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 29, 1995
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 29, 1995: 105,242,305 shares.
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PAGE 2
CSX CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 1995
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1:
Financial Statements
1. Consolidated Statement of Earnings-
Quarters and Nine Months Ended
September 29, 1995 and September 30, 1994 3
2. Consolidated Statement of Cash Flows-
Nine Months Ended September 29, 1995 and
September 30, 1994 4
3. Consolidated Statement of Financial Position-
At September 29, 1995 and December 30, 1994 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
---------------------- ----------------------
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
1995 1994 1995 1994
-------- -------- -------- --------
Operating Revenue
Transportation $ 2,605 $ 2,391 $ 7,602 $ 6,926
Non-Transportation 60 79 131 142
------- ------- ------- -------
Total 2,665 2,470 7,733 7,068
------- ------- ------- -------
Operating Expense
Transportation 2,239 2,076 6,622 6,123
Non-Transportation 44 44 106 105
Restructuring Charge --- --- 257 ---
------- ------- ------- -------
Total 2,283 2,120 6,985 6,228
------- ------- ------- -------
Operating Income 382 350 748 840
Other Income (Expense) 7 (6) (2) 11
Interest Expense 68 69 203 207
------- ------- ------- -------
Earnings before
Income Taxes 321 275 543 644
Income Tax Expense 119 98 201 231
------- ------- ------- -------
Net Earnings $ 202 $ 177 $ 342 $ 413
======= ======= ======= =======
Earnings Per Share $ 1.92 $ 1.68 $ 3.25 $ 3.94
======= ======= ======= =======
Average Common Shares
Outstanding (Thousands) 105,202 104,731 105,103 104,629
======= ======= ======= =======
Common Shares
Outstanding (Thousands) 105,242 104,744 105,242 104,744
======= ======= ======= =======
Cash Dividends Paid Per
Common Share $ .44 $ .44 $ 1.32 $ 1.32
======= ======= ======= =======
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
-----------------------
Sept. 29, Sept. 30,
1995 1994
--------- ---------
OPERATING ACTIVITIES
Net Earnings $ 342 $ 413
Adjustments to Reconcile Earnings
to Cash Provided
Depreciation 446 431
Deferred Income Taxes (57) 115
Restructuring Charge 257 ---
Productivity/Restructuring Charge Payments (117) (103)
Other Operating Activities 75 42
Changes in Operating Assets and Liabilities
Accounts Receivable (98) (62)
Materials and Supplies (14) 10
Other Current Assets (10) 15
Accounts Payable and Other Current Liabilities 140 (37)
----- ----
Cash Provided by Operating Activities 964 824
----- ----
INVESTING ACTIVITIES
Property Additions (819) (517)
Other Investing Activities 39 71
----- ----
Cash Used by Investing Activities (780) (446)
----- ----
FINANCING ACTIVITIES
Short-Term Debt - Net (46) 180
Long-Term Debt Issued 115 53
Long-Term Debt Repaid (95) (287)
Dividends Paid (139) (138)
Other Financing Activities 5 10
----- -----
Cash Used by Financing Activities (160) (182)
----- -----
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Increase in Cash and Cash Equivalents 24 196
Cash and Cash Equivalents at Beginning of Period 265 298
----- -----
Cash and Cash Equivalents at End of Period 289 494
Short-Term Investments at End of Period 274 156
----- -----
Cash, Cash Equivalents and Short-Term
Investments at End of Period $ 563 $ 650
===== =====
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 29, December 30,
1995 1994
------------- ------------
ASSETS
Current Assets
Cash, Cash Equivalents and
Short-Term Investments $ 563 $ 535
Accounts Receivable 811 706
Materials and Supplies 225 211
Deferred Income Taxes 139 151
Other Current Assets 72 62
------- -------
Total Current Assets 1,810 1,665
------- -------
Properties and Other Assets
Properties 16,654 16,315
Less Accumulated Depreciation 5,466 5,271
------- -------
Properties - Net 11,188 11,044
Affiliates and Other Companies 319 302
Other Assets 711 713
------- -------
Total Properties and Other Assets 12,218 12,059
------- -------
Total Assets $14,028 $13,724
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Other
Current Liabilities $ 2,122 $ 1,992
Current Maturities of Long-Term Debt 387 312
Short-Term Debt 155 201
------- -------
Total Current Liabilities 2,664 2,505
------- -------
Long-Term Debt 2,564 2,618
------- -------
Deferred Income Taxes 2,505 2,570
------- -------
Long-Term Liabilities and Deferred Gains 2,306 2,300
------- -------
Shareholders' Equity
Common Stock 105 105
Other Capital 1,418 1,368
Retained Earnings 2,599 2,391
Minimum Pension Liability Adjustment (133) (133)
------- -------
Total Shareholders' Equity 3,989 3,731
------- -------
Total Liabilities and Shareholders' Equity $14,028 $13,724
======= =======
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 29, 1995 and December 30, 1994, the results
of its operations for the quarters and nine months ended September 29, 1995
and September 30, 1994, and its cash flows for the nine months ended September
29, 1995 and September 30, 1994, such adjustments being of a normal recurring
nature.
Earnings per share are based on the weighted average of common shares
outstanding for the third quarters and nine months ended September 29, 1995
and September 30, 1994. Dilution for the quarters and nine months ended
September 29, 1995 and September 30, 1994, 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 1995
presentation.
NOTE 2.RESTRUCTURING CHARGE
In the second quarter, the company recorded a $257 million pretax
restructuring charge, $160 million after-tax, $1.52 per share, to recognize
the cost of initiatives undertaken to revise, restructure, and consolidate
specific operations and administrative functions at its rail and container-
shipping units. The initiatives resulted in a $163 million write-down of
telecommunications assets rendered obsolete and will further result in
separation payments totaling $80 million to approximately 800 affected
employees and $14 million of lease and facility-related exit costs.
The rail unit initiative represented $196 million of the total
restructuring charge, covering the write-down of assets and cost of employee
separations associated with a contractual agreement with AT&T Solutions
("AT&T") to replace, manage, and technologically enhance the unit's existing
private telecommunications network. Under the agreement, which was effective
May 1, 1995, AT&T will supply and manage new technology, thereby rendering the
unit's existing telecommunications assets commercially obsolete. The unit
will be obligated to pay minimum charges of approximately $330 million in
equal annual amounts over the next ten years.
The commercially obsolete assets represent the internal company-wide
telecommunications network including the unit's existing microwave and fiber
optic communications systems, portable radios, and road and yard communication
pole line distribution systems. AT&T will provide wireless communications
technology over its existing network to replace the rail unit's network.
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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 2.RESTRUCTURING CHARGE, Continued
After the phase-in of this technology, AT&T will retain ownership of its
equipment and will grant CSX access to the equipment and the network. The
commercially obsolete assets have no alternative use and their net realizable
value as an obsolete company-wide telecommunications network is not
significant. As a result of the agreement with AT&T, the net book value of
the assets being replaced was reduced by $163 million.
The restructuring initiatives at the container-shipping unit include
its global integration program and the reflagging of five U.S.-flag vessels to
the registry of the Marshall Islands in accordance with approval received from
the Federal Maritime Administration. The global integration program accounted
for $31 million of the total restructuring charge and represented employee
separation and facility exit costs associated with the global consolidation of
senior management functions and relocation of its corporate headquarters to
Charlotte, North Carolina, as well as the integration of its information
technology requirements. The vessel reflagging initiative represented
$30 million of the total restructuring charge, primarily related to the cost
of crew separations on the five vessels.
The $80 million total provision for separation and labor protection
payments under the rail and container-shipping initiatives was based upon
existing collective bargaining agreements with members of clerical,
electrical, and signal crafts and seafarer trades. The company expects 90% of
the affected employees to be impacted within one year and the remaining 10% to
be impacted within four to five years. Through September 29, 1995, 514
employee separations have been finalized and payments totaling $15 million
have been made.
NOTE 3.ACCOUNTS RECEIVABLE
The company has issued $200 million of Trade Receivable Participation
Certificates ("Certificates"), at 5.05%, due September 1998. The Certificates
are collateralized by $243 million of accounts receivable held in a master
trust.
In addition, the company has an agreement 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 to a financial
institution. At September 29, 1995 and December 30, 1994, accounts receivable
sold under this agreement totalled $172 million.
CSX has retained the collection and servicing responsibility with
respect to accounts receivable held in trust or sold. The receivables sold
and represented by Certificates issued have been reflected as reductions of
"Accounts Receivable" in the Consolidated Statement of Financial Position.
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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 4.OPERATING EXPENSE
Quarter Ended Nine Months Ended
------------------- -------------------
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
1995 1994 1995 1994
--------- --------- --------- ---------
Labor and Fringe Benefits $ 823 $ 786 $2,441 $2,338
Materials, Supplies and Other 665 571 1,920 1,680
Building and Equipment Rent 288 292 859 863
Inland Transportation 242 219 708 607
Depreciation 150 144 448 432
Fuel 115 108 352 308
Restructuring Charge --- --- 257 ---
------ ------ ------ ------
Total $2,283 $2,120 $6,985 $6,228
====== ====== ====== ======
NOTE 5.OTHER INCOME (EXPENSE)
Quarter Ended Nine Months Ended
------------------- --------------------
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
1995 1994 1995 1994
--------- --------- --------- ----------
Interest Income $ 19 $ 12 $ 48 $ 40
Gain on South Florida Track Sale --- --- --- 22
Net Costs for Accounts Receivable Sold (8) (7) (24) (22)
Minority Interest (8) (5) (19) (13)
Equity Earnings of Other Affiliates (1) (2) (4) (8)
Miscellaneous 5 (4) (3) (8)
------ ------ ------ ------
Total $ 7 $ (6) $ (2) $ 11
====== ====== ====== ======
NOTE 6.ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
September 29, December 30,
1995 1994
--------- ------------
Trade Accounts Payable $ 960 $ 926
Labor and Fringe Benefits 542 543
Income Taxes and Other 425 337
Casualty Reserves 195 186
------ ------
Total $2,122 $1,992
====== ======
NOTE 7.COMMITMENTS AND CONTINGENCIES
As part of the restructuring initiative, CSX Transportation, Inc.
("CSXT") entered a contractual agreement with AT&T to replace and
technologically enhance its existing private telecommunications network. The
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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 7.COMMITMENTS AND CONTINGENCIES, Continued
agreement was executed during the second quarter of 1995, and requires minimum
payments totaling approximately $330 million over its ten-year term.
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 for rail and certain other operations, is provided by companies
owned or partially owned by CSX.
CSXT is a party in various proceedings involving private parties and
regulatory agencies related to environmental issues. CSXT has been identified
as a potentially responsible party ("PRP") in a number of investigations and
actions relating to 106 environmentally impaired sites that are or may be
subject to remedial action under the Federal Superfund Statute ("Superfund")
or corresponding state statutes. Many 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 or corresponding state statutes 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 most sites is extremely complex. Cost estimates are based on information
available for each site, financial viability of other potentially responsible
parties, where available, and existing technology, laws and regulations.
CSXT's best estimate of the allocation method and percentage of liability when
other potentially responsible parties are involved are based on assessments by
consultants, agreements among potentially responsible parties, or
determinations by the EPA or other regulatory agencies.
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. The ultimate
liability for remediation is difficult to determine with certainty because of
the number of and creditworthiness of PRPs involved. Through the assessment
process, CSXT monitors the creditworthiness of such PRPs in determining
ultimate liability.
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
September 29, 1995, and December 30, 1994, were $136 million and $140 million,
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PAGE 10
NOTE 7.COMMITMENTS AND CONTINGENCIES, Continued
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 September 29, 1995
environmental liability is expected to be paid out over the next five years,
funded by cash generated from operations.
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. In addition, latent
conditions at any given location could result in exposure, the amount and
materiality of which cannot presently be reliably estimated. 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 and that the ultimate liability for these
matters will not materially affect its overall results of operations and
financial condition.
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 1995 Compared With 1994
- --------------------------------------
The company reported net earnings for the third quarter ended
September 29, 1995, of $202 million, $1.92 per share, versus $177 million,
$1.68 per share for the third quarter ended September 30, 1994.
Operating revenue for the third quarter of 1995 was $2.7 billion, 8%
above the prior year quarter of $2.5 billion, resulting primarily from higher
rail, container-shipping and barge volumes and an improved rate environment.
Operating expense was $2.3 billion for the third quarter, 10% higher than the
$2.1 billion reported for the third quarter of 1994. Operating income was
$382 million for the third quarter of 1995, up $32 million from 1994's third
quarter.
Rail Unit Results
- -----------------
CSX's rail unit achieved its sixth consecutive record quarter,
excluding the effect of the restructuring charge recorded in the second
quarter of 1995. Third quarter operating income was $269 million, up 20
percent from 1994's $224 million quarter.
The unit held operating expense flat while handling a 2 percent
increase in carloads. Operating revenue rose 4 percent, to $1.2 billion,
resulting in a quarterly operating ratio of 77.4 percent--the unit's best to
date.
Traffic was strong across virtually all major commodity groups.
Merchandise traffic rose 4 percent, led by gains in chemicals, agricultural
products, and phosphates and fertilizer. Overall, coal volume rose 2 percent
in the quarter to 40.2 million tons, with strong export coal movements more
than offsetting a slight decline in domestic coal traffic.
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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
- ----------------------------
RAIL OPERATING INCOME
(Millions of Dollars)
-----------------------------
Quarter Ended Nine Months Ended
------------------- ------------------
Sept. 29, Sept. 30, Percent Sept. 29, Sept. 30, Percent
1995 1994 Change 1995 1994 Change
-------- --------- ------- ------- -------- -------
Operating Revenue
Merchandise $ 767 $ 733 5% $ 2,363 $ 2,277 4%
Coal 388 384 1% 1,133 1,086 4%
Other 36 30 20% 100 79 27%
------ ------ ------- -------
Total 1,191 1,147 4% 3,596 3,442 4%
Operating Expense 922 923 --- 3,007 2,777 8%
------ ------ ------- -------
Operating Income $ 269 $ 224 20% $ 589 $ 665 (11)%
====== ====== ======= =======
Operating Income (a) $ 269 $ 224 20% $ 785 $ 665 18%
====== ====== ======= =======
Operating Ratio 77.4% 80.5% 83.6% 80.7%
====== ====== ======= =======
Operating Ratio (a) 77.4% 80.5% 78.2% 80.7%
====== ====== ======= =======
(a)Pro forma basis, excluding $196 million restructuring charge.
Container-Shipping Unit Results
- -------------------------------
The container-shipping unit generated operating income of $70
million, down from $78 million for 1994's third quarter. The decrease was
largely due to $13 million of relocation expenses associated with the unit's
global integration initiative and $8 million in casualty losses and other
expenses related to a ship collision.
The unit achieved record third quarter operating revenue of $1.03
billion, 12 percent higher than the 1994 period. Contributing to the record
revenue were a 6 percent increase in volume and higher average rates per
container in all major trade lanes.
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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
- -----------------------
The company's intermodal unit's operating revenue was up 1 percent to
$233 million in the quarter on a 2 percent decline in volume. Domestic volume
declined 4 percent while international traffic rose 1 percent. Operating
expense for the quarter was $228 million, versus $213 million in the prior-
year period, primarily due to higher volume on the western portion of the
intermodal unit's network and the continuing expense to maintain service
levels in the East.
Barge Unit Results
- ------------------
The company's barge unit more than doubled its operating income to
$36 million from $16 million in the prior-year quarter. Operating revenue
rose 33 percent over the 1994 period to $152 million, reflecting strong rates
as well as surging demand for transportation of grain and other bulk
commodities in the inland waterway system. Operating expense increased 18
percent over the prior-year quarter to $116 million, as the company took steps
to expand capacity in response to favorable market conditions.
First Nine Months 1995 Compared to 1994
- ---------------------------------------
For the first nine months of 1995, CSX earned $342 million, $3.25 per
share. Excluding the effect of the second-quarter, $257 million pretax
restructuring charge previously discussed, earnings for the first nine months
of 1995 would have been $502 million, $4.77 per share, up 22 percent from the
1994 period. In the first nine months of 1994, CSX earned $413 million, $3.94
per share.
The results for the first nine months of 1995 reflect the success of
the company's efforts to reduce costs, improve service and profitably respond
to growth opportunities and increased demand. In addition, the strength of
the domestic and global economies have positively impacted the year-to-date
results for 1995.
FINANCIAL CONDITION
- -------------------
Cash, cash equivalents and short-term investments totaled $563
million at September 29, 1995, an increase of $28 million since December 30,
1994. 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. Primary
sources of cash, cash equivalents and short-term investments were operations
and the issuance of long-term debt.
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PAGE 14
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, CONTINUED
FINANCIAL CONDITION, Continued
- ------------------------------
During the first nine months of 1995, net investing activities
consumed $780 million of cash and cash equivalents compared with $446 million
consumed in the first nine months of 1994. The increase in investing
activities was primarily due to the timing of property additions compared to
the nine months ended September 30, 1994.
Financing activities used $160 million of cash and cash equivalents
for the nine months ended September 29, 1995. This was a $22 million decrease
from the $182 million of cash used by financing activities in the first nine
months of 1994. The change was primarily due to a reduction in proceeds from
net short-term borrowings, an increase in proceeds from the issuance of long-
term debt, and a decrease in the repayment of long-term debt.
The working capital deficit increased $14 million during the nine
months ended September 29, 1995. The increase in the working capital deficit
was primarily due to an increase in trade accounts payable and income and
other taxes payable and an increased level of current maturities of long-term
debt. 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 or debt levels from
the prior year. Property additions for the full year are expected to be
approximately $100 million higher than 1994.
FINANCIAL DATA
- --------------
(Millions of Dollars)
-------------------------------
September 29, December 30,
1995 1994
------------- ------------
Cash, Cash Equivalents and
Short-Term Investments $ 563 $ 535
Commercial Paper Outstanding -
Short-Term $ 155 $ 201
Commercial Paper Outstanding -
Long-Term $ 300 $ 300
Working Capital (Deficit) $(854) $(840)
Current Ratio .68 .66
Debt Ratio 39% 41%
Ratio of Earnings to Fixed Charges 2.6x (a) 3.1x
(a) Excluding the pre-tax restructuring charge of $257 million, the ratio
of earnings to fixed charges would have been 3.4x for the nine months
ended September 29, 1995.
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PAGE 15
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, CONTINUED
OUTLOOK
- -------
During the fourth quarter of 1995, each of CSX's transportation units
anticipates favorable revenue levels compared with 1994. The higher revenue
levels are expected to result from strong demand for transportation services
and a stable 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 1995, the rail unit is experiencing
solid demand for export coal shipments as U.S. producers take advantage of
increased economic activity abroad. Merchandise traffic is expected to
maintain its strength over the remainder of the year. Additionally, the rail
unit anticipates continuing benefits from its cost reduction efforts.
The rail unit continues to monitor and be actively involved in on-
going industrywide labor contract negotiations. These negotiations have
traditionally taken place over a number of months and have not resulted in any
extended work stoppages.
The container-shipping unit anticipates solid traffic flows in the
fourth quarter of 1995 in all of its trade lanes. Strong demand for ocean
transportation should allow the unit to select higher-rated traffic. The unit
expects to incur an additional $4 million to $6 million in relocation and
training expenses during the remainder of 1995 associated with its global
integration initiative.
The intermodal unit expects lower domestic trailer volumes to
continue in the fourth quarter due to motor carrier competition. The unit
will continue to benefit from stronger international traffic revenue. The
unit has initiated cost reduction efforts in response to the motor carrier
competition.
The barge unit anticipates continued demand for its services,
resulting particularly in export grain shipments. With this demand, strong
barge rates are expected to continue in 1995.
OTHER MATTERS
- -------------
At its October 11, 1995 meeting, the Board of Directors approved a
two-for-one split of the company's common stock. Shareholders of record as of
December 4, 1995 will receive one new share of common stock for every share
they own on that date. Distribution of new shares will start December 21,
1995.
The company is assessing any potential impact of the provisions of
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which it expects to adopt for its fiscal year ending December 27, 1996. The
company has not completed a determination as to whether or not indicators of
impairment of long-lived assets are present in its operating units.
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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)
/s/ GREGORY R. WEBER
------------------------------
Gregory R. Weber
Vice President, Controller and
Treasurer
Dated: November 7, 1995 (Principal Accounting Officer)
- 16 -
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EPS are based on the weighted average of common shares outstanding for the
nine months ended September 29, 1995.
</LEGEND>
<MULTIPLIER> 1,000,000
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0
0
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