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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-8022
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CSX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 62-1051971
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 East Cary Street, Richmond, VA. 23219-4031
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 782-1400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------------------- -----------------------------
Common Stock, $1 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 ( )
On January 27, 1995, the aggregate market value of the Registrant's voting
stock held by nonaffiliates was $7.4 billion.
On January 27, 1995, there were 104,734,016 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Proxy Statement for the annual meeting of security holders on April 25,
1995, for Part III (Items 11, 12 and 13) is incorporated by reference.
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CSX CORPORATION
EDGAR Index - Form 10-K Annual Report
Item No. Page & Note Reference
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PART I
1. Business 4-7, 17-35 and Note 18 to
Consolidated Financial
Statements
2. Properties 4, 17-35 and Notes 7
and 10 to Consolidated
Financial Statements
3. Legal Proceedings Note 15 to Consolidated
Financial Statements
4. Not Applicable
PART II
5. Market for the Registrant's
Common Equity and Related
Stockholder Matters 77-81
6. Selected Financial Data 6-7
7. Management's Discussion and 17-35, and Notes 2, 3,
Analysis of Financial Condition 4, 6, 10, 13, 14,
and Results of Operations and 18 to Consolidated
Financial Statements
8. Financial Statements and
Supplementary Data
The response to this item is
submitted in Item 14.
9. Not Applicable
PART III
10. Directors and Executive Officers 72-76
of the Registrant
11. Executive Compensation (a)
12. Security Ownership of Certain (a)
Beneficial Owners and Management
13. Certain Relationships and Related (a)
Transactions
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CSX CORPORATION
EDGAR Index - Form 10-K Report
Item No. Page & Note Reference
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PART IV
14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
a. Consolidated Statement of
Earnings for the Years Ended
Dec. 30, 1994, Dec. 31, 1993 and 1992 36
Consolidated Statement of
Cash Flows for the Years Ended
Dec. 30, 1994, Dec. 31, 1993 and 1992 37-38
Consolidated Statement of
Financial Position at
Dec. 30, 1994, Dec. 31, 1993 and 1992 39
Notes to Consolidated Financial
Statements for the Years Ended
Dec. 30, 1994, Dec. 31, 1993 and 1992 40-70
Report of Independent Auditors 71
Index to Exhibits E-1
b. Reports on Form 8-K
None.
(a) Items Number 11, 12 and 13 will be incorporated by reference from the
registrant's 1995 Proxy Statement pursuant to instructions G(1) and
G(3) of the General Instructions to Form 10-K.
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CSX CORPORATE PROFILE
CSX Corporation is an international transportation company offering a
variety of rail, container-shipping, intermodal, trucking, barging, contract
logistics and related services worldwide. In 1994, the company earned $9.6
billion of operating revenue and $1.2 billion of operating income.
CSX Transportation Inc. (CSXT) provides rail transportation and
distribution services over 18,759 route miles and 32,462 track miles in 20
states in the East, Midwest and South; the District of Columbia; and Ontario,
Canada. CSXT is the largest hauler of coal in the United States and handles
one-third of all automobiles manufactured domestically. CSXT accounted for 48%
of CSX's 1994 operating revenue and 75% of operating income.
Sea-Land Service Inc. (Sea-Land) is a worldwide leader in
container-shipping transportation and related trade services. Sea-Land
operates a fleet of 93 container ships and approximately 188,000 containers in
U.S. and foreign trade and serves 120 ports in 80 countries and territories.
Sea-Land contributed 36% of CSX's 1994 operating revenue and 15% of operating
income.
CSX Intermodal Inc. (CSXI), the nation's only full-service, coast-to-
coast intermodal transportation company, operates a network of dedicated
intermodal terminals across North America. The company also offers
comprehensive trucking and chassis management and leasing services. CSXI
provided 9% of CSX's 1994 operating revenue and 5% of operating income.
American Commercial Lines Inc. (ACL) is a leader in barge
transportation, operating 117 towboats and approximately 3,300 barges on both
U.S. and foreign waterways. Additionally, ACL operates marine construction
facilities, river terminals and communication services. ACL accounted for 5%
of CSX's 1994 operating revenue and 5% of operating income.
Customized Transportation Inc. (CTI) is a premier provider of
dedicated contract logistics services. The company offers an array of premium
supply chain management services including distribution, warehousing,
processing and assembly, contract carriage and just-in-time delivery. CTI
provided 2% of CSX's 1994 operating revenue and 1% of operating income.
Non-Transportation: Resort holdings include The Greenbrier in White
Sulphur Springs, W.Va., and the Grand Teton Lodge Company in Moran, Wyo. CSX
Real Property Inc. is responsible for development, sales and leasing of CSX-
owned properties. CSX holds a majority interest in Yukon Pacific Corporation,
which is promoting construction of the Trans-Alaska Gas System (TAGS) to
transport Alaska's North Slope natural gas to Valdez for export to Asian
markets.
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1994 HIGHLIGHTS
CSX Corporation
- Generated return on invested capital in excess of cost of capital
for second consecutive year.
- Produced record free cash flow.
- Posted record financial results in revenue, operating income and
earnings.
- Increased annual dividend payout for 14th consecutive year.
CSX Transportation Inc.
- Achieved historic low operating ratio of 79.9%.
- Posted record operating income and free cash flow.
- Ranked No. 1 among Class I railroads with the lowest occurrence of
train accidents per million train miles.
- Won Chrysler Corporation Gold Pentastar quality service award for
second consecutive year.
Sea-Land Service Inc.
- Posted record earnings in third and fourth quarters.
- Increased loads 9%, to highest level ever.
- Completed major customer-service initiatives in the Asia-Middle
East and South America trades.
- Won Chrysler Corporation Gold Pentastar quality service award.
CSX Intermodal Inc.
- Achieved record volume of 1.3 million loads.
- Posted 15% increase in operating income.
- Initiated direct service between Chicago and New York.
- Completed initial track testing of Iron Highway train concept.
American Commercial Lines Inc.
- Increased operating income 40%, rebounding from 1993's floods.
- Posted record fourth-quarter earnings.
- Achieved record year in safety, reducing injury incident rate 25%.
- Improved northbound shipment volumes.
Customized Transportation Inc.
- Increased revenue 26%.
- Expanded services into new and non-traditional markets.
- Enhanced supply chain management capability through new software
development.
Non-Transportation
- The Greenbrier retained Mobil Five-Star rating for the 34th
consecutive year and the AAA Five-Diamond rating since its
inception 19 years ago.
- The Greenbrier hosted the 1994 Solheim Cup Matches.
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CSX CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Millions of Dollars, Except Per Share Amounts)
1994(a) 1993(c) 1992 1991(d) 1990
------- ------- ------- ------- -------
SUMMARY OF OPERATIONS
Operating Revenue $ 9,608 $ 8,940 $ 8,734 $ 8,636 $ 8,205
------- ------- ------- ------- -------
Operating Expense 8,376 7,934 7,769 7,782 7,337
Productivity/Restructuring
Charge (b) --- 93 699 755 53
------- ------- ------- ------- -------
Total Operating Expense 8,376 8,027 8,468 8,537 7,390
------- ------- ------- ------- -------
Operating Income $ 1,232 $ 913 $ 266 $ 99 $ 815
------- ------- ------- ------- -------
Earnings (Loss) From
Continuing Operations $ 652 $ 359 $ 20 $ (76) $ 365
======= ======= ======= ======= =======
PER COMMON SHARE
Earnings (Loss) From
Continuing Operations $ 6.23 $ 3.46 $ .19 $ (.75) $ 3.63
======= ======= ======= ======= =======
Cash Dividends $ 1.76 $ 1.58 $ 1.52 $ 1.43 $ 1.40
======= ======= ======= ======= =======
Market Price - High $ 92.38 $ 88.13 $ 73.63 $ 58.00 $ 38.13
- Low $ 63.13 $ 66.38 $ 54.50 $ 29.75 $ 26.00
======= ======= ======= ======= =======
PERCENTAGE CHANGE FROM
PRIOR YEAR
Operating Revenue 7.5% 2.4% 1.1% 5.3% 5.9%
======= ======= ======= ======= =======
Operating Expense 4.3% (5.2)% (.8)% 15.5% 7.5%
======= ======= ======= ======= =======
Operating Expense,
excluding Productivity/
Restructuring Charge 5.6% 2.1% (.2)% 6.1% 6.7%
======= ======= ======= ======= =======
Cash Dividends Per Common
Share 11.4% 3.9% 6.3% 2.1% 9.4%
======= ======= ======= ======= =======
SUMMARY OF FINANCIAL POSITION
Cash, Cash Equivalents and
Short-Term Investments $ 535 $ 499 $ 530 $ 465 $ 609
======= ======= ======= ======= =======
Working Capital (Deficit) $ (840) $ (704) $ (859) $ (942) $ (578)
======= ======= ======= ======= =======
Total Assets $13,724 $13,420 $13,049 $12,798 $12,804
======= ======= ======= ======= =======
Long-Term Debt $ 2,618 $ 3,133 $ 3,245 $ 2,804 $ 3,025
======= ======= ======= ======= =======
Shareholders' Equity $ 3,731 $ 3,180 $ 2,975 $ 3,182 $ 3,541
======= ======= ======= ======= =======
Book Value Per Common
Share $ 35.63 $ 30.53 $ 28.75 $ 31.08 $ 35.93
======= ======= ======= ======= =======
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CSX CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS, CONTINUED
1994(a) 1993(c) 1992 1991(d) 1990
------- ------- ------- ------- -------
EMPLOYEE COUNT (e)
Rail 28,773 29,216 30,916 33,239 35,672
Other 17,974 17,847 16,681 16,644 15,259
------- ------- ------- ------- -------
Total 46,747 47,063 47,597 49,883 50,931
======= ======= ======= ======= =======
See Notes 1, 2 and 4 to Consolidated Financial Statements
(a) In 1994, the state of Florida elected to satisfy its remaining
unfunded obligation issued in 1988 to consummate the purchase of 80
miles of track and right of way. The transaction resulted in an
accelerated pretax gain of $69 million and increased net earnings by
$42 million, 40 cents per share.
(b) In 1993, the company recorded a $93 million pretax charge to
recognize the estimated costs of restructuring certain operations and
functions at its container-shipping unit. The restructuring charge
reduced net earnings by $61 million, 59 cents per share. In 1992,
the company recorded a charge to recognize the estimated costs of
buying out certain trip-based compensation elements paid to train
crews. The pretax charge amounted to $699 million and reduced net
earnings for 1992 by $450 million, $4.38 per share. In 1991, the
company recorded a charge to provide for the estimated costs of
implementing work-force reductions, improvements in productivity and
other cost reductions at its major transportation units. The pretax
charge amounted to $755 million and reduced 1991 net earnings by $490
million, $4.88 per share. In 1990, the company recorded a $53
million restructuring charge related to its container-shipping unit.
On an after-tax basis, the restructuring charge was $36 million, 37
cents per share.
(c) The company revised its estimated annual effective tax rate in 1993
to reflect the change in the federal statutory income tax rate from
34 to 35 percent. The effect of this change was to increase income
tax expense for 1993 by $56 million, 54 cents per share. Of this
amount, $51 million, 48 cents per share, related to applying the
newly enacted statutory income tax rates to deferred tax balances as
of January 1, 1993.
(d) During 1991, the company consummated the sale of a one-third interest
in Sea-Land Orient Terminals Ltd., the sale of the stock of RF&P
Corporation and other investment transactions. After taxes and
minority interest, the transactions resulted in a net gain of $32
million, 32 cents per share.
(e) Employee count based on annual averages.
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CHAIRMAN'S MESSAGE
By most measures, 1994 was an excellent year for CSX. The company
generated $9.6 billion in operating revenue, $1.2 billion in operating income
and $652 million in net earnings - all records and all contributing to CSX
exceeding its cost of capital for the second consecutive year and producing a
record $486 million in free cash flow. Furthermore, each of the company's core
transportation businesses strengthened its competitive position and its long-
term fundamental earning power.
From the standpoint of stock performance, however, 1994 was a
disappointment. After climbing to an all-time high of $92.375 per share in
February, CSX stock finished the year at $69.625, down 15 percent from its
1993 close. We believe external forces - especially rising interest rates and
investor concerns about potential inflation - were largely responsible for the
poor performance of CSX's stock and that of transportation and cyclical stocks
in general. In addition, uncertainty over possible mergers in the rail
industry contributed to the 17 percent average decline in the stock price of
the six largest U.S. railroad companies (excluding CSX).
Even with 1994's price decline, CSX's stock performance for the past
3- and 5-year periods easily exceeded that of the S&P 500 and other broad
market indexes. In fact, CSX's market value has more than doubled over the
past five years, from $3.5 billion at the end of 1989 to nearly $7.3 billion
at the end of 1994.
While disappointed in the performance of CSX stock in 1994, we
believe it is just a matter of time before the company's improving financial
strength and earnings outlook are more fully reflected in its stock price.
Indeed, we have more confidence than ever in CSX's ability to provide superior
shareholder returns over the long term.
Five years of progress
The past year marked the successful completion of a five-year plan to
improve the strength and profitability of our individual business units and,
consequently, the core earning power of CSX. Each of our units made great
strides by re-engineering processes, cutting costs, enhancing service
reliability and improving quality and safety. This progress has enabled CSX to
produce strong, sustainable earnings and free cash flows. Most important, for
the past two years CSX earned in excess of its cost of capital, which we view
as critical to the creation of shareholder value.
Having made great progress in improving the performance of our
individual units, CSX now is beginning to reap the fruits of our efforts to
promote and coordinate cross-unit activities. Increasingly, we are working
across units to reduce costs, improve safety, use technology more effectively,
share market knowledge and pursue opportunities beyond the means of any single
one of our businesses. Much remains to be done before CSX realizes its full
potential, but we are encouraged by the progress our units are making to more
fully leverage the combined strengths of CSX.
Key to our ability to serve customers and create value is the human
element - the vast range of talent, expertise and ingenuity that make this
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company special. With that in mind, CSX is making a concerted effort to
broaden the professional development of our work force. We are committed to
creating within CSX a unique learning environment to enhance the individual
skills and competencies of our people.
We have the resources, knowledge and vision to establish CSX as the
premier provider of global transportation services, a company recognized
worldwide for its ability to create value for its customers, shareholders and
employees. We are determined - indeed, eager - to demonstrate the true
potential of this company. The achievements made by CSX's business units
during 1994 certainly laid a solid foundation for further improvements.
Record results at CSXT
Our railroad, CSX Transportation Inc. (CSXT), recorded the best
performance in its history by continuing to control costs while setting
records in operating income and free cash flow.
Cross-functional performance improvement teams continued to
scrutinize virtually every aspect of the railroad's operation. These teams
have eliminated over $350 million in excess costs over the past three years,
and they are targeting more than $100 million in further cost reductions in
1995.
For the year, CSXT posted an operating ratio slightly below 80
percent, which means that the railroad produced more than 20 cents in
operating income for every dollar of revenue it generated. Though pleased with
its success in improving operating efficiency, CSXT's management team views
its achievement of a record-low operating ratio as merely a milepost along the
path to a significantly better performance in 1995 and beyond.
The railroad undertook a major effort to improve service in 1994 and
began re-engineering key components of its operation to meet customer needs.
By improving the performance and reliability of its locomotive fleet and
reducing cycle times for its car fleet, CSXT continues to enhance asset
utilization and reduce capital spending requirements. The result is a greater
return on invested capital and the ability to meet market needs with smaller
equipment fleets and at less cost.
A strong finish for Sea-Land
At our ocean container-shipping unit, Sea-Land Service Inc. (Sea-
Land), strong traffic across all major trade lanes helped offset the severe
consequences of a second-quarter strike by the Teamsters Union. Absent the
strike, Sea-Land would have posted its best annual earnings ever. The company
ended the year on a particularly strong note, reporting record earnings in
both the third and fourth quarters.
Sea-Land continued to make significant progress reducing costs and
improving profitability during 1994. The company has eliminated over $350
million of expense since the beginning of 1992 and is committed to
strengthening its competitive advantage by further reducing its cost base.
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In 1994, Sea-Land took steps to improve the efficiency of its vessel
operations and inland transportation. The company implemented an automation
process that enhances productivity at its terminals and expanded the coverage
of a dynamic yield management system that identifies optimum cargo selection.
Sea-Land also announced plans to relocate its corporate headquarters
to Charlotte, N.C., and to consolidate divisional functions there by this
summer. In addition to streamlining administration, this centrally managed
approach will enable Sea-Land to respond more effectively to customer needs on
a global basis.
Intermodal strength continues
CSX Intermodal Inc. (CSXI) continued its eight-year record of
improved results, with operating income rising 15 percent to $61 million. CSXI
completed improvements to many of its terminals, initiated direct service
between Chicago and New York City and continued to forge partnerships with
motor carriers, railroads and distributors.
In 1995, CSXI will continue improving and expanding its national
service network to pave the way for future growth. CSXI also plans to begin
field testing its "Iron Highway" integrated train concept, which holds great
promise for making intermodal transportation competitive for distances of 700
miles or less.
Barge line bounces back
Our barge unit, American Commercial Lines Inc. (ACL), rebounded from
1993's flood-impacted downturn to post strong 1994 results. Operating income
rose 40 percent to $63 million on the strength of a robust U.S. economy and
bumper grain harvest. ACL continued to re-engineer its work processes and to
explore river transportation opportunities abroad, similar to its successful
barge operation on the Orinoco River in Venezuela.
CTI aggressively pursues growth
Customized Transportation Inc. (CTI), a logistics company
specializing in supply-chain management, leveraged its reputation as a leading
supplier of contract logistics for the automotive industry to expand its
presence in non-automotive markets. Though the youngest and smallest of CSX's
transportation units, CTI is pursuing aggressive growth targets that are
expected to double its size in five years.
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Pro Forma Net Earnings
---------------------------------------------
(Millions of Dollars, Except Per Share Amounts)
1994 1993 1992
----------- ----------- -----------
Per Per Per
Description (All After Tax) Amt. Share Amt. Share Amt. Share
--------------------------- ---- ----- ---- ----- ---- -----
Net Earnings as Reported $652 $6.23 $359 $3.46 $ 20 $ .19
Accelerated Gain on
So. Florida Track Sale (42) (.40) --- --- --- ---
Statutory Tax Rate Adjustment --- --- 51 .48 --- ---
Restructuring/Productivity Charge --- --- 61 .59 450 4.38
---- ----- ---- ----- ---- -----
Pro Forma Total $610 $5.83 $471 $4.53 $470 $4.57
==== ===== ==== ===== ==== =====
Non-transportation units
Finally, our non-transportation units continued to add value to the
company. Our resorts unit, which includes The Greenbrier in West Virginia and
the Grand Teton Lodge Company in Wyoming, produced strong earnings while
upholding its reputation for unsurpassed quality and service. Meanwhile, our
realty group continued its efforts to obtain the best value for property not
needed for other operations.
Consolidated results
Together, all units enabled CSX to produce record earnings of $652
million, or $6.23 a share. Earnings for 1994 include an after-tax gain of $42
million resulting from an accelerated payment to CSXT by the state of Florida
for track purchased in 1988. The prior year's earnings were impacted by a
restructuring charge and the effect of retroactively applying an increase in
income tax rates. Excluding these items, 1994 earnings rose 30 percent over
the prior year.
We are pleased with the record-breaking results CSX delivered in
1994, and we are confident we will achieve further progress in 1995 and
beyond.
Favorable business climate
For the near term, we see a favorable business climate both in the
United States and abroad. We expect the domestic economy to remain strong,
which would benefit all of our business units, especially our rail, intermodal
and barge operations. We also anticipate that strengthening economic
conditions overseas will aid all of our transportation units, particularly
Sea-Land, which operates in some 80 countries.
We are encouraged by the recent trend by countries all over the world
to reduce government regulation and liberalize trade policies, as is discussed
further in the "Public Policy" section of this report. We are especially
enthusiastic about the North American Free Trade Agreement (NAFTA) and the
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General Agreement on Tariffs and Trade (GATT), which promise to reduce trade
barriers and boost economic growth.
CSX is well situated to take advantage of this favorable trend toward
increased world trade. Through our container-shipping unit, CSX is involved in
many of the fastest-growing regions of the world, including China, Central and
Southeast Asia and Latin America. Also, our rail and barge units move bulk
commodities such as coal, grain and fertilizer bound for export markets, and
much of our intermodal company's business involves moving double-stack trains
of international cargo across North America.
The next five years
For the next five years, the efforts of our individual units will
continue to be guided by their overriding commitment to be the best in their
respective industries. Each is focused on meeting customer requirements by
delivering the highest level of service at the lowest possible cost. And each
is committed to exceeding its cost of capital and providing superior returns.
To reach these objectives, CSX will target increasingly difficult
performance improvement goals. We will continue our relentless efforts to
reduce costs wherever possible, to allocate capital judiciously, to utilize
assets intelligently and to improve safety and service reliability. Continued
success in these areas should enable us to meet our financial targets and to
create as much, if not more, shareholder value in the next five years as we
have over the past five years.
All of our business units operate in challenging environments;
competition is fierce, customer expectations are increasing, and the cost of
capital is rising. But as Winston Churchill said, "Kites rise highest against
the wind - not with it." We welcome the winds of change and the turbulence of
competition; such an unsettled environment inspires our company to soar to new
heights.
Sincerely,
/s/ JOHN W. SNOW
- ----------------
John W. Snow
Chairman and Chief Executive Officer
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PUBLIC POLICY STATEMENT
The 1994 elections were a milestone in American history. The revolt
of the voters against big government sent a new pro-business majority to
Congress with a bold program for reducing the size of government, lowering tax
burdens and lessening the effects of regulation. A similar change also
occurred in many states.
For the business community at large and for CSX in particular, the
most encouraging aspect of this political transformation is the move against
excessive regulation. In recent years the system of federally imposed economic
and environmental regulation has grown at an alarming rate, under both
Republican and Democratic administrations. Some regulations have been proposed
without any showing of need or any realistic relationship to the risks they
seek to prevent.
The new political climate in Washington and in the states offers a
historic opportunity for change. The imperative to reduce the cost of
government to balance the federal budget has forced a re-examination of the
need for regulatory agencies like the Interstate Commerce Commission (ICC),
which regulates railroads, and the Federal Maritime Commission (FMC), which
regulates ocean shipping.
For railroads, already freed from much economic regulation by the
Staggers Act of 1980, the ICC has increasingly become an anachronism. The
renaissance of the railroad industry proves what can be done when excessive
regulation is eliminated; a healthy and competitive rail industry should now
be treated like any other business except in those increasingly rare
situations where there is a strong public purpose for some safety net of
regulatory review.
Maritime Reform
In contrast to the railroads, which operate entirely within the
United States, where they and their competitors are covered by the same laws
and respond to the same economic incentives, the liner carriers operate in
international commerce, where their competitors play by the rules of many
different nations and often are driven by non-economic considerations. Many
who attack the FMC and the current conference system ignore these differences.
While CSX supports a reduction of maritime regulation, we should not
act rashly in a way that would put U.S.-flag carriers at a competitive
disadvantage. Their foreign competitors are often state-owned enterprises or
work in close cooperation with their national governments. If U.S. laws are
made more stringent, the U.S.-flag carriers will obey them, but we can not
expect the same cooperation from foreign carriers.
CSX continues to support a program for maritime reform that either
provides for reasonable payments to help offset the higher costs of operating
under the U.S. flag or allows carriers to reflag vessels with the
understanding that the vessels would be made available to the federal
government for defense purposes in the event of a national emergency.
Authority for five such reflaggings was granted as this report went to press.
That action is encouraging, but it is inconceivable to us that the United
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States would jeopardize its ability to meet its national defense requirements
by refusing to support a U.S. merchant marine. Clearly, U.S. support of
private, U.S.-flag merchant ships would be a far more efficient use of federal
funds than would investing billions of dollars in government-owned vessels.
Rail Passenger Service
The deficit-reduction imperative will force the Congress and the
administration to take a hard look at the need for heavily subsidized rail
passenger service. CSX is required by law to play a somewhat reluctant host to
more Amtrak trains than any other railroad except Conrail. Many are not
justified by public demand, yet they constrict rail capacity or force track
maintenance standards that exceed those needed for freight operations. In
effect, we are obligated by law to subsidize indirectly Amtrak's passenger
service - whose yearly government subsidy now totals nearly a billion dollars.
We hope the new era will bring about a restructuring of Amtrak so that it
operates economically on fewer routes.
The system of excessive regulation also has spilled over into our
judicial system, which has become clogged with litigation. Tort reforms would
lessen the incentive to turn to the courts to solve every dispute.
Congressional review of the Federal Employers' Liability Act (FELA), the
antiquated system under which rail employees are compensated when injured on
the job, could at long last give railroads and their employees the opportunity
to move from this costly, adversarial system of dealing with employee injuries
to the no-fault system of workers compensation used by every other industry.
Finally, CSX plans to work with other businesses to seek a fairer and
less intrusive system of regulation. Fundamentally, we believe there needs to
be dramatic change in the entire approach of government to regulation, so that
regulations are imposed only when a compelling need exists and where the
likely benefits exceed the costs. We support pending legislation that would
require performance standards and realistic cost-benefit assessments of the
real risks involved in perceived environmental hazards or threats to safety.
One message the voters sent to Congress and to their state
legislatures in November is that they agree with Thomas Jefferson: "That
government is best which governs the least." That is a principle that should
direct our approach to government and its regulatory role.
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CSX CORPORATION AND SUBSIDIARIES
FINANCIAL SECTION
A Message to Shareholders on CSX'S Financial Principles
The management of CSX Corporation is dedicated to reporting the
company's financial condition and results of operations in an accurate, timely
and conservative manner in order to give shareholders all the information they
need to make decisions about investment in the company. CSX management also
strives to present to shareholders a clear picture of the company's financial
objectives and the principles that guide its employees in achieving those
goals.
In this section, financial information is presented to assist you in
understanding the sources of earnings and financial resources of the company
and the contributions of the major business units. In addition, certain
information needed to meet the Securities and Exchange Commission's Form 10-K
requirements has been included in the Notes to Consolidated Financial
Statements.
The key objective of CSX is to increase shareholder value by
improving the return on capital invested in its businesses and maximizing free
cash flow. The company defines "free cash flow" as the amount of cash
available for debt service and other purposes generated by operating
activities after deducting capital expenditures, present value of new leases
and cash dividends.
To achieve these goals, managers utilize the following guidelines in
conducting the financial activities of the company:
Capital expenditures -- CSX business units are expected to earn returns on
capital expenditures in excess of the CSX cost of capital, unless such
expenditures are necessary to meet safety, environmental or other regulatory
requirements. Business units that do not earn above the CSX cost of capital
and do not generate an adequate level of free cash flow over an appropriate
period of time will be evaluated for sale or other disposition.
Taxes -- CSX will pursue all available opportunities to pay the lowest
possible federal, state and foreign taxes, consistent with applicable laws and
regulations and the company's obligation to carry a fair share of the cost of
government. CSX also works through the legislative process to keep effective
tax rates as low as possible.
Debt ratings -- The company will strive to maintain its investment grade debt
ratings, which allow cost-effective access to major financial markets
worldwide. The company will work to manage its business operations in a manner
consistent with meeting this objective, including monitoring its debt levels
and the amount of fixed charges it incurs.
Financial instruments -- From time to time the company may employ financial
instruments as part of its risk management program. The objective would be to
manage specific risks and exposures and not to actively trade financial
instruments for profit or loss.
- 15 -
PAGE 16
Dividends -- Every quarter, the cash dividend will be reviewed in light of the
current rate of inflation and competitive dividend yields. The dividend may be
increased periodically if cash flow projections show the higher payout level
could be adequately maintained.
Management's Responsibility for Financial Reporting
The consolidated financial statements of CSX Corporation have been
prepared by management, which is responsible for their content and accuracy.
The statements present the results of operations, cash flows and financial
position of the company in conformity with generally accepted accounting
principles and, accordingly, include amounts based on management's judgments
and estimates.
CSX and its subsidiaries maintain an internal control structure
designed to provide reasonable assurance that assets are safeguarded and that
transactions are properly authorized by management and recorded in conformance
with generally accepted accounting principles. This structure includes
accounting controls, written policies and procedures and a code of corporate
conduct that stresses the highest ethical standards and is routinely
communicated to all employees. This structure also includes an internal audit
staff to monitor the compliance with and effectiveness of established policies
and procedures.
The Audit Committee of the board of directors, which is composed
solely of outside directors, meets periodically with management, internal
auditors and the independent auditors to review audit findings, adherence to
corporate policies and other financial matters.
The firm of Ernst & Young LLP, independent auditors, has been engaged
to audit and report on the company's consolidated financial statements. Its
audit was conducted in accordance with generally accepted auditing standards
and included a review of internal accounting controls to the extent deemed
necessary for the purpose of its report, which appears on page 71.
- 16 -
PAGE 17
ANALYSIS OF OPERATIONS
Through its business units, CSX Corporation operates a unique global
freight transportation network offering rail, container-shipping, intermodal
and inland barge transportation. CSX also provides a range of related
services, including logistics management, warehousing, distribution and inland
marine construction and repair.
CSX units enjoy a major presence in their respective industries,
which gives them the financial stability and market strength to withstand
economic downturns and domestic and international competition. Management
focus is on increasing shareholder returns and generating "economic value
added" (EVA). The EVA concept holds that companies create wealth only when
they generate returns above their cost of capital. Using EVA to measure
financial performance, CSX has reduced costs, utilized assets more
effectively, conserved capital, increased productivity and improved service.
Each unit of CSX is charged with meeting stretch targets for return
on invested capital, operating income and free cash flow. Their efforts to
improve the core earning power of their businesses yielded record results for
CSX in 1994 - generating returns greater than the company's cost of capital.
Discussion of Earnings
Net earnings totaled $652 million, $6.23 per share in 1994, compared
with $359 million, $3.46 per share in 1993, and $20 million, 19 cents per
share, in 1992. Earnings for 1994 included the accelerated recognition of an
after-tax gain of $42 million, 40 cents per share, on a 1988 sale of track in
south Florida. Excluding this gain, earnings for 1994 would have been $610
million, $5.83 per share.
The 1993 results included the effect of a $93 million pretax
restructuring charge to recognize the expense associated with reorganizing and
downsizing the container-shipping unit's European and North American
operations. After taxes, this charge was $61 million, 59 cents per share. Also
in 1993, CSX recognized $51 million, 48 cents per share, of income tax expense
related to applying the newly enacted statutory income tax rate to deferred
tax balances as of Jan. 1, 1993.
Earnings for 1992 included a charge principally to recognize the
estimated costs of buying out certain trip-based compensation paid to train
crews. The pretax charge amounted to $699 million and reduced net earnings for
1992 by $450 million, $4.38 per share.
Excluding the above-mentioned charges and the impact of the tax-rate
change, earnings for 1993 and 1992 would have been $471 million, $4.53 per
share, and $470 million, $4.57 per share, respectively. On a comparable basis,
annual earnings per share in 1994 were $1.30 higher than in 1993 and $1.26
higher than in 1992.
- 17 -
PAGE 18
PRODUCTIVITY/RESTRUCTURING CHARGES
----------------------------------
(Millions of Dollars)
-------------------
1993 1992 1991
---- ---- ----
Provision:
Severance Costs $32 $669 $634
Exit, Settlement and Other Costs 61 30 121
--- ---- ----
Total Provision 93 699 755
--- ---- ----
Payments and Other Reductions:
Severance Costs (24) (293) (634)
Exit, Settlement and Other Costs (42) (30) (121)
--- ---- ----
Balance Dec. 30, 1994 $27 $376 $---
=== ==== ====
Consolidated operating revenue increased to $9.6 billion, 7% higher
than 1993 and 10% above 1992. The higher 1994 revenue was led by the rail
unit's improvement in merchandise traffic and the rebound of coal loadings
from 1993's levels, which were affected adversely by a strike against selected
eastern coal producers. Strong volume at the container-shipping and intermodal
units and a solid second half of the year for the barge company supported
revenue increases across all transportation units.
Compared with 1992, all CSX transportation units generated higher
revenue. These increases were driven by improved economic activity and market
share gains achieved through service improvements.
Consolidated operating expense was $8.4 billion, compared with $8
billion in 1993 and $8.5 billion in 1992. Operating expense in 1993 included
the container-shipping unit's $93 million pretax restructuring charge, while
1992 operating expense included the $699 million pretax productivity charge.
Excluding the restructuring and productivity charges, 1994 operating
expense would have been 6% higher than 1993's expense of $7.9 billion and 8%
higher than 1992's $7.8 billion. Concerted cost-reduction efforts by all CSX
units enabled the company to contain much of the expense associated with
supporting the increased revenue and the effects of inflation. In particular,
significant expense reductions were achieved by Performance Improvement Teams
at the rail and container-shipping units.
Consolidated operating income for 1994 was $1.2 billion. This
compared with $913 million in 1993 and $266 million in 1992, including the
restructuring and productivity charges recorded in both years. Excluding those
charges, operating income would have been $1 billion in 1993 and $965 million
in 1992. The year-to-year comparisons include the impact of 1993's coal strike
and midwest flooding on rail and barge operations, respectively.
- 18 -
PAGE 19
Other income totaled $55 million, compared with $18 million in 1993
and $3 million in 1992. Other income for 1994 reflected the accelerated $69
million net pretax gain on the south Florida track sale, partially offset by
higher fees related to accounts receivable sold and premium payments related
to retiring $300 million of long-term debt. The gain recognition was the
result of the state of Florida prepaying its unfunded obligation to the
company.
Interest expense for 1994 was $281 million, $17 million below 1993's
level. A $312 million net decrease in outstanding debt and lower interest
rates on equipment obligations contributed to the reduced expense compared
with 1993.
Discussion of Cash Flows
Cash provided by operating activities totaled $1.3 billion in 1994.
This compares with $962 million in 1993 and $939 million in 1992. Cash
provided by operating activities, together with proceeds from disposition of
properties, was adequate to fund property additions and cash dividends in 1994
and 1993, as well as to allow a significant reduction of long-term debt in
1994.
Payments related to the 1992 and 1991 productivity charges to
implement two-member crew agreements on the rail system impacted cash provided
by operations in all three years. These agreements, which were successfully
negotiated by the end of 1993, provided for two-member train crews on through-
freight and yard assignments, the buyout of excess positions and buyouts for
productivity fund and short-crew allowances. The company has paid $760 million
related to its 1992 and 1991 productivity charges to date, largely due to the
implementation of these agreements. The rail unit is realizing the
efficiencies and savings anticipated as a result of reducing train crew sizes.
Payments also were made in conjunction with the container-shipping unit's
European and North American restructuring as well as other rail unit severance
programs.
Consistent with its original estimates, CSX expects a significant
decrease in the level of future cash payments for those productivity and
restructuring costs. In management's opinion, existing reserves are adequate
for these payments.
Property additions totaled $875 million for the year, compared with
$768 million in 1993 and $1 billion in 1992, which included $137 million for
the barge company's acquisition of the Valley Line assets. Efforts to reduce
expenses, improve asset utilization and enhance productivity, such as through
Performance Improvement Teams and increased equipment turn times, have helped
hold the line on capital spending in a period of increasing business activity.
CSX committed additional capital in the form of new and renewed
operating leases. The present value of future payments on these additional
equipment and facility leases totaled $116 million in 1994, $108 million in
1993 and $17 million in 1992. New capital investment totaled $991 million in
1994, compared with $876 million in 1993 and $1 billion in 1992.
- 19 -
PAGE 20
Cash dividends per common share rose to $1.76, compared with $1.58 in
1993 and $1.52 in 1992. The annualized dividend rate increased 11% from 1993's
level and 16% from 1992's level. The number of CSX outstanding shares rose
slightly, to 104.7 million, as a result of stock issued under the provisions
of incentive, benefit and dividend reinvestment plans.
In 1995, CSX anticipates continued strong cash flows from core
transportation operations sufficient to meet future operating and capital
needs as well as cash dividends and debt repayments. The company also plans to
continue its successful record of extracting cash value from disposition or
lease of rights of way, real estate and other non-core asset holdings. CSX
expects to have access to financial markets, as necessary, to fund operations,
working capital and other requirements.
Discussion of Financial Position
Cash, cash equivalents and short-term investments totaled $535
million at Dec. 30, 1994. This compares with $499 million and $530 million at
year-end 1993 and 1992, respectively.
The working capital deficit increased $136 million during 1994,
primarily due to higher current maturities of long-term debt. The company had
year-end working capital deficits of $840 million in 1994, $704 million in
1993 and $859 million in 1992.
A working capital deficit is not unusual for CSX and does not
indicate a lack of liquidity. CSX maintains adequate resources to satisfy
current liabilities when they are due and has sufficient financial capacity to
manage its day-to-day cash requirements.
In 1993, working capital was affected by the reclassification of
current deferred income taxes. Under Statement of Financial Accounting
Standards No. 109, CSX reclassified $108 million of its long-term deferred
income tax balances to a current account during 1993 to match the life of this
deferred benefit with the underlying components that gave rise to the deferred
income taxes.
Long-term debt declined $515 million to $2.6 billion in 1994,
reflecting a higher level of scheduled maturities and use of the company's
increased cash flow to reduce outstanding debt. This compared with long-term
debt of $3.1 billion in 1993 and $3.2 billion in 1992. The company issued debt
in 1992 to finance productivity payments and property acquisitions.
The ratio of debt-to-total capitalization was 40.8% at year-end 1994,
compared with 49.2% for 1993 and 51.7% for 1992. Cash provided by operations,
property dispositions and proceeds from the prepayment of its unfunded
obligation by the state of Florida generated the cash available to reduce the
outstanding long-term debt. CSX anticipates using excess cash to continue to
reduce long-term debt over the next two to three years.
- 20 -
PAGE 21
Other Matters
CSX accepts the challenge of addressing its environmental
responsibilities and managing related expenditures. Environmental management
is an important part of CSX's strategic planning. As a result, there is an
active focus on finding the most efficient, cost-effective solutions for
dealing responsibly with waste materials generated from past and present
business operations. These solutions range from simple recycling and cleanup
efforts to high-tech remediation initiatives.
The company is a party to numerous regulatory proceedings and private
actions. These arise from laws governing the remediation of contaminated
property, such as the federal Superfund statute, hazardous waste and
underground storage tank laws, and similar state laws.
The rail unit has been identified, together with other parties, as a
potentially responsible party in a number of governmental investigations and
actions relating to environmentally impaired sites. Such sites frequently
involve other waste generators and disposal companies to whom costs associated
with site investigation and cleanup may be allocated or from whom such costs
may be recovered.
Due to the number of parties involved at many of these sites, the
wide range of costs of the possible remediation alternatives, changing cleanup
technology, the length of time over which these matters develop and evolving
governmental standards, it is not always possible to estimate precisely the
company's liability for the costs associated with the assessment and
remediation of contaminated sites.
The rail unit maintained reserves for 106 environmental sites at
year-end 1994. The company periodically reviews its environmental reserves as
new developments arise to determine whether additional provisions are
necessary. Based on current information, the company believes its reserves are
adequate to meet remedial actions to comply with present laws and regulations.
Although CSX's financial results could be significantly affected in any
quarterly reporting period in which the company incurred substantial remedial
expenses at a number of these and other sites, CSX believes the ultimate
liability for these matters will not materially affect its overall results of
operations and financial condition.
Total expenditures associated with protecting the environment and
remedial environmental cleanup efforts amounted to $39 million in 1994. This
compares with $42 million in 1993 and $27 million in 1992.
CSX employs risk management strategies to address business and
financial market risks. However, CSX currently has no significant hedging or
derivative financial instruments in place as part of its risk management
programs. The company may change this position to respond to evolving business
and market conditions, particularly as such conditions influence interest
rates, fuel costs and foreign currency exposure.
The company monitors the interest rate sensitivity of its portfolio
of investments and borrowings, and from time to time may use financial
instruments to manage the net interest exposure.
- 21 -
PAGE 22
Similarly, CSX monitors fuel oil price volatility and fluctuations in
the value of the U.S. dollar in foreign exchange markets. While the company is
not currently hedging these risks with financial instruments, on occasion it
may do so. CSX's objective in employing such strategies would be to manage
those risks and exposures, not to actively trade financial instruments for
profit or loss.
RESOURCES AVAILABLE DECEMBER 30, 1994
-------------------------------------
(Millions of Dollars)
-------------------
Cash, Cash Equivalents and Short-Term Investments $ 535
Total Credit Lines Available 880
Outstanding Borrowings:
Commercial Paper (501)
-----
Total Liquidity $ 914
-----
Working Capital (Deficit) $(840)
=====
Rail Results
CSX Transportation Inc. (CSXT) posted three consecutive quarters of
record operating income in 1994. These results were due to strong traffic
across virtually all merchandise commodities and continued success in cost
reductions. CSXT also rebounded from the 1993 coal strikes to yield notable
increases in domestic coal tonnage. These results were achieved in spite of
lower export coal loadings.
Rail operating income in 1994 totaled $929 million, $183 million
above 1993's $746 million and $189 million above 1992's comparable $740
million. This latter figure excludes a net productivity charge of $619 million
associated with labor reductions. Including this charge, rail operating income
was $121 million in 1992.
CSXT also achieved an operating ratio, which is the ratio of
operating expense to operating revenue, of 79.9% in 1994, surpassing a major
performance goal of 80% set in 1991. The operating ratio was 83% in 1993 and
83.3% in 1992, excluding the productivity charge.
Operating revenue rose to $4.63 billion, a 6% increase from 1993 and
a 4% increase over 1992, driven primarily by a rebound in domestic coal
tonnage and exceptional merchandise traffic. Rail revenue totaled $4.38
billion in 1993 and $4.43 billion in 1992.
CSXT overcame severe winter conditions in early 1994 and weaker-
than-expected export coal traffic to increase coal tonnage to 153.7 million
tons vs. 144.1 million tons in 1993. Domestic coal shipments rose 8% as
utility demand, driven by the need to rebuild stockpiles depleted from the
1993 strikes and the harsh winter weather, surged during the year. CSXT's
export shipments faced a number of market obstacles, including decreased
demand and increased foreign competition. In 1994, export coal shipments
decreased to 16 million tons from 16.7 million tons in 1993.
- 22 -
PAGE 23
CSXT anticipates a modest recovery in the U.S. export coal market and
slightly better domestic coal loadings in 1995. The implementation of Phase I
of the Clean Air Act in 1995 is expected to provide a net tonnage gain for
CSXT, as an increase in the production of high-quality, low-sulfur coal at
CSXT-served mines should more than offset any displacement caused by the Act.
Total rail merchandise carloads and revenue increased 6% and 5%,
respectively, over 1993 levels, reflecting the strength of the U.S. economy
and successful efforts to expand market share. These same figures both rose
10% vs. 1992's volume and revenue.
CSXT's automotive carloads increased 9% from a strong 1993 traffic
base. This growth, driven by increased U.S. auto production, soaring consumer
demand and improved service, pushed automotive revenue up 7% in 1994.
Demand for plastic products from the auto industry, housing
construction and the consumer goods market helped spur a 4% carload growth in
the chemicals market. Bulk Intermodal Distribution (BIDS) terminals, where
customers transfer and store bulk chemicals, gave CSXT a significant
competitive advantage in this market. The customer response to this service is
reflected in the 5% increase in chemicals revenue for 1994.
Minerals traffic and revenue for the year improved 12% and 10%,
respectively, propelled by growth in highway construction and demand for sand
for auto castings.
Shipments in the food and consumer category, which includes
government traffic and consumer durables, increased 6%, reflecting strong
industrial production, particularly in appliances.
Agricultural products experienced a surge in export grain traffic
late in the year, but it was not enough to offset the devastating effect of
the 1993 floods that caused a short supply of grain through the first three
quarters of 1994. Strong domestic feed grain loadings to the Southeast poultry
farms provided a solid base of traffic during the year. Carloads declined 7%,
while revenue decreased only 3% as a result of favorable yield and mix
changes.
The metals industry enjoyed one of its best years ever, as strong
demand from steel mini-mills led to a 13% carload increase in 1994. New
service packages offered by CSXT improved market share and contributed to a
17% gain in revenue.
Forest products traffic, which includes lumber, paper and
construction materials, improved 2% due to continued housing demand and steady
recovery of the paper business. CSXT's market position in lumber was aided by
the addition of several new lumber distribution centers.
The phosphates and fertilizer category experienced an 11% growth in
traffic as export loads rose with increased foreign demand. The distance CSXT
hauls export shipments of phosphate from Florida's Bone Valley to the Port of
Tampa is far less than that for domestic moves to the U.S. Midwest, leading to
lower revenue-per-carload comparisons.
- 23 -
PAGE 24
Although merchandise traffic experienced significant gains in 1994,
CSXT anticipates continued strength in the principal markets it serves in the
U.S. industrial sector in 1995. Combined with selective price increases, a
modest improvement is expected in merchandise traffic and revenue in 1995.
The rail unit undertook an effort to re-engineer key components of
its service delivery to meet customer needs better and enhance service
reliability in 1994. In the future, the unit hopes to strengthen traffic
levels in the various commodity groups by further satisfying customers through
improved performance.
Rail operating expense for 1994 was $3.7 billion, a 2% increase over
1993 and level with 1992, excluding the previously mentioned 1992 productivity
charge. These results reflect the continuing efforts of the rail unit to
reduce expense and control cost while retaining its customer focus.
Labor and fringe benefits expense increased 2% to $1.83 billion, vs.
$1.8 billion in both 1993 and 1992. Despite the increased traffic levels,
which required a greater number of crew starts, and the impact of a 4% wage
increase, CSXT controlled labor and fringe benefits expense. The company will
continue to implement work-force reductions over the next few years.
As the implementation of two-member crews extends throughout the rail
system, the average crew size continues to fall. At year-end 1994, the average
crew size was 2.5 members. In the next few years, reductions in yard and local
crews will result in an average crew size of 2.25 members.
CSXT, as a participant in national bargaining, is actively engaged in
contract negotiations with rail labor organizations. CSXT seeks to improve the
future competitiveness of its labor force through these negotiations.
CSXT continued to reduce accidents and injuries in 1994, and it
remains one of the safest railroads in the industry. Reportable injuries to
employees were reduced 20% and train accidents fell 21% by year-end, helping
CSXT maintain one of the highest rankings among Class I railroads. The
company's progress in safety not only continues to save lives, but increases
the quality and reliability of rail service while driving out unnecessary
expense.
- 24 -
PAGE 25
CSX CORPORATION AND SUBSIDIARIES
--------------------------------
(All Tables in Millions of Dollars)
Table 1. TRANSPORTATION OPERATING RESULTS
1994
----
Container Elim/
Total Rail Shipping Intermodal Barge Other
------ ------ --------- ---------- ------ -----
Operating Revenue $9,410 $4,625 $3,492 $ 902 $ 449 $ (58)
------ ------ ------ ----- ----- -----
Operating Expense
Labor and Fringe Benefits 3,006 1,828 859 89 104 126
Materials, Supplies and
Other (a) 2,314 918 919 120 191 166
Building and Equipment
Rents 1,088 374 600 67 19 28
Inland Transportation 839 --- 676 553 --- (390)
Depreciation 564 352 132 11 32 37
Fuel 421 224 119 1 40 37
------ ------ ------ ----- ----- -----
Total 8,232 3,696 3,305 841 386 4
------ ------ ------ ----- ----- -----
Operating Income (Loss) $1,178 $ 929 $ 187 $ 61 $ 63 $ (62)
====== ====== ====== ===== ===== =====
Operating Income (Loss)(b) $1,178 $ 929 $ 187 $ 61 $ 63 $ (62)
====== ====== ====== ===== ===== =====
Operating Ratio(b) 79.9% 94.6% 93.2% 86.0%
====== ====== ===== =====
Average Employment 28,773 9,437 1,626 2,644
====== ====== ===== =====
Property Additions and
Present Value of New
Operating Leases $ 958 $ 675 $ 199 $ 50 $ 15 $ 19
====== ====== ====== ===== ===== =====
- 25 -
PAGE 26
1993
----
Container Elim/
Total Rail Shipping Intermodal Barge Other
------ ------ --------- ---------- ------ -----
Operating Revenue $8,767 $4,380 $3,246 $ 793 $ 417 $ (69)
------ ------ ------ ----- ----- -----
Operating Expense
Labor and Fringe Benefits 2,922 1,797 822 81 107 115
Materials, Supplies and
Other (a) 2,158 891 828 108 175 156
Building and Equipment
Rents 1,034 369 559 64 19 23
Inland Transportation 721 --- 608 475 --- (362)
Depreciation 558 352 127 11 29 39
Fuel 413 225 109 1 42 36
Productivity/
Restructuring Charge 93 --- 93 --- --- ---
------ ------ ------ ----- ----- -----
Total 7,899 3,634 3,146 740 372 7
------ ------ ------ ----- ----- -----
Operating Income (Loss) $ 868 $ 746 $ 100 $ 53 $ 45 $ (76)
====== ====== ====== ===== ===== =====
Operating Income (Loss)(b) $ 961 $ 746 $ 193 $ 53 $ 45 $ (76)
====== ====== ====== ===== ===== =====
Operating Ratio(b) 83.0% 94.1% 93.3% 89.2%
====== ====== ===== =====
Average Employment 29,216 9,440 1,510 2,747
====== ====== ===== =====
Property Additions and
Present Value of New
Operating Leases $ 818 $ 576 $ 172 $ 50 $ 13 $ 7
====== ====== ====== ===== ===== =====
- 26 -
PAGE 27
1992
----
Container Elim/
Total Rail Shipping Intermodal Barge Other
------ ------ --------- ---------- ------ -----
Operating Revenue $8,550 $4,434 $3,148 $ 739 $ 443 $(214)
------ ------ ------ ----- ----- -----
Operating Expense
Labor and Fringe Benefits 2,853 1,814 795 70 114 60
Materials, Supplies and
Other (a) 2,165 939 807 110 174 135
Building and Equipment
Rents 1,011 374 558 54 25 ---
Inland Transportation 678 --- 605 454 --- (381)
Depreciation 513 332 117 11 23 30
Fuel 424 235 115 1 47 26
Productivity/
Restructuring Charge 681 619 17 45 --- ---
------ ------ ------ ----- ----- -----
Total 8,325 4,313 3,014 745 383 (130)
------ ------ ------ ----- ----- -----
Operating Income (Loss) $ 225 $ 121 $ 134 $ (6) $ 60 $ (84)
====== ====== ====== ===== ===== =====
Operating Income (Loss)(b) $ 906 $ 740 $ 151 $ 39 $ 60 $ (84)
====== ====== ====== ===== ===== =====
Operating Ratio(b) 83.3% 95.2% 94.7% 86.5%
====== ====== ===== =====
Average Employment 30,916 9,495 1,382 2,905
====== ====== ===== =====
Property Additions and
Present Value of New
Operating Leases $ 986 $ 570 $ 236 $ 28 $ 152 $ ---
====== ====== ====== ===== ===== =====
(a) A portion of intercompany interest income received from the CSX
parent company has been classified as a reduction of materials,
supplies and other, by the container shipping unit. This amount was
$64 million in 1994, 1993 and 1992, respectively, and the
corresponding charge is included in eliminations and other.
(b) Excludes productivity/restructuring charges.
Performance Improvement Team initiatives reduced expenses by more
than $350 million from 1991 through 1994. Besides shrinking the cost base,
this program has helped conserve capital as improvements are realized in
reliability, performance and efficiency throughout the system. All areas of
rail operations and administration - from repair and maintenance of
locomotives and freight cars to purchases of office supplies - were targeted.
Further savings of more than $100 million have been targeted by CSXT for each
of the next three years.
CSXT will continue to lower its cost base in 1995 and beyond through
increased asset utilization, crew-size reductions, improved safety and
continued Performance Improvement Team savings.
- 27 -
PAGE 28
Rail capital additions for 1994 increased to $675 million from 1993's
$576 million and 1992's $570 million. These figures include the present value
of new operating leases. Capital expenditures for roadway improvements,
including track, terminals, technology and other equipment, totaled $401
million, or 59% of the total. CSXT's maintenance-of-way program installed or
replaced 289 miles of rail in 1994, compared with 400 miles in both 1993 and
1992. The remaining rail property additions included $131 million for
locomotives and $143 million for the car fleet.
Table 2. RAIL COMMODITIES BY CARLOADS AND REVENUE
Market
Share (a) Carloads Revenue
(Percent) (Thousands) (Millions of Dollars)
--------- -------------------- ----------------------
1994 1994 1993 1992 1994 1993 1992
---- ----- ----- ----- ----- ------ ------
Automotive 28 354 326 288 $ 493 $ 461 $ 413
Chemicals 39 386 371 356 685 652 619
Minerals 38 419 374 345 365 332 310
Food and Consumer 33 176 166 161 204 196 196
Agricultural Products 28 263 284 264 318 327 297
Metals 28 292 258 225 285 243 219
Forest Products 33 442 435 441 444 442 448
Phosphates and Fertilizer 76 470 423 457 254 256 268
Coal 40 1,678 1,566 1,760 1,465 1,363 1,565
----- ----- ----- ------ ------ ------
Total 4,480 4,203 4,297 4,513 4,272 4,335
===== ===== ===== ------ ------ ------
Other Revenue 112 108 99
------ ------ ------
Total Operating Revenue $4,625 $4,380 $4,434
====== ====== ======
(a) Market Share is defined as CSX carloads versus carloads handled by
all major Eastern railroads.
CSXT reduced its locomotive fleet size by 1% to 2,785 in 1994. Eighty
new locomotives were added to the fleet, including 30 alternating-current (AC)
locomotives. This new AC technology, which provides substantially better
tractive effort, or pulling power, will allow CSXT to replace an average of
two older units in its existing fleet with each new unit. These AC locomotives
are the first of 250 fuel-efficient units to be delivered to CSXT through
1997.
- 28 -
PAGE 29
Rail Assets
(Owned or leased as of December 30, 1994)
-----------------------------------------
Freight Cars
Boxcars 14,718
Open-top hoppers 35,609
Covered hoppers 18,789
Gondolas 20,623
Other cars 15,092
-------
Total 104,831
=======
Locomotives 2,785
Track
Route miles 18,759
Track miles 32,462
In late 1994, CSXT resumed repairing and rebuilding freight cars at
its Raceland Car Shop in Kentucky. The facility plans to refurbish or rebuild
4,000 coal hopper cars in 1995. Notwithstanding this program, enhanced
utilization through improved car turn times will yield a net reduction in the
overall car fleet.
CSXT is engaged in preliminary negotiations to obtain all its
telecommunication services from AT&T. The goal of this transaction would be to
provide CSXT with the strategic opportunity to obtain state-of-the-art
technology, equipment and services from AT&T, without diverting CSXT's capital
and management resources from its core business. The arrangement, if
consummated, would enable CSXT to leverage technological enhancements as they
become available in the rapidly changing telecommunications industry. The
transaction could result in a significant future charge to cover the writedown
of certain telecommunications assets and labor separation costs.
In 1995, CSXT expects to improve equipment utilization further and
increase capital expenditures by approximately 10%, the majority of which will
go to the Raceland car program.
Container-Shipping Results
Volume at Sea-Land Service Inc. surged to record levels in 1994
despite a three-week nationwide Teamsters strike in April that closed Sea-
Land's West Coast operations and disrupted shipments to and from Alaska,
Hawaii and Asia. Although the strike interrupted a solid first half of the
year, Sea-Land finished the year with heavy volume in the third and fourth
quarters.
The unit's ongoing expense reductions, coupled with efficiencies
gained from its Performance Improvement Team efforts and its 1993 Atlantic
restructuring, were tempered by the strike impact on earnings of approximately
$45 million.
- 29 -
PAGE 30
Despite the strike, Sea-Land delivered $187 million of operating
income. This compares with $193 million in 1993, excluding the $93 million
pretax restructuring charge, and $151 million in 1992, excluding a $17 million
pretax productivity charge. Record earnings were posted in the third and
fourth quarters as strengthening economies in Europe, Japan, China and the
Middle East helped revive commercial traffic. Including charges, operating
income was $100 million in 1993 and $134 million in 1992.
Container-shipping operating revenue rose to $3.5 billion, an 8%
improvement over 1993's revenue of $3.25 billion and 11% better than 1992's
$3.15 billion.
Double-digit volume gains over 1993 levels were recorded in the
Pacific, Americas and Asia/Middle East/Europe (AME) trade lanes, while overall
volume increased 9%.
Average revenue per container slipped 3% as competition increased and
cargo mix varied from prior years. Sea-Land anticipates a more favorable
supply/demand ratio in its markets in 1995 as added capacity in most trade
lanes will be offset by significant market growth.
Container volumes in both eastbound and westbound Pacific lanes
increased significantly. Eastbound traffic was driven by increasing consumer
demand in the United States, while westbound gains resulted primarily from a
resurgence in commercial cargoes and increasing military traffic. Sea-Land
expects continued strong volumes during 1995 in the Pacific, propelled by
solid U.S. demand for imports from southeast Asia, China and Hong Kong and
exports to these countries.
An increase in traffic from Central and South America, along with
continued solid U.S. exports, drove the Americas volume up sharply in 1994.
Sea-Land anticipates continued growth in this trade in 1995, especially with
the continuing expansion of the North American Free Trade Agreement (NAFTA).
Strong shipments in the AME service reflected growing trade between
Asia and Europe, and the Middle East and Indian subcontinent.
In all of Sea-Land's markets, rates continue to reflect an intensely
competitive environment. The conference system, which helps to stabilize
pricing in most major trade lanes, is under review by U.S. and international
regulatory authorities.
The recent passage of the General Agreement on Tariffs and Trade
(GATT) will encourage higher levels of international trade. Serving customers
through a global infrastructure, Sea-Land is well positioned to capitalize on
the opportunities presented by GATT and NAFTA.
Sea-Land's operating expense increased 8% to $3.3 billion, compared
with $3.05 billion in 1993 and $3 billion in 1992, excluding restructuring and
productivity charges. Sea-Land's efforts to reroute containers and ships
during the April strike and the post-strike repositioning of equipment for
normal operations, along with the higher traffic volume, resulted in increased
expense in 1994. Including restructuring and productivity charges, total
operating expense was $3.15 billion in 1993 and $3.01 billion in 1992.
- 30 -
PAGE 31
Container-Shipping Assets
(Owned or leased as of December 30, 1994)
Containers
40- and 20-foot dry vans 155,648
45-foot dry vans 9,265
Refrigeration vans 17,467
Other specialized equipment 5,310
-------
Total 187,690
=======
Container ships 93
Terminals
Exclusive-use 8
Preferred berthing rights 15
The increase in the cost of bunker fuel during the summer led to a 9%
rise in fuel expense. In addition, severe winter weather in the northeastern
United States led to higher-than-expected fuel costs in the first quarter of
1994.
Sea-Land's ongoing commitment to lower its cost base by re-
engineering operations resulted in more than $100 million of reduced expense
in 1994, bringing the three-year total to more than $350 million. These
reductions were achieved in terminal operations, maintenance, overhead and,
through the efforts of Performance Improvement Teams, in areas such as parts
inventories, equipment and accounts receivable. Sea-Land plans expense savings
of approximately $100 million in 1995 in areas such as terminal efficiency,
inventory reduction and labor.
Productivity improvement efforts were hampered by the strike as the
percentage of on-time vessel arrivals and lifts per hour declined. Sea-Land
expects these figures to bounce back in 1995. Overall terminal efficiency is
expected to improve with the implementation of Sea-Land's Terminal Automation
System (TAS) over the next few years. This system tracks cargo in the terminal
and is designed to decrease terminal throughput time.
In February 1995, Sea-Land received approval from the Maritime
Administration (MARAD) to reflag five U.S.-flag vessels to the registry of the
Marshall Islands. The unit estimates that this reflagging will result in a net
reduction in annual operating expense of approximately $2.5 million per ship.
Applications to reflag eight more Sea-Land vessels are pending at MARAD. Sea-
Land remains hopeful that Congress will approve legislation authorizing
payments to reimburse or compensate for the additional cost of operating and
maintaining U.S.-flag ships.
Capital additions for 1994 totaled $199 million, including $134
million in expenditures and $65 million in present value of new long-term
operating leases. The total compares with $172 million in 1993 and $236
million in 1992.
In 1994, Sea-Land contracted for the construction of five high-
performance, fuel-efficient container vessels and the modification of three
- 31 -
PAGE 32
Atlantic Class Vessels (ACVs) in its fleet. The three ACV modifications were
completed in 1994; two of the new ships will be delivered late in 1995 and
three in 1996. Approximately $57 million of capital was spent in 1994 on the
first phase of this $315 million vessel program.
The five new vessels will replace capacity in the trans-Pacific trade
while the modified ACVs, which serve the AME trade, will have increased speed
and efficiency with the same effective capacity. These new and refurbished
ships will enable Sea-Land to replace older, higher-cost assets while gaining
efficiency and improving service.
Sea-Land spent $44 million of capital to enhance its rolling stock of
containers and $24 million to upgrade and refurbish terminal facilities. The
remaining portion of capital was dedicated to technology and other areas.
In the fourth quarter of 1994, Sea-Land announced a global
integration program, including a relocation of its corporate headquarters from
Liberty Corner, N.J., to Charlotte, N.C. While the unit's estimate of the
total cost is not yet finalized, it is expected to be approximately $50
million.
Sea-Land will consolidate in Charlotte senior management functions
now performed at its Seattle, Rotterdam and New Jersey offices. This will
allow Sea-Land to streamline much of its administration and increase customer
responsiveness. Sea-Land plans to begin operations in Charlotte during the
summer of 1995.
The earthquake that struck Japan in January 1995 caused considerable
property damage and business disruption to Sea-Land's operation at the Port of
Kobe. Sea-Land responded quickly, becoming the first carrier to resume limited
operations out of Kobe in late February. Sea-Land also started a supplemental
service into the neighboring Port of Osaka and is making greater use of its
terminals in Yokohama, Nagoya and Tokyo. Company officials estimate that the
port will be fully operational by the fall of 1995. Currently, Sea-Land
expects strong traffic in the Pacific trade to largely offset the earthquake's
impact on operations.
Intermodal Results
Operating income at CSX Intermodal Inc. (CSXI) surged to $61 million
in 1994, 15% ahead of 1993's $53 million and 56% better than 1992's $39
million, excluding a productivity charge. Domestic and international traffic
segments both experienced record volume and revenue growth in 1994.
In 1992, CSXT transferred to CSXI $45 million of the productivity
charge related to locomotive-crew buyouts. Including this charge, CSXI
recorded an operating loss of $6 million in 1992.
CSXI launched several new service initiatives in 1994 that increased
its competitiveness and improved customer service. The most notable was the
inauguration in August of daily direct intermodal service between the New York
City area and Chicago.
- 32 -
PAGE 33
Operating revenue totaled $902 million, 14% higher than 1993 and 22%
more than 1992. Domestic loads increased 11% over 1993 levels as a result of
growing shipments from distributors, truckline partners and direct shippers.
International traffic, reflecting increased volumes from ocean carriers, rose
14%.
Intermodal Assets
(Owned or leased as of December 30, 1994)
Equipment
Domestic Containers 3,386
Rail Trailers 9,584
Facilities
CSX Intermodal Terminals 33
Motor Carrier Operations Terminals 28
CSX Services Facilities 18
CSXI forecasts continued volume growth and service expansions during
1995 as customers look for cost-effective transportation solutions. Also,
initiatives are already under way to develop and expand new geographic markets
and service options in 1995.
In 1994, operating expense was $841 million, compared with $740
million in 1993 and $700 million in 1992, excluding the previously mentioned
1992 charge. The higher volumes and initial costs associated with the market
expansion contributed to the increase. Including the 1992 charge, operating
expense was $745 million.
CSXI spent $50 million on capital expenditures in 1994, flat with
1993 and $22 million more than 1992. Improvements in terminals, equipment and
technology were the major focus of spending. Plans for 1995 call for several
major terminal expansions as well as the addition of new terminals at
strategic locations. These projects and others that support CSXI's rapid
growth, such as terminal automation and fleet expansion, are expected to boost
capital spending to almost $70 million in 1995.
CSXI also will continue developing and begin field testing its Iron
Highway intermodal train concept in 1995. This concept employs a continuous
platform with a split-ramp design that allows for rapid drive-on/drive-off
loading, thereby reducing terminal costs and providing a highly reliable,
cost-efficient service. The project made major strides in 1994, including the
completion of track testing and the announcement of line-of-road testing in
two corridors during 1995.
The Iron Highway holds great promise for making intermodal
competitive for motor carrier traffic in both short- and medium-haul
corridors. Traditional intermodal rail economics have not provided this
opportunity.
- 33 -
PAGE 34
Barge Results
Operating income at American Commercial Lines Inc. (ACL) rebounded to
$63 million as a result of northbound traffic growth, cost containment and an
increase in grain traffic and rates late in the year. This income compares
with $45 million in 1993 and $60 million in 1992.
Grain, one of the barge unit's key commodities, was devastated by the
flooding along the Mississippi River system in 1993. The resulting weak grain
market, along with the severe winter weather, created an operating challenge
for the barge line in early 1994. Given this environment, ACL successfully
refocused on non-grain commodities, such as import steel and raw materials for
steel mini-mills.
Total operating revenue at ACL increased 8% to $449 million as a
result of these efforts. This compared with $417 million and $443 million in
1993 and 1992, respectively.
Total volume rose over weak prior-year figures as barge ton miles
totaled 51 billion, an increase of 6 billion over 1993 and 3 billion more than
1992.
Coal tonnage and revenue increased slightly during the year as world
demand languished. ACL expects moderate growth in export coal in 1995 as world
demand strengthens with improved economies in Europe and Japan.
In 1995, the barge unit anticipates increased loadings on the
continued strength of the northbound markets. Also, the record harvest is
expected to push export demand for corn over 2 billion bushels, an increase of
nearly 50% over 1994.
Operating expense increased 4% to $386 million, driven by improved
traffic volumes and higher repair costs. However, 1994's expenses vs. 1992's
were nearly equivalent as the company offset costs associated with increased
volume by improving operating efficiencies. This expense level also reflects
ACL's ongoing re-engineering efforts.
The higher level of barging activity in 1994 increased fuel
consumption 9% while expense declined 5% due to lower prices. Compared with
1992, consumption rose 1% while expense decreased 15%.
Like the rail unit, the barge company has focused considerable
attention on employee safety awareness. In 1994, the incident rate of
reportable injuries to employees improved 25% over 1993.
Capital additions at ACL in 1994 totaled $15 million, compared with
$13 million in 1993 and $152 million in 1992, which included $137 million for
the acquisition of the Valley Line assets. Spending in 1994 focused primarily
on terminal expansions and tanker barges. ACL's capital expenditures in 1995
are expected to increase modestly as the company renews a covered hopper
construction program while continuing to upgrade its chemical tanker fleet.
- 34 -
PAGE 35
Barging Assets
(Owned or leased as of December 30, 1994)
Towboats 117
Barges
Covered/open-top hoppers 3,055
Tankers 240
-----
Total 3,295
=====
Marine Services
River terminals 11
Fleeting operations 15
Shipyards 2
CTI Results
Customized Transportation Inc. (CTI) joined CSX in early 1993 with a
10-year reputation as a leading supplier of contract logistics primarily for
the automotive industry.
Operating income at CTI was $10 million in 1994, compared with $6
million in 1993. CTI generated operating revenue of $182 million in 1994 vs.
$145 million in 1993. Approximately 71% of 1994 revenue was generated from
automotive-related markets. Revenue is expected to grow aggressively over the
next five years as CTI diversifies its customer base to include more non-
automotive clients.
Consolidated Outlook
CSX enters 1995 with confidence and an optimistic outlook. Following
the healthy growth of 1994, world economic expansion is expected to continue
throughout 1995, led by the United States and improved prospects in Japan and
Europe. With the capabilities provided by its global infrastructure, CSX
stands ready to capitalize on the continued economic momentum, and the company
expects to improve its earnings in 1995.
CSX will continue to improve its performance, even though some of its
units are subject to such unpredictable external factors as adverse weather
conditions, work stoppages at major customer facilities and shifting economic
conditions in the U.S. and foreign economies.
CSX, like many other U.S. industrial-based companies, is concerned
about the economic impact of higher interest rates. However, the company's
base of non-economically sensitive commodities, such as coal and agricultural
products, coupled with expense control efforts of its Performance Improvement
Teams, helps CSX weather economic fluctuations.
CSX units are committed to meeting their 1995 stretch targets to
improve operating ratios and returns on invested capital - thus enhancing
their core earning power and increasing shareholder returns. Equally
important, CSX management and employees are committed to continually improving
service for CSX customers worldwide.
- 35 -
PAGE 36
CSX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Millions of Dollars, Except Per Share Amounts)
Fiscal Year Ended
---------------------------------
Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992
------ ------ ------
OPERATING REVENUE
Transportation $9,410 $8,767 $8,550
Non-Transportation 198 173 184
------ ------ ------
Total 9,608 8,940 8,734
------ ------ ------
OPERATING EXPENSE
Transportation 8,232 7,806 7,644
Non-Transportation 144 128 125
Productivity/Restructuring Charge --- 93 699
------ ------ ------
Total 8,376 8,027 8,468
------ ------ ------
OPERATING INCOME 1,232 913 266
Other Income 55 18 3
Interest Expense 281 298 276
------ ------ ------
EARNINGS (LOSS) BEFORE INCOME TAXES 1,006 633 (7)
Income Tax Expense (Benefit) 354 274 (27)
------ ------ ------
NET EARNINGS $ 652 $ 359 $ 20
====== ====== ======
EARNINGS PER SHARE $ 6.23 $ 3.46 $ .19
======= ======= =======
AVERAGE COMMON SHARES
OUTSTANDING (THOUSANDS) 104,652 103,915 102,907
======= ======= =======
COMMON SHARES OUTSTANDING
AT END OF YEAR (THOUSANDS) 104,722 104,143 103,476
======= ======= =======
CASH DIVIDENDS PAID PER COMMON SHARE $ 1.76 $ 1.58 $ 1.52
======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
- 36 -
PAGE 37
CSX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of Dollars)
Fiscal Year Ended
---------------------------
Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992
------- ------- -------
OPERATING ACTIVITIES
Net Earnings $ 652 $ 359 $ 20
Adjustments to Reconcile Net Earnings to
Cash Provided
Depreciation 577 572 527
Deferred Income Taxes 176 181 (72)
Productivity/Restructuring Charge - Provision --- 93 699
- Payments (159) (293) (445)
Other Operating Activities 56 35 67
Changes in Operating Assets and
Liabilities
Accounts Receivable (60) (15) 145
Materials and Supplies (12) (10) 18
Other Current Assets 32 3 35
Accounts Payable and Other Current
Liabilities 64 37 (55)
----- ----- ------
Cash Provided by Operating Activities 1,326 962 939
----- ----- ------
INVESTING ACTIVITIES
Property Additions (875) (768) (1,041)
Proceeds from Property Dispositions 170 85 75
Short-Term Investments - Net (69) (45) 8
Purchases of Long-Term Marketable Securities (66) (137) ---
Other Investing Activities (21) (5) (27)
----- ----- ------
Cash Used by Investing Activities (861) (870) (985)
----- ----- ------
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PAGE 38
CSX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
(Millions of Dollars)
Fiscal Year Ended
---------------------------
Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992
------- ------- -------
FINANCING ACTIVITIES
Short-Term Debt-Net 37 150 (154)
Long-Term Debt Issued 92 81 664
Long-Term Debt Repaid (447) (249) (260)
Cash Dividends Paid (184) (164) (157)
Other Financing Activities 4 14 37
----- ----- -------
Cash (Used) Provided by Financing Activities (498) (168) 130
----- ----- -------
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
(Decrease) Increase in Cash and Cash Equivalents (33) (76) 84
Cash and Cash Equivalents at Beginning of Year 298 374 290
----- ----- -------
Cash and Cash Equivalents at End of Year 265 298 374
Short-Term Investments 270 201 156
----- ----- -------
Cash, Cash Equivalents and Short-Term
Investments at End of Year $ 535 $ 499 $ 530
===== ===== =======
See accompanying Notes to Consolidated Financial Statements.
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PAGE 39
CSX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Millions of Dollars)
Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992
------- ------- -------
ASSETS
Current Assets
Cash, Cash Equivalents and
Short-Term Investments $ 535 $ 499 $ 530
Accounts Receivable 706 668 605
Materials and Supplies 211 199 189
Deferred Income Taxes 151 108 ---
Other Current Assets 62 97 97
------- ------- -------
Total Current Assets 1,665 1,571 1,421
------- ------- -------
Properties and Other Assets
Properties-Net 11,044 10,788 10,636
Affiliates and Other Companies 302 268 264
Other Assets 713 793 728
------- ------- -------
Total Properties and Other Assets 12,059 11,849 11,628
------- ------- -------
Total Assets $13,724 $13,420 $13,049
======= ======= =======
LIABILITIES
Current Liabilities
Accounts Payable and Other Current
Liabilities $ 1,992 $ 1,965 $ 2,066
Current Maturities of Long-Term Debt 312 146 200
Short-Term Debt 201 164 14
------- ------- -------
Total Current Liabilities 2,505 2,275 2,280
------- ------- -------
Long-Term Debt 2,618 3,133 3,245
------- ------- -------
Deferred Income Taxes 2,570 2,341 2,082
------- ------- -------
Long-Term Liabilities and Deferred Gains 2,300 2,491 2,467
------- ------- -------
SHAREHOLDERS' EQUITY
Common Stock, $1 Par Value 105 104 103
Other Capital 1,368 1,307 1,250
Retained Earnings 2,391 1,927 1,729
Minimum Pension Liability Adjustment (133) (158) (107)
------- ------- -------
Total Shareholders' Equity 3,731 3,180 2,975
------- ------- -------
Total Liabilities and
Shareholders' Equity $13,724 $13,420 $13,049
======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
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PAGE 40
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES.
Principles of Consolidation
The Consolidated Financial Statements reflect the results of
operations, cash flows and financial position of CSX and its majority-owned
subsidiaries as a single entity. All significant intercompany accounts and
transactions have been eliminated.
Investments in companies that are not majority-owned are carried at
either cost or equity, depending on the extent of control.
Change in Fiscal Year
Effective January 1, 1994, the company changed its fiscal reporting
period from a calendar year to a fiscal year ending on the last Friday in
December. The financial statements presented are for the fiscal years ended
December 30, 1994, and December 31, 1993 and 1992.
Cash, Cash Equivalents and Short-Term Investments
Cash in excess of current operating requirements is invested in
various short-term instruments carried at cost that approximates market value.
Those short-term investments having a maturity of three months or less at the
date of acquisition are classified as cash equivalents. Cash and cash
equivalents are net of outstanding checks that are funded daily from cash
receipts and maturing short-term investments.
Accounts Receivable
During 1993, a special purpose subsidiary of the company filed a
registration statement with the Securities and Exchange Commission covering
$250 million of Trade Receivable Participation Certificates ("Certificates")
evidencing undivided interests in a trade accounts receivable master trust.
The master trust assets include an ownership interest in a revolving portfolio
of rail freight accounts receivable.
Subsequently, the company issued $200 million of Certificates, at
5.05%, due September 1998. The Certificates are collateralized by $234
million of accounts receivable held in the master trust. The proceeds from
the issuance of the Certificates were used to reduce the amount of accounts
receivable sold under a previous agreement.
In addition, the company has a five-year revolving agreement with a
financial institution to sell with recourse on a monthly basis an undivided
percentage ownership interest in a designated pool of accounts receivable up
to a maximum of $200 million. CSX has retained the collection responsibility
with respect to accounts receivable held in trust or sold.
- 40 -
PAGE 41
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES, Continued
Accounts Receivable, Continued
At December 30, 1994, and December 31, 1993 and 1992, accounts
receivable have been reduced by $372 million, $380 million and $400 million,
respectively, representing Certificates and receivables sold.
The company maintains an allowance for doubtful accounts based upon
the expected collectibility of accounts receivable, including receivables
collateralizing Certificates and receivables sold. Allowances for doubtful
accounts of $84 million, $87 million and $96 million have been applied as a
reduction of accounts receivable at December 30, 1994, and December 31, 1993
and 1992, respectively.
Materials and Supplies
Materials and supplies are carried at average cost.
Properties
Properties are carried principally at cost. Provisions for
depreciation of rail property and equipment are based on estimated useful
service lives of seven to 42 years, computed primarily on the straight-line
composite method. Under this method, ordinary gains and losses on dispositions
are recorded to accumulated depreciation. Provisions for depreciation of
non-rail property and equipment are based on estimated useful service lives of
three to 45 years, computed on the straight-line unit basis method, and gains
and losses on dispositions are recorded in earnings as incurred.
Environmental Costs
Environmental costs that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to remediating an
existing condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities are recorded
when CSX's responsibility for environmental remedial efforts is deemed
probable, and the costs can be reasonably estimated. Generally, the timing of
these accruals coincides with the completion of a feasibility study or the
company's commitment to a formal plan of action.
Financial Instruments
Derivative financial instruments may be used from time to time by the
company in the management of its interest, foreign currency and commodity
exposures, and are accounted for on an accrual basis. Income and expense are
recorded in the same category as that of the underlying asset or liability.
There were no significant derivative financial instruments outstanding at
December 30, 1994.
- 41 -
PAGE 42
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES, Continued
Gains and losses related to hedges of existing assets or liabilities
are deferred and recognized over the expected remaining life of the related
asset or liability. Gains and losses related to hedges of anticipated
transactions are also deferred and recognized in income in the same period as
the hedged transaction.
Earnings Per Share
Earnings per share are based on the weighted average of common shares
outstanding. Dilution, which could result if all outstanding common stock
equivalents were exercised, is not significant.
Prior-Year Data
Certain prior-year data have been reclassified to conform to the 1994
presentation.
NOTE 2. PRODUCTIVITY AND RESTRUCTURING CHARGES.
1993 Restructuring Charge
The company recorded a $93 million pretax charge in the first quarter
of 1993 to recognize the estimated costs of restructuring certain operations
and functions at its container-shipping unit. Of the total charge, $32
million provided for employee separations and the remaining $61 million
related to various exit and settlement costs. The restructuring charge
reduced net earnings for 1993 by $61 million, 59 cents per share. As of
December 30, 1994, payments totaling $63 million have been recorded as a
reduction of the liability for the restructuring charge.
1992/1991 Productivity Charges
In the fourth quarter of 1991, the company recorded a charge to
provide for the estimated costs of implementing work force reductions,
improvements in productivity and other cost reductions at its major
transportation units. The charge amounted to $755 million on a pretax basis
and reduced 1991 net earnings by $490 million, $4.88 per share. In the second
quarter of 1992, the company recorded a charge principally to recognize the
estimated additional costs of buying out certain trip-based compensation paid
to train crews. The additional pretax charge amounted to $699 million and
reduced net earnings for 1992 by $450 million, $4.38 per share. Of the
combined charges, $1.3 billion was provided for negotiated employee
separations and associated liabilities and $151 million related to various
exit costs and claims expected to result from consolidation of terminal
operations and other negotiated settlements.
The $1.3 billion portion of the combined charges attributable to CSX
Transportation Inc. ("CSXT"), the company's rail unit, includes $1.2 billion
for reductions from three-to-two person train crews and for buying out
productivity funds and short-crew allowances. CSXT has reached labor
- 42 -
PAGE 43
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 2. PRODUCTIVITY AND RESTRUCTURING CHARGES, Continued
agreements across all portions of its rail system where it is allowed to
operate trains with two-member crews.
As of December 30, 1994, payments totaling $760 million have been
recorded as a reduction of the aggregate liabilities for the productivity
charges. The remaining liability consists of $376 million for employee
separations and associated costs.
NOTE 3. OPERATING EXPENSE.
1994 1993 1992
------- ------- -------
Labor and Fringe Benefits $ 3,154 $ 3,055 $ 2,986
Materials, Supplies and Other 2,137 1,977 1,992
Building and Equipment Rent 1,136 1,087 1,062
Inland Transportation 839 721 678
Depreciation 577 572 527
Fuel 421 413 424
Taxes Other Than Income and Payroll Taxes 112 109 100
Productivity/Restructuring Charge --- 93 699
------- ------- -------
Total $ 8,376 $ 8,027 $ 8,468
======= ======= =======
Selling, General and Administrative Expense
Included in Above Items $ 1,299 $ 1,202 $ 1,134
======= ======= =======
NOTE 4. OTHER INCOME.
1994 1993 1992
---- ---- ----
Interest Income $ 57 $ 52 $ 43
Gain on South Florida Track Sale(a) 91 20 7
Net Costs for Accounts Receivable Sold (29) (15) (17)
Minority Interest (21) (14) (15)
Loss on Redemption of Debt (13) --- ---
Equity Earnings of Other Affiliates (10) (7) 2
Miscellaneous (20) (18) (17)
----- ----- -----
Total $ 55 $ 18 $ 3
===== ===== =====
(a) On December 1, 1994, the state of Florida elected to satisfy its
remaining unfunded obligation issued in 1988 to consummate the
purchase of 80 miles of track and right of way. The transaction
resulted in cash proceeds of $102 million and an accelerated pretax
gain of $69 million. The scheduled payment resulted in a $22 million
gain in 1994.
- 43 -
PAGE 44
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 5. INCOME TAXES.
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." SFAS
No. 109 superseded SFAS No. 96, "Accounting for Income Taxes," which the
company adopted in 1987. SFAS No. 109 requires that deferred income tax
assets and liabilities be classified as current or non-current based upon the
classification of the related asset or liability for financial reporting. Net
earnings for 1993 were not impacted by the adoption of SFAS No. 109. As
permitted under the new rules, prior-year financial statements have not been
restated.
Earnings from domestic and foreign operations and related income tax
expense are as follows: 1994 1993 1992
----- ----- -----
Earnings (Loss) Before Income
Taxes:
- Domestic $ 893 $ 570 $ (67)
- Foreign 113 63 60
------ ----- -----
Total $1,006 $ 633 $ (7)
====== ===== =====
Income Tax Expense (Benefit):
Current - Federal $ 144 $ 71 $ 27
- Foreign 20 18 15
- State 14 4 3
------ ----- -----
Total Current 178 93 45
------ ----- -----
Deferred - Federal 165 160 (72)
- Foreign 2 1 2
- State 9 20 (2)
------ ----- -----
Total Deferred 176 181 (72)
------ ----- -----
Total Expense (Benefit) $ 354 $ 274 $ (27)
====== ===== =====
- 44 -
PAGE 45
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 5. INCOME TAXES, Continued
Income tax expense reconciled to the tax computed at statutory rates
is as follows:
1994 1993 1992
---- ---- ---- ---- ---- ----
Tax at Statutory Rates $352 35% $222 35% $ (2) (34)%
State Income Taxes 15 1 16 2 1 (a)
Increase in Statutory Rate(b) --- --- 51 8 --- ---
Prior Years' Income Taxes (10) (1) (15) (2) (14) (a)
Other Items (3) --- --- --- (12) (a)
---- ---- ---- ---- ---- ----
Total Expense (Benefit) $354 35% $274 43% $(27) (a)%
==== ==== ==== ==== ==== ====
(a) Percentage is not meaningful.
(b) The company revised its annual effective tax rate in 1993 to reflect the
change in the federal statutory rate from 34 to 35 percent. The effect
of this change was to increase income tax expense by $51 million related
to applying the newly enacted statutory income tax rate to deferred tax
balances as of January 1, 1993.
- 45 -
PAGE 46
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 5. INCOME TAXES, Continued
The significant components of deferred tax assets and liabilities
after considering the adoption of SFAS No. 109 include:
Dec. 30, Dec. 31, Jan. 1,
1994 1993 1993
-------- -------- -------
Deferred Tax Assets
Productivity/Restructuring Charge $ 246 $ 299 $ 375
Employee Benefit Plans 336 351 282
Deferred Gains and Related Rents 166 162 159
Other 330 312 283
------ ------ ------
Total 1,078 1,124 1,099
------ ------ ------
Deferred Tax Liabilities
Accelerated Depreciation 3,045 2,979 2,799
Other 452 378 382
------ ------ ------
Total 3,497 3,357 3,181
------ ------ ------
Net Deferred Tax Liabilities $2,419 $2,233 $2,082
====== ====== ======
In addition to the annual provision for deferred income tax expense,
the change in the year-end net deferred income tax liability balances included
the income tax effect of the minimum pension liability adjustments in 1994,
1993 and 1992.
The company has not recorded domestic deferred or additional foreign
income taxes applicable to undistributed earnings of foreign subsidiaries that
are reinvested. Such earnings amounted to $257 million, $213 million and $188
million at December 30, 1994, and December 31, 1993 and 1992, respectively.
These amounts could become taxable upon their remittance as dividends or upon
the sale or liquidation of these foreign subsidiaries. It is not practical to
determine the amount of net additional income tax that would be payable if
such earnings were repatriated.
Income tax payments during 1994, 1993 and 1992 totaled $175 million,
$92 million and $71 million, respectively.
The company files a consolidated federal income tax return, which
includes its principal domestic subsidiaries. Examinations of the federal
income tax returns of CSX have been completed through 1987. Returns for 1988-
1990 are currently under examination. Management believes adequate provision
has been made for any adjustments that might be assessed.
- 46 -
PAGE 47
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 6. CHANGES IN SHAREHOLDERS' EQUITY.
Common Shares Minimum
Outstanding Common Other Retained Pension
(Thousands) Stock Capital Earnings Liability
------------- ------ ------- -------- ---------
Balance December 31, 1991 102,362 $102 $1,217 $1,866 $ (3)
Net Earnings --- --- --- 20 ---
Dividends - Common --- --- --- (157) ---
Common Stock -
Stock Purchase
and Loan Plan
Stock Issued - Net 103 --- 8 --- ---
Purchase Loans - Net --- --- (3) --- ---
Other Stock Issued - Net 1,011 1 28 --- ---
Minimum Pension Liability --- --- --- --- (104)
------- ---- ------ ------ -----
Balance December 31, 1992 103,476 103 1,250 1,729 (107)
Net Earnings --- --- --- 359 ---
Dividends - Common --- --- --- (164) ---
Common Stock -
Stock Purchase
and Loan Plan
Stock Issued - Net (82) --- (4) --- ---
Purchase Loans - Net --- --- 19 --- ---
Other Stock Issued - Net 749 1 42 --- ---
Minimum Pension Liability --- --- --- --- (51)
Other - Net --- --- --- 3 ---
------- ---- ------ ------ -----
Balance December 31, 1993 104,143 104 1,307 1,927 (158)
Net Earnings --- --- --- 652 ---
Dividends - Common --- --- --- (184) ---
Common Stock -
Stock Purchase
and Loan Plan
Stock Canceled (68) --- (4) --- ---
Purchase Loans - Net --- --- 9 --- ---
Other Stock Issued - Net 647 1 56 --- ---
Minimum Pension Liability --- --- --- --- 25
Other - Net --- --- --- (4) ---
------- ---- ------ ------ -----
Balance December 30, 1994 104,722 $105 $1,368 $2,391 $(133)
======= ==== ====== ====== =====
- 47 -
PAGE 48
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 7. PROPERTIES.
Balance Retirements, Balance
at Beginning Sales and at End
of Year Additions Other Changes of Year
------------ --------- ------------- -------
1994
Property:
Transportation $15,450 $ 846 $(412) $15,884
Non-Transportation 403 29 (1) 431
------- ------ ----- -------
Total $15,853 $ 875 $(413) $16,315
======= ====== ===== =======
Accumulated Depreciation:
Transportation $ 4,961 $ 564 $(364) $ 5,161
Non-Transportation 104 13 (7) 110
------- ------ ----- -------
Total $ 5,065 $ 577 $(371) $ 5,271
======= ====== ===== =======
Properties - December 30, 1994 $11,044
=======
Balance Retirements, Balance
at Beginning Sales and at End
of Year Additions Other Changes of Year
------------ --------- ------------- -------
1993
Property:
Transportation $15,312 $ 747 $(609) $15,450
Non-Transportation 390 21 (8) 403
------- ------ ----- -------
Total $15,702 $ 768 $(617) $15,853
======= ====== ===== =======
Accumulated Depreciation:
Transportation $ 4,973 $ 560 $(572) $ 4,961
Non-Transportation 93 12 (1) 104
------- ------ ----- -------
Total $ 5,066 $ 572 $(573) $ 5,065
======= ====== ===== =======
Properties - December 31, 1993 $10,788
=======
- 48 -
PAGE 49
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 7. PROPERTIES, Continued
Balance Retirement, Balance
at Beginning Sales and at End
of Year Additions Other Changes of Year
------------ --------- ------------- -------
1992
Property:
Transportation $14,783 $1,016 $(487) $15,312
Non-Transportation 393 25 (28) 390
------- ------ ----- -------
Total $15,176 $1,041 $(515) $15,702
======= ====== ===== =======
Accumulated Depreciation:
Transportation $ 4,916 $ 513 $(456) $ 4,973
Non-Transportation 83 14 (4) 93
------- ------ ----- -------
Total $ 4,999 $ 527 $(460) $ 5,066
======= ====== ===== =======
Properties - December 31, 1992 $10,636
=======
NOTE 8. ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES.
Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992
------ ------ ------
Trade Accounts Payable $ 926 $ 917 $ 901
Labor and Fringe Benefits(a) 543 523 727
Income Taxes and Other 337 332 278
Casualty Reserves 186 193 160
------ ------ ------
Total $1,992 $1,965 $2,066
====== ====== ======
(a) Labor and Fringe Benefits includes separation liabilities of $22
million for 1994, $46 million for 1993 and $238 million for 1992.
- 49 -
PAGE 50
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 9. CASUALTY AND OTHER RESERVES, SEPARATION LIABILITIES AND DEFERRED
GAINS.
Long-term liabilities and deferred gains totaled $2.3 billion, $2.49
billion and $2.47 billion at year-end 1994, 1993 and 1992, respectively, and
included casualty reserves; deferred gains; pension and other post-retirement
obligations; productivity/restructuring charge liabilities; and other
liabilities.
Activity related to casualty and other reserves, separation
liabilities and deferred gains is as follows:
Deferred Gains
Casualty -----------------------------
and Other Separation Sale-Leaseback South Florida
Reserves(a) Liabilities(a) Transactions(c) Track Sale(d)
----------- -------------- --------------- -------------
Balance 12/31/91 $ 489 $ 701 $ 347 $ 129
Charged to Expense
and Other Additions 355 669 --- ---
Payments and Other
Reductions (336) (439)(b) (23) (7)
----- ----- ----- -----
Balance 12/31/92 508 931 324 122
Charged to Expense
and Other Additions 331 32 --- ---
Payments and Other
Reductions (275) (321)(b) (24) (20)
----- ----- ----- -----
Balance 12/31/93 564 642 300 102
Charged to Expense
and Other Additions 282 --- --- ---
Payments and Other
Reductions (302) (248)(b) (21) (102)
----- ----- ----- -----
Balance 12/30/94 $ 544 $ 394 $ 279 $ ---
===== ===== ===== =====
(a) Balances include current portions of casualty and other reserves and
separation liabilities, respectively, of $216 million and $22 million
at December 30, 1994; $223 million and $46 million at December 31,
1993; and $190 million and $238 million at December 31, 1992.
(b) Includes reallocation of $156 million in 1994, $95 million in 1993
and $62 million in 1992 to claims and other negotiated settlements.
(c) Deferred gains on sale-leaseback transactions are being amortized
over periods ranging from 2 to 21 years.
- 50 -
PAGE 51
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 9. CASUALTY AND OTHER RESERVES, SEPARATION LIABILITIES AND DEFERRED
GAINS, Continued.
(d) On December 1, 1994, the state of Florida elected to satisfy its
remaining unfunded obligation issued in 1988 to consummate the
purchase of 80 miles of track and right of way. The transaction
resulted in cash proceeds of $102 million and an accelerated pretax
gain of $69 million. The scheduled payment resulted in a $22 million
gain in 1994.
NOTE 10. DEBT AND CREDIT AGREEMENTS.
Type Average
(Maturity Dates) Interest Rates 1994 1993 1992
- ---------------- -------------- ------ ------ ------
Notes Payable
(1995-2021) 9% $1,122 $1,162 $1,242
Debentures
(1997-2022) 9% 649 945 945
Equipment Obligations
(1995-2010) 8% 594 644 672
Commercial Paper 4% 300 300 300
Mortgage Bonds
(1998-2003) 3% 78 84 137
Other Obligations
(1995-2011) 7% 187 144 149
------ ------ ------
Total 8% 2,930 3,279 3,445
Less Debt Due
Within One Year 312 146 200
------ ------ ------
Total Long-Term Debt $2,618 $3,133 $3,245
====== ====== ======
- 51 -
PAGE 52
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 10. DEBT AND CREDIT AGREEMENTS, Continued
During 1994, the company redeemed $300 million of 9.5%, 11.625% and
11.875% Sinking Fund Debentures. The redemption premium, unamortized debt
discount and issuance costs totaling $18 million were charged to expense.
In 1992, CSX issued $200 million of 8.625% debentures due 2022 under
a June 1991 shelf registration to provide for the issuance of up to $250
million of debt securities. In September 1992, the company filed a shelf
registration with the Securities and Exchange Commission to provide for the
issuance, from time to time, of up to $450 million of senior debt securities,
warrants to purchase debt securities or currency warrants. As of December 30,
1994, CSX had issued $250 million of debt under this registration, including
$100 million, 7% notes due 2002 and $150 million, 8.10% debentures due 2022.
The proceeds from the issuance of long-term debt securities in 1992 were
primarily used for the purchase of the assets of the Valley Line companies,
costs for implementation of work force reductions and costs related to
productivity improvements.
The company maintains revolving credit agreements with domestic and
foreign banks (aggregating $880 million) under which there were no borrowings
as of December 30, 1994. Substantially all of these agreements have underlying
debt maturities greater than 12 months. These agreements support $501 million
of privately placed commercial paper outstanding at December 30, 1994, of
which $300 million has been classified as long-term debt based upon the
company's ability and intention to maintain this debt outstanding for at least
one year.
Excluding long-term commercial paper, the company has long-term debt
maturities during the next five years aggregating $312 million in 1995, $487
million in 1996, $79 million in 1997, $119 million in 1998 and $76 million in
1999. Substantially all of the company's rail unit properties are pledged as
security for various rail-related, long-term debt issues.
Commercial paper classified as short-term debt was $201 million at
December 30, 1994, $164 million at December 31, 1993, and $4 million at
December 31, 1992. The average interest rate for the short-term commercial
paper outstanding at year-end was 6% for 1994, 3% for 1993 and 4% for 1992.
The average amount of short-term commercial paper outstanding (average monthly
interest rate) during 1994, 1993 and 1992 was $293 million (4%), $172 million
(3%), and $60 million (4%), respectively. The maximum amount of short-term
commercial paper outstanding was $449 million for 1994, $391 million for 1993
and $201 million for 1992.
Interest payments, net of amounts capitalized, totaled $306 million,
$304 million and $279 million, respectively, for 1994, 1993 and 1992.
- 52 -
PAGE 53
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 11. PREFERRED STOCK.
The company has total authorized preferred stock of 25 million
shares, of which 250,000 shares of Series A have been reserved for issuance,
and 3 million shares of Series B have been reserved for issuance under the
Shareholder Rights Plan. No shares have been issued as of December 30, 1994.
All preferred shares rank senior to common shares both as to
dividends and liquidation preference.
NOTE 12. COMMON STOCK.
The company has a single class of common stock, $1 par value, of
which 300 million shares are authorized. Each share is entitled to one vote in
all matters requiring a vote. The most recent quarterly dividend, paid in
December 1994, was 44 cents per share. For the years ended December 30, 1994,
and December 31, 1993 and 1992, respectively, dividends were paid at the rate
of $1.76, $1.58 and $1.52 per share.
Stock Purchase and Loan Plan
The 1991 Stock Purchase and Loan Plan provided for the issuance of
grants to 153 eligible officers and key employees at December 30, 1994. The
plan allowed for the purchase of common stock and related rights and also
entitled those employees to obtain loans with respect to those shares of
common stock. In July 1991, 2.2 million shares of common stock and related
rights were reserved for issuance under this Plan. Shares were granted in 1991
and 1992 at market price on date of grant. The shares were purchased with a 5%
down payment in the form of cash or recourse loans. The remaining 95% of the
purchase price was in the form of non-recourse loans secured by the shares
issued. The loans bear interest at rates set on the award date and are due on
July 31, 1996. The Plan is intended to further the long-term stability and
financial success of the company by providing a method for eligible employees
to significantly increase their ownership of common stock.
These loans were subject to certain adjustments after a vesting
period if the market price of CSX common stock equaled or exceeded certain
thresholds for a period of 10 consecutive business days. As of December 30,
1994, all interest (less dividends applied to accrued interest) and 25% of
each participant's loan balance has been forgiven.
- 53 -
PAGE 54
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 12. COMMON STOCK, Continued
Transactions involving the 1991 Stock Purchase and Loan Plan are
summarized as follows:
Shares Average
(000's) Price
------- -------
Outstanding at 12/31/91 2,007 $48.33
Granted 213 $64.33
Canceled (110) $48.33
----- ------
Outstanding at 12/31/92 2,110 $49.76
Canceled (82) $48.72
----- ------
Outstanding at 12/31/93 2,028 $40.43
Canceled (68) $65.59
----- ------
Outstanding at 12/30/94 1,960 $36.74
===== ======
1994 1993 1992
---- ---- ----
5% Down Payment Loans Outstanding $ 4 $ 5 $ 5
95% Purchase Loans Outstanding $ 68 $ 77 $100
Average Interest Rate 7.72% 7.72% 7.72%
Compensation Expense for the Year $ 4 $ 48 $ 22
Stock Purchase and Dividend Reinvestment Plans
The 1991 Employees Stock Purchase and Dividend Reinvestment Plan
provides a method and incentive for eligible employees to purchase shares of
common stock at market value by payroll deductions. Officers and key employees
who qualify for the 1991 Stock Purchase and Loan Plan are not eligible to
participate in this Plan. To encourage ownership of the company's stock,
employees receive a 17.65% matching payment on their contributions in the form
of additional stock purchased by the company. Each matching payment of stock
is subject to a two-year holding period. Sale of stock prior to the completion
of the holding period will result in forfeiture of the matching stock purchase
and dividends thereon. At December 30, 1994, there were 409,784 shares of
common stock available for issuance under this Plan.
Under the terms of the company's Dividend Reinvestment and Stock
Purchase Plans adopted in 1981, all employees and shareholders may purchase
CSX common stock at the average of daily high and low sale prices for the five
trading days ending on the day of purchase. To encourage ownership of the
company's stock, employees receive a 5% discount on all purchases under this
program. At December 30, 1994, there were 2,914,164 shares reserved for
issuance under these Plans.
- 54 -
PAGE 55
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 12. COMMON STOCK, Continued
Shareholder Rights Plan
In June 1988, the board of directors of the company adopted a
Shareholder Rights Plan and declared a dividend of one preferred share
purchase right ("right") for each outstanding share of CSX common stock held
as of June 8, 1988. The Shareholder Rights Plan was amended in 1990. Each
right entitles shareholders of record to purchase from the company, until the
earlier of June 8, 1998, or the redemption of the rights, one one-hundredth of
a share of Series B preferred stock at an exercise price of $100, subject to
certain adjustments or, under certain circumstances, to obtain additional
shares of common stock of the company in exchange for the rights. The rights
will not be exercisable or transferable apart from the CSX common stock until
the earlier of 10 days following the public announcement that a person or
affiliated group has acquired or obtained the right to acquire 20% or more of
CSX's common stock; or 10 days following the commencement or announcement of
an intention to make a tender offer or exchange offer, the consummation of
which would result in the ownership by a person or group of 20% or more of the
company's outstanding common stock. The board of directors may redeem the
rights at a price of one cent per right at any time prior to the acquisition
by a person of 20% or more of the outstanding CSX common stock.
1987 Long-Term Performance Stock Plan
The CSX Corporation 1987 Long-Term Performance Stock Plan, which
superseded the 1980 and 1981 stock option plans, provides for awards to a
group of 357 officers and employees. The awards are based on increases in the
current market value of CSX common stock over the market value at date of
grant or the financial performance of CSX, or both. During 1994, 5 million
additional shares of common stock were reserved for issuance under this Plan.
At December 30, 1994, a total of 10,738,768 shares were reserved for
issuance, of which 4,794,498 were available for new grants (1,200,578 at
December 31, 1993). The remaining shares are assigned to outstanding stock
options, Stock Appreciation Rights (SARs) and Performance Share Awards (PSAs).
Transactions involving stock options and SARs are summarized as follows:
- 55 -
PAGE 56
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 12. COMMON STOCK, Continued
Options SARs
-------------------- -------------------
Shares Average Units Average
(000s) Price (000s) Price
------ ------- ----- -------
Outstanding at 12/31/93 3,695 $53.59 284 $31.58
Granted 1,606 $79.97 --- ---
Canceled or Expired (34) $65.62 (4) $29.64
Exercised (164) $49.83 (28) $31.26
----- ------ ----- ------
Outstanding at 12/30/94 5,103 $61.93 252 $31.65
===== ====== ===== ======
Exercisable at 12/30/94 3,507 $53.70 252 $31.65
===== ====== ===== ======
Exercised in 1993 671 $40.05 54 $31.22
===== ====== ===== ======
Exercised in 1992 1,002 $33.18 77 $31.13
===== ====== ===== ======
The value of PSAs is contingent on achievement of performance goals
and completion of certain continuing employment requirements over a three-year
period. Each PSA earned will equal the fair market value of one share of CSX
common stock on the date of payment. At December 30, 1994, there were 588,850
shares reserved for outstanding PSAs.
Stock Award Plan
In 1990, the company implemented a Stock Award Plan whereby all
officers and employees of the company are eligible to receive shares of CSX
common stock as an incentive award. All awards of common stock shall be issued
based on terms and conditions approved by the Compensation Committee of the
company's board of directors. At December 30, 1994, there were 990,208 shares
reserved for issuance under the Plan, of which 664,710 were available for new
grants.
Directors' Stock Plan
In 1992, the board of directors of the company adopted a stock plan
for directors that changes the manner in which fees and retainers are paid. A
minimum of 40% of the retainer fees must be paid in common stock of the
company. In addition to the basic level of payment in stock, each director may
elect to receive up to 100% of the remaining retainer and fees in the form of
common stock of the company. The Plan permits each director to elect to
transfer stock into a trust that will hold the shares until the participant's
death, disability, retirement as a director, other cessation of services as a
director, or change in control of the company. At December 30, 1994, there
were 489,808 shares of common stock reserved for issuance under this Plan.
- 56 -
PAGE 57
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS.
The following table presents the carrying amounts and estimated fair
values of financial instruments as required by SFAS No. 107, "Disclosures
about Fair Value of Financial Instruments." SFAS 107 defines the fair value
of a financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties.
1994 1993 1992
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
-------- ----- -------- ----- --------- -----
Assets:
Cash, Cash
Equivalents and
Short-Term
Investments $ 535 $ 535 $ 499 $ 499 $ 530 $ 530
Accounts Receivable 706 706 668 668 605 605
Long-Term
Marketable
Securities 119 119 115 115 --- ---
Liabilities:
Accounts Payable 926 926 917 917 901 901
Short-Term Debt 201 201 164 164 14 14
Long-Term Debt 2,930 2,914 3,279 3,585 3,445 3,587
The following methods and assumptions were used by the company in
estimating fair values for financial instruments:
Cash, Cash Equivalents and Short-Term Investments
The carrying amounts approximate fair value because of the short-term
maturity of the instruments.
Current Assets and Current Liabilities
The carrying amounts reported in the statement of financial position
for current assets and current liabilities qualifying as financial instruments
approximate their fair values.
Long-Term Marketable Securities
The fair values of long-term marketable securities were based on the
quoted market prices as of the respective year-end dates.
Long-Term Debt and Short-Term Debt
The carrying amounts of the company's borrowings under its short-term
debt arrangements approximate their fair value. The fair values of the
company's long-term debt have been estimated using discounted cash flow
analyses based upon the company's current incremental borrowing rates for
similar types of borrowing arrangements.
- 57 -
PAGE 58
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS, Continued
Futures and Options Contracts
The company had no significant hedging of derivative financial
instruments employed at December 30, 1994, and December 31, 1993 and 1992.
NOTE 14. EMPLOYEE BENEFIT PLANS.
Pension Plans
CSX and its subsidiaries have defined benefit pension plans,
principally for salaried personnel. The plans provide for eligible employees
to receive benefits based principally on years of service with the company and
compensation rates near retirement. Contributions to the plans are made on the
basis of not less than the minimum funding standards set forth in the Employee
Retirement Income Security Act of 1974, as amended. Plan assets consist
primarily of common stocks, corporate bonds and cash and cash equivalents.
Pension costs for these plans include the following components:
1994 1993 1992
----- ----- -----
Service Cost $ 36 $ 28 $ 24
Interest Cost on Projected Benefit Obligation 89 88 86
Actual Return on Plan Assets (10) (95) (24)
Net Amortization and Deferral (45) 26 (70)
Foreign Pension Expense 4 4 4
----- ----- -----
Pension Expense $ 74 $ 51 $ 20
===== ===== =====
- 58 -
PAGE 59
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 14. EMPLOYEE BENEFIT PLANS, Continued
The funded status of the plans and the amounts reflected in the
accompanying statement of financial position at year-end are as follows:
1994
-------------------
Assets Benefits
Exceed Exceed
Benefits Assets
Assets and Obligations - -------- --------
Vested Benefits $ 19 $ 994
Non-Vested Benefits 1 58
------ ------
Accumulated Benefit Obligation 20 1,052
Effect of Anticipated Future
Salary Increases 1 125
------ ------
Projected Benefit Obligation 21 1,177
Fair Value of Plan Assets 33 822
------ ------
Funded Status 12 (355)
Unrecognized Initial Net Obligation (Asset) (3) 31
Unrecognized Prior Service Cost 1 15
Unrecognized Net Loss 6 316
Recognition of Minimum Liability --- (252)
------ ------
Net Pension Asset (Obligation) $ 16 $ (245)
====== ======
- 59 -
PAGE 60
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 14. EMPLOYEE BENEFIT PLANS, Continued
Pension Plans, Continued
1993
-------------------
Assets Benefits
Exceed Exceed
Benefits Assets
Assets and Obligations - -------- --------
Vested Benefits $ 20 $1,048
Non-Vested Benefits 1 44
------ ------
Accumulated Benefit Obligation 21 1,092
Effect of Anticipated Future
Salary Increases 1 166
------ ------
Projected Benefit Obligation 22 1,258
Fair Value of Plan Assets 33 862
------ ------
Funded Status 11 (396)
Unrecognized Initial Net Obligation (Asset) (4) 28
Unrecognized Prior Service Cost 1 10
Unrecognized Net Loss 6 398
Recognition of Minimum Liability --- (287)
------ ------
Net Pension Asset (Obligation) $ 14 $ (247)
====== ======
1992
-------------------
Assets Benefits
Exceed Exceed
Benefits Assets
Assets and Obligations - -------- --------
Vested Benefits $ 17 $ 911
Non-Vested Benefits 1 37
------ ------
Accumulated Benefit Obligation 18 948
Effect of Anticipated Future
Salary Increases 1 124
------ ------
Projected Benefit Obligation 19 1,072
Fair Value of Plan Assets 30 793
------ ------
Funded Status 11 (279)
Unrecognized Initial Net Obligation (Asset) (4) 32
Unrecognized Prior Service Cost 1 11
Unrecognized Net Loss 5 287
Recognition of Minimum Liability --- (229)
------ ------
Net Pension Asset (Obligation) $ 13 $ (178)
====== ======
- 60 -
PAGE 61
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 14. EMPLOYEE BENEFIT PLANS, Continued
Pension Plans, Continued
The projected benefit obligations were determined using assumed
discount rates of 8.25% for 1994, 7.25% for 1993 and 8.25% for 1992; and an
estimated long-term salary increase rate of 5% for 1994, 1993, and 1992. Net
pension cost was determined using expected long-term rates of return on assets
of 8.75% for 1994, 9.75% for 1993 and 10.5% for 1992. The effect of adjusting
the assumed discount rate for 1994, 1993 and 1992 changed the relative funded
status of a major plan and resulted in the recognition of an aggregate
additional minimum pension liability.
Savings Plans
The company has established savings plans for virtually all full-time
salaried employees and certain employees covered by collective bargaining
agreements of CSX and subsidiary companies. Eligible employees may contribute
from 1% to 15% of their annual compensation in 1% multiples to these plans.
CSX matches eligible employees' contributions in an amount equal to the lesser
of 50% of each participating employee's contributions or 3% of their annual
compensation. In addition, CSX contributes fixed amounts for each
participating employee covered by a collective bargaining agreement. Expense
for these plans for 1994, 1993 and 1992 was $31 million, $32 million and $29
million, respectively.
Other Post-Retirement Benefit Plans
In addition to the company's defined benefit pension plans, CSX has
three defined benefit post-retirement plans covering most full-time salaried
employees. Two plans provide medical benefits and another plan provides life
insurance benefits. The post-retirement health care plans are contributory,
with retiree contributions adjusted annually, and contain other cost-sharing
features such as deductibles and coinsurance. The accounting for the health
care plans anticipates future cost-sharing changes to the written plans that
are consistent with the company's expressed intent to increase the retiree
contribution rate annually for the expected medical inflation rate for that
year. The life insurance plan is non-contributory.
- 61 -
PAGE 62
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 14. EMPLOYEE BENEFIT PLANS, Continued
Other Post-retirement Benefit Plans, Continued
The company's current policy is to fund the cost of the
post-retirement health care and life insurance benefits on a pay-as-you-go
basis, as in prior years. The amounts recognized for the combined plans in the
company's statement of financial position at December 30, 1994, and December
31, 1993 and 1992 are as follows:
1994
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Accumulated Post-Retirement
Benefit Obligation:
Retirees $172 $66
Fully Eligible Active Participants 26 3
Other Active Participants 39 3
---- ---
Accumulated Post-Retirement
Benefit Obligation 237 72
Unrecognized Prior Service Cost 23 6
Unrecognized Net Loss (25) (7)
---- ---
Net Post-Retirement
Benefit Obligation $235 $71
==== ===
1993
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Accumulated Post-Retirement
Benefit Obligation:
Retirees $181 $73
Fully Eligible Active Participants 27 3
Other Active Participants 42 3
---- ---
Accumulated Post-Retirement
Benefit Obligation 250 79
Unrecognized Prior Service Cost 29 7
Unrecognized Net Loss (50) (14)
---- ---
Net Post-Retirement
Benefit Obligation $229 $72
==== ===
- 62 -
PAGE 63
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 14. EMPLOYEE BENEFIT PLANS, Continued
Other Post-retirement Benefit Plans, Continued
1992
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Accumulated Post-Retirement
Benefit Obligation:
Retirees $149 $65
Fully Eligible Active Participants 24 3
Other Active Participants 32 2
---- ---
Accumulated Post-Retirement
Benefit Obligation 205 70
Unrecognized Prior Service Cost 36 7
Unrecognized Net Loss (13) (4)
---- ---
Net Post-Retirement Benefit Obligation $228 $73
==== ===
Net periodic post-retirement benefit expense for 1994, 1993 and
1992 was $29 million, $23 million and $29 million, respectively.
The weighted-average annual assumed rate of increase in the per
capita cost of covered benefits (i.e., health care cost trend rate) for the
medical plans is 11% for 1994-1995 and is assumed to decrease gradually to
5.5% by 2005 and remain at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amounts reported. For example,
increasing the assumed health care cost trend rates by one percentage point in
each year would increase the accumulated post-retirement benefit obligation
for the medical plans as of December 30, 1994, by 9%, and net periodic
post-retirement benefit expense for 1994 by $3 million. The weighted-average
discount rate used in determining the accumulated post-retirement benefit
obligation was 8.25% for 1994, 7.25% for 1993 and 8.25% for 1992.
Other Plans
Under collective bargaining agreements, the company participates in a
number of union-sponsored, multi-employer benefit plans. Payments to these
plans are made as part of aggregate assessments generally based on number of
employees covered, hours worked, tonnage moved or a combination thereof. The
administrators of the multi-employer plans generally allocate funds received
from participating companies to various health and welfare benefit plans and
pension plans. Current information regarding such allocations has not been
provided by the administrators. Total contributions of $209 million, $211
million and $194 million, respectively, were made to these plans in 1994, 1993
and 1992.
- 63 -
PAGE 64
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 15. SUMMARY OF COMMITMENTS AND CONTINGENCIES.
Lease Commitments
CSX leases equipment under agreements with terms up to 21 years.
Non-cancelable, long-term leases generally include options to purchase at fair
value and to extend the terms. At December 30, 1994, minimum building and
equipment rentals under non-cancelable operating leases totaled approximately
$405 million for 1995, $378 million for 1996, $371 million for 1997, $347
million for 1998, $302 million for 1999 and $2.6 billion thereafter.
Rent expense on operating leases, including net daily rental charges
on railroad operating equipment of $258 million, $247 million and $205 million
in 1994, 1993 and 1992, respectively, amounted to $1.1 billion in 1994, 1993
and 1992. Deferred gains arising from sale-leaseback transactions are being
amortized from 2 to 21 years and have reduced rent expense by $21 million, $24
million and $23 million, in 1994, 1993 and 1992, respectively.
Purchase Commitments
CSXT entered into an agreement during 1993 to purchase 300
locomotives. This large single order covers CSXT's normal locomotive
replacement needs for 1994 through 1997. This purchase agreement will
introduce alternating current traction technology to CSXT's locomotive fleet.
CSXT took delivery of 50 direct current and 30 alternating current locomotives
in 1994, and the remaining 220 alternating current units will be delivered
during 1995-1997.
Sea-Land Service, Inc. ("Sea-Land"), the container-shipping unit of
CSX, has entered into agreements for the construction of five high-
performance, fuel-efficient container vessels. Estimated capital expenditures
for these vessels are $278 million, of which $20 million was expended in 1994,
with the remaining $258 million expected to be incurred over the next two to
three years.
Contingent Liabilities
The company and its subsidiaries are contingently liable individually
and jointly with others as guarantors of long-term debt and obligations
principally relating to leased equipment, joint ventures and joint facilities.
These contingent obligations amounted to approximately $81 million at December
30, 1994.
- 64 -
PAGE 65
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 15. SUMMARY OF COMMITMENTS AND CONTINGENCIES, Continued
Although the company obtains substantial amounts of commercial
insurance for potential losses for third-party liability and property damage,
reasonable levels of risk are retained on a self-insurance basis. A
substantial portion of the insurance coverage, up to $100 million per
occurrence from rail and certain other operations, is provided by companies
owned or partially owned by CSX.
CSXT is a party to various proceedings brought both by private
parties and regulatory agencies related to environmental issues. CSXT has
been identified as a potentially responsible party in a number of governmental
investigations and actions relating to environmentally impaired sites that are
or may be subject to remedial action under the Federal Superfund statute
("Superfund") or corresponding state statutes. The majority of these
proceedings are based on allegations that CSXT, or its railroad predecessors,
sent hazardous substances to the facilities in question for disposal. Such
proceedings arising under Superfund typically involve numerous other waste
generators and disposal companies and seek to allocate or recover costs
associated with site investigation and cleanup, which could be substantial.
The assessment of the required response and remedial costs associated
with these sites is extremely complex. Cost estimates are based on
information available for each site, financial viability of other potentially
responsible parties, and existing technology, laws and regulations.
CSXT frequently reviews its role, if any, with respect to each such
location, giving consideration to the nature of CSXT's alleged connection to
the location (e.g., generator, owner or operator), the extent of CSXT's
alleged connection (e.g., volume of waste sent to the location and other
relevant factors), the accuracy and strength of evidence connecting CSXT to
the location, and the number, connection and financial position of other named
and unnamed potentially responsible parties at the location. Further, CSXT
periodically reviews its exposure in all non-Superfund environmental
proceedings with which it is involved.
Based upon such reviews and updates of the sites with which it is
involved, CSXT has recorded, and periodically reviews for adequacy, reserves
to cover estimated contingent future environmental costs with respect to such
sites. The recorded liabilities for estimated future environmental costs at
December 30, 1994, and December 31, 1993 and 1992, were $140 million, $131
million and $77 million, respectively. The liability has been accrued for
future costs for all sites where the company's obligation is probable and
where such costs can be reasonably estimated. The liability includes future
costs for remediation and restoration of sites as well as for ongoing
monitoring costs, but excludes any anticipated insurance recoveries. The
majority of the December 30, 1994 environmental liability is expected to be
paid out over the next five years, funded by cash generated from operations.
- 65 -
PAGE 66
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 15. SUMMARY OF COMMITMENTS AND CONTINGENCIES, Continued
The company does not currently possess sufficient information to
reasonably estimate the amounts of additional liabilities, if any, on some
sites until completion of future environmental studies. Based upon
information currently available, however, the company believes that its
environmental reserves are adequate to accomplish remedial actions to comply
with present laws and regulations. The company believes that the ultimate
liability for these matters will not materially affect its overall results of
operations and financial condition.
Legal Proceedings
A number of legal actions, other than environmental, are pending
against CSX and certain subsidiaries in which claims are made in substantial
amounts. While the ultimate results of environmental investigations, lawsuits
and claims involving the company cannot be predicted with certainty,
management does not currently expect that these matters will have a material
adverse effect on the consolidated financial position, results of operations
and cash flows of the company.
NOTE 16. QUARTERLY DATA (Unaudited).
1994(a)
1st 2nd 3rd 4th(b)
------ ------ ------ ------
Operating Revenue $2,227 $2,371 $2,470 $2,540
====== ====== ====== ======
Operating Income $ 186 $ 304 $ 350 $ 392
====== ====== ====== ======
Net Earnings $ 74 $ 162 $ 177 $ 239
====== ====== ====== ======
Earnings Per Share $ .71 $ 1.55 $ 1.68 $ 2.29
====== ====== ====== ======
1993
1st(c) 2nd 3rd(d) 4th
------ ------ ------ ------
Operating Revenue $2,123 $2,264 $2,238 $2,315
====== ====== ====== ======
Operating Income $ 63 $ 278 $ 252 $ 320
====== ====== ====== ======
Net Earnings (Loss) $ (9) $ 154 $ 63 $ 151
====== ====== ====== ======
Earnings (Loss) Per Share $ (.09) $ 1.48 $ .61 $ 1.46
====== ====== ====== ======
- 66 -
PAGE 67
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 16. QUARTERLY DATA (Unaudited), Continued
1992
1st 2nd(e) 3rd 4th(f)
------ ------ ------ ------
Operating Revenue $2,086 $2,189 $2,214 $2,245
====== ====== ====== ======
Operating Income (Loss) $ 157 $ (445) $ 262 $ 292
====== ====== ====== ======
Net Earnings (Loss) $ 62 $ (322) $ 128 $ 152
====== ====== ====== ======
Earnings (Loss) Per Share $ .60 $(3.13) $ 1.25 $ 1.47
====== ====== ====== ======
(a) Effective January 1, 1994, the company changed its fiscal reporting
periods from four calendar quarters to four 13-week quarters. Fiscal
1994 began on January 1, 1994, and included 52 weeks. The four 13-
week quarters ended on April 1, July 1, September 30 and December 30,
1994.
(b) On December 1, 1994, the state of Florida elected to satisfy its
remaining unfunded obligation issued in 1988 to consummate the
purchase of 80 miles of track and right of way. The transaction
resulted in cash proceeds of $102 million, an accelerated pretax gain
of $69 million, and increased net earnings by $42 million, 40 cents
per share.
(c) The company recorded a $93 million pretax charge in the first quarter
of 1993 to recognize the estimated costs of restructuring certain
operations and functions at its container-shipping unit. The
restructuring charge reduced net earnings by $61 million, 59 cents
per share.
(d) The company revised its estimated annual effective tax rate in the
third quarter of 1993 to reflect the change in the federal statutory
rate from 34 to 35 percent. The effect of this change was to
increase income tax expense for the third quarter of 1993 by $54
million, 52 cents per share. Of this amount, $51 million, 48 cents
per share, related to applying the newly enacted statutory income tax
rate to deferred tax balances as of January 1, 1993.
(e) Includes impact of $699 million pretax productivity charge, $450
million after-tax, $4.38 per share, to reflect the estimated costs of
implementing work-force reductions.
(f) In the fourth quarter of 1992, the company adjusted its estimate of
the annual effective tax rate, which increased fourth-quarter
earnings by $5 million, 5 cents per share.
- 67 -
PAGE 68
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 17. SUMMARIZED FINANCIAL DATA - SEA-LAND SERVICE INC.
During 1987, Sea-Land entered into agreements to sell and lease back
by charter three new U.S.-built, U.S.-flag, D-7 class container ships. CSX has
guaranteed the obligations of Sea-Land pursuant to the related charters which,
along with the container ships, serve as collateral for debt securities
registered with the Securities and Exchange Commission ("SEC"). In accordance
with SEC disclosure requirements, summarized financial information for
Sea-Land and its consolidated subsidiaries is as follows:
Summary of Operations: 1994 1993 1992
--------------------- -------- -------- -------
Operating Revenue $3,492 $3,246 $3,148
Operating Expense - Public 3,101 2,972 2,843
- Affiliated (a) 235 202 188
------ ------ ------
Operating Income $ 156 $ 72 $ 117
====== ====== ======
Net Earnings $ 73 $ 12 $ 17
====== ====== ======
Summary of Financial Position: 1994 1993 1992
------------------------------ ------ ------ ------
Current Assets - Public $ 584 $ 515 $ 429
- Affiliated (a) 16 24 24
Other Assets - Public 1,527 1,497 1,492
- Affiliated (a) 101 115 123
Current Liabilities - Public 515 574 477
- Affiliated (a) 266 149 78
Other Liabilities - Public 671 673 722
- Affiliated (a) 75 113 141
Equity 701 642 650
(a) Amounts represent activity with CSX affiliated companies.
- 68 -
PAGE 69
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 17. SUMMARIZED FINANCIAL DATA - SEA-LAND SERVICE INC., Continued
SL Alaska Trade Company ("SLATCO") is a special purpose,
unconsolidated subsidiary of Sea-Land with assets of $116 million in a trust
account securing $106 million of debt maturing on October 1, 2015. The assets
of SLATCO are not available to creditors of Sea-Land or its subsidiaries, nor
are the SLATCO notes guaranteed by Sea-Land or any of its subsidiaries.
NOTE 18. BUSINESS SEGMENTS.
Operating Revenue Operating Income
-------------------------- -------------------------
Years Ended Years Ended
-------------------------- --------------------------
Dec. 30, Dec. 31, Dec. 31, Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992 1994 1993 1992
------ ------ ------ ------ ------ ------
Transportation $9,410 $8,767 $8,550 $1,178 $ 868 $ 225
Non-Transportation 198 173 184 54 45 41
------ ------ ------ ------ ------ ------
Total $9,608 $8,940 $8,734 1,232 913 266
====== ====== ====== ------ ------ ------
Other Income 55 18 3
Interest Expense 281 298 276
------ ------ ------
Earnings (Loss) before Income Taxes $1,006 $ 633 $ (7)
====== ====== ======
Identifiable Assets
---------------------------
Dec. 30, Dec. 31, Dec. 31,
1994 1993 1992
------- ------- -------
Transportation $12,974 $12,511 $12,138
Non-Transportation 750 909 911
------- ------- -------
Total $13,724 $13,420 $13,049
======= ======= =======
- 69 -
PAGE 70
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 18. BUSINESS SEGMENTS, Continued
The principal components of the business segments are:
Transportation -
Rail, international container-shipping, intermodal, barge and
contract logistics operations. The container-shipping operation reported
revenue of $3.5 billion for 1994, $3.2 billion for 1993 and $3.1 billion for
1992. Approximate revenue allocation by port of origin for 1994, 1993 and
1992 was: North America - 41%; Asia - 34%; Europe - 17%; and Other - 8%.
Non-Transportation -
Real estate sales and rentals, resort management and operations,
integrated computer services and eliminations of intersegment sales and
corporate-related items.
- 70 -
PAGE 71
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of CSX Corporation
We have audited the accompanying consolidated statement of financial
position of CSX Corporation and subsidiaries as of December 30, 1994, and
December 31, 1993 and 1992, and the related consolidated statements of
earnings and cash flows for the years then ended. These financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above (appearing on pages 36-70) present fairly, in all material respects, the
consolidated financial position of CSX Corporation and subsidiaries at
December 30, 1994, and December 31, 1993 and 1992, and the consolidated
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP
Richmond, Virginia
January 27, 1995
- 71 -
PAGE 72
BOARD OF DIRECTORS
- ------------------
Edward L. Addison (1,3,5)
Chairman and CEO
The Southern Company, Atlanta, Ga.
Elizabeth E. Bailey (2,4)
John C. Hower Professor of Public Policy and Management
The Wharton School
University of Pennsylvania, Philadelphia, Pa.
Robert L. Burrus, Jr. (4,5)
Partner and Chairman
McGuire, Woods, Battle & Boothe
Richmond, Va.
Bruce C. Gottwald (4,5)
Chairman and CEO
Ethyl Corporation, Richmond, Va.
John R. Hall (2)
Chairman and CEO
Ashland Oil Inc., Ashland, Ky.
Robert D. Kunisch (1,3)
Chairman, President and CEO
PHH Corporation, Hunt Valley, Md.
Hugh L. McColl, Jr. (2,4)
Chairman and CEO
NationsBank Corp., Charlotte, N.C.
James W. McGlothlin (1,5)
Chairman and CEO
The United Company, Bristol, Va.
Southwood J. Morcott (1,2,4)
Chairman, President and CEO
Dana Corporation, Toledo, Oh.
Charles E. Rice (1,2,3)
Chairman and CEO
Barnett Banks Inc., Jacksonville, Fla.
William C. Richardson (3)
President
The Johns Hopkins University
Baltimore, Md.
Frank S. Royal, M.D. (3)
Physician
Richmond, Va.
- 72 -
PAGE 73
BOARD OF DIRECTORS, CONTINUED
- -----------------------------
John W. Snow (1)
Chairman, President and CEO
CSX Corporation, Richmond, Va.
William B. Sturgill (1,5)
President
East Kentucky Investment Company,
Lexington, Ky.
Sir Denis Thatcher, Bt MBE TD
Counsellor to the Board
London, England
KEY TO COMMITTEES OF THE BOARD
- ------------------------------
1 - Executive
2 - Audit
3 - Compensation
4 - Pension
5 - Organization & Corporate Responsibility
- 73 -
PAGE 74
CSX CORPORATION OFFICERS
- ------------------------
John W. Snow, 55 *
Chairman, President and CEO
elected February 1991
Mark G. Aron, 52 *
Senior Vice President-Law and Public Affairs
elected January 1986
James Ermer, 52 *
Senior Vice President-Finance
elected April 1985
Andrew B. Fogarty, 49
Vice President-Audit and Advisory Services
elected March 1995
Thomas E. Hoppin, 53
Vice President-Corporate Communications
elected July 1986
Richard H. Klem, 50 *
Vice President-Corporate Strategy
elected May 1992
Jesse R. Mohorovic, 52 *
Vice President-Executive Department
elected February 1995
James P. Peter, 43
Vice President-Taxes
elected June 1993
Woodruff M. Price, 59
Corporate Vice President-Federal Affairs
elected May 1988
Alan A. Rudnick, 47
Vice President-General Counsel and Corporate Secretary
elected June 1991
Micheal J. Ruehling, 47
Vice President-State Relations
elected January 1995
James A. Searle Jr., 48
Vice President-Special Projects
elected August 1989
Peter J. Shudtz, 46
General Counsel
elected September 1991
- 74 -
PAGE 75
CSX CORPORATION OFFICERS, CONTINUED
- -----------------------------------
William H. Sparrow, 51 *
Vice President-Capital Planning and Budgeting
elected May 1994
Gregory R. Weber, 49 *
Vice President, Controller and Treasurer
elected April 1989
CSX UNIT OFFICERS
- -----------------
CSX Transportation Inc.
500 Water Street
Jacksonville, FL 32202
(904) 359-3100
Alvin R. (Pete) Carpenter, 53 *
President and CEO
since January 1992
Donald D. Davis, 55 *
Senior Vice President-Employee Relations
since April 1992
Paul R. Goodwin, 52 *
Executive Vice President-Finance and Administration
since February 1995
Gerald L. Nichols, 59 *
Executive Vice President and COO
since February 1995
Sea-Land Service Inc.
150 Allen Road
Liberty Corner, NJ 07938
(908) 558-6000
John P. Clancey, 50 *
President and CEO
since August 1991
Robert J. Grassi, 48 *
Senior Vice President-Finance and Planning
since October 1991
Wilford W. Middleton Jr., 56 *
Executive Vice President
since January 1990
- 75 -
PAGE 76
CSX UNIT OFFICERS, CONTINUED
- ----------------------------
Charles G. Raymond, 51 *
Senior Vice President-Operations
since September 1988
CSX Intermodal Inc.
200 International Circle
Hunt Valley, MD 21030
(410) 584-0100
M. McNeil Porter, 61 *
President and CEO
since September 1987
American Commercial Lines Inc.
1701 E. Market Street
Jeffersonville, IN 47130
(812) 288-0100
Michael C. Hagan, 48 *
President and CEO
since May 1992
Customized Transportation Inc.
10407 Centurion Parkway, N., Ste. 400
Jacksonville, FL 32256
(904) 928-1400
David G. Kulik, 46
President and CEO
since December 1994
The Greenbrier
White Sulphur Springs, WV 24986
(304) 536-1110
Ted J. Kleisner, 50
President and Managing Director
since January 1989
Yukon Pacific Corporation
1049 W. 5th Avenue
Anchorage, AK 99501
(907) 265-3100
Jeff B. Lowenfels, 46
President and CEO
since February 1995
* Executive officers of the corporation
- 76 -
PAGE 77
CORPORATE INFORMATION
Headquarters
One James Center
901 East Cary Street
Richmond, VA 23219-4031
(804) 782-1400
Market Information
CSX's common stock is listed on the New York, London and Swiss stock
exchanges and trades with unlisted privileges on the Midwest, Boston,
Cincinnati, Pacific and Philadelphia stock exchanges. The official trading
symbol is "CSX."
Description of Common and Preferred Stock
A total of 300 million shares of common stock is authorized, of which
104,721,988 shares were outstanding as of Dec. 30, 1994. Each share is
entitled to one vote in all matters requiring a vote of shareholders. There
are no pre-emptive rights.
A total of 25 million shares of preferred stock is authorized.
Series A consists of 250,000 shares of $7.00 Cumulative Convertible Preferred
Stock. All outstanding shares of Series A Preferred Stock were redeemed as of
July 31, 1992.
Series B consists of 3 million shares of Junior Participating
Preferred Stock, none of which has been issued. These shares will become
issuable only and when the rights distributed to holders of common stock under
the Preferred Share Rights Plan adopted by CSX on June 8, 1988, become
exercisable.
Common Stock Shares Outstanding, Number of Registered Shareholders
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
Number of Shareholders: 57,355 59,714 62,820 66,032 66,658
====== ====== ====== ====== ======
Shares Outstanding as of Jan. 27, 1995: 104,734,016
Common Stock Shareholders as of Jan. 27, 1995: 57,267
- 77 -
PAGE 78
Common Stock Price Range and Dividends Per Share
Year 1994
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $92.38 $83.25 $79.13 $74.50
Low $79.88 $71.00 $66.00 $63.13
Dividends Per Share $.44 $.44 $.44 $.44
Year 1993
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $79.75 $78.13 $80.25 $88.13
Low $67.13 $66.38 $67.88 $74.88
Dividends Per Share $.38 $.38 $.38 $.44
Year 1992
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $62.00 $67.50 $67.75 $73.63
Low $54.88 $55.50 $56.63 $54.50
Dividends Per Share $.38 $.38 $.38 $.38
Year 1991
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $39.00 $47.88 $52.63 $58.00
Low $29.75 $36.50 $44.25 $47.75
Dividends Per Share $.35 $.35 $.35 $.38
Year 1990
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $38.13 $36.00 $36.88 $31.88
Low $31.25 $31.38 $26.00 $26.13
Dividends Per Share $.35 $.35 $.35 $.35
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PAGE 79
SHAREHOLDER INFORMATION
Shareholder Services
Shareholders with questions about their accounts should write to the
transfer agent at the address below or call (800) 521-5571. Illinois residents
should call (312) 461-5545.
General questions about CSX or information contained in company
publications should be directed to corporate communications at the address or
telephone number shown below.
Security analysts, portfolio managers or other investment community
representatives should contact investor relations at the address or telephone
number shown below.
Transfer Agent, Registrar and Dividend Disbursing Agent
Harris Trust Company
P.O. Box A3309
Chicago, IL 60690
(800) 521-5571
(312) 461-5545, in Illinois
Shareholder Relations
Anne B. Taylor
Administrator-Shareholder Services
CSX Corporation
P.O. Box 85629
Richmond, VA 23285-5629
(804) 782-1465
Corporate Communications
Suzanne S. Walston
Mgr.-Corporate Communications
CSX Corporation
P.O. Box 85629
Richmond, VA 23285-5629
(804) 782-1406
Investor Relations
Katherine E. Wilson
Director-Financial Planning
CSX Corporation
P.O. Box 85629
Richmond, VA 23285-5629
(804) 782-1553
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PAGE 80
SHAREHOLDER INFORMATION, Continued
Stock Held in Brokerage Accounts
When a broker holds your stock, it is usually registered in the
broker's name, or "street name." We do not know the identity of individual
shareholders who hold stock in this manner. We know only that a broker holds a
certain number of shares that may be for any number of customers. If your
stock is in a street-name account, you are not eligible to participate in the
company's Dividend Reinvestment Plan. Also, you will receive your dividend
payments, annual reports and proxy materials through your broker. You should
notify your broker, not Harris Trust, if you wish to eliminate unwanted,
duplicate mailings and improve the timeliness on the delivery of these
materials and your dividend payments.
Lost or Stolen Stock Certificates
If your stock certificates are lost, stolen or in some way destroyed,
you should notify Harris Trust in writing immediately.
Multiple Dividend Checks and Duplicate Mailings
Some shareholders hold their stock on CSX records in similar but
different names (e.g. John A. Smith and J.A. Smith). When this occurs, we are
required to create separate accounts for each name. Although the mailing
addresses are the same, we are required to mail separate dividend checks to
each account. Duplicate mailings of annual reports can be eliminated if you
send the labels or copies of the labels from a CSX mailing to Harris Trust.
You should mark the labels to indicate names to be kept on the mailing list
and names to be deleted. However, this action will affect mailings of
financial materials only. Dividend checks and proxy materials will continue to
be sent to each account.
Consolidating Accounts
If you want to consolidate separate accounts into one account, you
should contact Harris Trust for the necessary forms and instructions. When
accounts are consolidated, it may be necessary to reissue the stock
certificates.
Dividends
CSX pays quarterly dividends on its common stock on or about the 15th
of March, June, September and December, when declared by the board of
directors, to shareholders of record approximately three weeks earlier. CSX
now offers direct deposit of dividends to shareholders who request it. If you
are interested, please contact Harris Trust at the address or phone number
shown above.
Replacing Dividend Checks
If you do not receive your dividend check within 10 business days
after the payment date or if your check is lost or destroyed, you should
notify Harris Trust so payment on the check can be stopped and a replacement
issued.
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PAGE 81
SHAREHOLDER INFORMATION, Continued
Dividend Reinvestment
CSX provides dividend reinvestment and stock purchase plans for
shareholders of record and employees as a convenient method of acquiring
additional CSX shares by reinvestment of dividends or by optional cash
payments, or both.
The Shareholders Dividend Reinvestment Plan permits automatic
reinvestment of common stock dividends without payment of any brokerage
commission or service charge. In fact, under the plan, you may elect to
continue receiving dividend payments while making cash payments of up to
$1,500 per month for investment in additional CSX shares without any fee.
For a prospectus or other information on the plan, write or call the
Harris Trust Dividend Reinvestment Department at the address or telephone
number shown on page 79.
Proxy and Financial Supplement to the Annual Report
Proxy materials are forwarded to shareholders with this annual
report, and shareholders are urged to vote, sign and return their Proxy
promptly.
Copies of the Financial Supplement to the Annual Report will be
available to shareholders at the annual meeting, or may be reserved by
contacting Katherine E. Wilson at the address shown on page 79.
The Financial Supplement is not automatically mailed to shareholders.
- 81 -
PAGE 82 CSX CORPORATION FORM 10-K
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 3rd day of
March 1995.
CSX CORPORATION
By: /s/ GREGORY R. WEBER
----------------------------------------
Gregory R. Weber
Vice President, Controller and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures Title
---------- -----
John W. Snow Chairman of the Board, President,
Chief Executive Officer and Director
(Principal Executive Officer)(a)
James Ermer Senior Vice President-Finance
(Principal Financial Officer)(a)
Edward L. Addison Director(a)
Elizabeth E. Bailey Director(a)
Robert L. Burrus Jr. Director(a)
Bruce C. Gottwald Director(a)
John R. Hall Director(a)
Robert D. Kunisch Director(a)
Hugh L. McColl Jr. Director(a)
James W. McGlothlin Director(a)
Southwood J. Morcott Director(a)
Charles E. Rice Director(a)
William C. Richardson Director(a)
Frank S. Royal, M.D. Director(a)
William B. Sturgill Director(a)
(a) /s/ PETER J. SHUDTZ
---------------------------------
Peter J. Shudtz, Attorney-in-Fact
March 3, 1995
- 82 -
PAGE 83
CSX CORPORATION
Statement of Differences
1. The pages in the electronic filing do not correspond to the pages in
the printed document because there is more material on each page of
the printed document. There are, therefore, fewer printed pages.
The printed Annual Report and Form 10-K also contains numerous
charts, graphs and pictures not incorporated into the electronic Form
10-K.
2. Page references in the electronic Form 10-K refer to pages in the
electronic filing, while page references in the printed document
refer to pages in that document. The information on pages 32 and 33
of the printed document, i.e. the 10-K cover sheet and index, has
been repositioned on pages 1 and 2 of the electronic document with
the page references changed as discussed above.
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