PAGE 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 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
----------------- ----------------
Commission File Number 1-8022
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, Virginia 23219-4031
(Address of principal executive offices) (Zip Code)
(804) 782-1400
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 1994: 104,743,893 shares.
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PAGE 2
CSX CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1:
Financial Statements
1. Consolidated Statement of Earnings-
Quarters and Nine Months Ended
September 30, 1994 and 1993 3
2. Consolidated Statement of Cash Flows-
Nine Months Ended September 30, 1994 and 1993 4
3. Consolidated Statement of Financial Position-
At September 30, 1994 and December 31, 1993 5
Notes to Consolidated Financial Statements 6
Item 2:
Management's Discussion and Analysis of Results of
Operations and Financial Condition 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
Signature 16
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PAGE 3
CSX CORPORATION AND SUBSIDIARIES
Consolidated Statement of Earnings
(Millions of Dollars, Except Per Share Amounts)
Quarter Ended Nine Months Ended
--------------------- ---------------------
September 30, September 30,
1994 1993 1994 1993
-------- -------- -------- --------
Operating Revenue
Transportation $ 2,391 $ 2,176 $ 6,926 $ 6,505
Non-Transportation 79 62 142 120
------- ------- ------- -------
Total 2,470 2,238 7,068 6,625
------- ------- ------- -------
Operating Expense
Transportation 2,076 1,945 6,123 5,844
Non-Transportation 44 41 105 95
Restructuring Charge --- --- --- 93
------- ------- ------- -------
Total 2,120 1,986 6,228 6,032
------- ------- ------- -------
Operating Income 350 252 840 593
Other Income (Expense) (6) 1 11 30
Interest Expense 69 74 207 223
------- ------- ------- -------
Earnings before
Income Taxes 275 179 644 400
Income Tax Expense 98 116 231 192
------- ------- ------- -------
Net Earnings $ 177 $ 63 $ 413 $ 208
======= ======= ======= =======
Earnings Per Share $ 1.68 $ .61 $ 3.94 $ 2.00
======= ======= ======= =======
Average Common Shares
Outstanding (Thousands) 104,731 103,996 104,629 103,856
======= ======= ======= =======
Common Shares
Outstanding (Thousands) 104,744 104,047 104,744 104,047
======= ======= ======= =======
Cash Dividends Paid Per
Common Share $ .44 $ .38 $ 1.32 $ 1.14
======= ======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
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PAGE 4
CSX CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Millions of Dollars)
Nine Months Ended
-------------------
September 30,
1994 1993
------ ------
OPERATING ACTIVITIES
Net Earnings $ 413 $ 208
Adjustments to Reconcile Earnings
to Cash Provided
Depreciation 431 429
Deferred Income Taxes 115 143
Restructuring Charge -- Provision --- 93
Productivity/Restructuring Charge -- Payments (103) (249)
Other Operating Activities 42 8
Changes in Operating Assets and Liabilities
Accounts Receivable (62) (72)
Materials and Supplies 10 (18)
Other Current Assets 15 7
Accounts Payable and Other Current Liabilities (37) (52)
----- -----
Cash Provided by Operating Activities 824 497
----- -----
INVESTING ACTIVITIES
Property Additions (517) (486)
Short-Term Investments - Net 53 56
Purchases of Long-Term Marketable Securities (59) (111)
Other Investing Activities 77 59
----- -----
Cash Used by Investing Activities (446) (482)
----- -----
FINANCING ACTIVITIES
Short-Term Debt - Net 180 295
Long-Term Debt Issued 53 81
Long-Term Debt Repaid (287) (221)
Dividends Paid (138) (118)
Other Financing Activities 10 (2)
----- -----
Cash (Used) Provided by Financing Activities (182) 35
----- -----
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Increase in Cash and Cash Equivalents 196 50
Cash and Cash Equivalents at Beginning of Period 298 374
----- -----
Cash and Cash Equivalents at End of Period 494 424
Short-Term Investments at End of Period 156 99
----- -----
Cash, Cash Equivalents and Short-Term
Investments at End of Period $ 650 $ 523
===== =====
See accompanying Notes to Consolidated Financial Statements.
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PAGE 5
CSX CORPORATION AND SUBSIDIARIES
Consolidated Statement of Financial Position
(Millions of Dollars)
September 30, December 31,
1994 1993
------------- ------------
ASSETS
Current Assets
Cash, Cash Equivalents and
Short-Term Investments $ 650 $ 499
Accounts Receivable 812 668
Materials and Supplies 190 199
Deferred Income Taxes 122 108
Other Current Assets 82 97
------- -------
Total Current Assets 1,856 1,571
------- -------
Properties and Other Assets
Properties 16,116 15,853
Less Accumulated Depreciation 5,258 5,065
------- -------
Properties - Net 10,858 10,788
Affiliates and Other Companies 313 268
Other Assets 672 793
------- -------
Total Properties and Other Assets 11,843 11,849
------- -------
Total Assets $13,699 $13,420
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Other
Current Liabilities $ 1,990 $ 1,965
Current Maturities of Long-Term Debt 95 146
Short-Term Debt 344 164
------- -------
Total Current Liabilities 2,429 2,275
------- -------
Long-Term Debt 2,953 3,133
------- -------
Long-Term Liabilities and Deferred Gains 2,336 2,491
------- -------
Deferred Income Taxes 2,470 2,341
------- -------
Shareholders' Equity
Common Stock 105 104
Other Capital 1,363 1,307
Retained Earnings 2,201 1,927
Minimum Pension Liability Adjustment (158) (158)
------- -------
Total Shareholders' Equity 3,511 3,180
------- -------
Total Liabilities and Shareholders' Equity $13,699 $13,420
======= =======
See accompanying Notes to Consolidated Financial Statements.
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PAGE 6
CSX CORPORATION AND SUBSIDIARIES
--------------------------------
Notes to Consolidated Financial Statements
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 1. BASIS OF PRESENTATION
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the company's
financial position as of September 30, 1994, and December 31, 1993, and the
results of operations for the quarters and nine months ended September 30,
1994 and 1993, and its cash flows for the nine months ended September 30, 1994
and 1993, such adjustments being of a normal recurring nature.
Earnings per share are based on the weighted average of common shares
outstanding for the third quarter and nine months ended September 30, 1994 and
1993. Dilution for the quarters and nine months ended September 30, 1994 and
1993, which could result if all outstanding common stock equivalents were
exercised, is not significant.
While the company believes that the disclosures presented are
adequate to make the information not misleading, it is suggested that these
financial statements be read in conjunction with the financial statements and
the notes included in the company's latest Annual Report and Form 10-K.
Certain prior-year data have been reclassified to conform to the 1994
presentation.
NOTE 2. CHANGE IN FISCAL REPORTING PERIODS
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 will include 52 weeks. The four 13-week
quarters will end on April 1, July 1, September 30 and December 30, 1994.
NOTE 3. ACCOUNTING AND REPORTING CHANGES
Effective January 1, 1994, the company adopted Statement of Financial
Accounting Standards ("SFAS") No. 112, "Employers' Accounting for Post-
employment Benefits." SFAS No. 112 requires that certain benefits provided to
former or inactive employees, after employment but before retirement, such as
workers' compensation and disability benefits, be accrued if attributable to
employees' service already rendered. The financial statement impact of
adopting SFAS No. 112 was not significant.
Effective January 1, 1994, the company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." SFAS No.
115 requires that investments that have readily determinable fair values be
classified as "held-to-maturity," "trading," or "available-for-sale"
securities. Investments in debt securities have been classified as "held-to-
maturity," or "available-for-sale," and reported at amortized cost, which
approximates fair value, in the consolidated statement of financial position.
The financial statement impact of adopting SFAS No. 115 was not significant.
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PAGE 7
CSX CORPORATION AND SUBSIDIARIES
--------------------------------
Notes to Consolidated Financial Statements, Continued
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 4. 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. The restructuring charge
reduced net earnings for the first nine months of 1993 by $61 million, 59
cents per share. As of September 30, 1994, payments totaling $52 million have
been recorded as a reduction of the liability for the restructuring charge.
NOTE 5. ACCOUNTS RECEIVABLE
During 1993, the company issued $200 million of Trade Receivable
Participation Certificates ("Certificates"), at 5.05%, due September 1998.
The Certificates are collateralized by $234 million of accounts receivable
held in a 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 designated pools of accounts receivable up to
a maximum of $200 million. CSX has retained the collection and servicing
responsibility with respect to accounts receivable held in trust or sold.
At September 30, 1994 and December 31, 1993, accounts receivable have
been reduced by $372 million and $380 million, respectively, representing
Certificates and accounts receivable sold.
NOTE 6. OPERATING EXPENSE
Quarter Ended Nine Months Ended
------------------ ------------------
September 30, September 30,
1994 1993 1994 1993
-------- -------- -------- --------
Labor and Fringe Benefits $ 786 $ 761 $2,338 $2,275
Materials, Supplies and Other 571 540 1,680 1,590
Building and Equipment Rent 292 268 863 811
Inland Transportation 219 185 607 529
Depreciation 144 142 432 428
Fuel 108 90 308 306
Restructuring Charge --- --- --- 93
------ ------ ------ ------
Total $2,120 $1,986 $6,228 $6,032
====== ====== ====== ======
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PAGE 8
CSX CORPORATION AND SUBSIDIARIES
--------------------------------
Notes to Consolidated Financial Statements, Continued
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 7. OTHER INCOME (EXPENSE)
Quarter Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
1994 1993 1994 1993
-------- -------- ------- --------
Interest Income $ 12 $ 13 $ 40 $ 38
Gain on South Florida Track Sale --- --- 22 20
Net Gain on Investment Transactions 1 --- 3 15
Discount on and Servicing of
Accounts Receivable Sold (7) (2) (22) (10)
Minority Interest (5) (5) (13) (10)
Miscellaneous (7) (5) (19) (23)
------ ------ ------ ------
Total $ (6) $ 1 $ 11 $ 30
====== ====== ====== ======
NOTE 8. INCOME TAXES
The effective income tax rate for the third quarter and first nine
months of 1994 and 1993 reflects the federal statutory rate of 35 percent.
In the third quarter of 1993, the company revised its estimated
annual effective tax rate 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 December 31,
1992.
NOTE 9. ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
September 30, December 31,
1994 1993
------------- ------------
Trade Accounts Payable $ 883 $ 917
Labor and Fringe Benefits 548 523
Income Taxes and Other 367 332
Casualty Reserves 192 193
------ ------
Total $1,990 $1,965
====== ======
NOTE 10. COMMITMENTS AND CONTINGENCIES
Sea-Land Service, Inc. ("Sea-Land"), the container-shipping unit of
CSX, has entered into agreements for the construction of four high-
performance, fuel-efficient container vessels and the modification of three
Atlantic Class vessels in its current fleet. Estimated capital expenditures
for the total program are approximately $250 million over the next three
years.
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PAGE 9 CSX CORPORATION AND SUBSIDIARIES
--------------------------------
Notes to Consolidated Financial Statements, Continued
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 10. 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 from rail
operations and certain other operations, is provided by insurance companies
owned or partially owned by CSX.
CSX Transportation, Inc. ("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. Among the variables that management
must assess are imprecise and changing remedial cost estimates and continually
evolving governmental standards.
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. Liabilities are recorded when the company'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. 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. Such additional
liabilities could be significant to future consolidated results of operations
and cash flows. 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.
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PAGE 10
CSX CORPORATION AND SUBSIDIARIES
--------------------------------
Notes to Consolidated Financial Statements, Continued
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 10. COMMITMENTS AND CONTINGENCIES, Continued
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.
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PAGE 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
- ---------------------
Third-Quarter 1994 Compared With 1993
- --------------------------------------
The company reported net earnings for the third quarter ended
September 30, 1994, of $177 million, $1.68 per share, versus $63 million, 61
cents per share for the third quarter ended September 30, 1993. In the third
quarter of 1993, the company revised its estimated annual effective tax rate
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. Excluding the effect of
the corporate income tax rate change, earnings for the third quarter of 1993
would have been $117 million, $1.13 per share.
Operating revenue for the third quarter of 1994 was $2.5 billion, 10
percent above the prior-year quarter of $2.2 billion. Operating expense was
$2.1 billion for the third quarter of 1994, compared with $2 billion for the
third quarter of 1993. Operating income for the third quarter of 1994 was
$350 million versus $252 million in the third quarter of 1993.
Rail Unit Results
- -----------------
Operating income at the rail unit rose $64 million or 40 percent, to
$224 million for the third quarter of 1994, from $160 million in the prior-
year quarter. Driving the 1994 third-quarter results were double-digit
traffic gains in several commodity groups and the continued success of the
unit's cost-control and expense-reduction programs.
Rail revenue, at $1.1 billion for the third quarter of 1994, rose $85
million, or 8 percent, from the prior-year quarter. Echoing the continued
strength of the U.S. industrial sector, merchandise carloadings rose 6 percent
for the third quarter of 1994 overall and revenue increased a like amount.
The strongest revenue gains were achieved by a 20 percent increase in metals,
12 percent increase in minerals and an 11 percent increase in auto's over the
1993 third quarter.
Coal shipments rose 10 percent from the 1993 third quarter level to
39.5 million tons, as domestic utilities continued to build stockpiles that
were depleted from 1993's United Mine Workers strike and harsh weather
conditions of early 1994. Utility shipments increased to 26.1 million tons in
the third quarter of 1994 from 24.1 million tons in 1993's third quarter.
Export coal loadings strengthened, edging up 8 percent in 1994's third quarter
to 4 million tons, compared with 3.7 million tons in the prior-year quarter.
However, soft European demand for coal and competitive pressures continue to
limit demand for U.S. coal in the world market.
Rail operating expense was $923 million in the third quarter of 1994
compared with $902 million in the third quarter of 1993. Despite an 8 percent
increase in carloads handled, rail operating expense increased only 2 percent
over the expense level in the prior-year quarter. The control of operating
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PAGE 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, CONTINUED
RESULTS OF OPERATIONS, Continued
- --------------------------------
Rail Unit Results, Continued
- ----------------------------
expense resulted in an 80.5 percent operating ratio in the third quarter of
1994, a solid improvement over the prior-year third quarter operating ratio of
84.9 percent.
RAIL OPERATING INCOME
(Millions of Dollars)
-----------------------------
Quarter Ended Year-To-Date Ended
------------------ ------------------
September 30, Percent September 30, Percent
1994 1993 Change 1994 1993 Change
-------- -------- ------- ------- -------- -------
Operating Revenue
Merchandise $ 733 $ 693 6% $ 2,277 $ 2,152 6 %
Coal 384 340 13% 1,086 1,034 5 %
Other 30 29 3% 79 83 (5)%
------ ------ ------- --------
Total 1,147 1,062 8% 3,442 3,269 5 %
Operating Expense 923 902 2% 2,777 2,742 1 %
------ ------ ------- --------
Operating Income $ 224 $ 160 40% $ 665 $ 527 26 %
====== ====== ======= ========
Operating Ratio 80.5% 84.9% 80.7% 83.9%
====== ====== ======= ========
Container Shipping Unit Results
- -------------------------------
CSX's container-shipping unit, riding solid traffic gains in several
major trade lanes and benefiting from effective expense controls, generated
operating income of $78 million, 10 percent above 1993's third quarter of $71
million.
Operating revenue for the third quarter of 1994 grew 9 percent to
$920 million, compared with $846 million in the 1993 third quarter, as the
carrier realized strong volume gains in all areas except Alaska. Quarter-
over-quarter volume growth topped 20 percent in the Americas lanes and and 15
percent in the Asia/Middle East/Europe and Pacific trades. The average
revenue per container during the third quarter of 1994 was $2,355, modestly
lower than the $2,436 rate of the 1993 quarter.
The unit's operating expense tracked revenue growth, increasing 9
percent, to $842 million, in the quarter. Labor and fringe benefit expense
grew only slightly for the 1994 third quarter as a result of Sea-Land's
reorganization and restructuring efforts of recent years.
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PAGE 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, CONTINUED
RESULTS OF OPERATIONS, Continued
- --------------------------------
Intermodal Unit Results
- -----------------------
CSX's intermodal unit reported operating income of $17 million in the
third quarter of 1994 compared to 1993's third-quarter level of $16 million.
The unit posted an 11 percent increase in traffic during the 1994 third
quarter, and revenue grew 12 percent over the same period. However, the
start-up expense associated with the launch of its new, direct Chicago-New
York service and additional service in a key corridor limited the unit's
operating income growth to 6 percent for the third quarter of 1994 over its
results for the third quarter of 1993.
Barge Unit Results
- ------------------
The barge unit rebounded dramatically from the flood-impacted 1993
third quarter to produce operating income of $16 million versus $3 million in
the third quarter of 1993. Tonnage handled during the third quarter of 1994
rose 41 percent from the prior year third quarter to a more normal level of
15.7 million tons. Scrap metal, steel products and bulk commodities other
than grain continued their solid performances. Grain shipments remained light
in the third quarter of 1994, but have since strengthened significantly as
unprecedented corn and soybean harvests have driven fourth-quarter and early
1995 barging rates higher.
First Nine Months 1994 Compared to 1993
- ---------------------------------------
For the first nine months ended September 30, 1994, the company
reported net earnings of $413 million, $3.94 per share versus $208 million,
$2.00 per share for the nine months ended September 30, 1993. The 1993
results included a pretax charge of $93 million, $61 million after tax, 59
cents per share, which solely related to the restructuring of certain
operations and functions at Sea-Land Service Inc., CSX's wholly-owned
container-shipping subsidiary and the $54 million, 52 cents per share impact
of the corporate income tax rate change. Exclusive of these items, earnings
for the first nine months of 1993 would have been $323 million, $3.11 per
share.
The results for the first nine months of 1994 reflect the continued
strength of the U.S. economy and the improving economic conditions abroad.
The improving economic conditions increased the demand for CSX transportation
services. In addition, the long-term efforts to reduce expense and improve
productivity resulted in a $154 million increase in operating income compared
to the prior period, excluding the 1993 pretax charge of $93 million.
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PAGE 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, CONTINUED
FINANCIAL CONDITION
- -------------------
Cash, cash equivalents and short-term investments totaled $650
million at September 30, 1994, an increase of $151 million since December 31,
1993. Primary sources of cash, cash equivalents and short-term investments
were operations and the issuance of short-term debt. Primary uses of cash,
cash equivalents and short-term investments were property additions, repayment
of long-term debt, payment of dividends and payments relating to
productivity/restructuring charge liabilities.
During the first nine months of 1994, net investing activities
consumed $446 million of cash and cash equivalents compared with $482 million
consumed in the first nine months of 1993. The changes in investing
activities were primarily due to a lower level of purchases of long-term
marketable securities compared to the nine months ended September 30, 1993.
Financing activities used $182 million of cash and cash equivalents
for the nine months ended September 30, 1994. This was a $217 million change
from the first nine months of 1993. The change was primarily due to a
reduction in proceeds from net short-term borrowings, an increase in the
company's cash dividends paid per common share, a reduction in scheduled debt
repayments, and a partial redemption of the company's 9 1/2% Sinking Fund
Debentures due July 1, 2016. The company redeemed $100 million of the $250
million principal amount outstanding on July 1, 1994.
The working capital deficit, current ratio, debt ratio, and ratio of
earnings to fixed charges all improved during the nine months ended September
30, 1994. A working capital deficit is not unusual for CSX and does not
indicate a lack of liquidity. CSX continues to maintain adequate current
assets to satisfy current liabilities when they are due and has sufficient
liquidity and financial resources to manage its day-to-day cash needs. For
the full year, CSX does not expect significant changes in working capital,
property additions, or debt levels from the prior year.
FINANCIAL DATA
- --------------
(Millions of Dollars)
-----------------------------
September 30, December 31,
1994 1993
------------- ------------
Cash, Cash Equivalents and
Short-Term Investments $ 650 $ 499
Commercial Paper Outstanding -
Short-Term $ 344 $ 164
Commercial Paper Outstanding -
Long-Term $ 300 $ 300
Working Capital (Deficit) $(573) $(704)
Current Ratio .76 .69
Debt Ratio 45% 49%
Ratio of Earnings to Fixed Charges 2.8x 2.3x
- 14 -
PAGE 15
OUTLOOK
- -------
In the fourth quarter of 1994, each of CSX's major transportation
units continue to anticipate favorable revenue levels compared with 1993. The
higher revenue levels are expected to result from the strong domestic economy.
The company also plans to continue the intense focus on productivity
improvements and expense control throughout its transportation units.
Entering the fourth quarter of 1994, CSXT is experiencing solid
demand for domestic coal shipments as U.S. utilities continue to rebuild
inventories depleted by 1993's United Mine Workers strikes and the harsh
winter conditions of early 1994. Export coal shipments, however, will
continue to be affected by soft European demand and foreign competition.
CSXT merchandise traffic, reflecting the underlying strength of the U.S.
industrial sector, is expected to remain strong for the remainder of the
year.
CSXT will monitor and be actively involved in industrywide labor
contract negotiations which are expected to begin in late 1994. These
negotiations have traditionally taken place over a number of months and have
not resulted in any extended work stoppages.
Sea-Land anticipates traffic flows in the fourth quarter of 1994 in
nearly all of its trade lanes will surpass prior-year fourth quarter levels.
Strong demand for ocean transportation should allow Sea-Land to select higher-
rated traffic. A more stable rate environment is expected throughout the
industry.
CSX Intermodal expects sustained strong levels of shipments and
revenue during the remaining months of 1994. The unit continues to benefit
from growth in the general economy as well as market share gains.
With the expectation of a healthy grain harvest in the fourth
quarter, American Commercial Lines anticipates stronger demand for its
services and with this demand, recovery of barge rates.
The state of Florida has notified CSXT of its intention to redeem the
remaining amounts due on its installment purchase of 80 miles of track and
right-of-way as of December 1, 1994. If consummated, the December 1, 1994
redemption would result in proceeds of approximately $100 million and the
recognition of a pretax deferred gain of approximately $60 million.
OTHER MATTERS
- -------------
Sea-Land is planning to integrate the corporate functions of its
global organization and has announced it will consolidate these activities in
Charlotte, North Carolina. Activities currently based in Elizabeth and
Liberty Corner, New Jersey, Rotterdam, The Netherlands, and Seattle,
Washington would be affected. The financial impact of the consolidation has
not been determined. The consolidation may result in a fourth quarter pretax
charge that may significantly reduce Sea-Land's operating results.
- 15 -
PAGE 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
1. None.
(b) Reports on Form 8-K
1. None.
SIGNATURE
---------
Pursuant to the requirements 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.
CSX CORPORATION
(Registrant)
By: GREGORY R. WEBER
------------------------------
Gregory R. Weber
Vice President, Controller and
Treasurer
Dated: October 28, 1994 (Principal Accounting Officer)
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EPS are based on the weighted average of common shares outstanding for the nine
months ended September 30, 1994.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 494
<SECURITIES> 156
<RECEIVABLES> 812
<ALLOWANCES> 0
<INVENTORY> 190
<CURRENT-ASSETS> 1,856
<PP&E> 16,116
<DEPRECIATION> 5,258
<TOTAL-ASSETS> 13,699
<CURRENT-LIABILITIES> 2,429
<BONDS> 2,953
<COMMON> 105
0
0
<OTHER-SE> 3,406
<TOTAL-LIABILITY-AND-EQUITY> 13,699
<SALES> 0
<TOTAL-REVENUES> 7,068
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,228
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 207
<INCOME-PRETAX> 644
<INCOME-TAX> 231
<INCOME-CONTINUING> 413
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 413
<EPS-PRIMARY> 3.94
<EPS-DILUTED> 0
</TABLE>
