings — — 880 — — 880 Other Comprehensive Income — — — 6 — 6 Total Comprehensive Earnings 886 Common stock dividends, $ 0.12 per share — — ( 235 ) — — ( 235 ) Share Repurchases ( 6,789 ) ( 7 ) ( 240 ) — — ( 247 ) Excise Tax on Net Share Repurchases — — ( 1 ) — — ( 1 ) Stock Option Exercises and Other 2,961 55 ( 2 ) — — 53 Balance March 31, 2024 1,954,929 $ 2,698 $ 10,011 $ ( 273 ) $ 5 $ 12,441 Comprehensive Earnings: Net Earnings — — 963 — — 963 Other Comprehensive Income — — — 3 — 3 Total Comprehensive Earnings 966 Common stock dividends, $ 0.12 per share — — ( 233 ) — — ( 233 ) Share Repurchases ( 16,308 ) ( 16 ) ( 547 ) — — ( 563 ) Excise Tax on Net Share Repurchases ( 6 ) ( 6 ) Stock Option Exercises and Other 124 15 1 — ( 1 ) 15 Balance June 30, 2024 1,938,745 $ 2,697 $ 10,189 $ ( 270 ) $ 4 $ 12,620 Comprehensive Earnings: Net Earnings — — 894 — — 894 Other Comprehensive Income — — — 1 — 1 Total Comprehensive Earnings 895 Common stock dividends, $ 0.12 per share — — ( 232 ) — — ( 232 ) Share Repurchases ( 11,925 ) ( 12 ) ( 390 ) — — ( 402 ) Excise Tax on Net Share Repurchases — — ( 4 ) — — ( 4 ) Stock Option Exercises and Other 1,603 58 — — 1 59 Balance September 30, 2024 1,928,423 $ 2,743 $ 10,457 $ ( 269 ) $ 5 $ 12,936 (a) See Note 11, Revision of Prior Period Financial Statements. (b) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $ 74 million as of December 31, 2023, $ 72 million as of March 31, 2024, $ 72 millio

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Dollars in Millions) Nine Months 2023 Common Shares Outstanding (Thousands) Common Stock and Other Capital Retained Earnings (a) Accumulated Other Comprehensive (Loss) Income (a,b) Non-controlling Minority Interest Total Shareholders' Equity (a) Balance December 31, 2022 2,066,367 $ 2,640 $ 10,229 $ ( 410 ) $ 10 $ 12,469 Comprehensive Earnings: Net Earnings — — 974 — — 974 Other Comprehensive Income — — — 2 — 2 Total Comprehensive Earnings 976 Common stock dividends, $ 0.11 per share — — ( 226 ) — — ( 226 ) Share Repurchases ( 35,157 ) ( 35 ) ( 1,032 ) — — ( 1,067 ) Excise Tax on Net Share Repurchases — — ( 10 ) — — ( 10 ) Stock Option Exercises and Other 1,865 15 — — ( 2 ) 13 Balance March 31, 2023 2,033,075 $ 2,620 $ 9,935 $ ( 408 ) $ 8 $ 12,155 Comprehensive Earnings: Net Earnings — — 984 — — 984 Other Comprehensive Income — — — ( 4 ) — ( 4 ) Total Comprehensive Earnings 980 Common stock dividends, $ 0.11 per share — — ( 222 ) — — ( 222 ) Share Repurchases ( 27,434 ) ( 28 ) ( 835 ) — — ( 863 ) Excise Tax on Net Share Repurchases — — ( 9 ) — — ( 9 ) Stock Option Exercises and Other 712 38 ( 1 ) — ( 4 ) 33 Balance June 30, 2023 2,006,353 $ 2,630 $ 9,852 $ ( 412 ) $ 4 $ 12,074 Comprehensive Earnings: Net Earnings — — 828 — — 828 Other Comprehensive Income — — — 18 — 18 Total Comprehensive Earnings 846 Common stock dividends, $ 0.11 per share — — ( 218 ) — — ( 218 ) Share Repurchases ( 31,018 ) ( 31 ) ( 940 ) — — ( 971 ) Excise Tax on Net Share Repurchases — — ( 9 ) — — ( 9 ) Stock Option Exercises and Other 797 34 — — — 34 Balance September 30, 2023 1,976,132 $ 2,633 $ 9,513 $ ( 394 ) $ 4 $ 11,756 (a) See Note 11, Revision of Prior Period Financial Statements. (b) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $ 129 million as of December 31, 2022, $ 128 million as

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. Nature of Operations and Significant Accounting Policies Background CSX Corporation together with its subsidiaries ("CSX" or the "Company"), based in Jacksonville, Florida, is one of the nation's leading transportation companies. The Company provides rail-based transportation services including traditional rail service, the transport of intermodal containers and trailers, as well as other transportation services such as rail-to-truck transfers and bulk commodity operations. CSX's principal operating subsidiary, CSX Transportation, Inc. ("CSXT"), provides an important link to the transportation supply chain through its approximately 20,000 route-mile rail network and serves major population centers in 26 states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec. The Company's intermodal business links customers to railroads via trucks and terminals. CSXT is also responsible for the Company's real estate sales, leasing, acquisition and management and development activities, substantially all of which are focused on supporting railroad operations. Other entities In addition to CSXT, the Company's subsidiaries include Quality Carriers, Inc. ("Quality Carriers"), CSX Intermodal Terminals, Inc. ("CSX Intermodal Terminals"), Total Distribution Services, Inc. ("TDSI"), Transflo Terminal Services, Inc. ("Transflo"), CSX Technology, Inc. ("CSX Technology") and other subsidiaries. Quality Carriers is the largest provider of bulk liquid chemicals truck transportation in North America. CSX Intermodal Terminals owns and operates a system of intermodal terminals, predominantly in the eastern United States and also performs drayage services (the pickup and delivery of intermodal shipments) for certain customers. TDSI serves the automotive industry with distribution centers and storage locations. Transflo connects non-rail served customers to the many benef

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. Nature of Operations and Significant Accounting Policies, continued Basis of Presentation In the opinion of management, the accompanying consolidated financial statements contain all normal, recurring adjustments necessary to fairly present the consolidated financial statements and accompanying notes. Where applicable, prior year information has been reclassified to conform to the current presentation. Pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been omitted from these interim financial statements. CSX suggests that these financial statements be read in conjunction with the audited financial statements and the notes included in CSX's most recent annual report on Form 10-K and any subsequently filed current reports on Form 8-K. Fiscal Year The Company's fiscal periods are based upon the calendar year. Except as otherwise specified, references to "third quarter(s)" or "nine months" indicate CSX's fiscal periods ending September 30, 2024 and September 30, 2023, and references to "year-end" indicate the fiscal year ended December 31, 2023. New Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Improvements to Reportable Segment Disclosures . This standard update requires additional interim and annual disclosures about a reportable segment's expenses, even for companies with only one reportable segment. The Company is required to adopt the guidance for its 2024 annual report filed on Form 10-K. The Company is currently evaluating the impact of these amendments on its disclosures, but this standard update will not impact the Company's results of operations or financial posit

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 2. Earnings Per Share The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution. Third Quarters Nine Months 2024 2023 (a) 2024 (a) 2023 (a) Numerator (Dollars in Millions) : Net Earnings $ 894 $ 828 $ 2,737 $ 2,786 Denominator (Units in Millions) : Average Common Shares Outstanding 1,936 1,994 1,946 2,022 Other Potentially Dilutive Common Shares 4 5 4 5 Average Common Shares Outstanding, Assuming Dilution 1,940 1,999 1,950 2,027 Net Earnings Per Share, Basic $ 0.46 $ 0.42 $ 1.41 $ 1.38 Net Earnings Per Share, Assuming Dilution $ 0.46 $ 0.41 $ 1.40 $ 1.37 (a) See Note 11, Revision of Prior Period Financial Statements. Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock outstanding and common stock equivalents adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards including employee stock options, performance units and restricted stock units. When calculating diluted earnings per share, the potential shares that would be outstanding if all outstanding stock options were exercised are included. This number is different from outstanding stock options because it is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. The total average outstanding stock options that were excluded from the diluted earnings per share calculation because their effect was antidilutive is in the table below. Third Quarters Nine Months 2024 2023 2024 2023 Antidilutive Stock Options Excluded from Diluted EPS (Units in Millions) 3 3 3 4 CSX Q3 2024 Form 10-Q p.10 Table of Contents CSX COR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 2. Earnings Per Share, continued Share Repurchases During November 2023, the share repurchase program announced in July 2022 was completed and the Company began repurchasing shares under the $ 5 billion share repurchase program approved in October 2023. Total repurchase authority remaining was $ 3.6 billion as of September 30, 2024. Share repurchases may be made through a variety of methods including, but not limited to, open market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and negotiated block purchases. The timing of share repurchases depends upon management's assessment of marketplace conditions and other factors, and the program remains subject to the discretion of the Board of Directors. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the Accounting Standards Codification ("ASC"), the excess of repurchase price over par value is recorded in retained earnings. During third quarters and nine months ended September 30, 2024 and September 30, 2023, the Company engaged in the following repurchase activities: Third Quarters Nine Months 2024 2023 2024 2023 Shares Repurchased (Millions) 12 31 35 94 Cost of Shares (Dollars in Millions) $ 402 $ 971 $ 1,212 $ 2,901 The Inflation Reduction Act of 2022 imposes a nondeductible 1% excise tax on the net value of most share repurchases made after December 31, 2022. Excise tax commensurate with net share repurchases is reflected in equity and a corresponding liability for excise taxes payable is included in other current liabilities on the consolidated balance sheet. Amounts shown in the table above exclude the impact of this excise tax. Dividend Increase In February 2024, the Company's Board of Directors authorized a 9 % increase in the quarterly cash d

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 3. Stock Plans and Share-Based Compensation Under CSX's share-based compensation plans, awards consist of performance units, stock options and restricted stock units for management and stock grants for directors. Share-based compensation expense for awards under share-based compensation plans is measured using the fair value of the award on the grant date and is recognized on a straight-line basis over the service period of the respective award. Alternatively, expense is recognized upon death or over an accelerated service period for employees whose agreements allow for continued vesting upon retirement or separation. Forfeitures are recognized as they occur. Total pre-tax expense and income tax benefits associated with share-based compensation are shown in the table below. Income tax benefits include impacts from option exercises and the vesting of other equity awards. Third Quarters Nine Months (Dollars in Millions) 2024 2023 2024 2023 Share-Based Compensation Expense: Restricted Stock Units $ 7 $ 5 $ 21 $ 14 Performance units 4 5 7 14 Stock Options 3 3 9 9 Employee Stock Purchase Plans 2 2 6 6 Stock Awards for Directors — — 2 2 Total Share-Based Compensation Expense $ 16 $ 15 $ 45 $ 45 Income Tax Benefit $ 4 $ 3 $ 12 $ 10 Long-term Incentive Plan In February 2024, the Company granted the following awards under a new long-term incentive plan ("LTIP") for the years 2024 through 2026, which was adopted under the CSX 2019 Stock and Incentive Award Plan. Granted (Thousands) Weighted Avg. Fair Value Performance Units 605 $ 38.66 Restricted Stock Units 601 36.72 Stock Options 957 11.57 CSX Q3 2024 Form 10-Q p.12 Table of Contents CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 3. Stock Plans and Share-Based Compensation, continued Performance Units Units vest approximately three years after grant. Payouts will be made in CSX common stock with a payout range for most participants between 0 % and 200 % of the target awards depending on Company performance against predetermined goals. Payouts for certain executive officers are subject to formulaic upward or downward adjustment by up to 25 %, capped at an overall payout of 250 %, based upon the Company's total shareholder return relative to specified comparable groups over the performance period. The fair values of performance units granted to certain executive officers were calculated using a Monte-Carlo simulation model. Measurement against goals related to both average annual operating income growth and Economic Profit (CSX Cash Earnings or CCE), in each case excluding non-recurring items as defined in the plan, will each comprise 50 % of the payout. As defined under the plan, Economic Profit incentivizes strategic investments earning more than management's desired minimum required return and is calculated as CSX's gross cash earnings minus the capital charge on gross operating assets. Stock Options Stock options were granted with ten-year terms and vest over three years in equal installments each year on the anniversary of the grant date. These awards are time-based and are not based upon attainment of performance goals. The fair values of stock option awards were estimated at the grant date using the Black-Scholes valuation model. Restricted Stock Units The restricted stock units awarded vest over three years in equal installments each year on the anniversary of the grant date and are settled in CSX common stock on a one -for-one basis. These awards are time-based and are not based upon CSX's attainment of performance goals. For more information related to the Company's outstanding long-term incentive compensatio

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 4. Casualty, Environmental and Other Reserves Personal injury and environmental reserves are considered critical accounting estimates due to the need for management judgment. Casualty, environmental and other reserves are provided for in the consolidated balance sheets as shown in the table below. September 30, 2024 December 31, 2023 (Dollars in Millions) Current Long-term Total Current Long-term Total Casualty: Personal Injury $ 51 $ 91 $ 142 $ 45 $ 83 $ 128 Occupational 11 58 69 7 60 67 Total Casualty 62 149 211 52 143 195 Environmental 36 111 147 41 113 154 Other 49 49 98 51 40 91 Total $ 147 $ 309 $ 456 $ 144 $ 296 $ 440 These liabilities are accrued when probable and reasonably estimable in accordance with the Contingencies Topic in the ASC. Actual settlements and claims received could differ, and final outcomes of these matters cannot be predicted with certainty. Considering the legal defenses currently available, the liabilities that have been recorded and other factors, it is the opinion of management that none of these items individually, when finally resolved, will have a material adverse effect on the Company's financial condition, results of operations or liquidity. Should a number of these items occur in the same period, however, their combined effect could be material in that particular period. Casualty Casualty reserves represent accruals for personal injury, occupational disease and occupational injury claims primarily related to railroad operations. The Company's self-insured retention amount for casualty claims is $ 100 million per occurrence as discussed at Note 5, Commitments and Contingencies . Currently, no individual claim is expected to exceed the self-insured retention amount. Personal Injury Personal injury reserves represent liabilities for employee work-related and third-party injuries. Work-related injuries for CSXT employees are primarily subject to the

View Full Filing

View this 10-Q filing on SEC EDGAR