CSX Annual Report 2023 | Quarterlytics

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FY2023 Annual Report · CSX

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Annual
Report

2023

In This Report

Message from the CEO

Powered to Perform

Financial Performance

Safety Performance

Service Performance

Growth Opportunities

Environmental, Social and Governance

Board of Directors

Executive Management

Message from the CEO

Dear Fellow
Shareholders,

Fueled by innovation, service excellence and an

increasingly engaged workforce, CSX delivered

solid results in 2023, as we advanced our strategy

of expanding the role of rail in the U.S. supply chain.

We provided reliable, industry-leading service to our

customers. We signifi cantly improved our safety

performance. And we achieved overall volume growth

in our Merchandise and Coal market segments that

outpaced the industrial economy. This allowed us to

fi nish the year in a robust fi nancial position, even as

softness in certain commodity markets contributed to

year-over-year declines in revenue and earnings.

Our 2023 successes were a tribute to the dedication

of our employees, who embraced our ONE CSX cultural

transformation that is building trust and teamwork

across the company. We made tremendous progress

on our many initiatives to improve the work experience

for all employees by responding to their feedback and

implementing policies and practices that demonstrate

our respect for the value they create for our company.

Strengthening our ONE CSX workforce is a fundamental

part of our strategy to grow our business by providing

customers with dependable service performance and

solutions that allow us to increase our share of the

freight transportation market. At the same time, we are

implementing new technologies to enhance safety and

improve the customer experience, and we are continuing

to pursue environmental initiatives that increase fuel

effi ciency, reduce emissions and help our customers

achieve their supply chain sustainability goals.

These strategies helped drive our business performance

in 2023. Growth in our merchandise shipments eff ectively

mitigated adverse revenue impacts caused by diminished

income from fuel surcharges, pricing declines in export

coal due to the impact of lower benchmark rates and

other supplemental charges, as well as a revenue

gain in 2022 from a property sale agreement with the

Commonwealth of Virginia. These factors contributed

to a 1% decline in revenue and an 11% decrease in net

earnings for the year.

Among the highlights of our growth strategy in 2023

were the introduction of innovative new service solutions,

such as the expanding use of ISO-tank equipment

through our Quality Carriers business, which provides

a fast, effi cient connection to our intermodal product

for chemicals customers, and the expansion of our

TRANSFLO transloading service that has nearly 50

active terminals across our network, so customers can

ship bulk commodities by rail to supply destinations

that aren’t rail-served. We also benefi ted from an

expanding number of new customer facilities that

We are pleased with our 2023 safety improvement,

and technologies. We expanded and accelerated

continue to locate on CSX lines through the excellent

which included fi nishing the year with one of the

deployment of wayside defect detection sensors,

work of our industrial development team and our

strongest quarters for safety in our company’s history.

strengthened analysis of data gathered by remote

best-in-class CSX Select Site program.

In the fourth quarter, our rate of reportable personal

sensors and committed $1.7 billion of last year’s

injuries improved 44% and our train accident rate

$2.3 billion capital budget to essential track, bridge

Superior service was the foundation of our growth

improved 46% from the previous quarter. Altogether,

and signal projects that support the consistent, safe

initiatives, as we regained or surpassed pre-pandemic

for the full year 2023, we achieved a 12% year-over-year

operations of our network. We are also continuing

levels in multiple performance metrics. The scheduled

reduction in our FRA personal injury rate and a

to explore new technologies to supplement those

railroading operating principles implemented over the

1% improvement in our train accident rate. While these

we are already using to increase the frequency and

past seven years, along with a successful crew hiring

statistics show progress, we are also deeply saddened

thoroughness of our inspections of infrastructure

campaign, helped lead our service gains, while the

by the loss of three CSX employees who were fatally

and equipment.

ONE CSX initiatives to improve the employee experience

injured during workplace incidents in 2023. Their lives

put us on a course for continued progress.

cannot be replaced, but we have dedicated our safety

Entering 2024, we are excited about our company’s

In 2023, we became the fi rst Class I railroad to reach

improvement to their memory.

future and looking forward to delivering the growth

and ongoing safety and service improvements made

agreements with rail labor unions that provide paid sick

CSX always regards safe operations as our foremost

possible by our ONE CSX workforce.
possible by our ONE CSX workforce.

leave for our represented employees. We also revised our

responsibility, and in 2023, we heightened our focus

attendance policy for operations employees to encourage

following a high-profi le train accident on another

more ﬂ exibility and foster a coaching-oriented approach.

Class I railroad. The East Palestine, Ohio, incident

And we enhanced our supervisor training with stronger

prompted increased public scrutiny of rail safety,

emphasis on collaboration and communication.

and we responded with a thorough review and several

enhancements to our accident-prevention programs

Joe Hinrichs
Joe Hinrichs
President and Chief Executive Offi cer

Powered to

Perform

CSX Revenue Mix

59%
Merchandise

CSX brings on-time delivery,

first-class service and a

seamless shipping experience

to customers across an

extensive network that reaches

nearly two-thirds of the U.S.

population and a diverse set of

consumers and industrial end

markets. A leading supplier of

rail-based freight transportation,

CSX is powered to deliver

17%
Coal

comprehensive service solutions.

14%
Intermodal

6%
Trucking

4%
Other

30%
Chemicals

19%
Agricultural and
Food Products

14%
Automotive

12%
Forest Products

11%
Metals and Equipment

8%
Minerals
6%
Fertilizers

A leading supplier of rail-based freight
transportation, CSX is powered to deliver
comprehensive service solutions.

CSX Network

PORTLAND

SYRACUSE
SYRACUSE

BUFFALO

SELKIRK
SELKIRK

CHICAGO

TOLEDO

CLEVELAND
CLEVELAND

DETROIT

AVONAVON

WILLARD
WILLARD

COLUMBUS
COLUMBUS

CINCINNATI
CINCINNATI

RUSSELL
RUSSELL

PITTSBURGH
PITTSBURGH

CUMBERLAND
CUMBERLAND

BALTIMORE

LOUISVILLE
LOUISVILLE

NASHVILLE
NASHVILLE

MEMPHIS
MEMPHIS

BIRMINGHAM

ATLANTA
ATLANTA

RICHMOND

ROCKY MOUNT

HAMLET
HAMLET

FLORENCE

CHARLESTON

MONTGOMERY
MONTGOMERY

SAVANNAH

WAYCROSS

JACKSONVILLE

MOBILE

NEW ORLEANS

TAMPA

MAJOR TERMINAL

CSX RAIL SERVICE

CSX OPERATING
AGREEMENT

Financial Performance

Safety Performance

$14,853

(FRA) Personal Injury Frequency Index was

In a year of many challenging economic trends,

Revenue (millions)

CSX delivered solid financial results in 2023.

The effects of stronger merchandise pricing

and higher merchandise and coal volume, which

grew 2% and 8%, respectively, compared to

2022, were offset by lower intermodal storage

revenue, reduced fuel surcharge, the effects of

softer global benchmark coal prices and weaker

intermodal volume. For the full year, revenues

declined by 1%, operating income decreased by

2022

2023

$14,657

-1%

Operating Income (millions)

8%, and earnings per share were 5% lower vs.

2022

2022. Last year’s results included $144 million in

pre-tax gains from the property sale agreement

$6,023

with the Commonwealth of Virginia.

2023

$5,561

-8%

Net Earnings
(millions)

Operating Ratio

Merchandise
Volume (thousands)

Merchandise
Revenue (millions)

$4,166

$3,715

62.1%

59.5%

2,558

2,621

$8,239

$8,653

2022

2023

2022

2023

2022

2023

2022

2023

-11%

260 bps
increase

CSX employees continued to display their

the company’s first responder training program

commitment to our safety-focused culture in 2023.

reached more than 6,000 people in communities

The company’s Federal Railroad Administration

throughout its rail network.

0.89 per 100,000 employees, which was a 12%

These investments and more demonstrate CSX’s

improvement over 2022. The FRA Train Accident

commitment to safety and protecting its employees,

Rate was 3.32, a 1% improvement over the prior

communities and customers.

year. The improvement in CSX’s safety results

can be attributed to the company’s continued

investment in infrastructure, technology, training

and personnel.

FRA Train Accident Rate

2022

2023

In 2023, CSX invested $1.7 billion in track, bridge

and signal projects, out of a total $2.3 billion capital

3.37

3.32

budget. The company also made key technology

FRA Personal Injury Frequency Index

2022

2023

1.01

0.89

12%

investments, including second-generation hot

bearing detectors, which provide more accurate

temperature measurements of train bearings and

are more effective at preventing accidents. CSX also

invested in autonomous track testing cars, which

can allow key lines to be inspected as often as twice

per week versus twice per year when relying only on

manual methods. Other technology projects included

automated train inspection portals, a drone safety

program and next-generation Positive Train Control

system enhancements.

CSX’s 2023 safety investment also extended to

its employees. Among its several initiatives, the

company assigned additional mentors to reinforce

fundamental safety practices with its newly hired

employees and also provided more comprehensive

risk assessment resources and training. In addition,

Service Performance

Growth Opportunities

CSX reached new levels of service performance

Train Velocity (miles per hour)

in 2023, and remains focused on continual

improvement. At year-end 2023, velocity and

2022

2023

dwell improved by 12% and 17% respectively,

16.1

18.0

compared to the previous year. The company

also saw a substantial enhancement in carload

trip plan performance, which rose to 84%

Terminal Car Dwell (hours per car)

from 64%. Likewise, intermodal trip plan

2022

2023

performance strengthened to 95% from a

90% average in 2022. Overall, 2023 marked

a significant year for the consistency of

CSX’s service, with visible improvement

across key service metrics that was recognized

by our customers.

We believe that it is our company’s unique

combination of a robust operating model and

employees who strive for excellence in safety,

service and efficiency—underpinned by the

ONE CSX culture—that is the primary drivers

of CSX’s service performance success.

11.3

9.4

17%

Cars Online

2022

2023

138,074

125,580

Carload Trip Plan Performance

2022

2023

64%

84%

31%

Intermodal Trip Plan Performance

2022

2023

90%

95%

Profitable growth remained the focus point of

As part of its efforts, CSX has been leveraging

CSX’s strategy in 2023. Foundational to this strategy

technology to provide greater customers with tools

is building a culture of trust and teamwork among

that make it easier for them to do business with us.

12%

employees and investing in technologies to ensure

The modernization of the ShipCSX customer

a higher level of employee engagement to support

web portal is adding new tools, a more intuitive

excellence in customer service.

platform, and simplified pricing documents.

CSX also launched an enhanced carbon calculator

The ONE CSX cultural transformation lies at the

on its ShipCSX portal in 2023 to help customers

center of the company’s growth potential. As a critical

make informed decisions about using rail to reduce

part of this initiative, CSX is soliciting feedback from

emissions and meet their sustainability goals.

employees about how to improve their overall work

experience. In response to this feedback, the company

In addition, CSX is proactively helping customers

is introducing innovative policies and processes

locate prime, rail-served locations to develop through

that are aimed at increasing transparency and

its Select Site program while collaborating with

management responsiveness. ONE CSX is a way

others to design rail-based service solutions

for the company to demonstrate our commitment

to meet their changing business needs.

to the CSX team members who are all working

together for our shared success.

These and other tools and technologies implemented

in 2023 are positioning CSX for continued growth

by providing greater operational efficiencies, better

service and a seamless customer experience.

Environmental,
Social and
Governance

Environmental Sustainability

Key sustainability advancements include:

CSX continues to demonstrate

its dedication to maintaining

an environmentally friendly

freight rail system. Renowned

for fuel efficiency, its trains

B20 biodiesel fuel. The company is also partnering

with CPKC to explore the development of hydrogen

locomotive conversion kits. Furthermore,

battery-powered, zero-emission locomotives

have been identified as a feasible option

for certain operations.

can move a ton of freight more

In addition to technological advancements,

than 500 miles on just one gallon

of fuel. With consistent efforts

to enhance fuel efficiency

and reduce greenhouse

gas emissions, CSX remains

a forerunner in sustainable

freight transportation.

CSX has pledged to reduce GHG emissions by

37.3% before 2030 and has already reduced our

emissions intensity by 13% since 2014. As part

of its commitment, the company is leveraging

advanced locomotive technologies and innovative

operating practices to move closer to this goal.

CSX is also actively testing and investing in

alternative fuel projects and technologies, including

a successful pilot program with Wabtec testing

CSX enhances its service solutions to help customers

optimize supply chains and reduce carbon footprints.

Quality Carriers expands the reach of our efficient

network to a broader base of chemicals customers,

reducing their dependency on carbon-intensive trucks.

The TRANSFLO network continues to grow, providing

efficient transloading services. The CSX Greenway

offers seamless dock-to-dock, environmentally

friendly transportation for refrigerated goods along

the I-95 corridor.

As previously mentioned, CSX has also launched

an enhanced Carbon Calculator to support shippers'

sustainability goals. The calculator provides detailed

analyses of carbon savings, allowing for informed

supply chain decisions for favoring rail over truck

transportation, considering factors like freight type,

distance and volume.

Overall, CSX's approach to sustainability

encompasses a broad spectrum of initiatives, from

advanced technologies to optimized services, proving

its status as a leader in sustainable transportation.

Further implementation and utilization

Incorporation of over 1,200 upgraded

of the Wabtec-developed Optimizer

locomotives with distributed power

system, which functions as a sophisticated,

capabilities. Locomotives equipped with

data-driven cruise control for trains, saving

this technology can be placed at different

about 41 million gallons of fuel annually.

locations in a train instead of being

Investment in distributed power

technology, enabling longer trains and

more efficient movement.

coupled at the head end. This allows CSX

to distribute power more efficiently and
to operate longer trains, which enables

us to move more freight with less fuel.

Continuance of a Fuel Conservation

Automated engine start-stop

Desk, responsible for real-time fuel

systems and other technologies aimed

management and fleet optimization

at reducing locomotive idle time and

across the CSX network.

boosting fuel efficiency.

500+ miles Distance CSX moves one ton

of freight on a single gallon of fuel

Social Responsibility

Beyond maintaining a robust

and profitable corporate standing,

CSX places equal importance on

being a responsible and caring

neighbor. Throughout 2023, the

company showcased its dedication

to strengthening its surrounding

communities through a variety

of philanthropic endeavors, both

at the corporate level and through

employee-driven initiatives.

The company’s philanthropic efforts led to

charitable giving amounting to $14.9 million, with

employees donating $456,839 and contributing

18,606 volunteer hours. CSX also supported

423 organizations through grant distributions.

Together CSX and its employees impacted 948

communities across its network.

CSX leaders showed commitment to philanthropy,

with the entire leadership team contributing to

United Way. With 100% participation in United

Way’s Tocqueville Society, CSX is proud to have

leaders who strengthen the company’s connection

with its communities.

In 2023, CSX also continued to support service

members, veterans and first responders through

its Pride in Service initiative, sponsoring 1,292 service

events, distributing 1,122 grants to service members,

and awarding 240 scholarships to children in

the military and first responder community.

Employees were integral to this endeavor,

generously dedicating $25,898 and 3,257

Zoo and Gardens. To preserve the history of the

its support of military members and families.

railroad industry, CSX announced it will donate

CSX was also recognized as a military and

volunteer hours to CSX Pride in Service efforts.

$5 million to help renovate the B&O museum in

veteran-friendly employer and as a top workplace

CSX also made significant investment in its

hometowns that provide a high quality of life

for citizens and visitors. The company announced

Baltimore, which is located right in the center of

for disability inclusion.

the region where the first miles of America’s

railroads were built.

a $10 million donation to the University of Florida

For the company’s purpose- and mission-driven

to support a future graduate center in downtown

work in 2023, CSX received a Silver Anthem Award,

Jacksonville, and a $1 million commitment to

recognizing its commitment to diversity,

help build a new train station in the Jacksonville

equity and inclusion in the workplace, as well as

Social Responsibility

CSX prioritizes its role

as a corporate citizen.

In 2023, the company’s

corporate level and

employee-driven initiatives

enabled CSX to effectively

support individuals and

organizations across its

vast network.

$14.9M
Total charitable giving
in 2023

948
Communities impacted

18,606 Hours
Contributed by
employees

$456,839
Donated by employees

423
Grants distributed

*Data pulled from 2023 statistics

Governance

Effective governance

practices play a crucial role

in reducing risk, safeguarding

shareholder interests and

fostering sustained growth

and prosperity in business.

Throughout 2023, CSX remained dedicated

to these principles. The company’s executive

leadership, with the support and collaboration

with the Board of Directors, created and

implemented policies that reflected

that commitment.

It is the responsibility of the CSX Board of

Directors and executive team to articulate

the company’s vision and purpose to

CSX’s practices are essential for ensuring

proper disclosure of information, auditing

and compliance. The company’s governance

program includes:

Annual election of directors

Majority voting standard for election

of directors

Independent chairman of the board

Stock ownership guidelines for

officers and directors

Policy against hedging or pledging

of CSX shares

Proxy access

employees, customers and the communities

Pay for performance alignment

where CSX operates. That responsibility also

includes supervising the adoption of robust

governance standards, maintaining adherence

to company policies, codes and values and

overseeing continuous compliance with legal

requirements and regulations.

18
18

Board of
Directors

Executive
Management

From

left to right:

Donna M. Alvarado

Thomas P. Bostick

Joe Hinrichs

Steven T. Halverson

Founder and President

Retired U.S. Army Lieutenant

President and Chief

Chairman and former

of Aguila International

General and former Chief

Executive Officer of CSX

Chief Executive Officer

Operating Officer at Intrexon

of The Haskell Company

From

left to right:

Joe Hinrichs

President and

Kevin S. Boone

Mike Cory

Nathan D. Goldman

Executive Vice President

Executive Vice President,

Chief Executive Officer

and Chief Commercial Officer

and Chief Operating Officer

Chief Legal Officer and

Corporate Secretary

Paul C. Hilal

Founder and

David M. Moffett

Linda H. Riefler

Suzanne M. Vautrinot

Retired Chief Executive Officer

Director of MSCI and

Founder and President of Kilovolt

Controller of MR Argent

and Director of the Federal

Former Chairman of Global

Consulting, Inc. and Retired U.S.

Advisor LLC

Home Loan Mortgage Corporation

Research for Morgan Stanley

Air Force Major General

James L. Wainscott

J. Steven Whisler

John J. Zillmer

Former Chairman, President

Retired Chairman and Chief

Chairman of the Board and

and Chief Executive Officer of

Executive Officer of Phelps

Chief Executive Officer and

AK Steel Holding Corporation

Dodge Corporation

Director of Aramark Corporation

Sean R. Pelkey

Diana B. Sorfleet

Stephen Fortune

Executive Vice President

and Chief Financial Officer

and Chief Administrative Officer

and Chief Digital and

Technology Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

(☒) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023
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

(State or other jurisdiction of incorporation
or organization)

62-1051971

(I.R.S. Employer Identification No.)

500 Water Street

15th Floor

Jacksonville

32202

904

359-3200

(Address of principal executive offices)

(Zip Code)

(Telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common Stock, $1 Par Value

Trading Symbol(s)

Name of exchange on which registered

CSX

Nasdaq Global Select Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Securities registered pursuant to Section 12(g) of the Act: None

Yes (X) No ( )

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ( ) No (X)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes (X) No ( )

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files).

Yes (X) No ( )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company (as defined in Exchange Act Rule 12b-2).
Large Accelerated Filer (X) Accelerated Filer ( ) Non-accelerated Filer ( ) Smaller reporting company (☐)
Emerging growth company (☐)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ( )

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report (☒)
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. (□)

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). (□)

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).

Yes (☐) No (X)

On June 30, 2023 (which is the last day of the second quarter and the required date to use), the aggregate market value of the Registrant’s voting stock
held by non-affiliates was approximately $68 billion (based on the close price as reported on the NASDAQ National Market System on such date).

There were 1,959,134,342 shares of Common Stock outstanding on January 31, 2024 (the latest practicable date that is closest to the filing date).

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Definitive Proxy Statement (the “Proxy Statement”) to be filed no later than 120 days after the end of the fiscal year with
respect to its 2024 annual meeting of shareholders.

CSX 2023 Form 10-K p.1

CSX CORPORATION
FORM 10-K
TABLE OF CONTENTS

Item No.

Page

1. Business

1A. Risk Factors
1B. Unresolved Staff Comments
1C. Cybersecurity

2. Properties
3. Legal Proceedings
4. Mine Safety Disclosures

Executive Officers of the Registrant

PART I

PART II

5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities
6. Reserved
7. Management's Discussion and Analysis of Financial Condition and Results of Operations

· Terms Used by CSX
· 2023 Highlights
· Results of Operations
· Liquidity and Capital Resources

· Contractual Obligations, Other Commitments and Off-Balance Sheet Arrangements
· Labor Agreements
· Critical Accounting Estimates
· Forward-Looking Statements

7A. Quantitative and Qualitative Disclosures about Market Risk

8. Financial Statements and Supplementary Data
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

9A. Controls and Procedures
9B. Other Information
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III

10. Directors, Executive Officers of the Registrant and Corporate Governance
11. Executive Compensation
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
13. Certain Relationships and Related Transactions, and Director Independence
14. Principal Accounting Fees and Services

15. Exhibits, Financial Statement Schedules

PART IV

Signatures

3
7
13
14
16
20
20
21

23
25
26
26
28
28
36

41
41
42
46
48
49
116
116
119
119

119
119
119
119
119

120

124

CSX 2023 Form 10-K p.2

Item 1. Business

CSX CORPORATION
PART I

CSX Corporation, together with its subsidiaries ("CSX" or the “Company”), based in Jacksonville,
Florida, is one of the nation's leading transportation companies. The Company provides rail-based freight
transportation services including traditional rail service, the transport of intermodal containers and trailers,
as well as other transportation services such as rail-to-truck transfers and bulk commodity operations.
CSX and the rail industry provide customers with access to an expansive and interconnected
transportation network that plays a key role in North American commerce and is critical to the long-term
economic success and improved global competitiveness of the United States. In addition, freight railroads
provide the most economical and environmentally efficient means to transport goods over land.

CSX Transportation, Inc.

CSX’s principal operating subsidiary, CSX Transportation, Inc. (“CSXT”), provides an important
link to the transportation supply chain through its approximately 20,000 route-mile rail network and serves
major population centers in 26 states east of the Mississippi River, the District of Columbia and the
Canadian provinces of Ontario and Quebec. It has access to over 70 ocean, river and lake port terminals
along the Atlantic and Gulf Coasts, the Mississippi River, the Great Lakes and the St. Lawrence
Seaway. This access allows the Company to meet the dynamic transportation needs of manufacturers,
industrial producers, the automotive industry, construction companies, farmers and feed mills,
wholesalers and retailers, and energy producers. The Company’s intermodal business links customers to
railroads via trucks and terminals. CSXT also serves thousands of production and distribution facilities
through track connections with other Class I railroads and more than 240 short-line and regional
railroads. On June 1, 2022, CSX completed its acquisition of Pan Am Systems, Inc. (“Pan Am”), which is
the parent company of Pan Am Railways, Inc. This acquisition expanded CSXT’s reach in the
Northeastern United States. For further details, refer to Note 17, Business Combinations.

CSXT is also responsible for the Company's real estate sales, leasing, acquisition and
management and development activities. Substantially all of these activities are focused on supporting
railroad operations.

Other Entities

In addition to CSXT, the Company’s subsidiaries include Quality Carriers, Inc. ("Quality Carriers"),
CSX Intermodal Terminals, Inc. (“CSX Intermodal Terminals”), Total Distribution Services, Inc. (“TDSI”),
TRANSFLO Terminal Services, Inc. (“TRANSFLO”), CSX Technology, Inc. (“CSX Technology”) and other
subsidiaries. Effective July 1, 2021, CSX acquired Quality Carriers, the largest provider of bulk liquid
chemicals truck transportation in North America. For further details, refer to Note 17, Business
Combinations. CSX Intermodal Terminals owns and operates a system of intermodal terminals,
predominantly in the eastern United States, and also provides drayage services (the pickup and delivery
of intermodal shipments) for certain customers. TDSI serves the automotive industry with distribution
centers and storage locations. TRANSFLO connects non-rail served customers to the many benefits of
rail by transferring products from rail to trucks. The biggest TRANSFLO markets are chemicals and
agriculture, which includes shipments of plastics and ethanol. CSX Technology and other subsidiaries
provide support services for the Company.

Operating Model

The Company is focused on developing and strictly maintaining a scheduled service plan with an
emphasis on improving customer service, optimizing assets and increasing employee engagement.
When this operating model is executed effectively, the Company competes for an increased share of the
U.S. freight market. Further, this model leads to reduced costs and strong free cash flow generation.

CSX 2023 Form 10-K p.3

CSX CORPORATION
PART I

Lines of Business

During 2023, the Company's services generated $14.7 billion of revenue and served four primary

lines of business: merchandise, intermodal, coal and trucking.

•

The merchandise business shipped 2.6 million carloads (43% of volume) and generated $8.7
billion in revenue (59% of revenue) in 2023. The Company’s merchandise business is
comprised of shipments in the following diverse markets: chemicals, agricultural and food
products, automotive, minerals, forest products, metals and equipment, and fertilizers.
The intermodal business shipped 2.8 million units (45% of volume) and generated $2.1 billion
in revenue (14% of revenue) in 2023. The intermodal business combines the superior
economics of rail transportation with the flexibility of trucks and offers a cost and
environmental advantage over long-haul trucking. Through a network of approximately 30
terminals, the intermodal business serves all major markets east of the Mississippi River and
transports mainly manufactured consumer goods in containers, providing customers with
truck-like service for longer shipments.

• The coal business shipped 755 thousand carloads (12% of volume) and generated $2.5 billion
in revenue (17% of revenue) in 2023. The Company transports domestic coal, coke and iron
ore to electricity-generating power plants, steel manufacturers and industrial plants as well as
export coal to deep-water port facilities. Most of the export coal the Company transports is
used for steelmaking, while the majority of domestic coal the Company ships is used for
electricity generation.
The trucking business generated $882 million, or 6%, of revenue in 2023. Trucking revenue
includes revenue from the operations of Quality Carriers, which was acquired by CSX effective
July 1, 2021.

•

Other revenue accounted for 4% of the Company’s total revenue in 2023. This category includes
revenue from regional subsidiary railroads and incidental charges, including intermodal storage and
equipment usage, demurrage and switching. Revenue from regional subsidiary railroads includes
shipments by railroads that the Company does not directly operate. Intermodal storage represents
charges for customer storage of containers at an intermodal terminal, ramp facility or offsite location
beyond a specified period of time. Demurrage represents charges assessed when freight cars are held
by a customer beyond a specified period of time. Switching represents charges assessed when a railroad
switches cars for a customer or another railroad.

CSX's Committed Workforce

Most of the Company’s employees provide or support transportation services. The Company had
more than 23,000 employees as of December 2023, which includes approximately 17,700 employees
that are members of a rail labor union. As of December 2, 2022, all 12 rail unions at CSX that participated
in national bargaining were covered by national agreements with the Class I railroads and CSX-specific
agreements that will remain in effect through December 31, 2024. Collective agreements under the
Railway Labor Act do not expire, but continue until amended, and formal notices to amend these
agreements may be served as early as November 1, 2024.

CSX prioritizes workplace safety for employees and is committed to continued improvement
through enhanced processes, training, technology, communication, and continuous collaboration with
customers and peers across the railroad industry. Training programs and processes are focused on injury
and accident prevention as well as emergency preparedness. The attainment of key safety targets is a
component of management's annual incentive program. The FRA Personal Injury Frequency Index, a
measure of the number of FRA-reportable injuries per 200,000 man-hours, was 0.89 in 2023 and 1.01 in
2022, improving year over year.

CSX 2023 Form 10-K p.4

CSX CORPORATION
PART I

The Compensation and Talent Management Committee of the Board of Directors is charged with
oversight of CSX's workforce. The Company is committed to developing a culture that promotes
workforce diversity and inclusion and encourages ethical behavior. As of December 31, 2023,
approximately 23% of CSX's overall workforce and 37% of management was diverse, calculated as the
percentage of males of color and all females. In 2023, CSX was recognized as a “Best Place to Work for
Disability Inclusion” by Disability:IN and the American Association of People with Disabilities for a fifth
consecutive year after receiving a top score on their disability equality index. The CSX Code of Ethics
serves as a guiding standard for ethical behavior and covers many types of matters, including
discrimination and harassment as well as safety. Annually, all management employees are required, and
union employees are highly encouraged, to complete ethics training.

Company History

A leader in freight rail transportation for nearly 200 years, the Company’s heritage dates back to
the early nineteenth century when The Baltimore and Ohio Railroad Company (“B&O”), the nation’s first
common carrier, was chartered in 1827. Since that time, the Company has built on this foundation to
create a railroad that could safely and reliably service the ever-increasing demands of a growing nation.
Since its founding, numerous railroads have combined with the former B&O through merger and
consolidation to create what has become CSX. Each of the railroads that combined into the CSX family
brought new geographical reach to valuable markets, gateways, cities, ports and transportation corridors.

CSX Corporation was incorporated in 1978 under Virginia law. In 1980, the Company completed
the merger of the Chessie System and Seaboard Coast Line Industries into CSX. The merger allowed the
Company to connect northern population centers and Appalachian coal fields to growing southeastern
markets. Later, the Company’s acquisition of key portions of Conrail, Inc. ("Conrail") allowed CSXT to link
the northeast, including New England and the New York metropolitan area, with Chicago and midwestern
markets as well as the growing areas in the Southeast already served by CSXT. This current rail network,
which now includes the network acquired from Pan Am, allows the Company to directly serve every major
market in the eastern United States with safe, dependable, environmentally responsible and fuel efficient
freight transportation and intermodal service.

Competition

The business environment in which the Company operates is highly competitive. Shippers
typically select transportation providers that offer the most compelling combination of service and
price. Service requirements, both in terms of transit time and reliability, vary by shipper and commodity.
As a result, the Company’s primary competition varies by commodity, geographic location and mode of
available transportation and includes other railroads, motor carriers that operate similar routes across its
service area and, to a less significant extent, barges, ships and pipelines.

CSXT’s primary rail competitor is Norfolk Southern Railway, which operates throughout much of
the Company’s territory. Other railroads also operate in parts of the Company’s territory. Depending on
the specific market, competing railroads and deregulated motor carriers may exert pressure on price and
service levels. For further discussion on the risk of competition to the Company, see Item 1A. Risk
Factors.

CSX 2023 Form 10-K p.5

CSX CORPORATION
PART I

Regulatory Environment

The Company's operations are subject to various federal, state, provincial (Canada) and local
laws and regulations generally applicable to businesses operating in the United States and Canada. In
the U.S., the railroad operations conducted by the Company's subsidiaries, including CSXT, are subject
to the regulatory jurisdiction of the Surface Transportation Board (“STB”), the Federal Railroad
Administration (“FRA”), and its sister agency within the U.S. Department of Transportation ("DOT"), the
Pipeline and Hazardous Materials Safety Administration (“PHMSA”). Together, FRA and PHMSA have
broad jurisdiction over railroad operating standards and practices, including track, freight cars,
locomotives and hazardous materials requirements. In addition, the U.S. Environmental Protection
Agency (“EPA”) has regulatory authority with respect to matters that impact the Company's properties
and operations.

The Transportation Security Administration (“TSA”), a component of the Department of Homeland
Security, has broad authority over railroad operating practices that may have homeland security
implications. In Canada, the railroad operations conducted by the Company’s subsidiaries, including
CSXT, are subject to the regulatory jurisdiction of the Canadian Transportation Agency.

Although the Staggers Act of 1980 significantly deregulated the U.S. rail industry, the STB
has broad jurisdiction over rail carriers. The STB regulates routes, fuel surcharges, conditions of service,
rates for non-exempt traffic, acquisitions of control over rail common carriers and the transfer, extension
or abandonment of rail lines, among other railroad activities. Any new rules from the STB regarding,
among other things, competitive access or revenue adequacy could have a material adverse effect on the
Company's financial condition, results of operations and liquidity as well as its ability to invest in
enhancing and maintaining vital infrastructure. For further discussion on regulatory risks to the Company,
see Item 1A. Risk Factors.

Financial Information

Information regarding the Company's results of operations and financial position can be found in

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Other Information

CSX makes available on its website www.csx.com, free of charge, its annual reports on Form 10-
K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as
soon as reasonably practicable after such reports are filed with or furnished to the Securities and
Exchange Commission (“SEC”). The information on the CSX website is not part of this annual report on
Form 10-K. Additionally, the Company has posted its code of ethics on its website, which is also available
to any shareholder who requests it. This Form 10-K and other SEC filings made by CSX are also
accessible through the SEC’s website at www.sec.gov.

CSX has included the certifications of its Chief Executive Officer (“CEO”) and the Chief Financial
Officer (“CFO”) required by Section 302 of the Sarbanes-Oxley Act of 2002 (“the Act”) as Exhibit 31, as
well as Section 906 of the Act as Exhibit 32 to this Form 10-K report.

For additional information concerning business conducted by the Company during 2023, see Item

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

CSX 2023 Form 10-K p.6

Item 1A. Risk Factors

CSX CORPORATION
PART I

The risks set forth in the following risk factors could have a material adverse effect on the
Company's financial condition, results of operations or liquidity, and could cause those results to differ
materially from those expressed or implied in the Company's forward-looking statements. Additional risks
and uncertainties not currently known to the Company or that the Company currently does not deem to
be material also may materially impact the Company's financial condition, results of operations or
liquidity.

Regulatory, Legislative and Legal

New legislation, regulatory changes or other governmental actions could impact the Company's
earnings or restrict its ability to independently negotiate prices.

Legislation passed by Congress, new regulations issued by federal agencies, or executive orders
issued by the President of the United States could significantly affect the revenues, costs, including
income taxes, and profitability of the Company's business. In addition, statutes or regulations that, among
other things, impose price constraints or affecting rail-to-rail competition could adversely affect the
Company's profitability.

Government regulation and compliance risks may adversely affect the Company's operations and
financial results.

The Company is subject to the jurisdiction of various regulatory agencies, including the STB, FRA,
PHMSA, TSA, EPA and other state, provincial, local and federal regulatory agencies for a variety of
economic, health, safety, labor, environmental, tax, legal, cybersecurity and other matters. New or
modified rules or regulations by these agencies could increase the Company's operating costs, adversely
impact revenue or reduce operating efficiencies and affect service performance. Noncompliance with
applicable laws or regulations could erode public confidence in the Company and can subject the
Company to fines, penalties and other legal or regulatory sanctions.

CSXT, as a common carrier by rail, is required by law to transport hazardous materials and could
be adversely impacted by non-compliance with applicable regulations or from regulatory and
legislative changes.

CSXT is required to comply with regulations regarding the handling of hazardous materials and
has a legal obligation to transport certain hazardous materials under the common carrier mandate.
Applicable rules issued by the TSA place significant security and safety requirements on passenger and
freight railroad carriers, rail transit systems and facilities that ship hazardous materials by rail.
Noncompliance with these rules can subject the Company to significant penalties and could be a factor in
litigation arising out of a train accident. Finally, legislation preventing the transport of hazardous materials
through certain cities could result in network congestion and increase the length of haul for hazardous
substances, which could increase operating costs, reduce operating efficiency or increase the risk of an
accident involving the transport of hazardous materials.

CSX 2023 Form 10-K p.7

The Company may be subject to various claims and lawsuits that could result in significant
expenditures.

CSX CORPORATION
PART I

As part of its railroad and other operations, the Company is subject to various claims and lawsuits
related to disputes over commercial practices, labor and unemployment matters, occupational and
personal injury claims, property damage or freight damage, environmental and other matters. The
Company may experience material judgments or incur significant costs to defend existing and future
lawsuits. Although the Company maintains insurance to cover some of these types of claims and
establishes reserves when appropriate, final amounts determined to be due on any outstanding matters
may exceed
recorded
reserves. Additionally, the Company could be impacted by adverse developments not currently reflected
in the Company's reserve estimates.

insurance coverage or differ materially

the Company's

from

the

Operational, Safety and Business Disruption

An epidemic or pandemic and the initiatives to reduce its transmission could adversely affect the
Company's business.

The Company could be materially and adversely affected by a public health crisis, including a
widespread epidemic or pandemic. During a health crisis, policies and initiatives may be instituted by the
public and private sector to reduce transmission, such as closures of businesses and manufacturing
facilities, the promotion of social distancing, the adoption of working from home by companies and
institutions, and travel restrictions. These policies or initiatives could adversely affect demand for the
commodities and products that the Company transports, including import and export volume.

In addition, initiatives to reduce transmission could result in supply chain disruptions, which could
impact volumes and make it more difficult for the Company to serve its customers. Moreover, operations
are negatively affected when a significant number of employees are quarantined as the result of exposure
to a contagious illness. To the extent a public health crisis adversely affects the Company's business and
financial results, it may also have the effect of heightening many of the other risks described herein.

The Company relies on the security, stability and availability of its technology systems to operate
its business.

The Company relies on information technology in all aspects of its business. The security, stability
and availability of the Company’s and its key third-party vendors’ information technology systems are
critical to its ability to operate safely and effectively and to compete within the transportation industry. A
successful data breach, cyber-attack, or the occurrence of any similar incident that impacts the
Company’s or its key third-party vendors’ information technology systems could result in a service
interruption, train accident, misappropriation of confidential or proprietary information (including personal
information), process failure, or other operational difficulties. A disruption or compromise of the
Company’s or its key third-party vendors' information technology systems, even for short periods of time,
and any resulting theft or compromise of Company confidential or proprietary information (including
personal information), could adversely affect the Company’s business or reputation, create significant
legal, regulatory or financial exposure and have a material adverse impact on CSX’s business, financial
condition or operations.

CSX 2023 Form 10-K p.8

CSX CORPORATION
PART I

The Company, its third-party vendors and other companies in the rail and transportation industries
have been subject to, and are likely to continue to be the target of, data breaches, cyber-attacks and
other similar incidents. These incidents may include, among other things, malware, ransomware,
distributed denial of service attacks, social engineering, phishing, theft, malfeasance or improper access
by employees or third-party vendors, software bugs, server malfunctions, software or hardware failures,
human error, fraud, or other modes of attack or disruption. Attacks of these nature are increasing in
frequency, levels of persistence, intensity and sophistication, including by nation-state threat actors or
those associated with nation-states. Further, the Company may be at increased risk of experiencing a
cyber-attack as a result of being a component of the critical U.S. infrastructure. If such an event takes
place, the Company may be required to incur significant expenses in excess of existing cybersecurity
insurance coverage. As cybersecurity threats continue to evolve, the Company may be required to
expend significant additional resources to continue to modify or enhance its protective measures or to
investigate and remediate any information security vulnerabilities, data breaches, cyber-attacks or other
similar incidents. The Company or its third-party vendors may also experience cybersecurity incidents as
a result of employees, third-party vendors and other third parties with which they interact working
remotely on less secure systems and environments.

Despite the Company’s efforts to protect its information technology systems, it may not be able to
prevent or anticipate all data breaches, cyber-attacks or other similar incidents, detect or react to such
incidents in a timely manner or adequately remediate any such incident. Due to applicable laws, rules
and regulations or contractual obligations, CSX may be held responsible for data breaches, cyber-attacks
or other similar incidents attributed to its third-party vendors as they relate to the information CSX shares
with them.

Additionally, if CSX is unable to successfully acquire, develop or implement new technology,
including artificial intelligence, it may suffer a competitive disadvantage within the rail industry and with
companies providing other modes of transportation services.

Network or supply chain constraints could have a negative impact on service, operating efficiency
or volume of shipments.

CSXT could experience rail network difficulties related to: (i) locomotive or crew shortages; (ii)
labor shortages or other service disruptions in the supply chain affecting trucking, ports, handling
facilities, customer facilities or other railroads; (iii) unpredictable increases in demand; (iv) extreme
weather conditions; (v) regulatory changes resulting in forced access or impacting where and how fast
CSXT can transport freight or maintain routes; (vi) reductions in availability of pooled equipment,
including chassis; (vii) impacts from changes in network capacity or structure; or (viii) increased
passenger activities, which could impact CSXT's operational fluidity, leading to deterioration of service,
asset utilization and overall efficiency.

CSXT, as a common carrier by rail, transports hazardous materials, which could expose the
Company to significant costs and claims in the event of a train accident.

A train accident involving the transport of hazardous materials could result in significant costs and
claims arising from personal injury, property or natural resource damage, environmental penalties and
remediation obligations. Such claims, if insured, could exceed existing insurance coverage or insurance
may not continue to be available at commercially reasonable rates, which could have a material adverse
effect on the Company's results of operations, financial condition, and liquidity. Under federal regulations,
CSXT is required to transport certain hazardous materials under the legal duty referred to as the common
carrier mandate regardless of risk or potential exposure to loss.

CSX 2023 Form 10-K p.9

CSX CORPORATION
PART I

Future acts of terrorism, war or regulatory changes to combat the risk of terrorism may cause
significant disruptions in the Company's operations.

Terrorist attacks, along with any government response to those attacks, may adversely affect the
Company's financial condition, results of operations or liquidity. CSXT's rail lines, other key infrastructure
and information technology systems may be targets or indirect casualties of acts of terror or war. This risk
could cause significant business interruption and result in increased costs and liabilities and decreased
revenues. In addition, premiums charged for some or all of the insurance coverage currently maintained
by the Company could increase dramatically, or the coverage may no longer be available.

Furthermore, in response to the heightened risk of terrorism, federal, state and local governmental
bodies are proposing and, in some cases, have adopted legislation and regulations relating to security
issues that impact the transportation industry. For example, the Department of Homeland Security
adopted regulations that require freight railroads to implement additional security protocols when
transporting hazardous materials. Complying with these or future regulations could continue to increase
the Company's operating costs and reduce operating efficiencies.

Severe weather or other natural occurrences could result in significant business interruptions
and expenditures in excess of available insurance coverage.

The Company's operations may be affected by external factors such as severe weather and other
natural occurrences, including floods, hurricanes, fires and earthquakes. As a result, the Company's rail
network may be damaged, its workforce may be unavailable, fuel costs may rise and significant business
interruptions could occur. In addition, the performance of locomotives and railcars could be adversely
affected by extreme weather conditions. Hurricanes as well as storm and flooding events have impacted
the Company's network in the past, leading to interrupted service and damage to track and equipment.
Changes in weather patterns caused by climate change are expected to increase the frequency, severity
or duration of certain adverse weather conditions.

Insurance maintained by the Company to protect against loss of business and other related
consequences resulting from these natural occurrences is subject to coverage limitations, depending on
the nature of the risk insured. This insurance may not be sufficient to cover all of the Company's damages
or damages to others, and this insurance may not continue to be available at commercially reasonable
rates. Even with insurance, if any natural occurrence leads to a catastrophic interruption of service, the
Company may not be able to restore service without a significant interruption in operations.

Competitive, Economic and Financial

The Company faces competition from other transportation providers.

The Company experiences competition in pricing, service, reliability and other factors from various
transportation providers including railroads and motor carriers that operate similar routes across its
service area and, to a less significant extent, barges, ships and pipelines. Other transportation providers
generally use public rights-of-way that are built and maintained by governmental entities, while CSXT and
other railroads must build and maintain rail networks largely using internal resources. Any future
improvements or expenditures materially increasing the quality or reducing the cost of alternative modes
of transportation such as through the use of automation, autonomy or electrification, or legislation
providing for less stringent size or weight restrictions on trucks, could negatively impact the Company's
competitive position. Additionally, any future consolidation in the rail industry could materially affect the
regulatory and competitive environment in which the Company operates.

CSX 2023 Form 10-K p.10

CSX CORPORATION
PART I

Global economic conditions could negatively affect demand for commodities and other freight.

A decline or disruption in general domestic and global economic conditions that affects demand
for the commodities and products the Company transports, including import and export volume, could
reduce revenues or have other adverse effects on the Company's cost structure and profitability. For
example, slower rates of economic growth in Asia, contraction of European economies, and changes in
the global supply of seaborne coal or price of seaborne coal have adverse impacts on U.S. export coal
volume and result in lower coal revenue for CSX. Additionally, embargoes or changes to trade
agreements or policies could result in reduced import and export volumes due to increased tariffs and
lower consumer demand. If the Company experiences significant declines in demand for its
transportation services with respect to one or more commodities and products or continues to experience
the impacts of inflation, the Company may experience reduced revenue and increased operating costs,
workforce adjustments, and other related activities, which could have a material adverse effect on the
Company's financial condition, results of operations and liquidity.

Changing dynamics in the U.S. and global energy markets could negatively impact profitability.

Over time, changing dynamics in the U.S. and global energy markets, including the impacts of
regulation and alternative fuel sources, have resulted in lower energy production from coal-fired power
plants in CSX's service territory. Changes in natural gas prices, or other factors impacting demand for
electricity, could impact future power generation at coal-fired plants, which would affect the Company's
coal volumes and revenues.

Weaknesses in the capital and credit markets could negatively impact the Company’s access to
capital.

The Company regularly relies on capital markets for the issuance of long-term debt instruments,
commercial paper and bank financing from time to time. Instability or disruptions of the capital markets,
including credit markets, significant increases in interest rates, or the deterioration of the Company’s
financial condition due to internal or external factors, could restrict or prohibit access and could increase
financing costs. A significant deterioration of the Company’s financial condition could also reduce credit
ratings and could limit or affect its access to external sources of capital and increase the costs of short
and long-term debt financing.

Availability of Critical Supplies and Labor

The unavailability of critical resources could adversely affect the Company’s operational
efficiency and ability to meet demand.

Marketplace conditions for resources like locomotives as well as the availability of qualified
personnel, including engineers and conductors as well as other skilled professional or technical
employees, could each have a negative impact on the Company’s ability to meet demand for rail service.
Although the Company strives to maintain adequate resources and personnel for the current business
environment, unpredictable increases in demand for rail services or extreme weather conditions may
exacerbate such risks, which could have a negative impact on the Company’s operational efficiency and
otherwise have a material adverse effect on the Company’s financial condition, results of operations, or
liquidity in a particular period.

CSX 2023 Form 10-K p.11

CSX CORPORATION
PART I

Disruption to a key railroad industry supplier could negatively affect operating efficiency and
increase costs.

The capital intensive and unique nature of core rail equipment (including rail, ties, freight cars and
locomotives) limits the number of railroad equipment suppliers. If any of the current manufacturers stops
production or experiences a supply shortage, CSXT could experience a significant cost increase or
material shortage. In addition, a few critical railroad suppliers are foreign and, as such, adverse
developments in international relations, new trade regulations, disruptions in international shipping or
increases in global demand could make procurement of these supplies more difficult or increase CSXT's
costs. Additionally, if a fuel supply shortage were to arise, the Company would be negatively impacted.

Failure to complete negotiations on collective bargaining agreements could result in strikes and/
or work stoppages.

Most of CSX's employees are represented by labor unions and are covered by collective
bargaining agreements. These agreements are either bargained for nationally by the National Carriers
Conference Committee or locally between CSX and the union. Such agreements are negotiated over the
course of several years and previously have not resulted in any extended work stoppages. Under the
Railway Labor Act's procedures (which include mediation, cooling-off periods and the possibility of an
intervention by the President of the United States), during negotiations neither party may take action until
the procedures are exhausted. If, however, CSX is unable to negotiate acceptable agreements, the
employees covered by the Railway Labor Act could strike, which could result in loss of business and
increased operating costs as a result of higher wages or benefits paid to union members.

Climate Change and Environmental

The Company’s operations and financial results could be negatively impacted by climate change
and regulatory and legislative responses to climate change.

There is potential for operational impacts from changing weather patterns or rising sea levels in

the Company's operational territory, which could impact the Company's network or other assets.

Climate change and other emissions-related laws and regulations have been proposed and, in
some cases adopted, on the federal, state, provincial and local levels. These final and proposed laws and
regulations take the form of restrictions, caps, taxes or other controls on emissions as well as
requirements to disclose information relating to climate change. In particular, the EPA has issued various
regulations and may issue additional regulations targeting emissions, including rules and standards
governing emissions from certain stationary sources and from vehicles. Any of these pending or
proposed laws or regulations, could adversely affect the Company's operations and financial results by,
among other things: (i) reducing coal-fired electricity generation due to mandated emission standards; (ii)
reducing the consumption of coal as a viable energy resource in the United States and Canada; (iii)
increasing the Company's fuel, capital and other operating costs and negatively affecting operating and
fuel efficiencies; and (iv) making it difficult for the Company's customers in the U.S. and Canada to
produce products in a cost competitive manner. Any of these factors could reduce the amount of
shipments the Company handles and have a material adverse effect on the Company's financial
condition, results of operations or liquidity. In addition, CSX may become subject to legal requirements to
disclose climate change related information and may become subject to demands or expectations by its
supply chain partners, customers or other stakeholders to disclose information relating to climate risk or
set related targets or goals. The Company's current practices with respect to climate risk disclosure may
fail to meet these developing legal requirements or stakeholder demands or expectations. In addition,
legislative or regulatory uncertainties and change regarding climate-related risks, including inconsistent
perspectives or requirements, are likely to result in higher regulatory, compliance, credit, reputational and
other risks and costs.

CSX 2023 Form 10-K p.12

CSX CORPORATION
PART I

The Company is subject to environmental laws and regulations that may result in significant
costs.

The Company is subject to wide-ranging federal, state, provincial and local environmental laws
and regulations concerning, among other things, emissions into the air, ground and water; the handling,
storage, use, generation, transportation and disposal of waste and other materials; the clean-up of
hazardous material and petroleum releases and the health and safety of our employees. If the Company
violates or fails to comply with these laws and regulations, CSX could be fined or otherwise sanctioned by
regulators. The Company can also be held liable for consequences arising out of human exposure to any
hazardous substances for which CSX is responsible. In certain circumstances, environmental liability can
extend to formerly owned or operated properties, leased properties, adjacent properties and properties
owned by third parties or Company predecessors, as well as to properties currently owned, leased or
used by the Company.

The Company has been, and may in the future be, subject to allegations or findings to the effect
that it has violated, or is strictly liable under, environmental laws or regulations, and such violations can
result in the Company's incurring fines, penalties or costs relating to the cleanup of environmental
contamination. Although the Company believes it has appropriately recorded current and long-term
liabilities for known and reasonably estimable future environmental costs, it could incur significant costs
that exceed reserves or require unanticipated cash expenditures as a result of any of the foregoing. The
Company also may be required to incur significant expenses to investigate and remediate known,
unknown or future environmental contamination.

Item 1B. Unresolved Staff Comments

None

CSX 2023 Form 10-K p.13

CSX CORPORATION
PART I

Item 1C. Cybersecurity

Cybersecurity Risk Management and Strategy

Strong performance and reliability of the Company's technology systems are critical to operating
safely and effectively, and protecting personal and customer data is essential to maintaining stakeholder
trust. The Company has implemented processes designed to assess, identify, and manage material
cybersecurity risks, as described further below. CSX maintains a cybersecurity framework that is
integrated across the organization through people, processes and technology to help protect the personal
information of its customers, its contractors and its suppliers as well as protect the integrity of its own
operations. Cybersecurity is also integrated into the Company’s Enterprise Risk Management (“ERM”)
program. The Company equips CSX systems with various cybersecurity tools, conducts vulnerability
scans and provides critical cybersecurity information to application users, as appropriate. The Company
also takes proactive measures to advise CSX employees of how they can assist the Company in its
cybersecurity practices. CSX informs employees on cybersecurity best practices, including how to identify
cyber-related suspicious activity, how to report such activity and, as appropriate, proactive measures
employees can take to safeguard company information and devices. The Company also provides
cybersecurity awareness training to employees and conducts cybersecurity testing exercises to help
maintain cybersecurity vigilance. With the assistance of third-party consultants, the Company conducts
an annual cybersecurity exercise, which is often a "tabletop" scenario involving a cross-functional group
responding to a hypothetical cybersecurity threat.

The Company considers its material cybersecurity-related risks, as described in more detail below
and at Item 1A. Risk Factors, and applies various frameworks to establish controls that are reasonably
designed to identify, protect, detect, respond to, and recover from significant cybersecurity incidents. The
Company also tests its cybersecurity program to assess whether enhancements to cybersecurity
measures are appropriate, such as additional detection and prevention capabilities. These tests may
include the use of internal or third-party external risk assessments, and penetration testing. The Company
also conducts periodic cybersecurity assessments, as appropriate, pursuant to its annual risk
assessment process. Third party resources may also be used for these assessments.

As part of its cybersecurity program, CSX partners with a third-party to provide a managed service
that is designed to enable continuous monitoring at its Security Operation Center ("SOC"). The SOC has
established processes to identify, address, and remediate cybersecurity threats or vulnerabilities. This
includes the engagement, where necessary, of third-party experts, advisors, and other cybersecurity
professionals that have been retained by the Company to assist in responding to cybersecurity incidents
or threats. Company processes also include various procedures for notifying members of the company's
cybersecurity department, Chief Information Security Officer ("CISO"), legal department, accounting
department, and others as applicable.

The Company has processes designed to provide reasonable oversight for the identification of
cybersecurity risks associated with certain third-party service providers. As appropriate, the Company
requires certain third-party providers to complete a cybersecurity questionnaire, to provide Service
Organization Control assessment results, if such results exist, or to agree to contractual language
regarding cybersecurity and incident notification obligations in agreements with the company. CSX also
has processes that help monitor risks associated with its key third-party vendors’ technology systems,
including, where appropriate, performing security assessments of cyber incidents through dashboard
alerting for reported events. CSX’s internal cybersecurity processes and disclosure protocols consider
cybersecurity incidents involving key applications provided by third-parties.

CSX 2023 Form 10-K p.14

CSX CORPORATION
PART I

The Company, its third-party vendors and other companies in the rail and transportation industries
have been subject to, and are likely to continue to be the target of, data breaches, cyber-attacks and
other similar incidents as discussed in more detail in Item 1A. Risk Factors. In light of the numerous
cybersecurity risks that CSX faces, it is reasonably likely that any of the related risks, individually or
collectively, if significant, could materially affect the Company’s operations, including but not limited to
service interruption, train accident or derailment, misappropriation of confidential or proprietary
information (including personal information), process failure, or other operational difficulties.

Cybersecurity Governance

The cybersecurity program and related risks at CSX are managed by the VP Technology and
CISO. The Company's CISO is a Certified Information Systems Auditor with over 30 years of industry
experience including information security leadership positions at multiple publicly-traded companies.

The CISO is notified of cybersecurity events as needed based on the Company’s processes for
addressing cybersecurity incidents and threats. The CISO is supported by a team that includes the SOC,
which consists of the Deputy Chief Information Security Officer and other cybersecurity professionals as
well as a team of third-party contractors. The SOC, with the assistance of outside third-parties as needed,
analyzes, evaluates and remediates cybersecurity incidents and provides investigative information to the
CISO. Depending on the significance of any specific cybersecurity incident or threat, and/or relation to
prior incidents, the CISO will escalate relevant information, as appropriate, and the Company’s legal and
accounting groups, with assistance from other company departments and third parties, will assist in
assessing potential SEC disclosure obligations. The CISO coordinates disclosure to other agencies,
when necessary, including requirements under the Transportation Security Administration directives.

More significant cybersecurity incidents or threats may result in notifications to senior leadership
and, if necessary, to the Audit Committee and the Board of Directors. Additionally, a cybersecurity
governance briefing takes place quarterly with leaders from the Company's technology, operations,
commercial, legal, and accounting departments to discuss cybersecurity risks, threats, and incidents,
including updates from the SOC and an assessment of ways to mitigate and remediate any threats or
incidents the Company may be facing.

The Company's Audit Committee of the Board of Directors oversees the Company's cybersecurity
risk, mitigation strategies and overall resiliency of the Company’s technology infrastructure. Such risk is
managed as part of the Company’s overall risk management and business continuity processes and is
included in the ERM program, which is also overseen by the Audit Committee. The Audit Committee
periodically reviews assessments of information security controls and procedures, any incidents that
could have a potentially significant impact on the company’s network, as well as potential cybersecurity
risk disclosures. The Company's senior leadership team briefs the Audit Committee and Board of
Directors at least annually on information technology and cybersecurity matters, including more frequent
updates as circumstances warrant. Such annual updates include significant findings or updates by
internal or external evaluations. The Audit Committee is apprised annually on emerging risks to the
Company, including education on cybersecurity-related matters as needed. CSX has a cybersecurity
expert on the Board and its Audit Committee to provide expanded oversight of the Company’s
cybersecurity and technology systems.

CSX 2023 Form 10-K p.15

Item 2. Properties

CSX CORPORATION
PART I

The Company’s properties primarily consist of track and its related infrastructure, locomotives,
and freight cars and equipment. These categories and the geography of the network are described below.

Track and Infrastructure

Serving 26 states, the District of Columbia, and the Canadian provinces of Ontario and Quebec,
the CSXT rail network serves, among other markets, New York, Philadelphia and Boston in the Northeast
and Mid-Atlantic, the southeast markets of Atlanta, Miami and New Orleans, and the midwestern markets
of St. Louis, Columbus and Chicago.

CSXT’s track structure includes mainline track, connecting terminals and yards, track within
terminals and switching yards, sidings used for passing trains, track connecting CSXT's track to customer
locations and turnouts that divert trains from one track to another. Total track miles, which reflect the size
of CSXT’s network that connects markets, customers and western railroads, are greater than CSXT’s
approximately 20,000 route miles. At December 2023, the breakdown of track miles was as follows:

Single Mainline Track
Other Mainline Track
Terminals and Switching Yards
Passing Sidings and Turnouts

Total

Track
Miles

19,671
5,652
9,270
896
35,489

In addition to its physical track structure, the Company operates numerous yards and terminals for
rail and intermodal service. These serve as points of connectivity between the Company and its local
customers and as sorting facilities where railcars and intermodal containers are received, classed for
destination and placed onto outbound trains, or arrive and are delivered to the customer. The Company’s
largest yards and terminals based on 2023 volume (number of railcars or intermodal containers
processed) are listed below.

Yards and Terminals

Waycross, GA
Bedford Park Intermodal Terminal (Chicago)
Nashville, TN
Cincinnati, OH
Selkirk, NY
Avon, IN (Indianapolis)
Walbridge, OH (Toledo)
Fairburn, GA Intermodal Terminal (Atlanta)
Louisville, KY
Chicago, IL

Annual Volume
930,651
926,845
645,352
644,478
625,308
597,169
378,869
362,767
356,740
307,588

CSX 2023 Form 10-K p.16

CSX CORPORATION
PART I

Network Geography

CSXT’s operations are primarily focused on four major transportation networks and corridors that

are defined geographically and by commodity flows below.

Interstate 90 (I-90) Corridor – This CSXT corridor links Chicago and the Midwest to metropolitan areas in
New York and New England. This route, also known as the “waterlevel route,” has minimal hills and
grades and nearly all of it has two main tracks (referred to as double track). These engineering attributes
permit the corridor to support high-speed service across intermodal, automotive and merchandise
commodities. This corridor is a primary route for import traffic coming from the far east through western
ports moving eastward across the country, through Chicago and into the population centers in the
Northeast. The I-90 Corridor is also a critical link between ports in New York, New Jersey, and
Pennsylvania and consumption markets in the Midwest. This route carries goods from all three of the
Company’s major rail markets – merchandise, intermodal and coal.

Interstate 95 (I-95) Corridor – The CSXT I-95 Corridor connects Charleston, Jacksonville, Miami and
many other cities throughout the Southeast with the heavily populated mid-Atlantic and northeastern
cities of Baltimore, Philadelphia and New York. CSXT primarily transports food and consumer products,
as well as metals and chemicals along this line. It is the leading rail corridor along the eastern seaboard
south of the District of Columbia and provides access to major eastern ports.

Southeastern Corridor – This critical part of the network runs between CSXT’s western gateways of
Chicago, St. Louis and Memphis through the cities of Nashville, Birmingham, and Atlanta and markets in
the Southeast. The Southeastern Corridor is the premier rail route connecting these key cities, gateways,
and markets and positions CSXT to efficiently handle projected traffic volumes of intermodal, automotive
and general merchandise traffic.

Coal Network – The CSXT coal network connects the coal mining operations in the Appalachian
mountain region and Illinois basin with industrial areas in the Southeast, Northeast and Mid-Atlantic, as
well as many river, lake, and deep water port facilities. The domestic coal market has declined
significantly over the last decade and export coal remains subject to volatility. CSXT’s coal network
remains well positioned to supply utility markets in both the Northeast and Southeast and to transport
coal shipments for export outside of the U.S. Most of the export coal the Company transports is used for
steelmaking, while the majority of domestic coal the Company ships is used for electricity generation.

See the following page for a map of the CSX Rail Network. Also included on the map, "CSX
Operating Agreement" indicates areas within which CSX can operate through trackage rights beyond the
CSX network.

CSX 2023 Form 10-K p.17

CSX CORPORATION
PART I

CSX Rail Network

CSX 2023 Form 10-K p.18

CSX CORPORATION
PART I

Locomotives

As of December 2023, CSXT owns or long-term leases more than 3,500 locomotives. From time
to time, the Company also short-term leases locomotives based on business needs. Freight locomotives
are used primarily to pull trains while switching locomotives are used in yards. Auxiliary units are typically
used to provide extra traction for heavy trains in hilly terrain. Of owned locomotives, approximately 68%
were in active service as of December 31, 2023, and the remainder were in storage to be utilized as
needed. Storing locomotives and equipment allows the Company to quickly adjust its active fleet based
on demand and other factors while avoiding delays due to supply limitations or excessive lead times to
acquire additional equipment. As of December 2023, CSXT’s fleet of owned or long-term leased
locomotives consisted of the following types:

Freight
Switching
Auxiliary Units

Total Locomotives

Equipment

Locomotives

Average Age
(in Years)

3,160
234
175
3,569

89 %
6 %
5 %
100 %

23
46
30
25

The Company owns or long-term leases rail equipment, including several types of freight cars and
intermodal containers. Of total owned and long-term leased equipment, approximately 89% was in active
service as of December 31, 2023, and the remainder were in storage to be utilized as needed. As of
December 2023, the Company’s owned and long-term leased equipment consisted of the following:

Equipment
Gondolas
Multi-level Flat Cars
Open-top Hoppers
Covered Hoppers
Box Cars
Flat Cars
Other Cars

Subtotal Freight Cars

Containers
Total Equipment

Number of Units

18,978
11,095
6,215
6,088
3,059
575
586
46,596
19,230
65,826

%
41 %
24 %
13 %
13 %
7 %
1 %
1 %
100 %

At any time, approximately two-thirds of the railcars on the CSXT system are not owned or leased
by the Company. Examples of these include railcars owned by other railroads (which are utilized by
CSXT), shipper-furnished or private cars (which are generally used only in that shipper’s service), multi-
level railcars used to transport automobiles (which are shared between railroads) and double-stack
railcars, or well cars (which are industry pooled), that allow for two intermodal containers to be loaded
one above the other.

CSX 2023 Form 10-K p.19

CSX CORPORATION
PART I

The Company’s revenue-generating equipment, either owned or long-term leased, primarily

consists of freight cars and containers as described below.

Gondolas – Support CSXT’s metals markets and provide transport for woodchips and other bulk
commodities. Some gondolas are equipped with special hoods for protecting products like coil and
sheet steel.

Multi-level flat cars – Transport finished automobiles and are differentiated by the number of levels: bi-
levels for large vehicles such as pickup trucks and SUVs and tri-levels for sedans and smaller
automobiles.

Covered hoppers – Have a permanent roof and are segregated based upon commodity
density. Lighter bulk commodities such as grain, fertilizer, flour, salt, sugar, clay and lime are shipped in
large cars called jumbo covered hoppers. Heavier commodities like cement, ground limestone and
industrial sand are shipped in small cube covered hoppers.

Open-top hoppers – Transport heavy dry bulk commodities such as coal, coke, stone, sand, ores and
gravel that are resistant to weather conditions.

Box cars – Include a variety of tonnages, sizes, door configurations and heights to accommodate a
including paper, auto parts, appliances and building
wide
materials. Insulated box cars deliver food products, canned goods, beer and wine.

finished products,

range of

Flat cars – Used for shipping intermodal containers and trailers or bulk and finished goods, such as
lumber, pipe, plywood, drywall and pulpwood.

Other cars – Primarily slab steel cars.

Containers – Weather-proof boxes used for bulk shipment of freight, primarily in intermodal service.

Item 3. Legal Proceedings

For further details, please refer to Note 8. Commitments and Contingencies of this annual report

on Form 10-K.

Item 4. Mine Safety Disclosure

Not Applicable

CSX 2023 Form 10-K p.20

Executive Officers of the Registrant

CSX CORPORATION
PART I

Executive officers of the Company are elected by the CSX Board of Directors and generally hold
office until the next annual election of officers. There are no family relationships or any arrangement or
understanding between any officer and any other person pursuant to which such officer was elected. As
of the date of this filing, the executive officers’ names, ages and business experience are:

Name and Age

Business Experience During Past Five Years

Joseph R. Hinrichs, 57
President and Chief Executive
Officer

Hinrichs, a leader with more than 30 years of experience in the global
automotive, manufacturing, and energy sectors, was named President and
Chief Executive Officer in September 2022.

Hinrichs previously worked at Ford Motor Company from 2000 to 2020, most
recently serving as President of Ford's global automotive business. In that role,
he led the company’s automotive operations, overseeing Ford’s global
business units and the Ford and Lincoln brands. He also led Ford’s automotive
skill teams, overseeing product development, purchasing, manufacturing, labor
affairs, marketing and sales, government affairs, information technology,
sustainability, safety and environmental engineering. Other positions he held at
Ford include President of Global Operations, President of the Americas,
President of Asia Pacific and Africa, Chairman and CEO of Ford China, and
Chairman & CEO of Ford Canada.

Over the four years prior to joining CSX, Hinrichs also served in multiple
advisory and board roles of various companies.

Sean R. Pelkey, 44
Executive Vice President and
Chief Financial Officer

Kevin S. Boone, 46
Executive Vice President and
Chief Commercial Officer

Pelkey was named Executive Vice President and Chief Financial Officer in
January 2022. In this role, he guides all of the finance activities for the
relations,
Company
procurement, tax and treasury. Prior to this role, Pelkey held the role of Vice
President Finance & Treasury since 2017.

including accounting,

financial planning,

investor

Prior to 2017, he has held the positions of AVP Capital Markets and Director
Performance Analysis. During his 18 years with CSX, Mr. Pelkey has held a
variety of other roles, including financial planning and technology finance.

Boone has served as Executive Vice President and Chief Commercial Officer
since June 2021. In his current role, he is responsible for developing and
implementing the Company's commercial strategy and oversees functions
including sales, marketing, customer solutions, real estate and industrial
development.

Mr. Boone has more than 20 years of experience in finance, accounting,
mergers and acquisitions, and transportation performance analysis. He joined
CSX in September 2017 as Vice President of Corporate Affairs and Chief
Investor Relations Officer and was later named Vice President, Marketing and
Strategy leading research and data analysis to advance growth strategies for
CSX. In May 2019 he was named Chief Financial Officer. Before joining CSX in
2017, Mr. Boone worked as a Senior Equity Research Analyst at Janus Capital.
He also served as a Vice President at Morgan Stanley in equity research and
an associate at Merrill Lynch in the mergers and acquisitions group.

CSX 2023 Form 10-K p.21

CSX CORPORATION
PART I

Name and Age

Business Experience During Past Five Years

Michael A. Cory, 61
Executive Vice President and
Chief Operating Officer

Cory was named Executive Vice President and Chief Operating Officer in
September 2023. In this role, he is responsible for transportation, network
operations including terminals, mechanical, engineering and labor relations.

Mr. Cory is a seasoned railroad executive with approximately 40 years of
operations experience, working at the Canadian National Railway Company
("CN") from 1981 to 2019. He served as Executive Vice President and Chief
Operating Officer at CN. He also held positions including Vice President of
Network Operations, Senior Vice President of Network Operations, Senior Vice
President of the Eastern Region and Senior Vice President for the Western
Region during his time at CN.

After Mr. Cory's retirement from CN in 2019, he continued to provide
transportation consulting services as well as serving as the President of Pacific
National, Australia's largest private railroad, in 2021.

Stephen Fortune, 54
Executive Vice President and
Chief Digital and Technology
Officer

Fortune was named CSX's Executive Vice President and Chief Digital and
Technology Officer in April 2022. In this role, he is responsible for leading the
Company's technology strategy development and all aspects of CSX's
information technology systems operations, including cybersecurity.

Prior to joining CSX with nearly 20 years of information technology experience,
he spent 30 years at BP, most recently as Chief Information Officer of the
global BP group.

Nathan D. Goldman, 66
Executive Vice President and
Chief Legal Officer

Goldman has served as Executive Vice President and Chief Legal Officer, and
Corporate Secretary of CSX since November 2017. In this role, he directs the
Company’s legal affairs, government relations, risk management, public safety,
environmental, and audit functions.

During his 20 years with the Company, Mr. Goldman has previously served as
Vice President of Risk Compliance and General Counsel and has overseen
work in compliance, risk management and safety programs.

Diana B. Sorfleet, 59
Executive Vice President and
Chief Administrative Officer

Sorfleet was named Executive Vice President and Chief Administrative Officer
in July 2018. In this role, her responsibilities include human resources, people
systems and analytics, total rewards, facilities and aviation.

During her 12 years with the Company, Ms. Sorfleet has previously served as
Chief Human Resources Officer. Prior to joining CSX, she worked in human
resources for 20 years.

Angela C. Williams, 49
Vice President and Chief
Accounting Officer

Williams has served as Vice President and Chief Accounting Officer of CSX
since March 2018. She is responsible for financial and regulatory reporting,
freight billing and collections, payroll, accounts payable and various other
accounting processes.

During her 20 years with the Company, she previously served as Assistant Vice
President - Assistant Controller and in other various accounting roles. With
more than 25 years of experience, Williams held various accounting and
auditing positions prior to joining CSX. Ms. Williams is a Certified Public
Accountant in the state of Florida.

CSX 2023 Form 10-K p.22

CSX CORPORATION
PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

Market Information

CSX’s common stock is listed on the Nasdaq Global Select Market, which is its principal trading
market, and is traded over-the-counter and on exchanges nationwide. The official trading symbol is
“CSX.”

Description of Common and Preferred Stock

A total of 5.4 billion shares of common stock are authorized, of which 1,958,427,685 shares were
outstanding as of December 31, 2023. Each share is entitled to one vote in all matters requiring a vote of
shareholders. There are no preemptive rights, which are privileges extended to select shareholders that
would allow them to purchase additional shares before other members of the general public in the
event of an offering. At January 31, 2024, the latest practicable date that is closest to the filing date, there
were 21,547 common stock shareholders of record. The weighted average of common shares
outstanding, which was used in the calculation of diluted earnings per share, was 2,013 million as of
December 31, 2023. (See Note 2, Earnings Per Share.) A total of 25 million shares of preferred stock is
authorized, none of which is currently outstanding.

The following table sets forth, for the quarters indicated, the dividends declared on CSX common

stock.

2023
2022

Quarter

1st

2nd

3rd

4th

Year

0.11 $

0.10 $

0.11 $

0.10 $

0.11 $

0.10 $

0.11 $

0.10 $

0.44

0.40

CSX 2023 Form 10-K p.23

CSX CORPORATION
PART II

Stock Performance Graph

The cumulative shareholder returns, assuming reinvestment of dividends, on $100 invested at
December 31, 2018 are illustrated on the graph below. The Company references the Standard & Poor's
500 Stock Index (“S&P 500 ®”), and the Dow Jones U.S. Transportation Average Index, which provide
comparisons to a broad-based market index and other companies in the transportation industry. This
performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of
Section 18 of the Exchange Act, or otherwise subject to liabilities under that Section, and shall not be
deemed to be incorporated by reference into any filing of CSX Corp. under the Securities Act of 1933, as
amended, or the Exchange Act.

CSX 2023 Form 10-K p.24

CSX Purchases of Equity Securities

CSX CORPORATION
PART II

During November 2023, the share repurchase program announced in July 2022 was completed
and the Company began repurchasing shares under the $5 billion share repurchase program approved
on October 17, 2023. Total repurchase authority remaining as of December 31, 2023 was $4.8 billion.
For more information about share repurchases, see Note 2, Earnings Per Share. Share repurchase
activity of $581 million for the fourth quarter 2023 was as follows:

CSX Purchases of Equity Securities for the Quarter

Total Number
of Shares
Purchased

Average
Price
Paid per
Share

Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs

Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans
or Programs

$ 371,411,668

Fourth Quarter

Beginning Balance

October 1 - October 31, 2023

10,791,515

$ 30.53

10,791,515

41,950,017

November 1 - November 30, 2023

December 1 - December 31, 2023

6,756,749

1,326,238

30.66

33.45

6,756,749

4,834,766,702

1,326,238

4,790,399,073

Ending Balance

18,874,502

$ 30.78

18,874,502

$ 4,790,399,073

Item 6. Reserved

CSX 2023 Form 10-K p.25

CSX CORPORATION
PART II

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

TERMS USED BY CSX

When used in this report, unless otherwise indicated by the context, these terms are used to

mean the following:

Car hire - A charge paid by one railroad for its use of cars belonging to another railroad or car owner.

Class I freight railroad - One of the largest line haul freight railroads as determined based on operating
revenue; the exact revenue required to be in each class is periodically adjusted for inflation by the
Surface Transportation Board. Smaller railroads are classified as Class II or Class III.

Common carrier mandate - A federal mandate that requires U.S. railroads to accommodate reasonable
requests from shippers to carry any freight, including hazardous materials.

Demurrage - A charge assessed by railroads for the use of rail cars by shippers or receivers of freight
beyond a specified free time.

Department of Transportation ("DOT") - A U.S. government agency with jurisdiction over matters of all
modes of transportation.

Depreciation study - Conducted by a third-party specialist and analyzed by management, a periodic
statistical analysis of fixed asset service lives, salvage values, accumulated depreciation, and other
factors for group assets along with a comparison of similar asset groups at other companies.

Double-stack - Stacking containers two-high on specially equipped cars.

Economic Profit (CSX Cash Earnings or CCE) - A non-GAAP measure designed to incentivize
strategic investments earning more than the required return. Economic Profit is calculated as CSX’s
gross cash earnings (after-tax adjusted EBITDA) minus the capital charge (long-term average cost of
capital) on gross operating assets.

Environmental Protection Agency (“EPA”) - A U.S. government agency that has regulatory authority
with respect to environmental law.

Federal Railroad Administration ("FRA") - The branch of the DOT that is responsible for developing
and enforcing railroad safety regulations, including safety standards for rail infrastructure and equipment.

Free cash flow - The calculation of a non-GAAP measure by using net cash provided by operating
activities and adjusting for property additions and certain other investing activities. Free cash flow is a
measure of cash available for paying dividends, share repurchases and principal reduction on
outstanding debt.

Group-life depreciation - A type of depreciation in which assets with similar useful lives and
characteristics are aggregated into groups. Instead of calculating depreciation for individual assets,
depreciation is calculated as a whole for each group.

Incidental charges - Charges for switching, demurrage, storage, etc.

Intermodal - A flexible way of transporting freight over highway, rail and water without being removed
from the original transportation equipment, namely a container or trailer.

CSX 2023 Form 10-K p.26

CSX CORPORATION
PART II

Mainline - The main track thoroughfare, exclusive of terminals, yards, sidings and turnouts.

Pipeline and Hazardous Materials Safety Administration (“PHMSA”) - An agency within the DOT
that, together with the FRA, has broad jurisdiction over railroad operating standards and practices,
including hazardous materials requirements.

Positive Train Control ("PTC") - An interoperable train control system designed to prevent train-to-train
collisions, over-speed derailments, incursions into established work-zone limits, and train diversions onto
another set of tracks.

Revenue adequacy - The achievement of a rate of return on investment over time at least equal to the
industry cost of investment capital, as measured by the STB.

Shipper - A customer shipping freight via rail.

Siding - Track adjacent to the mainline used for passing trains.

Staggers Act of 1980 - Congressional law that significantly deregulated the rail industry, replacing the
regulatory structure in existence since the 1887 Interstate Commerce Act. Where previously rates were
controlled by the Interstate Commerce Commission, the Staggers Act allowed railroads to establish their
own rates for shipments, enhancing their ability to compete with other modes of transportation.

Surface Transportation Board
independent governmental adjudicatory body
administratively housed within the DOT, responsible for the economic regulation of interstate surface
transportation within the United States.

("STB")

- An

Switching - Putting cars in a specific order, placing cars for loading, retrieving empty cars or adding or
removing cars from a train at an intermediate point.

Terminal - A facility, typically owned by a railroad, for the handling of freight and for the breaking up,
making up, forwarding and servicing of trains.

Transportation Security Administration (“TSA”) - A component of the Department of Homeland
Security with broad authority over railroad operating practices that may have homeland security
implications.

TTX Company ("TTX") - A company that provides its owner-railroads with standardized fleets of
intermodal, automotive and general use railcars at time and mileage rates. CSX owns about 20 percent
of TTX's common stock, and the remainder is owned by the other leading North American railroads and
their affiliates.

Turnout - A track that diverts trains from one track to another.

Yard - A system of tracks, other than main tracks and sidings, used for making up trains, storing cars and
other purposes.

CSX 2023 Form 10-K p.27

CSX CORPORATION
PART II

2023 HIGHLIGHTS

• Revenue of $14.7 billion decreased $196 million or 1% versus the prior year.
• Expenses of $9.1 billion increased $266 million or 3% year over year.
• Operating income of $5.6 billion decreased $462 million or 8% year over year.
• Operating ratio of 62.1% increased 260 basis points from 59.5%.
• Earnings per diluted share of $1.85 decreased $0.10 or 5% year over year.

RESULTS OF OPERATIONS

The following section generally discusses the Company's results of operations and financial
condition for the year ended December 31, 2023, compared to the year ended December 31, 2022. A
discussion regarding results of operations and financial condition for the year ended December 31, 2022,
compared to the year ended December 31, 2021, can be found in Part II, Item 7 of CSX's Annual Report
on Form 10-K for the year ended 2022, filed with the Securities and Exchange Commission on February
15, 2023.

2023 vs. 2022 Results of Operations

(Dollars in Millions)
Revenue

Expense

Labor and Fringe

Purchased Services and Other

Depreciation and Amortization

Fuel

Equipment and Other Rents

Gains on Property Dispositions

Total Expense

Operating Income

Interest Expense

Other Income - Net

Income Tax Expense

Net Earnings

Earnings Per Diluted Share

Operating Ratio

Years Ended

2023

2022

$ Change % Change

$ 14,657

$ 14,853

(196)

(1) %

3,024

2,764

1,611

1,377

354

(34)

9,096

5,561

(809)

139

(1,176)

$ 3,715

1.85

62.1 %

2,861

2,685

1,500

1,626

396

(238)

8,830

6,023

(742)

133

(1,248)

4,166

1.95

59.5 %

(163)

(79)

(111)

249

(204)

(266)

(462)

(67)

72
(451)

(0.10)

(6)

(3)

(7)

(86)

(3)

(8)

(9)

6
(11)

(5) %
(260) bps

CSX 2023 Form 10-K p.28

CSX CORPORATION
PART II

Volume and Revenue (Unaudited)
Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)

Volume

Revenue

Revenue Per Unit

2023

2022

%
Change

2023

2022

%
Change

2023

2022

%
Change

642

468

388

358

284

282

199

641

481

338

337

267

291

203

— % $ 2,599 $ 2,584

1 % $ 4,048 $ 4,031

— %

(3) % 1,657

1,664

— % 3,541

3,459

15 % 1,219

1,054

16 % 3,142

3,118

6 %

733

917

(3) % 1,012

(2) %

516

658

828

996

455

11 % 2,047

1,953

11 % 3,229

3,101

2 % 3,589

3,423

13 % 2,593

2,241

Chemicals

Agricultural and Food Products

Automotive

Minerals

Metals and Equipment

Forest Products

Fertilizers

Total Merchandise

Intermodal

Coal

Trucking

Other

Total

2 %

1 %

5 %

4 %

5 %

16 %

2 %

(4) %

(6) %

— %

2,621

2,558

2 % 8,653

8,239

5 % 3,301

3,221

2,766

2,963

(7) % 2,060

2,306

(11) %

745

778

755

697

8 % 2,484

2,434

2 % 3,290

3,492

—

— %

882

578

966

908

(9) %

(36) %

—

6,142

6,218

(1) % $ 14,657 $ 14,853

(1) % $ 2,386 $ 2,389

CSX 2023 Form 10-K p.29

CSX CORPORATION
PART II

Revenue

Total revenue decreased by $196 million in 2023, or 1%, when compared to the previous year
primarily due to decreases in other revenue, lower fuel recovery, pricing declines in export coal due to the
impact of lower benchmark rates and declines in intermodal volume. These declines were partially offset
by pricing and volume gains in merchandise and higher coal volumes.

Merchandise Volume

Chemicals - Increased shipments of export plastics, waste, and sand were offset by lower
shipments of materials used in making plastics.

Agricultural and Food Products – Decreased primarily due to lower shipments of ethanol and
export grain.

Automotive - Increased due to higher North American vehicle production as well as new business
wins.

Minerals - Increased due to higher shipments of aggregates and cement driven by increased road
construction and other infrastructure-related activities.

Metals and Equipment - Increased due to higher steel and scrap shipments, as well as stronger
equipment shipments.

Forest Products – Decreased primarily due to lower shipments of pulpboard, paper, and lumber,
partially offset by higher shipments of other building products.

Fertilizers - Decreased due to declines in short-haul shipments, which were partially offset by
increases in long-haul potash and phosphate shipments.

Intermodal Volume

Lower volume was due to decreased international shipments driven by high inventory levels and
lower imports. Domestic shipments increased due to growth with key customers as well as the
prior year impact of supply-side constraints.

Coal Volume

Export coal increased due to higher shipments of metallurgical and thermal coal. Domestic coal
decreased due to lower shipments of coal to northern utility plants.

Trucking Revenue

Trucking revenue decreased $84 million versus the prior year due to lower fuel and capacity
surcharges.

Other Revenue

Other revenue was $330 million lower, primarily resulting from lower intermodal storage and
equipment usage.

CSX 2023 Form 10-K p.30

CSX CORPORATION
PART II

Expense

In 2023, total expenses increased $266 million, or 3%, compared to prior year. Descriptions of

each expense category as well as significant year-over-year changes are described below.

Labor and Fringe expenses include employee wages and related payroll taxes, health and welfare costs,
pension, other post-retirement benefits and incentive compensation. These expenses increased $163
million due to the following items:

•
•

•

An increase of $144 million was driven by inflation.
An increase of $89 million was due to the impacts of higher headcount and union
employee vacation and sick benefits.
Incentive compensation costs decreased $34 million primarily due to lower expected
payouts as well as the impacts of accelerated expense for eligible employees in the prior
year.
Prior year amounts included $32 million of out-of-period labor and benefit costs due to the
agreement reached with labor unions.
Other costs decreased by $4 million due to non-significant items.

Purchased Services and Other expenses consist primarily of contracted services to maintain
infrastructure and equipment, terminal and pier services, purchased trucking and other transportation,
and professional services. This category also includes costs related to materials, travel, casualty claims,
environmental remediation, train accidents, property and sales tax, utilities and other items. Total
purchased services and other expenses increased $79 million driven by the following:

•

•
•

An increase of $101 million was due to higher operating support costs, which were
primarily due to inflation and higher repair and maintenance costs. These increases were
partially offset by lower volume and reduced congestion in intermodal operations.
A decrease of $54 million was due to insurance recoveries in the current year.
All other costs increased $32 million as higher technology spending, inflation and other
increases were partially offset by lower trucking expenses and other non-significant items.

Depreciation expense primarily relates to recognizing the costs of capital assets, such as locomotives,
railcars and track structure, over their respective useful lives, which are reviewed periodically as part of
depreciation studies. This expense is impacted primarily by the capital expenditures made each year.
Depreciation expense increased $111 million primarily due to the impacts of a 2022 equipment
depreciation study as well as a larger net asset base.

Fuel expense includes locomotive diesel fuel as well as non-locomotive fuel. This expense is largely
driven by the market price and locomotive consumption of diesel fuel. Fuel expense decreased
$249 million primarily due to a 19% decrease in locomotive fuel prices, partially offset by higher fuel
consumption.

Equipment and Other Rents expense includes rent paid for freight cars owned by other railroads or
private companies, net of rents received by CSXT for use of its equipment. This category of expenses
also includes expenses for short-term and long-term leases of locomotives, railcars, containers, tractors
and trailers, offices and other rentals. These expenses decreased $42 million primarily due to lower car
hire costs from improved car cycle times, partially offset by costs related to higher automotive volume.

Gains on Property Dispositions decreased to $34 million in 2023 from $238 million in 2022 primarily due
to the inclusion of $144 million of gains in 2022 from the sale of property rights to the Commonwealth of
Virginia.

CSX 2023 Form 10-K p.31

CSX CORPORATION
PART II

Interest Expense
Interest Expense includes interest on long-term debt and related fair value hedges, equipment obligations
and finance leases. Interest expense increased $67 million primarily as a result of higher average debt
balances and higher effective interest rates.

Other Income - Net
Other Income - Net includes investment gains, losses, interest income, components of net periodic
pension and post-retirement benefit cost and other non-operating activities. Other income increased $6
million primarily due to higher interest income and other non-significant items, partially offset by a
decrease in net pension benefit credits.

Income Tax Expense
Income Tax Expense decreased $72 million primarily due to lower earnings before income taxes, partially
offset by prior year favorable state legislative changes.

Net Earnings and Earnings per Diluted Share
Net Earnings decreased $451 million to $3.7 billion, and earnings per diluted share decreased $0.10 to
$1.85, due to the factors mentioned above. Average shares outstanding was lower as a result of share
repurchase activity during the year and had a favorable impact on earnings per diluted share.

CSX 2023 Form 10-K p.32

CSX CORPORATION
PART II

NON-GAAP MEASURES (Unaudited)

CSX reports its financial results in accordance with United States generally accepted accounting
principles ("GAAP"). CSX also uses certain non-GAAP measures that fall within the meaning of Securities
and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the
financial information with additional meaningful comparison to prior reported results. Non-GAAP
measures do not have standardized definitions and are not defined by GAAP. Therefore, CSX’s non-
GAAP measures are unlikely to be comparable to similar measures presented by other companies. The
presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for,
or as superior to the financial information presented in accordance with GAAP. Reconciliations of non-
GAAP measures to corresponding GAAP measures are below.

Economic Profit

Management believes Economic Profit (CSX Cash Earnings or CCE) provides additional
perspective to investors about financial returns generated by the business by representing a profit
generated over and above the cost of capital used by the business to generate that profit. Economic
Profit is designed to incentivize strategic investments that earn more than the required return. Increases
in Economic Profit indicate that the Company is effectively allocating capital and rewarding shareholders
by generating growth in excess of the incremental cost of capital associated with reinvestment in the
business. This measure should be considered in addition to, rather than a substitute for, net income. This
measure is defined by the Company as gross cash earnings minus the capital charge on gross operating
assets. Gross cash earnings is calculated as Adjusted Earnings before Interest, Taxes, Depreciation and
Amortization ("Adjusted EBITDA"), less an assumed 15% cash tax. The capital charge uses a long-term
average cost of capital of 8% multiplied by the gross operating assets. CSX's gross operating assets
include gross properties and other non-cash assets, net of non-interest bearing liabilities.

The following table reconciles net income (GAAP measure) to Economic Profit (non-GAAP

measure).

(Dollars in Millions)
Net Income

Add: Income Tax Expense
Remove: Other Income - Net
Add: Interest Expense
Add: Depreciation, Amortization, and Operating Lease Expense
Remove: Unusual Items (a)

Adjusted EBITDA
15% Assumed Cash Tax
Gross Cash Earnings

Current Assets (Less Cash and Short-term Investments)
Gross Properties
Other Assets
Non-Interest Bearing Liabilities
Gross Operating Assets (b)
8% Capital Charge
Economic Profit (Non-GAAP)

Years Ended

2023

2022

3,715 $
1,176
(139)
809
1,720
—
7,281
(1,092)
6,189

(1,908)
(49,212)
(3,896)
10,873
(44,143)
(3,531)
2,658 $

4,166
1,248
(133)
742
1,609
(144)
7,488
(1,123)
6,365

(1,843)
(47,471)
(3,862)
10,640
(42,536)
(3,403)
2,962

(a) Unusual items are defined by management as unique events with greater than $100 million full year operating income impact,
consistent with the terms of the Company's long-term incentive plan agreements. Gains from the Virginia transaction of $144
million were excluded for 2022.

(b) Gross operating assets reflects an average of reported balance sheet figures.

CSX 2023 Form 10-K p.33

CSX CORPORATION
PART II

Free Cash Flow

Management believes free cash flow is useful to investors as it is important in evaluating the
Company’s financial performance. More specifically, free cash flow measures cash generated by the
business after reinvestment. This measure represents cash available for both equity and bond investors
to be used for dividends, share repurchases or principal reduction on outstanding debt. Free cash flow is
calculated by using net cash from operations and adjusting for property additions and proceeds from
property dispositions. This measure should be considered in addition to, rather than a substitute for, cash
provided by operating activities. Free cash flow before dividends decreased $412 million year-over-year
to $3.3 billion primarily due to lower proceeds and advances from property dispositions, mostly
attributable to the sale of property rights to the Commonwealth of Virginia in the prior year, as well as
higher property additions and less cash from operating activities. Cash from operating activities includes
lower cash-generating net earnings and the impact of $168 million of higher payments for retroactive
wages and bonuses, and associated taxes, related to finalized labor agreements as well as the offsetting
impact of $381 million of postponed federal estimated tax payments, which were extended until first
quarter 2024 under an Internal Revenue Service tax relief announcement for those impacted by
Hurricane Idalia.

The following table reconciles cash provided by operating activities (GAAP measure) to free cash

flow (non-GAAP measure).

(Dollars in Millions)
Net Cash Provided by Operating Activities
Property Additions
Proceeds and Advances from Property Dispositions
Free Cash Flow, before Dividends (Non-GAAP)

Years Ended

2023

2022

5,549 $
(2,281)
52
3,320 $

5,619
(2,133)
246
3,732

CSX 2023 Form 10-K p.34

CSX CORPORATION
PART II

OPERATING STATISTICS (Estimated)

Certain operating statistics are estimated and can continue to be updated as actuals settle. The
methodology for calculating train velocity, dwell, cars online and trip plan performance differs from that
used by the Surface Transportation Board. The Company will continue to report these metrics to the
Surface Transportation Board using the prescribed methodology.

Fiscal Years

2023

2022

Improvement/
(Deterioration)

Operations Performance (a)
Train Velocity (Miles per hour)

Dwell (Hours)

Cars Online

On-Time Originations

On-Time Arrivals

Carload Trip Plan Performance

Intermodal Trip Plan Performance

Fuel Efficiency

Revenue Ton-Miles (Billions)

Merchandise

Coal

Intermodal

Total Revenue Ton-Miles

Total Gross Ton-Miles (Billions)

Safety (b)
FRA Personal Injury Frequency Index

FRA Train Accident Rate

18.0

9.4

16.1

11.3

125,580

138,074

77 %

71 %

84 %

95 %

60 %

52 %

64 %

90 %

1.02

0.99

128.0

37.4

28.3

193.7

381.3

0.89

3.32

126.0

33.8

30.0

189.8

375.5

1.01

3.37

12 %

17 %

9 %

28 %

37 %

31 %

6 %

(3) %

2 %

11 %

(6) %

2 %

12 %

1 %

(a) Beginning second quarter 2023, all operations performance metrics include results from the network acquired from Pan Am. The impact of
including Pan Am data was insignificant.

(b) Safety metrics do not include results from the network acquired from Pan Am. These metrics will be updated to include the Pan Am network
results as integration completes.

Key Performance Measures Definitions:

Train Velocity - Average train speed between origin and destination in miles per hour (does not include locals, yard jobs, work trains or
passenger trains). Train velocity measures actual train miles and times of a train movement on CSX's network.
Dwell - Average amount of time in hours between car arrival to and departure from the yard.
Cars Online - Average number of active freight rail cars on lines operated by CSX, excluding rail cars that are being repaired, in storage, those
that have been sold, or private cars dwelling at a customer location more than one day.
On-Time Originations - Percent of scheduled road trains that depart the origin yard on-time or ahead of schedule.
On-Time Arrivals - Percent of scheduled road trains that arrive at the destination yard on-time to within two hours of scheduled arrival.
Carload Trip Plan Performance - Percent of measured cars (excludes unit trains and other non-scheduled service as well as empty automotive
shipments) destined for a customer that complete their scheduled plan at or ahead of the original estimated time of arrival or interchange (as
applicable).
Intermodal Trip Plan Performance - Percent of measured containers (excludes port shipments along with empty containers and other non-
scheduled service) destined for a customer that complete their scheduled plan at or ahead of the original estimated time of arrival, notification
or interchange (as applicable).
Fuel Efficiency - Gallons of locomotive fuel per 1,000 gross ton-miles.
Revenue Ton-Miles (RTM's) - The movement of one revenue-producing ton of freight over a distance of one mile.
Gross Ton-Miles (GTM's) - The movement of one ton of train weight over one mile. GTM's are calculated by multiplying total train weight by
distance the train moved. Total train weight is comprised of the weight of the freight cars and their contents.
FRA Personal Injury Frequency Index - Number of FRA-reportable injuries per 200,000 man-hours.
FRA Train Accident Rate - Number of FRA-reportable train accidents per million train-miles.

CSX 2023 Form 10-K p.35

CSX CORPORATION
PART II

The Company is committed to continuous improvement in safety and service performance
through training, innovation and investment. Training and safety programs are designed to prevent
incidents that can adversely impact employees, customers and communities. Technological innovations
that can detect and avoid many types of human factor incidents are designed to serve as an additional
layer of protection for the Company's employees. Continued capital investment in the Company's assets,
including track, bridges, signals, equipment and detection technology also supports safety performance.

The Company remains focused on safety, service, and controlling costs. Velocity and dwell
improved 12% and 17%, respectively, relative to 2022. Carload trip plan performance improved to 84%
compared to 64% while intermodal trip plan performance improved to 95% compared to 90%, relative to
2022. CSX has seen an improvement in service metrics throughout 2023.

From a safety perspective, the FRA personal injury index improved by 12% and the train-accident
rate improved by 1% compared to prior year. Safety is a guiding principle at CSX and the Company
remains focused on its strong safety culture, including instilling the importance of safety in new hires.
CSX is committed to reducing risk and enhancing the overall safety of its employees, customers and
communities in which the Company operates.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is a company’s ability to generate adequate amounts of cash to meet both current and
future needs for obligations as they mature and to provide for planned capital expenditures, including
those to address regulatory and legislative requirements. To have a complete picture of a company’s
liquidity, its sources and uses of cash, balance sheet and external factors should be reviewed.

Significant Cash Flows

The following charts highlight the operating, investing and financing components of the change in

cash and cash equivalents for operating, investing and financing activities for full years 2023 and 2022.

In 2023, the Company generated $5.5 billion of cash from operating activities, which was $70
million less than prior year primarily driven by lower cash-generating net earnings and $168 million higher
payments for retroactive wages and bonuses, including the associated taxes, related to finalized labor
agreements. This decrease was partially offset by the impact of $381 million of postponed federal
estimated tax payments mentioned above. Net cash used in investing activities was $2.3 billion, an
increase in net spend of $156 million from the prior year primarily due to lower proceeds from property
dispositions and higher property additions, partially offset by decreased acquisition spending. Cash used
in financing activities was $3.9 billion, which represents an increase in net spend of $98 million from the
prior year primarily due to lower proceeds from the issuance of long-term debt, partially offset by lower
share repurchases.

CSX 2023 Form 10-K p.36

OPERATING CASH FLOWS (in millions) $5,549$5,61920232022INVESTING CASH FLOWS(in millions) $(2,287)$(2,131)20232022FINANCING CASH FLOWS(in millions) $(3,867)$(3,769)20232022CSX CORPORATION
PART II

Sources of Cash and Liquidity

The Company has multiple sources of liquidity, including cash generated from operations and
financing sources. The Company filed a shelf registration statement with the SEC on February 16, 2022,
which may be used to issue debt or equity securities at CSX’s discretion, subject to market conditions
and CSX Board authorization. While CSX seeks to give itself flexibility with respect to cash requirements,
there can be no assurance that market conditions would permit CSX to sell such securities on acceptable
terms at any given time, or at all. In 2023, CSX issued $600 million of long-term debt. See Note 10, Debt
and Credit Agreements for more information.

CSX has access to a $1.2 billion five-year unsecured revolving credit facility backed by a diverse
syndicate of banks that expires in February 2028. As of December 31, 2023, the Company had no
outstanding balances under this facility. The Company also has a commercial paper program, backed by
the revolving credit facility, under which the Company may issue unsecured commercial paper notes up
to a maximum aggregate principal amount of $1.0 billion outstanding at any one time. As of December
31, 2023, the Company had no outstanding debt under the commercial paper program.

Uses of Cash

CSX uses current cash balances for general corporate purposes, which may include capital
expenditures, working capital requirements, reduction or refinancing of outstanding indebtedness,
redemptions and repurchases of CSX common stock, dividends to shareholders, acquisitions and other
business opportunities, and contributions to the Company's qualified pension plan.

In 2023, CSX continued to invest in its business to create long-term value for shareholders. The
Company is committed to maintaining and improving its existing infrastructure and to positioning itself for
long-term, profitable growth through optimizing network and terminal capacity. Funds used for property
additions are further described below.

Capital Expenditures (Dollars in Millions)
Track
Bridges, Signals and Other

Total Infrastructure

Strategic Projects and Commercial Facilities
Freight Cars
Locomotives
Regulatory (including PTC)

Total Capital Expenditures

Years Ended

2023

2022

$ 1,007 $

693
1,700
304
136
117
24

$ 2,281 $

1,000
673
1,673
251
75
104
30
2,133

Planned capital investments for 2024 are expected to be approximately $2.5 billion. Spending to
sustain core infrastructure with a focus on safety and reliability will be a top priority. In addition,
management is committed to investments that promote profitable growth, including projects supporting
service enhancements and productivity initiatives, including investments in locomotives and freight cars.
CSX intends to fund capital investments primarily through cash generated from operations.

CSX is continually evaluating market and regulatory conditions that could affect the Company’s
ability to generate sufficient returns on capital investments. CSX may revise its future estimates for capital
spending as a result of changes in business conditions, tax legislation or the enactment of new laws or
regulations, which could have a material adverse effect on the Company’s operations and financial
performance in the future (see Risk Factors under Item 1A of this Form 10-K).

CSX 2023 Form 10-K p.37

CSX CORPORATION
PART II

CSX is committed to returning cash to shareholders. Capital structure, capital investments and
cash distributions, including dividends and share repurchases, are reviewed at least annually by the
Board of Directors. On February 14, 2024, the Company's Board of Directors authorized a 9% increase in
the quarterly cash dividend to $0.12 per common share effective March 2024. Management's
assessment of market conditions and other factors guides the timing and volume of repurchases. Future
share repurchases are expected to be funded by cash on hand, cash generated from operations and debt
issuances.

Material Changes in the Consolidated Balance Sheets and Working Capital

CSX's balance sheet reflects its strong capital base and the impact of CSX's balanced approach
in deploying capital for the benefit of its shareholders, which includes investments in infrastructure,
dividend payments and share repurchases. Further, CSX is well positioned from a liquidity standpoint.
The Company ended the year with $1.4 billion of cash, cash equivalents and short-term investments.

Total assets as well as total liabilities and shareholders' equity increased $496 million from prior
year end. The increase in total assets was primarily due to a $693 million increase in net properties
consistent with planned capital expenditures, a $113 million increase in net pension assets for qualified
pension plans, a $105 million increase in materials and supplies and a $105 million increase in
investments in affiliates and other companies. These increases were partially offset by a $605 million
decrease in cash as noted above.

Total liabilities increased $988 million from prior year end primarily due to the issuance of $600
million in long-term debt, a $414 million increase in income and other taxes payable largely related to
postponed federal estimated tax payments, a $177 million increase in deferred income taxes and a $107
million increase in accounts payable. These increases were partially offset by payouts of accrued
retroactive wages and bonuses totaling $238 million and debt repayments of $153 million. Total
shareholders' equity decreased $492 million from prior year end primarily driven by share repurchases of
$3.5 billion and dividends paid of $882 million, partially offset by net earnings of $3.7 billion.

Working capital is considered a measure of a company’s ability to meet its short-term needs. CSX
had a working capital surplus of $160 million at December 2023 and $1.4 billion at December 2022. This
decrease of $1.2 billion since year end is primarily due to cash paid for share repurchases of $3.5 billion,
property additions of $2.3 billion and dividend payments of $882 million, as well as a $558 million of long-
term debt maturing in 2024. These decreases were partially offset by cash earned from operations of
$5.5 billion and $600 million in cash received from debt issued.

CSX 2023 Form 10-K p.38

CSX CORPORATION
PART II

The Company’s working capital balance varies due to factors such as the timing of scheduled
debt payments and changes in cash and cash equivalent balances. Although the Company currently has
a surplus, a working capital deficit is not unusual for CSX or other companies in the industry and does not
indicate a lack of liquidity. The Company continues to maintain adequate current assets to satisfy current
liabilities and maturing obligations when they come due. Furthermore, CSX has sufficient financial
capacity, including its revolving credit facility, commercial paper program and shelf registration statement
to manage its day-to-day cash requirements and any anticipated obligations. The Company from time to
time accesses the credit markets for additional liquidity.

Completed Transactions
Acquisition of Pan Am Systems, Inc.

On June 1, 2022, CSX completed its acquisition of Pan Am. The closing price of $600 million was
funded through a combination of common stock valued at $422 million and cash totaling $178 million.
Total cash consideration paid to acquire the business includes a $30 million deposit paid in fourth quarter
2020. For further details, refer to Note 17, Business Combinations.

Acquisition of Quality Carriers, Inc.

On July 1, 2021, CSX acquired Quality Carriers, Inc. for a purchase price of $544 million in cash.
This transaction was funded by cash on hand. For further details, refer to Note 17, Business
Combinations.

Sale of Property Rights to the Commonwealth of Virginia

On March 26, 2021, the Company entered into a comprehensive agreement to sell certain
property rights in three CSX-owned line segments to the Commonwealth of Virginia (“Commonwealth”)
over three phases. Over the course of the transaction, which was completed in 2022, total proceeds of
$525 million were collected and total gains of $493 million were recognized. This includes $125 million of
proceeds collected and $144 million of gains recognized in 2022. For further details, refer to Note 6,
Properties.

CSX 2023 Form 10-K p.39

CSX CORPORATION
PART II

Credit Ratings

Credit ratings reflect an independent agency’s judgment on the likelihood that a borrower will
repay a debt obligation at maturity. The ratings reflect many considerations, such as the nature of the
borrower’s industry and its competitive position, the size of the company, its liquidity and access to capital
and the sensitivity of a company’s cash flows to changes in the economy. The two largest rating
agencies, Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Service (“Moody’s”), use
alphanumeric codes to designate their ratings. The highest quality rating for long-term credit obligations is
AAA and Aaa for S&P and Moody’s, respectively. A credit rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency.

The cost and availability of unsecured financing are materially affected by CSX's long-term credit
ratings. CSX's credit ratings improved during 2023 following an upgrade by Moody's from a long-term
rating Baa1 (Stable) as of December 2022 to A3 (Stable) as of December 2023. S&P's long-term rating
for CSX remains consistent at BBB+ (Stable) for both December 2022 and December 2023. Ratings of
BBB- and Baa3 or better by S&P and Moody’s, respectively, reflect ratings on debt obligations that fall
within a band of credit quality considered to be investment grade. If CSX's credit ratings were to decline
to below investment-grade levels, the Company could experience significant increases in its interest cost
for new debt. In addition, a decline in CSX’s credit ratings to below investment grade levels could
adversely affect the market’s demand, and thus the Company’s ability to readily issue new debt. The
Company is committed to maintaining an investment-grade credit profile.

CSX 2023 Form 10-K p.40

CSX CORPORATION
PART II

CONTRACTUAL OBLIGATIONS, OTHER COMMITMENTS AND OFF-BALANCE
SHEET ARRANGEMENTS

Contractual Obligations

CSX is party to contractual arrangements that obligate the Company to make future cash
payments. These obligations impact the Company’s liquidity and capital resource needs. The Company’s
contractual obligations primarily consist of long-term debt and related interest payments, purchase
commitments, leases, other-post employment benefits and agreements with Conrail.

• As of December 31, 2023, the Company had outstanding fixed-rate notes with varying maturities.
See Note 10, Debt and Credit Agreements, for additional information related to future debt
payments. Future interest payments associated with outstanding debt total $14.3 billion, with
$804 million payable in 2024.

• Purchase commitments consist of CSX’s long-term locomotive maintenance program and other
commitments to purchase technology, communications, railcar maintenance and other services.
See Note 8, Commitments and Contingencies, for additional information about future payments
related to purchase commitments.

• Capital expenditures include investments related to public-private partnerships. These partnership
investments are typically for projects that are partially or wholly reimbursed to CSX through
government awards or other funding sources. Project contribution commitments that are not
reimbursable total $55 million as of December 31, 2023.

•

The Company’s leases include property, equipment, and line leases. See Note 7, Leases, for
additional information about future payments related to leases.

• Other post-employment benefits include estimated other post-retirement medical and life
insurance payments and payments under non-qualified pension plans that are unfunded. See
Note 9, Employee Benefit Plans, for additional information about future payments under such
plans.

• Conrail owns rail infrastructure and operates for the joint benefit of CSX and Norfolk Southern
Corporation ("NS"). This is known as the shared asset area. Conrail charges fees for right-of-way
usage, equipment rentals and transportation, switching and terminal service charges in the shared
asset area. See Note 15, Investment in Affiliates and Related-Party Transactions, for additional
information about future payments related to agreements with Conrail.

Other Commitments and Off-Balance Sheet Arrangements

Other commitments total $187 million and primarily consist of guarantees, letters of credit and
surety bonds, none of which are individually significant. These off-balance sheet arrangements are not
reasonably likely to have a material effect on the Company's financial condition, results of operations or
liquidity.

LABOR AGREEMENTS

Approximately 17,700 of the Company's approximately 23,000 employees are members of a rail
labor union. As of December 2, 2022, all 12 rail unions at CSX that participated in national bargaining
were covered by national agreements with the Class I railroads and CSX-specific agreements that will
remain in effect through December 31, 2024. Collective agreements under the Railway Labor Act do not
expire, but continue until amended, and formal notices to amend these agreements may be served as
early as November 1, 2024.

CSX 2023 Form 10-K p.41

CSX CORPORATION
PART II

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires that management make estimates in reporting the amounts of
certain assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements and certain revenues and expenses during the reporting period. Actual results may differ from
those estimates. These estimates and assumptions are discussed with the Audit Committee of the Board
of Directors on a regular basis. Significant estimates using management judgment are made for the
following areas:
•
•
•

personal injury and environmental reserves;
pension plan accounting; and
depreciation policies for assets under the group-life method

Personal Injury and Environmental Reserves
Personal Injury

Personal Injury reserves of $128 million and $126 million for 2023 and 2022, respectively,
represent liabilities for employee work-related and third-party injuries. CSXT retains an independent
actuary to assist management in assessing the value of personal injury claims. The methodology used by
the actuary includes a development factor to reflect growth or reduction in the value of these personal
injury claims. It is based largely on CSXT's historical claims and settlement experience. Actual results
may vary from estimates due to the number, type and severity of the injury, costs of medical treatments
and uncertainties in litigation. For additional details, including a description of our related accounting
policies, see Note 5, Casualty, Environmental and Other Reserves, in the consolidated financial
statements.

Environmental

Environmental reserves were $154 million and $161 million for 2023 and 2022, respectively. The
Company is a party to various proceedings related to environmental issues, including administrative and
judicial proceedings involving private parties and regulatory agencies. The Company has been identified
as a potentially responsible party at approximately 230 environmentally impaired sites. The Company
reviews its potential liability with respect to each site identified, giving consideration to a number of factors
such as:
•
•

type of clean-up required;
nature of the Company’s alleged connection to the location (e.g., generator of waste sent to
the site or owner or operator of the site);
extent of the Company’s alleged connection (e.g., volume of waste sent to the location and
other relevant factors); and
number, connection and financial viability of other named and unnamed potentially responsible
parties at the location.

•

Conditions that are currently unknown could, at any given location, result in additional exposure,
the amount and materiality of which cannot presently be reasonably estimated. For additional details,
including a description of our related accounting policies, see Note 5, Casualty, Environmental and Other
Reserves, in the consolidated financial statements.

CSX 2023 Form 10-K p.42

CSX CORPORATION
PART II

Critical Accounting Estimates, continued

Pension Plan Accounting

The Company sponsors defined benefit pension plans principally for salaried, management
personnel. For employees hired prior to 2003, the plans provide eligible employees with retirement
benefits based predominantly on years of service and compensation rates near retirement. For
employees hired between 2003 and 2019, benefits are determined based on a cash balance formula,
which provides benefits by utilizing interest and pay credits based upon age, service and compensation.
Beginning in 2020, the CSX Pension Plan was closed to new participants. As of December 2023, the
projected benefit obligation for the Company’s pension plans was $2.3 billion. For information related to
the funded status of the Company's pension plans, see Note 9, Employee Benefit Plans.

The accounting for these plans is subject to the guidance provided in the Compensation-
Retirement Benefits Topic in the Accounting Standards Codification ("ASC"). This rule requires that
management make certain assumptions relating to the following:

•
•
•

discount rates used to measure future obligations and interest expense;
long-term rate of return on plan assets; and
other assumptions.

Critical Accounting Estimates, continued

Discount Rates

Discount rates affect the amount of liability recorded and the service and interest cost components
of pension expense. Discount rates reflect the rates at which pension benefits could be effectively settled,
or in other words, how much it would cost the Company to buy enough high quality bonds to generate
cash flow equal to the Company's expected future benefit payments. The Company determines the
discount rate based on the market yield as of year-end for high quality corporate bonds whose maturities
match the plans' expected benefit payments.

The Company measures the service and interest cost components of the net pension benefits
expense by using individual spot rates matched with separate cash flows for each future year. Under the
spot rate approach, individual spot discount rates along the same high quality corporate bonds yield
curve used to measure the pension benefit liabilities are applied to the relevant projected cash flows at
the relevant maturity.

The weighted average discount rate used by the Company to value its pension obligations was
4.82% and 5.02% as of December 2023, and December 2022, respectively. As of December 2023, the
estimated duration of pension benefits is approximately 9 years.

Each year, the discount rate is reevaluated and adjusted using the current market interest rates
for high quality corporate bonds to reflect the best estimate of the current effective settlement rates. In
general, if interest rates decline or rise, the assumed discount rate will change.

CSX 2023 Form 10-K p.43

CSX CORPORATION
PART II

Critical Accounting Estimates, continued

Long-term Rate of Return on Plan Assets

The expected long-term average rate of return on plan assets reflects the average rate of
earnings expected on the funds invested, or to be invested, to provide for benefits included in the
projected benefit obligation. In estimating that rate, the Company gives appropriate consideration to the
returns being earned by the plan assets in the funds and the rates of return expected to be available for
reinvestment as well as the current and projected asset mix of the funds. Management, with the
assistance of an outsourced investment manager, balances market expectations obtained from various
investment managers with both market and actual plan historical returns to develop a reasonable
estimate of the expected long-term rate of return on assets. As this assumption is long term, the annual
review may result in less frequent adjustment than other assumptions used in pension accounting. The
long-term rate of return on plan assets used by the Company to value its benefit cost for the subsequent
plan year was 6.75% in both 2023 and 2022.

Other Assumptions

The calculations made by the actuaries also include assumptions relating to mortality rates,
turnover, retirement age and salary inflation rates. These assumptions are based upon historical data,
recent plan experience and industry trends and are determined by management.

2024 Estimated Pension Expense

Net periodic pension benefit expense for 2024 is expected to be a credit of $22 million. Net
periodic pension benefit expense for 2024 is expected to include service cost expense of $23 million.
Service cost expense is included in labor and fringe on the consolidated income statement and all other
components of net pension expense are included in other income - net. Net periodic pension expense in
2023 was a credit of $1 million. The net increase in the expected credit is primarily due to impacts from
recent favorable pension asset experience.

The following sensitivity analysis illustrates the effects of a 1% change in certain assumptions on

the 2024 estimated pension expense:

(Dollars in Millions)
Discount Rate
Long-term Rate of Return

Pension Expense
12
$
25
$

CSX 2023 Form 10-K p.44

Critical Accounting Estimates, continued

CSX CORPORATION
PART II

Depreciation Policies for Assets Utilizing the Group-Life Method

The depreciable assets of the Company are depreciated using either the group-life or straight-line
method of accounting, which are both acceptable depreciation methods in accordance with GAAP. The
Company depreciates its railroad assets, including main-line track, locomotives and freight cars, using
the group-life method of accounting. Assets depreciated under the group-life method comprise 84% of
total fixed assets of $50.3 billion on a gross basis at December 31, 2023. The remaining depreciable
assets of the Company, including non-railroad assets and assets under finance leases, are depreciated
using the straight-line method on a per asset basis. Land is not depreciated.

•

statistical analysis of historical life and salvage data for each group of property;
statistical analysis of historical retirements for each group of property;
evaluation of current operations;
evaluation of technological advances and maintenance schedules;
previous assessment of the condition of the assets;

•
• management's outlook on the future use of certain asset groups;

•

expected net salvage to be received upon retirement; and
comparison of assets to the same asset groups with other companies.

The STB requires depreciation studies be performed every three years for equipment assets (e.g.,
locomotives and freight cars) and every six years for road and track assets (e.g., bridges, signals, rail,
ties, and ballast). The Company completed a depreciation study for its road and track assets in 2020 and
for equipment assets in 2022, both of which resulted in changes to accumulated depreciation, service
lives, salvage values, and other related factors for certain assets. The 2022 equipment study resulted in
an increase in annual depreciation expense of approximately $80 million primarily due to deferred losses
on assets depreciated using the group-life method. A depreciation study was not performed in 2023.

A 1% change in the average estimated useful life of all group-life assets would result in an
approximate $13 million change to the Company’s annual depreciation expense. There were no
significant changes to the Company's asset lives as a result of the 2022 and 2020 studies. For additional
details, including a more detailed description of our related accounting policies, see Note 6, Properties, in
the consolidated financial statements.

New Accounting Pronouncements and Changes in Accounting Policy

See Note 1, Nature of Operations and Significant Accounting Policies under the caption “New

Accounting Pronouncements.”

CSX 2023 Form 10-K p.45

CSX CORPORATION
PART II

FORWARD-LOOKING STATEMENTS

Certain statements in this report and in other materials filed with the Securities and Exchange
Commission, as well as information included in oral statements or other written statements made by the
Company, are forward-looking statements. The Company intends for all such forward-looking statements
to be covered by the safe harbor provisions for forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements within
the meaning of the Private Securities Litigation Reform Act may contain, among others, statements
regarding:

• projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings,

expenses, taxes or other financial items;

• expectations as to results of operations and operational initiatives;
• expectations as to the effect of claims, lawsuits, environmental costs, commitments,
contingent liabilities, labor negotiations or agreements on the Company's financial condition,
results of operations or liquidity;

• management's plans, strategies and objectives for future operations, capital expenditures,
workforce levels, dividends, share repurchases, safety and service performance, proposed
new services and other matters that are not historical facts, and management's expectations
as to future performance and operations and the time by which objectives will be achieved;
and

• future economic, industry or market conditions or performance and their effect on the

Company's financial condition, results of operations or liquidity.

Forward-looking statements are typically identified by words or phrases such as "will," "should,"
“believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. The Company
cautions against placing undue reliance on forward-looking statements, which reflect its good faith beliefs
with respect to future events and are based on information currently available to it as of the date the
forward-looking statement is made. Forward-looking statements should not be read as a guarantee of
future performance or results and will not necessarily be accurate indications of the timing when, or by
which, such performance or results will be achieved.

Forward-looking statements are subject to a number of risks and uncertainties and actual
performance or results could differ materially from those anticipated by any forward-looking statements.
The Company undertakes no obligation to update or revise any forward-looking statement. If the
Company does update any forward-looking statement, no inference should be drawn that the Company
will make additional updates with respect to that statement or any other forward-looking statements.

The following important factors, in addition to those discussed in Part II, Item 1A. Risk Factors and
elsewhere in this report, may cause actual results to differ materially from those contemplated by any
forward-looking statements:

• legislative, regulatory or legal developments involving transportation, including rail or
intermodal transportation, the environment, hazardous materials, taxation, international
trade and initiatives to further regulate the rail industry;

• the outcome of litigation, claims and other contingent liabilities, including, but not limited to,
those related to fuel surcharge, environmental matters, taxes, shipper and rate claims
subject to adjudication, personal injuries and occupational illnesses;

• changes in domestic or international economic, political or business conditions, including
those affecting the transportation industry (such as the impact of industry competition,
conditions, performance and consolidation, as well as the impact of international trade
agreements and tariffs) and the level of demand for products carried by CSXT;

CSX 2023 Form 10-K p.46

CSX CORPORATION
PART II

• natural events such as severe weather conditions, including floods, fire, hurricanes and
earthquakes, a pandemic crisis affecting the health of the Company's employees, its
shippers or the consumers of goods, or other unforeseen disruptions of the Company's
operations, systems, property, equipment or supply chain;

• competition from other modes of freight transportation, such as trucking, and competition

and consolidation or financial distress within the transportation industry generally;

• the cost of compliance with laws and regulations that differ from expectations as well as
costs, penalties and operational and liquidity impacts associated with noncompliance with
applicable laws or regulations;

• the impact of increased passenger activities in capacity-constrained areas, including
potential effects of high speed rail initiatives, or regulatory changes affecting when CSXT
can transport freight or service routes;

• unanticipated conditions in the financial markets that may affect timely access to capital
markets and the cost of capital, as well as management's decisions regarding share
repurchases;

• changes in fuel prices, surcharges for fuel and the availability of fuel;
• the impact of natural gas prices on coal-fired electricity generation;
• the impact of global supply and price of seaborne coal on CSX's export coal market;
• availability of insurance coverage at commercially reasonable rates or insufficient insurance

coverage to cover claims or damages;

• the inherent business risks associated with safety and security, including the transportation
of hazardous materials or a cybersecurity attack which would threaten the availability and
reliability of information technology;

• adverse economic or operational effects from actual or threatened war or terrorist activities

and any governmental response;

• loss of key personnel or the inability to hire and retain qualified employees;
• labor and benefit costs and labor difficulties, including stoppages affecting either the
Company's operations or customers' ability to deliver goods to the Company for shipment;
• the Company's success in implementing its strategic, financial and operational initiatives,

including acquisitions;

• the impact of conditions in the real estate market on the Company's ability to sell assets;
• changes in operating conditions and costs, including the impacts of inflation, or commodity

concentrations;

• the impacts of a public health crisis and any policies or initiatives instituted in response; and
• the inherent uncertainty associated with projecting economic and business conditions.

Other important assumptions and factors that could cause actual results to differ materially from
those in the forward-looking statements are specified elsewhere in this report and in CSX's other SEC
reports, which are accessible on the SEC's website at www.sec.gov and the Company's website at
www.csx.com. The information on the CSX website is not part of this annual report on Form 10-K.

CSX 2023 Form 10-K p.47

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

CSX CORPORATION
PART II

Changes in interest rates may impact the cost of future long-term debt issued by the Company,
and as a result, represent interest rate risk to the Company. In an effort to manage this risk, CSX may use
certain financial instruments such as interest rate forward contracts. The following information, together
with information included in Note 10, Debt and Credit Agreements, and Note 13, Fair Value
Measurements, describes the key aspects of such contracts and the related market risk to CSX.

Changes in interest rates could impact the fair value of the Company's forward starting interest
rate swaps. In 2020, the Company executed two forward starting interest rate swaps with an aggregate
notional value of $500 million. These swaps were effected to hedge the benchmark interest rate
associated with future interest payments related to the anticipated refinancing of notes due in 2027. In
2022, CSX settled a portion equal to $160 million notional value of the cash flow hedges. In 2023, CSX
executed two partial settlements equal to $226 million notional value of the cash flow hedges. As of
December 31, 2023, these cash flow hedges had an aggregate notional value of $114 million and an
asset value of $48 million. As of December 31, 2023, the potential change in fair value of forward starting
interest rate swaps resulting from a hypothetical 10% change in interest rates would not be material.

Changes in interest rates could impact the fair value of the Company's fixed-to-floating interest
rate swaps. In 2023, CSX entered into two separate fixed-to-floating interest rate swaps classified as fair
value hedges. The swaps are designed to hedge 10 years of interest rate risk associated with market
fluctuations attributable to the Secured Overnight Financing Rate ("SOFR") on a cumulative $250 million
of fixed rate outstanding notes which are due in 2033. As of December 31, 2023, the cumulative fair value
of these swaps was a $19 million asset. In 2022, CSX entered into five separate fixed-to-floating interest
rate swaps classified as fair value hedges. The swaps are designed to hedge 10 years of interest rate risk
associated with market fluctuations attributable to SOFR on a cumulative $800 million of fixed rate
outstanding notes, which are due between 2036 and 2040. As of December 31, 2023, the cumulative fair
value of these swaps was a $107 million liability. As of December 31, 2023, the potential change in fair
value of fixed-to-floating interest rate swaps resulting from a hypothetical 10% change in interest rates
would not be material.

As of December 31, 2023, CSX has no floating rate notes outstanding. However, changes in
interest rates could impact the fair value (but not the carrying value) of the Company's fixed rate long-
term debt. The potential decrease in fair value of the Company's fixed rate long-term debt resulting from a
hypothetical 10% increase in U.S. Treasury rates, or approximately 40 basis points, is estimated to be
$730 million as of December 31, 2023, and $709 million as of December 31, 2022. The underlying fair
values of the Company's long-term debt were estimated based on quoted market prices or on the current
rates offered for debt with similar terms and maturities.

CSX 2023 Form 10-K p.48

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)

Page

CSX Corporation

Consolidated Financial Statements and Notes to Consolidated Financial Statements

Herewith:

Consolidated Income Statements for the Years Ended:

December 31, 2023
December 31, 2022
December 31, 2021

Consolidated Comprehensive Income Statements for the Years Ended:

December 31, 2023
December 31, 2022
December 31, 2021

Consolidated Balance Sheets as of:

December 31, 2023
December 31, 2022

Consolidated Cash Flow Statements for Years Ended:

December 31, 2023
December 31, 2022
December 31, 2021

Consolidated Statements of Changes in Shareholders' Equity:

December 31, 2023
December 31, 2022
December 31, 2021

Notes to Consolidated Financial Statements

CSX 2023 Form 10-K p.49

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of CSX Corporation

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of CSX Corporation (the Company) as of
December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income,
changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31,
2023 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting
principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), and our report dated February 14, 2024
expressed an unqualified opinion thereon.

Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in
any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on
the accounts or disclosure to which it relates.

CSX 2023 Form 10-K p.50

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, continued

Description of
the Matter

Depreciation Policies for Assets Utilizing the Group-Life Method

As of December 31, 2023, assets depreciated under the group-life method comprised
84% of total gross fixed assets of $50.3 billion. As discussed in Note 6 of the
consolidated financial statements, the group-life method aggregates assets with similar
lives and characteristics into groups and depreciates each of these groups as a whole.
When using the group-life method, an underlying assumption is that each group of
assets, as a whole, is used and depreciated to the end of the group’s recoverable life.
The Company utilizes different depreciable asset categories to account for depreciation
expense for the railroad assets that are depreciated under the group-life method.

Under the group-life method, depreciation studies are conducted by a third-party
specialist and analyzed by the Company’s management to review asset service lives,
salvage values, accumulated depreciation and other factors related to group assets.
Depreciation studies are performed every three years for equipment assets and every six
years for road and track assets. In years when depreciation studies are not performed,
annual data reviews are conducted by a third-party specialist and analyzed by the
Company’s management to review the asset service lives. For road and track assets and
equipment assets, the most recent depreciation studies were performed in 2020 and
2022, respectively. These studies were evaluated by the Company’s management in the
current year through an annual data review.

Auditing depreciation expense for assets subject to the group-life method was complex
and required the involvement of specialists due to the nature of the methods used in the
depreciation studies to determine the useful service lives and salvage values of the
Company’s assets. These methods have a significant effect on depreciation expense.

How We
Addressed the
Matter in Our
Audit

We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the Company’s process related to the assessment of
periodic depreciation studies and annual data reviews of its group-life assets. For
example, we tested controls over management’s review of asset activity that could impact
the estimated useful lives determined in the most recent depreciation studies of
equipment and road and track assets.

To test the estimated useful lives and salvage values of the Company’s group-life assets,
we performed audit procedures that included, among others: obtaining the periodic
depreciation studies and annual data reviews performed by the Company’s third-party
specialist and reviewed by management; assessing the completeness and accuracy of
the data provided by management to the third-party specialist; and including a specialist
on our team to evaluate the methods used by the third-party specialist and reviewed by
management in determining if any changes were necessary to the estimated useful lives
and salvage values resulting from the annual data reviews.

We compared the assumptions used by management to those used throughout the
industry and within other depreciation studies. We assessed the historical accuracy of
management’s estimates via retrospective review and independently recalculated the
current year depreciation rates.

We have served as the Company’s auditor since 1981.

/s/ Ernst & Young LLP

Jacksonville, Florida
February 14, 2024

CSX 2023 Form 10-K p.51

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

CONSOLIDATED INCOME STATEMENTS
(Dollars in Millions, Except Per Share Amounts)

Revenue
Expense

Labor and Fringe
Purchased Services and Other
Depreciation and Amortization
Fuel
Equipment and Other Rents
Gains on Property Dispositions

Total Expense

Years Ended
2022
$ 14,657 $ 14,853 $ 12,522

2023

2021

3,024
2,764
1,611
1,377
354
(34)

9,096

2,861
2,685
1,500
1,626
396
(238)
8,830

2,550
2,135
1,420
913
364
(454)
6,928

Operating Income

5,561

6,023

5,594

Interest Expense
Other Income - Net (Note 14)

Earnings Before Income Taxes

Income Tax Expense (Note 12)
Net Earnings

Per Common Share (Note 2)
Net Earnings Per Share

Basic
Assuming Dilution

Average Common Shares Outstanding (Millions)

Basic
Assuming Dilution

(809)
139
4,891

(742)
133
5,414

(722)
79
4,951

(1,176)
3,715 $

(1,248)
4,166 $

(1,170)
3,781

1.85 $
1.85 $

1.95 $
1.95 $

1.68
1.68

2,008
2,013

2,136
2,141

2,250
2,255

$
$

See accompanying Notes to Consolidated Financial Statements.

CSX 2023 Form 10-K p.52

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS
(Dollars in Millions)

Net Earnings
Other Comprehensive Income (Loss) - Net of Tax:

Pension and Other Post-Employment Benefits
Interest Rate Derivatives
Other
Total Other Comprehensive Income (Note 16)

Comprehensive Earnings

Years Ended
2022
$ 3,715 $ 4,166 $ 3,781

2023

2021

74
—
2
76

167
8
15
190
$ 3,791 $ 4,186 $ 3,971

(66)
80
6
20

See accompanying Notes to Consolidated Financial Statements.

CSX 2023 Form 10-K p.53

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)

ASSETS

Current Assets:

Cash and Cash Equivalents

Short-term Investments

Accounts Receivable - Net (Note 11)

Materials and Supplies

Other Current Assets

Total Current Assets

Properties

Accumulated Depreciation

Properties - Net (Note 6)

Investment in Affiliates and Other Companies (Note 15)

Right of Use Lease Asset (Note 7)

Goodwill and Other Intangible Assets - Net (Note 18)

Other Long-term Assets

Total Assets

Current Liabilities:

Accounts Payable

LIABILITIES AND SHAREHOLDERS' EQUITY

Labor and Fringe Benefits Payable

Casualty, Environmental and Other Reserves (Note 5)

Current Maturities of Long-term Debt (Note 10)

Income and Other Taxes Payable

Other Current Liabilities

Total Current Liabilities

Casualty, Environmental and Other Reserves (Note 5)

Long-term Debt (Note 10)

Deferred Income Taxes - Net (Note 12)

Long-term Lease Liability (Note 7)

Other Long-term Liabilities

Total Liabilities

Shareholders' Equity:

Common Stock, $1 Par Value (Note 3)

Other Capital

Retained Earnings

Accumulated Other Comprehensive Loss (Note 16)

Non-controlling Minority Interest

Total Shareholders' Equity

December

2023

2022

1,353 $

1,393

446

109

3,384

1,958

129

1,313

341

108

3,849

50,320

48,105

(15,385)

(13,863)

34,935

34,242

2,397

2,292

498

506

688

505

502

522

42,408 $

41,912

1,237 $

1,130

517

144

558

525

243

3,224

296

17,975

7,746

491

543

707

144

151

111

228

2,471

292

17,896

7,569

488

571

30,275

29,287

1,959

691

9,790

(312)

12,133

2,066

574

10,363

(388)

12,625

41,912

Total Liabilities and Shareholders' Equity

42,408 $

See accompanying Notes to Consolidated Financial Statements.

CSX 2023 Form 10-K p.54

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

CONSOLIDATED CASH FLOW STATEMENTS
(Dollars in Millions)

OPERATING ACTIVITIES

Net Earnings
Adjustments to Reconcile Net Earnings to Net Cash
Provided by Operating Activities:
Depreciation and Amortization
Deferred Income Taxes
Gains on Property Dispositions
Other Operating Activities

Changes in Operating Assets and Liabilities:

Accounts Receivable
Other Current Assets
Accounts Payable
Income and Other Taxes Payable
Other Current Liabilities

Net Cash Provided by Operating Activities

INVESTING ACTIVITIES
Property Additions
Purchases of Short-term Investments
Proceeds from Sales of Short-term Investments
Proceeds and Advances from Property Dispositions
Business Acquisition, Net of Cash Acquired (Note 17)
Other Investing Activities

Net Cash Used in Investing Activities

FINANCING ACTIVITIES
Shares Repurchased
Dividends Paid
Long-term Debt Repaid
Long-term Debt Issued (Note 10)
Other Financing Activities

Net Cash Used in Financing Activities

Net Decrease in Cash and Cash Equivalents

CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents at Beginning of Period

Cash and Cash Equivalents at End of Period

SUPPLEMENTAL CASH FLOW INFORMATION

Issuance of Common Stock as Consideration for Acquisition
Interest Paid - Net of Amounts Capitalized
Income Taxes Paid

2023

Years Ended
2022

2021

3,715 $

4,166 $

3,781

1,611
140
(34)
(5)

(51)
(120)
83
431
(221)
5,549

(2,281)
(104)
153
52
(31)
(76)
(2,287)

(3,482)
(882)
(153)
600
50
(3,867)
(605)

1,500
117
(238)
(17)

(101)
(22)
140
(39)
113
5,619

(2,133)
(59)
9
246
(227)
33
(2,131)

(4,731)
(852)
(186)
2,000
—
(3,769)
(281)

1,420
167
(454)
12

(141)
(25)
128
72
139
5,099

(1,791)
(75)
5
529
(541)
(4)
(1,877)

(2,886)
(839)
(426)
—
39
(4,112)
(890)

1,958
1,353 $

2,239
1,958 $

3,129
2,239

— $
806 $
630 $

422 $
729 $
1,167 $

—
718
931

$
$
$

See accompanying Notes to Consolidated Financial Statements.

CSX 2023 Form 10-K p.55

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS’ EQUITY
(Dollars in Millions)

Common
Shares
Outstanding
(Thousands)

Common
Stock and
Other
Capital

Accumulated
Other
Comprehensive
(Loss) Income(a)

Non-
controlling
Minority
Interest

Total
Shareholders'
Equity

Retained
Earnings

2,287,587 $ 2,440 $

11,259 $

(598) $

9 $

13,110

December 31, 2020

Comprehensive Earnings:

Net Earnings

Other Comprehensive Income (Note 16)

Total Comprehensive Earnings

Common stock dividends,$0.37 per share

Share Repurchases

Other

December 31, 2021

Comprehensive Earnings:

Net Earnings

Other Comprehensive Income (Note 16)

Total Comprehensive Earnings

—

3,781

—

(90,431)

4,631

(90)

(82)

(839)

(2,796)

225

2,201,787

2,268

11,630

—

4,166

—

Common stock dividends, $0.40 per share

—

(852)

Share Repurchases

(151,419)

(151)

(4,580)

Issuance of common stock for acquisition of Pan
Am Systems, Inc.

Other

December 31, 2022

Comprehensive Earnings:

Net Earnings

Other Comprehensive Income (Note 16)

Total Comprehensive Earnings

13,173

422

2,826

101

—

(1)

2,066,367

2,640

10,363

(388)

—

3,715

—

Common stock dividends, $0.44 per share

—

(882)

Share Repurchases

(112,484)

(112)

(3,370)

Excise Tax on Net Share Repurchases

Other

December 31, 2023

—

4,874

122

(33)

(3)

—

190

—

(408)

—

(5)

3,781

190

3,971

(839)

(2,886)

144

13,500

4,166

4,186

(852)

(4,731)

422

100

12,625

3,715

3,791

(882)

(3,482)

(33)

114

1,958,757 $ 2,650 $

9,790 $

(312) $

5 $

12,133

(a) Accumulated Other Comprehensive Loss year-end balances shown above are net of tax. The associated taxes were $84 million, $122 million,
and $107 million for 2023, 2022 and 2021, respectively. For additional information see Note 16, Other Comprehensive Income (Loss).

See accompanying Notes to Consolidated Financial Statements.

CSX 2023 Form 10-K p.56

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Nature of Operations and Significant Accounting Policies

Business

CSX Corporation together with its subsidiaries ("CSX" or the “Company”), based in Jacksonville,
Florida, is one of the nation's leading transportation companies. The Company provides rail-based
transportation services including traditional rail service, the transport of intermodal containers and trailers,
as well as other transportation services such as rail-to-truck transfers and bulk commodity operations.

CSX Transportation, Inc.

CSX’s principal operating subsidiary, CSX Transportation, Inc. (“CSXT”), provides an important
link to the transportation supply chain through its approximately 20,000 route mile rail network and serves
major population centers in 26 states east of the Mississippi River, the District of Columbia and the
Canadian provinces of Ontario and Quebec. It has access to over 70 ocean, river and lake port terminals
along the Atlantic and Gulf Coasts, the Mississippi River, the Great Lakes and the St. Lawrence
Seaway. The Company’s intermodal business links customers to railroads via trucks and terminals. CSXT
also serves thousands of production and distribution facilities through track connections to more than 240
short-line and regional railroads. On June 1, 2022, CSX completed its acquisition of Pan Am Systems,
Inc. (“Pan Am”), which is the parent company of Pan Am Railways, Inc. This acquisition expands CSXT’s
reach in the Northeastern United States. For further details, refer to Note 17, Business Combinations.

Other Entities

In addition to CSXT, the Company’s subsidiaries include Quality Carriers, Inc. ("Quality Carriers"),
CSX Intermodal Terminals, Inc. (“CSX Intermodal Terminals”), Total Distribution Services, Inc. (“TDSI”),
TRANSFLO Terminal Services, Inc. (“TRANSFLO”), CSX Technology, Inc. (“CSX Technology”) and other
subsidiaries. Effective July 1, 2021, CSX acquired Quality Carriers, the largest provider of bulk liquid
chemicals truck transportation in North America. For further details, refer to Note 17, Business
Combinations. CSX Intermodal Terminals owns and operates a system of intermodal terminals,
predominantly in the eastern United States, and also provides drayage services (the pickup and delivery
of intermodal shipments) for certain customers. TDSI serves the automotive industry with distribution
centers and storage locations. TRANSFLO connects non-rail served customers to the many benefits of
rail by transferring products from rail to trucks. The biggest TRANSFLO markets are chemicals and
agriculture, which include shipments of plastics and ethanol. CSX Technology and other subsidiaries
provide support services for the Company.

CSX 2023 Form 10-K p.57

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

Lines of Business

During 2023, the Company's services generated $14.7 billion of revenue and served four primary

lines of business: merchandise, intermodal, coal and trucking.

•

The merchandise business shipped 2.6 million carloads (43% of volume) and generated
$8.7 billion in revenue (59% of revenue) in 2023. The Company’s merchandise business is
comprised of shipments in the following diverse markets: chemicals, agricultural and food
products, minerals, automotive, forest products, metals and equipment, and fertilizers.
The intermodal business shipped 2.8 million units (45% of volume) and generated $2.1 billion
in revenue (14% of revenue) in 2023. The intermodal business combines the superior
economics of rail transportation with the flexibility of trucks and offers a cost and
environmental advantage over long-haul trucking. Through a network of approximately 30
terminals, the intermodal business serves all major markets east of the Mississippi River and
transports mainly manufactured consumer goods in containers, providing customers with
truck-like service for longer shipments.

•

The trucking business generated $882 million, or 6%, of revenue in 2023. Trucking revenue
includes revenue from the operations of Quality Carriers, which was acquired by CSX effective
July 1, 2021.

The Company has two operating segments: rail and trucking. Although the Company provides a
breakdown of revenue by line of business, the overall financial and operational performance of the
railroad is analyzed as one operating segment due to the integrated nature of the rail network. As the
trucking segment is not material for separate disclosure, the results of all operations are included in one
reportable segment.

Employees

The Company's number of employees was more than 23,000 as of December 2023, which
includes approximately 17,700 union employees. Most of the Company’s employees provide or support
transportation services.

CSX 2023 Form 10-K p.58

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements contain all
normal, recurring adjustments necessary to fairly present the financial position of CSX and its
subsidiaries at December 31, 2023 and December 31, 2022, and the consolidated statements of income,
comprehensive income, cash flows and changes in shareholders’ equity for the years ended 2023, 2022
and 2021. In addition, management has evaluated and disclosed all material events occurring
subsequent to the date of the financial statements up to the date this annual report is filed on Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires that management make estimates in reporting the amounts of
certain assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of certain revenues and expenses during the reporting
period. Actual results may differ from those estimates. Critical accounting estimates using management
judgment are made for the following areas:

•

•
•

personal injury and environmental reserves (see Note 5, Casualty, Environmental and Other
Reserves);
pension plan accounting (see Note 9, Employee Benefit Plans); and
depreciation policies for assets under the group-life method (see Note 6, Properties)

Fiscal Year

The Company's fiscal periods are based upon the calendar year. Except as otherwise specified,
references to full years indicate CSX’s fiscal years ended on December 31, 2023, December 31, 2022,
and December 31, 2021.

Principles of Consolidation

The consolidated financial statements include results of operations of CSX and subsidiaries over
which CSX has majority ownership or financial control. All significant intercompany accounts and
transactions have been eliminated. Most investments in companies that were not majority-owned were
carried at cost (if less than 20% owned and the Company has no significant influence) or were accounted
for under the equity method (if the Company has significant influence but does not have control). These
investments are reported within Investment in Affiliates and Other Companies on the consolidated
balance sheets.

CSX 2023 Form 10-K p.59

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

Cash and Cash Equivalents

On a daily basis, cash in excess of current operating requirements is invested in various highly
liquid investments having a typical maturity date of three months or less at the date of acquisition. These
investments are carried at cost, which approximates market value, and are classified as cash
equivalents.

Investments

Investments in instruments with original maturities greater than three months that will mature in
less than one year are classified as short-term investments. Investments with original maturities of one
year or greater are initially classified within other long-term assets, and the classification is re-evaluated
at each balance sheet date.

Materials and Supplies

Materials and supplies in the consolidated balance sheets are carried at average cost and consist
primarily of parts used in the repair and maintenance of track structure, equipment, and CSXT’s freight
car and locomotive fleets, as well as fuel.

New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards
Update ("ASU") 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. As
the London Interbank Offered Rate ("LIBOR") is no longer available as of July 2023, this standard update
provides practical expedients for contract modifications made as part of the transition from LIBOR to
alternative reference rates. The guidance was effective upon issuance and at present can generally be
applied through December 31, 2024. The Company applied the practical expedient to its forward starting
interest rate swaps effective June 30, 2023. See Note 10, Debt and Credit Agreements, for additional
information. The Company does not have any other contracts that are affected by the transition from
LIBOR.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment
Disclosures. This standard update requires additional interim and annual disclosures about a reportable
segment’s expenses, even for companies with only one reportable segment. The Company is required to
adopt the guidance for its 2024 annual report filed on Form 10-K, though early adoption is permitted. The
Company is currently evaluating the impact of these amendments on its disclosures, but this standard
update will not impact the Company's results of operations or financial position.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures.
This standard update requires additional interim and annual disclosures about a company’s income
taxes, including more detailed information around the annual rate reconciliation and income taxes paid.
The Company is required to adopt the guidance for its 2025 annual report filed on Form 10-K, though
early adoption is permitted. The Company is currently evaluating the impact of these amendments on its
disclosures, but this standard update will not impact the Company's results of operations or financial
position.

CSX 2023 Form 10-K p.60

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 2. Earnings Per Share

The following table sets forth the computation of basic earnings per share and earnings per share,

assuming dilution:

Numerator (Dollars in Millions):

Net Earnings

Denominator (Units in Millions):

2023

Years Ended
2022

2021

3,715 $

4,166 $

3,781

Average Common Shares Outstanding
Other Potentially Dilutive Common Shares
Average Common Shares Outstanding, Assuming Dilution

2,008
5
2,013

2,136
5
2,141

Net Earnings Per Share, Basic
Net Earnings Per Share, Assuming Dilution

$
$

1.85 $
1.85 $

1.95 $
1.95 $

2,250
5
2,255

1.68
1.68

Basic earnings per share is based on the weighted-average number of shares of common stock
outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares
of common stock outstanding and common stock equivalents adjusted for the effects of common stock
that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are
made up of equity awards including stock options, performance and restricted stock units.

When calculating diluted earnings per share, the potential shares that would be outstanding if all
outstanding stock options were exercised are included. This number is different from outstanding stock
options, which is included in Note 4, Stock Plans and Share-Based Compensation, because it is offset by
shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the
common stock equivalent. The total average outstanding equity awards that were excluded from the
diluted earnings per share calculation because their effect was antidilutive is in the table below.

Years Ended
2022

2021

2023

Antidilutive Stock Options Excluded from Diluted EPS (Units in Millions)

Share Repurchase Programs

During November 2023, the share repurchase program announced in July 2022 was completed
and the Company began repurchasing shares under the $5 billion share repurchase program approved
on October 17, 2023. Total repurchase authority remaining was $4.8 billion as of December 31, 2023.
Previous share repurchase programs were announced in October 2020 and January 2019 and were
completed in July 2022 and June 2021, respectively.

CSX 2023 Form 10-K p.61

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 2. Earnings Per Share, continued

Share repurchases may be made through a variety of methods including, but not limited to, open
market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and
negotiated block purchases. The timing of share repurchases depends upon management's assessment
of marketplace conditions and other factors, and the program remains subject to the discretion of the
Board of Directors. Future share repurchases are expected to be funded by cash on hand, cash
generated from operations and debt issuances. Shares are retired immediately upon repurchase. In
accordance with the Equity Topic in the Accounting Standards Codification ("ASC"), the excess of
repurchase price over par value is recorded in retained earnings.

Share Repurchase Activity

During 2023, 2022 and 2021, CSX repurchased the following shares:

Shares Repurchased (Units in Millions)
Cost of Shares (Dollars in Millions)
Average Price Paid per Share

2023

Years Ended
2022

2021

112

3,482 $

30.95 $

151

4,731 $

31.25 $

2,886

31.91

The Inflation Reduction Act of 2022 imposes a nondeductible 1% excise tax on the net value of
most share repurchases made after December 31, 2022. Excise tax commensurate with net share
repurchases is reflected in equity and a corresponding liability for excise taxes payable is included in
other current liabilities on the consolidated balance sheet. Amounts shown in the table above exclude the
impact of this excise tax.

Structured Share Repurchases

Periodically, CSX enters into structured agreements for the repurchase of CSX shares. Upon
execution of each agreement, the Company pays a fixed amount of cash in exchange for the right to
receive either CSX stock or a predetermined amount of cash, including a premium. Shares acquired
through these structured share repurchase agreements were recorded in common stock and retained
earnings and are included in the share repurchases table above. There were no repurchases under a
structured agreement in 2023 or 2022. In 2021, the Company paid a net total of approximately
$378 million and received approximately 12 million shares as a result of entering into and settling
structured share repurchase agreements. Premiums received were not material.

Dividend Increase

On February 14, 2024, the Company's Board of Directors authorized a 9% increase in the

quarterly cash dividend to $0.12 per common share effective March 2024.

CSX 2023 Form 10-K p.62

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 3. Shareholders’ Equity

Common and preferred stock consists of the following:

Common Stock, $1 Par Value

Common Shares Authorized
Common Shares Issued and Outstanding

Preferred Shares Authorized
Preferred Shares Issued and Outstanding

Preferred Stock

December 2023
(Units in Millions)

5,400
1,958

25
—

Holders of common stock are entitled to one vote on all matters requiring a vote for each share

held. Preferred stock is senior to common stock with respect to dividends and upon liquidation of CSX.

Common Stock Split

On June 4, 2021, CSX announced a three-for-one split of the Company’s common stock in the
form of a stock dividend. Each shareholder of record on June 18, 2021, received two additional shares of
common stock for each share held as of this record date. The new shares were distributed after close of
trading on June 28, 2021. All prior period share and per share amounts, common stock, other capital, and
retained earnings were retroactively adjusted to reflect the impact of the stock split. Proportional
adjustments were also made to outstanding awards under the Company's stock-based compensation
plans.

Other Capital

As a result of the stock split during second quarter 2021, CSX's common stock balance was
increased and its other capital balance was reduced commensurately. Because this adjustment brought
the other capital balance below zero, $1.0 billion was reclassified from retained earnings to other capital
to bring the other capital balance to zero as of June 30, 2021.

CSX 2023 Form 10-K p.63

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 4. Stock Plans and Share-Based Compensation

Under CSX's share-based compensation plans, awards consist of performance units, stock
options, restricted stock units and restricted stock awards for management and stock grants for directors.
Awards granted under the various programs are determined and approved by the Compensation and
Talent Management Committee of the Board of Directors. Awards to the Chief Executive Officer are
approved by the full Board and awards to senior executives are approved by the Compensation and
Talent Management Committee. In certain circumstances, the Chief Executive Officer or delegate
approves awards to management employees other than senior executives. The Board of Directors
approves awards granted to CSX's non-management directors upon recommendation of the Governance
and Sustainability Committee.

Share-based compensation expense for awards under share-based compensation plans and
purchases made as part of the employee stock purchase plan is measured using the fair value of the
award on the grant date and is recognized on a straight-line basis over the service period of the
respective award. Alternatively, expense is recognized upon death or over an accelerated service period
for retirement-eligible employees whose agreements allow for continued vesting upon retirement.
Forfeitures are recognized as they occur. Total pre-tax expense and income tax benefits associated with
share-based compensation are shown in the table below. Income tax benefits include impacts from option
exercises and the vesting of other equity awards.

(Dollars in Millions)
Share-Based Compensation Expense

Performance Units
Restricted Stock Units and Awards
Stock Options
Employee Stock Purchase Plan
Stock Awards for Directors

Total Share-based Compensation Expense

Income Tax Benefit

Long-term Incentive Plans

Years Ended
2022

2021

2023

20 $
19
12
7
2
60 $

14 $

35 $
15
17
5
2
74 $

17 $

71
12
18
4
2
107

The objective of the CSX Long-term Incentive Plans (“LTIP”) is to motivate and reward certain
employees for achieving and exceeding certain financial goals. The 2023-2025, 2022-2024, and
2021-2023 LTIPs were adopted under the 2019 Stock and Incentive Award Plan. Grants were made in
performance units, with each unit being equivalent to one share of CSX common stock, and payouts will
be made in CSX common stock. The payout range for most participants will be between 0% and 200% of
the target awards depending on Company performance against predetermined goals for each three-year
cycle.

CSX 2023 Form 10-K p.64

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 4. Stock Plans and Share-Based Compensation, continued

In 2023, 2022 and 2021, target performance units were granted to certain employees under three
separate LTIP plans covering three-year cycles: the 2023-2025 ("2023-2025 LTIP"), the 2022-2024
("2022-2024 LTIP"), and the 2021-2023 ("2021-2023 LTIP"). Payouts of performance units for the plans
will be based on the achievement of certain goals, in each case excluding non-recurring items as
disclosed in the Company’s financial statements.

•

For the 2023-2025 and 2022-2024 LTIP plan, the average annual operating income growth
percentage and Economic Profit (CSX Cash Earnings or CCE), in each case excluding non-
recurring items as defined in the plan, will each comprise 50% of the payout and will be measured
independently of the other. Participants will receive stock dividend equivalents declared over the
performance period based on the number of performance units paid upon vesting. As defined
under the plan, Economic Profit incentivizes strategic investments earning more than the required
return and is calculated as CSX’s gross cash earnings (after-tax adjusted EBITDA) minus the
long-term average cost of capital on gross operating assets.

•

For the 2021-2023 LTIP plan, the average annual operating income growth percentage
and cumulative free cash flow over the plan period will each comprise 50% of the payout and will
be measured independently of the other. Participants will receive stock dividend equivalents
declared over the performance period based on the number of performance units paid upon
vesting.

For these plans, payouts for certain executive officers are subject to formulaic upward or
downward adjustment by up to 25%, capped at an overall payout of 250%, based upon the Company’s
total shareholder return relative to specified comparable groups over the performance period.

The fair values of the performance units awarded during the years ended December 2023, 2022
and 2021 were calculated primarily using a Monte-Carlo simulation model with the following weighted-
average assumptions:

Weighted-Average Assumptions Used:
Risk-free Interest Rate
Annualized Volatility
Expected Life (in years)

2023

4.4 %
33.2 %
2.8

Years Ended
2022

2.3 %
33.0 %
2.7

2021

0.2 %
33.6 %
2.9

The risk-free interest rate assumptions reflect the U.S. Treasury yield curve in effect at the time of
grant. The annualized volatility is based on observed historical volatility of daily stock returns for the
three-year period preceding the grant date. The expected life is calculated using the remainder of the
performance period.

CSX 2023 Form 10-K p.65

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 4. Stock Plans and Share-Based Compensation, continued

Performance unit grant and vesting information is summarized as follows:

Weighted-Average Fair Value of Units Granted
Fair Value of Units Vested (in Millions)

$
$

31.57 $
16 $

33.89 $
24 $

30.11
19

The performance unit activity related to the outstanding long-term incentive plans and

corresponding fair value is summarized as follows:

2023

Years Ended
2022

2021

Unvested at December 31, 2022
Granted
Forfeited
Vested
Unvested at December 31, 2023

Performance Units
Outstanding
(in Thousands)

Weighted-Average
Fair Value at Grant
Date

1,254 $
755
(118)
(570)
1,321 $

32.14
31.57
32.20
30.23
32.65

As of December 2023, there was $20 million of total unrecognized compensation cost related to
performance units that is expected to be recognized over a weighted-average period of approximately
two years.

Stock Options

Stock options in 2023, 2022 and 2021 were primarily granted along with the corresponding LTIP
plans. With these grants, an employee receives an award that provides the opportunity in the future to
purchase CSX shares at the closing market price of the stock on the date the award is granted (the strike
price). Options granted become exercisable in equal installments on the anniversary of the grant date
over a vesting period (three-year graded). All options expire 10 years from the grant date if they are not
exercised.

The fair value of stock options granted was estimated as of the dates of grant using the Black-
Scholes option valuation model, which uses the following assumptions: dividend yield, risk-free interest
rate, annualized volatility and expected life. The annual dividend yield is based on the most recent
quarterly CSX dividend payment annualized. The risk-free interest rate is based on U.S. Treasury yield
curve in effect at the time of grant. The annualized volatility is based on historical volatility of daily CSX
stock price returns over a 6.0 year look-back period ending on the grant date. The expected life is
calculated using the safe harbor approach due to lack of historical data on CSX options, which is the
midpoint between the vesting schedule and contractual term (10 years).

CSX 2023 Form 10-K p.66

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 4. Stock Plans and Share-Based Compensation, continued

Assumptions and inputs used to estimate fair value of stock options are summarized as follows:

Weighted-Average Fair Value of Units Granted

9.82 $ 10.12 $

7.94

Years Ended
2022

2021

2023

Stock Options Valuation Assumptions:

Annual Dividend Yield
Risk-free Interest Rate
Annualized Volatility
Expected Life (in Years)
Other Pricing Model Inputs:

1.4 %
3.8 %

1.2 %
1.1 %
0.7 %
2.0 %
29.6 % 30.1 % 31.2 %
6.0

6.0

Weighted-average Grant-date Market Price of CSX Stock
(Strike Price)

$ 31.54 $ 35.12 $ 29.65

The stock option activity is summarized as follows:

Weighted-
Average
Exercise
Price

Weighted-
Average
Remaining
Contractual
Life
(in Years)

Aggregate
Intrinsic
Value
(in Millions)

Outstanding at December 31, 2022
Granted
Forfeited
Exercised
Outstanding at December 31, 2023

Stock
Options
Outstanding
(in
Thousands)
13,400
1,234
(189)
(2,351)
12,094

24.03
31.54
32.68
22.06
25.04

Exercisable at December 31, 2023

9,239

22.73

6.0

5.3

117

111

Unrecognized compensation expense related to stock options as of December 2023 was $12
million and is expected to be recognized over a weighted-average period of approximately two years. The
Company issues new shares upon stock option exercises. Additional information on stock option
exercises is summarized as follows:

(Dollars in Millions)
Intrinsic Value of Stock Options Exercised
Cash Received from Option Exercises

2023

2022

2021

$
$

27 $
52 $

9 $
15 $

32
31

Years Ended

CSX 2023 Form 10-K p.67

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 4. Stock Plans and Share-Based Compensation, continued

Restricted Stock Grants

Restricted stock grants consist of units and awards, each equivalent to one share of CSX
stock. Restricted stock units are primarily issued along with corresponding LTIP plans and vest three
years after the date of grant (three-year cliff) or on the annual anniversary of the grant date over a vesting
period (three-year graded). Separately, restricted stock awards generally vest over an employment period
of up to five years. These awards are time-based and not based upon CSX’s attainment of operational
targets. Participants receive cash or stock dividend equivalents on these shares, depending on the grant.
Restricted stock grant and vesting information is summarized as follows:

Weighted-Average Fair Value of Units Granted
Fair Value of Units and Awards Vested (in Millions)

Years Ended
2022

2021

2023

$
$

31.46 $
8 $

34.55 $
5 $

29.84
12

The restricted stock activity related to the outstanding long-term incentive plans and other awards

and corresponding fair value is summarized as follows:

Unvested at December 31, 2022
Granted
Forfeited
Vested
Unvested at December 31, 2023

Restricted Stock
Units and Awards
Outstanding
(in Thousands)

Weighted-Average
Fair Value at Grant
Date

1,552 $
880
(100)
(303)
2,029 $

31.68
31.46
31.92
27.49
31.70

As of December 2023, unrecognized compensation expense for these restricted stock units and
awards was approximately $28 million, which will be expensed over a weighted-average remaining period
of two years.

CSX 2023 Form 10-K p.68

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 4. Stock Plans and Share-Based Compensation, continued

Stock Awards for Directors

CSX’s non-management directors receive a base annual retainer of $130,000 to be paid quarterly
in cash, unless the director chooses to defer the retainer in the form of cash or CSX common stock.
Additionally, non-management directors receive an annual grant of common stock in the amount of
approximately $180,000 and the independent non-executive Chairman also receives an annual grant of
common stock in the amount of approximately $250,000. These awards are evaluated periodically by the
Board of Directors.

Employee Stock Purchase Plan

In May 2018, shareholders approved the 2018 CSX Employee Stock Purchase Plan (“ESPP”) for
the benefit of Company employees. The Company registered 12 million shares of common stock that
may be issued pursuant to this plan. Under the ESPP, employees may contribute between 1% and 10%
of base compensation, after-tax, to purchase up to $25,000 of market value CSX common stock per year
at 85% of the closing market price on either the grant date or the last day of the six-month offering period,
whichever is lower. During 2023, 2022 and 2021, the Company issued the following shares under this
program.

Shares Issued (in Thousands)
Weighted Average Purchase Price Per Share

Years Ended
2022

2021

2023

959
25.66 $

726
25.93 $

730
21.90

CSX 2023 Form 10-K p.69

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 5. Casualty, Environmental and Other Reserves

Activity related to casualty, environmental and other reserves is as follows:

(Dollars in Millions)
December 31, 2020
Assumed in Acquisition of Quality Carriers
Charged to Expense
Payments
December 31, 2021
Assumed in Acquisition of Pan Am
Charged to Expense
Payments
December 31, 2022
Charged to Expense
Payments
December 31, 2023

Casualty
Reserves

Environmental
Reserves

Other
Reserves

Total

196 $
—
55
(71)
180
19
45
(50)
194
69
(68)
195 $

76 $
29
26
(23)
108
36
47
(30)
161
29
(36)
154 $

42 $ 314
62
33
130
49
(138)
(44)
368
80
55
—
143
51
(130)
(50)
436
81
165
67
(57)
(161)
91 $ 440

Personal injury and environmental reserves are considered critical accounting estimates due to
the need for management judgment. In the table above, the impacts of changes in estimates are included
in the charged to expense amount and were not material in 2023, 2022 and 2021. Casualty,
environmental and other reserves are provided for in the consolidated balance sheets as shown in the
table below.

(Dollars in Millions)
Casualty:
Personal Injury
Occupational

Total Casualty

Environmental
Other

Total

December 2023
Long-term

Current

Total

Current

December 2022
Long-term

Total

45 $
7
52 $
41
51
144 $

83 $
60
143 $
113
40
296 $

128 $
67
195 $
154
91
440 $

40 $
10
50 $
53
41
144 $

86 $
58
144 $
108
40
292 $

126
68
194
161
81
436

CSX 2023 Form 10-K p.70

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 5. Casualty, Environmental and Other Reserves, continued

These liabilities are accrued when probable and reasonably estimable in accordance with the
Contingencies Topic in the ASC. Actual settlements and claims received could differ and final outcomes
of these matters cannot be predicted with certainty. Considering the legal defenses currently available,
the liabilities that have been recorded and other factors, it is the opinion of management that none of
these items individually, when finally resolved, will have a material adverse effect on the Company's
financial condition, results of operations or liquidity. Should a number of these items occur in the same
period, however, their combined effect could be material in that particular period.

Casualty

Casualty reserves represent accruals for personal injury, occupational disease and occupational
injury claims primarily related to railroad operations. Casualty reserves include liabilities assumed as a
result of the Company's acquisition of Pan Am in 2022. The Company's self-insured retention amount for
casualty claims is $100 million per occurrence. Currently, no individual claim is expected to exceed the
self-insured retention amount. Most of the Company's casualty claims relate to CSXT. In accordance with
the Contingencies Topic in the ASC, to the extent the value of an individual claim exceeds the self-
insured retention amount, the Company would present the liability on a gross basis with a corresponding
receivable for insurance recoveries.

These reserves fluctuate based upon the timing of payments as well as changes in estimate.
Actual results may vary from estimates due to the number, type and severity of the injury, costs of
medical treatments and uncertainties in litigation. Defense and processing costs, which historically have
been insignificant and are anticipated to be insignificant in the future, are not included in the recorded
liabilities. Changes in casualty reserves are included in purchased services and other on the consolidated
income statements.

Personal Injury

Personal injury reserves represent liabilities for employee work-related and third-party injuries.
Work-related injuries for CSXT employees are primarily subject to the Federal Employers' Liability Act
("FELA"). CSXT retains an independent actuary to assist management in assessing the value of personal
injury claims. An analysis is performed by the actuary quarterly and is reviewed by management. The
methodology used by the actuary includes a development factor to reflect growth or reduction in the value
of these personal injury claims based largely on CSXT's historical claims and settlement experience.
These analyses did not result in a material adjustment to the personal injury reserve in 2023, 2022 or
2021.

CSX 2023 Form 10-K p.71

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 5. Casualty, Environmental and Other Reserves, continued

Occupational

Occupational reserves represent liabilities arising from allegations of exposure to certain materials
in the workplace (such as solvents, soaps, chemicals and diesel fumes), past exposure to asbestos or
allegations of chronic physical injuries resulting from work conditions (such as repetitive stress injuries).
The Company retains an independent actuary to analyze the Company’s historical claims, settlement
amounts, and dismissal rates to assist in determining future anticipated claim filing rates and average
settlement values. This analysis is performed by the actuary and reviewed by management quarterly.
There were no material adjustments to the occupational reserve in 2023, 2022 or 2021.

Environmental

The Company is a party to various proceedings related to environmental issues, including
administrative and judicial proceedings involving private parties and regulatory agencies. The Company
has been identified as a potentially responsible party at approximately 230 environmentally impaired
sites. Many of these are, or may be, subject to remedial action under the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), also known as the
Superfund Law, or similar state statutes. Most of these proceedings arose from environmental conditions
on properties used for ongoing or discontinued railroad operations. A number of these proceedings,
however, are based on allegations that the Company, or its predecessors, sent hazardous substances to
facilities owned or operated by others for treatment, recycling or disposal. In addition, some of the
Company’s land holdings were leased to others for commercial or industrial uses that may have resulted
in releases of hazardous substances or other regulated materials onto the property and could give rise to
proceedings against the Company. Environmental reserves include liabilities assumed as a result of the
Company's acquisition of Pan Am in 2022 and Quality Carriers in 2021.

In any such proceedings, the Company is subject to environmental clean-up and enforcement
actions under the Superfund Law, as well as similar state laws that may impose joint and several liability
for clean-up and enforcement costs on current and former owners and operators of a site without regard
to fault or the legality of the original conduct. These costs could be substantial.

CSX 2023 Form 10-K p.72

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 5. Casualty, Environmental and Other Reserves, continued

In accordance with the Asset Retirement and Environmental Obligations Topic in the ASC, the
Company reviews its role with respect to each site identified at least quarterly, giving consideration to a
number of factors such as:

•
•

•

Based on management's review process, amounts have been recorded to cover contingent
anticipated future environmental remediation costs with respect to each site to the extent such costs are
reasonably estimable and probable. The recorded liabilities for estimated future environmental costs are
undiscounted. The liability includes future costs for remediation and restoration of sites as well as any
significant ongoing monitoring costs, but excludes any anticipated insurance recoveries. Payments
related to these liabilities are expected to be made over the next several years. Environmental
remediation costs are included in purchased services and other on the consolidated income statements.

Currently, the Company does not possess sufficient information to reasonably estimate the
amounts of additional liabilities, if any, on some sites until completion of future environmental studies. In
addition, conditions that are currently unknown could, at any given location, result in additional exposure,
the amount and materiality of which cannot presently be reasonably estimated. Based upon information
currently available, however, the Company believes its environmental reserves accurately reflect the
estimated cost of remedial actions currently required.

Other

Other reserves include liabilities for various claims, such as automobile, property, general liability,
workers' compensation and longshoremen disability claims. Other reserves include liabilities assumed as
a result of the Company's acquisition of Pan Am in 2022 and Quality Carriers in 2021.

CSX 2023 Form 10-K p.73

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 6. Properties

Details of the Company’s net properties are as follows:

(Dollars in Millions)

December 2023

Road

Accumulated Net Book

Annual
Depreciation

Estimated
Useful Life

Depreciation

Cost

Depreciation

Value

Rate

(Avg. Years)

Method

Rail and Other Track Material

$ 9,537 $

(1,978) $ 7,559

Ties

Grading

Ballast

7,020

2,796

3,424

(2,131)

4,889

(668)

2,128

(1,119)

2,305

Bridges, Trestles, and Culverts

3,121

(525)

2,596

Signals and Interlockers

3,376

(1,351)

2,025

2.5%

3.5%

1.3%

2.6%

1.7%

4.1%

Buildings

Other

Equipment

Locomotive

Freight Cars

1,530

(608)

922

2.5%

5,786

(2,546)

3,240

4.1%

Total Road 36,590

(10,926) 25,664

4,952

2,300

(1,981)

2,971

(378)

1,922

3.8%

3.1%

Work Equipment and Other

3,391

(2,100)

1,291

8.9%

Total Equipment

10,643

(4,459)

6,184

Group Life

Group Life/
Straight Line (a)
Group Life/
Straight Line (a)

Group Life

Group Life/
Straight Line (a)

Land

Construction In Progress

2,272

815

—

2,272

815

N/A

Total Properties $ 50,320 $

(15,385) $ 34,935

(a) For depreciation method, certain asset categories contain intermodal terminals, trucking or technology-related assets, which are depreciated
using the straight-line method.

CSX 2023 Form 10-K p.74

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 6. Properties, continued

(Dollars in Millions)

December 2022

Road

Accumulated Net Book

Annual
Depreciation

Estimated
Useful Life

Depreciation

Cost

Depreciation

Value

Rate

(Avg. Years)

Method

Rail and Other Track Material $ 8,660 $

(1,405) $ 7,255

Ties

Grading

Ballast

Bridges, Trestles, and
Culverts

Signals and Interlockers

6,763

2,741

3,383

2,989

3,299

(2,010)

4,753

(637)

2,104

(1,130)

2,253

(454)

2,535

(1,210)

2,089

2.5%

3.5%

1.3%

2.6%

1.7%

4.1%

Buildings

Other

Equipment

Locomotive

Freight Cars

1,416

(558)

858

2.5%

5,541

(2,323)

3,218

4.1%

Total Road 34,792

(9,727) 25,065

4,848

2,316

(1,856)

2,992

(369)

1,947

3.8%

3.1%

Work Equipment and Other

3,132

(1,911)

1,221

8.9%

Total Equipment

10,296

(4,136)

6,160

Group Life

Group Life/
Straight Line (a)
Group Life/
Straight Line (a)

Group Life

Group Life/
Straight Line (a)

Land

Construction In Progress

2,272

745

—

2,272

745

N/A

Total Properties $ 48,105 $

(13,863) $ 34,242

(a) For depreciation method, certain asset categories contain intermodal terminals, trucking or technology-related assets, which are depreciated
using the straight-line method.

CSX 2023 Form 10-K p.75

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 6. Properties, continued

Capital Expenditures

The Company’s capital investment includes purchased and self-constructed assets and property
additions that substantially extend the service life or increase the utility of those assets. Indirect costs that
can be specifically traced to capital projects are also capitalized. The Company is committed to
maintaining and improving its existing infrastructure and expanding its network capacity for long-term
growth. Rail operations are capital intensive and CSX accounts for these costs in accordance with United
States generally accepted accounting principles ("GAAP") and the Company’s capitalization policy. All
properties are stated at historical cost less an allowance for accumulated depreciation.

The Company’s largest category of capital investment is the replacement of track assets, which is
primarily completed by CSXT employees, as well as the acquisition or construction of new assets that
enable CSX to enhance its operations or provide new capacity offerings to its customers. Costs for track
asset replacement and capacity projects that are capitalized include:

•

labor costs, because many of the assets are self-constructed;
costs to purchase or construct new track or to prepare ground for the laying of track;
•
• welding (rail, field and plant), which are processes used to connect segments of rail;

•

new ballast, which is gravel and crushed stone that holds track in line;
fuels and lubricants associated with tie, rail and surfacing work, which is the process of raising
track to a designated elevation over an extended distance;
cross, switch and bridge ties, which are the braces that support the rails on a track;
gauging, which is the process of standardizing the distance between rails;
handling costs associated with installing rail, ties or ballast;
usage charge of machinery and equipment utilized in construction or installation; and
other track materials.

Labor is a significant cost in self-constructed track replacement work. CSXT engineering
employees directly charge their labor to the track replacement project (the capitalized depreciable
property). In replacing track, these employees concurrently perform deconstruction and installation of
track material. Because of this concurrent process, CSX must estimate the amount of labor that is related
to deconstruction versus installation. As a component of the depreciation study for road and track assets,
management performs an analysis of labor costs related to the self-constructed track replacement work,
which includes direct observation of track replacement processes. Through this analysis, CSX
determined that approximately 20% of labor costs associated with track replacement is related to the
deconstruction of old track, for which certain elements are expensed, and 80% is associated with the
installation of new track, which is capitalized.

Capital investment related to locomotives and freight cars comprises the second largest category
of the Company’s capital assets. This category includes purchases of locomotives and freight cars as well
as costs to modify or rebuild these assets, which are capitalized if the investment incurred extends the
asset’s service life or improves utilization. Improvement projects must meet specified dollar thresholds to
be capitalized and are reviewed by management to determine proper accounting treatment. Routine
repairs, overhauls and other maintenance costs, for all asset categories, are expensed as incurred.

CSX 2023 Form 10-K p.76

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 6. Properties, continued

Depreciation Method

The depreciable assets of the Company are depreciated using either the group-life or straight-line
method of accounting, which are both acceptable depreciation methods in accordance with GAAP. The
Company depreciates its railroad assets, including main-line track, locomotives and freight cars, using
the group-life method. Assets depreciated under the group-life method comprise 84% of total fixed assets
of $50.3 billion on a gross basis as of December 2023. The remaining depreciable assets of the
Company, including non-railroad assets and assets under finance leases, are depreciated using the
straight-line method on a per asset basis. Land is not depreciated.

The group-life method aggregates assets with similar lives and characteristics into groups and
depreciates each of these groups as a whole. When using the group-life method, an underlying
assumption is that each group of assets, as a whole, is used and depreciated to the end of its group’s
recoverable life. The Company currently utilizes different depreciable asset categories to account for
depreciation expense for the railroad assets that are depreciated under the group-life method. By utilizing
various depreciable categories, the Company can more accurately account for the use of its assets. All
assets of the Company are depreciated on a time or life basis.

The group-life method of depreciation closely approximates the straight-line method of
depreciation. Additionally, due to the nature of most of its assets (e.g. track is one contiguous, connected
asset), the Company believes that this is the most accurate and effective way to properly depreciate its
assets.

Depreciation Studies

Management performs a review of depreciation expense and useful lives on a regular basis.
Under the group-life method, the service lives and salvage values for each group of assets are
determined by completing periodic depreciation studies and applying management’s methods to
determine the service lives of its properties. A depreciation study is the periodic review of asset service
lives, salvage values, accumulated depreciation, and other related factors for group assets conducted by
a third-party specialist, analyzed by the Company’s management and approved by the Surface
Transportation Board ("STB"), the regulatory board that has broad jurisdiction over railroad practices. The
STB requires depreciation studies be performed every three years for equipment assets (e.g.,
locomotives and freight cars) and every six years for road and track assets (e.g., bridges, signals, rail,
ties, and ballast). The Company believes the frequency of depreciation studies currently required by the
STB, complemented by annual data reviews conducted by a third-party specialist and analyzed by the
Company's management, provides adequate review of asset service lives and that a more frequent
review would not result in a material change due to the long-lived nature of most of the assets.

The Company completed a depreciation study for its road and track assets in 2020 and for
equipment assets in 2022, both of which resulted in changes to accumulated depreciation, service lives,
salvage values, and other related factors for certain assets. The 2022 equipment study resulted in an
increase in annual depreciation expense of approximately $80 million primarily due to deferred losses on
assets depreciated using the group-life method. A depreciation study was not performed in 2023.

CSX 2023 Form 10-K p.77

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 6. Properties, continued

Group-Life Assets Sales and Retirements

Since the rail network is one contiguous, connected network it is impractical to maintain specific
identification records for these assets. For track assets (e.g., rail, ties, and ballast), CSX retires assets on
a statistical curve relative to the age of the assets. Equipment assets (e.g., locomotives and freight cars)
are specifically identified at retirement. When an equipment asset is retired that has been depreciated
using the group-life method, the cost is reduced from the cost base and recorded in accumulated
depreciation.

For sales or retirements of assets depreciated under the group-life method that occur in the
ordinary course of business, the asset cost (net of salvage value or sales proceeds) is charged to
accumulated depreciation and no gain or loss is immediately recognized. This practice is consistent with
accounting treatment prescribed under the group-life method. As part of the depreciation study, an
assessment of the recorded amount of accumulated depreciation is made to determine if it is deficient (or
in excess) of the appropriate amount indicated by the study. Any such deficiency (or excess), including
any deferred gains or losses, is amortized as a component of depreciation expense over the remaining
service life of the asset group until the next required depreciation study. Since the overall assumption with
the group-life method is that the assets within the group on average have the same service life and
characteristics, it is therefore concluded that the deferred gains and losses offset over time.

For sales or retirements of assets depreciated under the group-life method that do not occur in the
ordinary course of business, a gain or loss may be recognized if the sale or retirement meets each of the
following three criteria: (i) it is unusual, (ii) it is material in amount, and (iii) it varies significantly from the
retirement profile identified through depreciation studies. No material gains or losses were recognized on
the sale of assets depreciated using the group-life method in 2023, 2022 or 2021, as no sales met the
criteria described above.

Land and Straight-line Assets Sales and Retirements

When the Company sells or retires land, land-related easements or assets depreciated under the
straight-line method, a gain or loss is recognized in purchased services and other on the consolidated
statements of income. Primarily as a result of its initiative to monetize non-core properties, the Company
recognized gains on the sale of properties of $34 million, $238 million, and $454 million in 2023, 2022
and 2021, respectively. Gains in 2022 and 2021 include amounts from the Virginia transaction discussed
below.

Sale of Property Rights to the Commonwealth of Virginia

On March 26, 2021, the Company entered into a comprehensive agreement to sell certain
property rights in three CSX-owned line segments to the Commonwealth of Virginia (“Commonwealth”)
over three phases. The timing and amount of gains recognized were based on the allocation of fair value
to each conveyance, the timing of future conveyances and collectability. Over the course of this
transaction, which was completed in 2022, total proceeds of $525 million were collected and total gains of
$493 million were recognized. Gains and proceeds related to this transaction are summarized in the
following table.

(Dollars in Millions)
Gains
Proceeds

Years Ended
2022

2021

2023

$ — $

—

144 $
125

349
400

CSX 2023 Form 10-K p.78

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 6. Properties, continued

Impairment Review

Properties and other long-lived assets are reviewed for impairment whenever events or business
conditions indicate the carrying amount of such assets may not be fully recoverable. Initial assessments
of recoverability are based on estimates of undiscounted future net cash flows associated with an asset
or a group of assets in accordance with the Property, Plant, and Equipment Topic in the ASC. Where
impairment is indicated, the assets are evaluated and their carrying amount is reduced to fair value based
on discounted net cash flows or other estimates of fair value. Impairment expense of $2 million in 2023,
$4 million in 2022, and $2 million in 2021 was primarily due to the discontinuation of certain in-progress
projects. Impairment expense is recorded in purchased services and other expense on the consolidated
income statement.

Government Assistance

The Company is a party to contracts with recipients and subrecipients of awards from federal,
state and local governmental agencies. These contracts meet the disclosure requirements under ASU
2021-10, Disclosure by Business Entities about Government Assistance, which the Company adopted
effective year end 2022. These awards are typically in the form of cash for purposes of making
improvements to the rail network as part of public safety, corridor expansion or economic revitalization
initiatives. The awarding agency generally specifies how the awards are to be spent by the recipients and
may include limited conditions requiring return of the assistance.

Government funding received or receivable related to a property asset is netted with the cost of
the asset in properties on the consolidated balance sheet, and the net asset is subject to depreciation.
Any amounts owed by the government entity are recorded within accounts receivable until reimbursed.
For the years ended December 31, 2023, and December 31, 2022, the total amounts received under
contracts with government entities to improve the rail network was $84 million and $49 million,
respectively. Non-freight accounts receivable related to these government projects was $57 million and
$34 million as of December 31, 2023, and December 31, 2022, respectively.

CSX 2023 Form 10-K p.79

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 7. Leases

At inception, the Company determines if an arrangement contains a lease and whether that lease
meets the classification criteria of a finance or operating lease. Some of the Company’s lease
arrangements contain lease components (e.g., minimum rent payments) and non-lease components
(e.g., maintenance, labor charges, etc.). The Company generally accounts for each component
separately based on the estimated standalone price of each component. For certain equipment leases,
such as freight car, vehicles and work equipment, the Company accounts for the lease and non-lease
components as a single lease component.

Certain of the Company’s lease agreements include rental payments that are adjusted periodically
for an index or rate. The leases are initially measured using the projected payments adjusted for the
index or rate in effect at the commencement date. The Company’s lease agreements do not contain any
material residual value guarantees or material restrictive covenants.

Operating Leases

Operating leases are included in right-of-use lease assets, other current liabilities and long-term
lease liabilities on the consolidated balance sheets. These assets and liabilities are recognized at the
commencement date based on the present value of remaining lease payments over the lease term using
the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-
term operating leases, which have an initial term of 12 months or less, are not recorded on the balance
sheet.

The Company has various lease agreements with other parties with terms up to 50 years,
including a significant operating lease with the State of Georgia for approximately 137 miles of right-of-
way with integral equipment for a term of 50 years with an annual 2.5% increase. Non-cancelable, long-
term leases may include provisions for maintenance, options to purchase and options to extend the
terms. These options are included in the lease term when it is reasonably certain that the option will be
exercised. Lease expense for operating leases, including leases with escalations over their terms, is
recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the
period in which the obligation for those payments is incurred. Lease expense is included in equipment
and other rents on the consolidated income statements and is reported net of lease income. Lease
income was not material to the results of operations for 2023, 2022 or 2021.

CSX 2023 Form 10-K p.80

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 7. Leases, continued

The following table presents information about the amount, timing and uncertainty of cash flows

arising from all of the Company’s operating leases as of December 31, 2023.

(Dollars in Millions)

Maturity of Lease Liabilities
2024
2025
2026
2027
2028
Thereafter
Total Undiscounted Operating Lease Payments
Less: Imputed Interest
Present Value of Operating Lease Liabilities

(Dollars in Millions)
Balance Sheet Classification
Right of Use Asset

Current Lease Liabilities (Included in Other Current Liabilities) $
Long-term Lease Liabilities
Total Operating Lease Liabilities

Other Information
Weighted-average Remaining Lease Term for Operating
Leases
Weighted-average Discount Rate for Operating Leases

December 2023
Lease Payments

2023

2022

498

68
491
559

70
67
51
43
35
1,108
1,374
(815)
559

505

69
488
557

30 years

31 years

5.1 %

5.0 %

Cash Flows

As of December 2023 and 2022, the Company's right-of-use asset was valued at $498 million and
$505 million, respectively. In 2023, right of use assets of $56 million were recognized as non-cash asset
additions due to new operating lease liabilities. In 2022, right-of-use assets of $74 million were
recognized as non-cash asset additions due to new operating lease liabilities. Cash paid for amounts
included in the present value of operating lease liabilities was $78 million and $76 million during the years
ended 2023 and 2022, respectively, and is included in operating cash flows.

CSX 2023 Form 10-K p.81

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 7. Leases, continued

Operating Lease Costs

These costs are primarily related to long-term operating leases, but also include immaterial
amounts for variable leases and short-term leases with terms greater than 30 days. These amounts are
shown in the table below.

(Dollars in Millions)
Rent Expense on Operating Leases

Finance Leases

Years Ended
2022

2021

2023

109 $

Finance leases are included in properties - net and long-term debt on the consolidated balance
sheets and were not material as of December 2023 or December 2022. The associated amortization
expense and interest expense are included in depreciation and interest expense, respectively, on the
consolidated income statements and were not material to the results of operations for 2023, 2022 or
2021.

NOTE 8. Commitments and Contingencies

Purchase Commitments

CSXT's long-term locomotive maintenance program agreement with a third party contains
commitments related to specific locomotive rebuilds and a long-term maintenance program that covers a
portion of CSXT’s fleet of locomotives. The maintenance program costs are based on the maintenance
cycle for each covered locomotive, which is determined by the asset's age and type. Expected future
costs may change as required maintenance schedules are revised and locomotives are placed into or
removed from service. Under CSXT’s current obligations, the agreement will expire no earlier than 2035.

The following table summarizes CSXT’s payments, including prepayments, for the long-term
maintenance program which covers approximately 1,900 locomotives with payments based on active
status during the period.

(Dollars in Millions)
Amounts Paid

(a) The 2022 amount has been updated to include prepayments of $40 million.

Years Ended (a)
2022

2023

2021

200 $

168 $

CSX 2023 Form 10-K p.82

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 8. Commitments and Contingencies, continued

The total of annual payments under the agreement, including those related to locomotive rebuilds

and the long-term locomotive maintenance program, are estimated in the table below.

Additionally,

the Company has various other commitments

technology,
communications,
from various
suppliers. Total annual payments under all of these purchase commitments are also estimated in the
table below.

track maintenance services and materials, and other services

to purchase

(Dollars in Millions)
2024
2025
2026
2027
2028
Thereafter
Total

Insurance

Locomotive
Maintenance &
Rebuild
Payments

342
365
397
521
402
1,223
3,250

Other
Commitments
182
$
137
37
37
33
56
482

Total

524
502
434
558
435
1,279
3,732

The Company maintains insurance programs with substantial limits for property damage, including
resulting business interruption, and third-party liability. A certain amount of risk is retained by the
Company on each insurance program. Under its property insurance program, the Company retains all
risk up to $100 million per occurrence for losses from floods and named windstorms and up to $75 million
per occurrence for other property losses. For third-party liability claims, the Company retains all risk up to
$100 million per occurrence. As CSX negotiates insurance coverage above its full self-retention amounts,
it retains a percentage of risk at various layers of coverage. While the Company believes its insurance
coverage is adequate, future claims could exceed existing insurance coverage or insurance may not
continue to be available at commercially reasonable rates.

Legal

The Company is involved in litigation incidental to its business and is a party to a number of legal
actions and claims, various governmental proceedings and private civil lawsuits, including, but not limited
to, those related to fuel surcharge practices, tax matters, environmental and hazardous material exposure
matters, FELA and labor claims by current or former employees, other personal injury or property claims
and disputes and complaints involving certain transportation rates and charges. Some of the legal
proceedings include claims for compensatory as well as punitive damages and others are, or are
purported to be, class actions. While the final outcomes of these matters cannot be predicted with
certainty, considering, among other things, the legal defenses available and liabilities that have been
recorded along with applicable insurance, it is currently the opinion of management that none of these
pending items is likely to have a material adverse effect on the Company's financial condition, results of
operations or liquidity. An unexpected adverse resolution of one or more of these items, however, could
have a material adverse effect on the Company's financial condition, results of operations or liquidity in
that particular period.

CSX 2023 Form 10-K p.83

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 8. Commitments and Contingencies, continued

The Company is able to estimate a range of possible loss for certain matters for which a loss is
reasonably possible in excess of reserves established. The Company has estimated this range to be $3
million to $55 million in the aggregate as of December 31, 2023. This estimated aggregate range is based
upon currently available information and is subject to significant judgment and a variety of assumptions.
Accordingly, the Company's estimate will change from time to time, and actual losses may vary
significantly from the current estimate.

Fuel Surcharge Antitrust Litigation

In May 2007, class action lawsuits were filed against CSXT and three other U.S.-based Class I
railroads alleging that the defendants' fuel surcharge practices relating to contract and unregulated traffic
resulted from an illegal conspiracy in violation of antitrust laws. The class action lawsuits were
consolidated into one case in federal court in the District of Columbia. In 2017, the District Court issued
its decision denying class certification. On August 16, 2019, the U.S. Court of Appeals for the D.C. Circuit
affirmed the District Court’s ruling.

The consolidated case is now moving forward without class certification. Although the class was
not certified, individual shippers have since brought claims against the railroads, which have been
consolidated into a separate case.

CSXT believes that its fuel surcharge practices were arrived at and applied lawfully and that the
case is without merit. Accordingly, the Company intends to defend itself vigorously. However, penalties for
violating antitrust laws can be severe, and resolution of these matters individually or when aggregated
could have a material adverse effect on the Company's financial condition, results of operations or
liquidity in that particular period.

Environmental

CSXT is indemnifying Pharmacia LLC, formerly known as Monsanto Company, ("Pharmacia") for
certain liabilities associated with real estate located in Kearny, New Jersey along the Lower Passaic River
(the “Property”). The Property, which was formerly owned by Pharmacia, is now owned by CSXT. CSXT's
indemnification and defense duties arise with respect to several matters. The U.S. Environmental
Protection Agency ("EPA"), using its CERCLA authority, seeks the investigation and cleanup of hazardous
substances in the 17-mile Lower Passaic River Study Area (the "Study Area”). CSXT, on behalf of
Pharmacia, and a significant number of other potentially responsible parties are together conducting a
Remedial Investigation and Feasibility Study of the Study Area pursuant to an Administrative Settlement
Agreement and Order on Consent with the EPA. Pharmacia’s share of responsibility, indemnified by
CSXT, for the investigation and cleanup costs of the Study Area may be determined through various
mechanisms including (a) an allocation and settlement with EPA; (b) litigation brought by EPA against
non-settling parties; or (c) litigation among the responsible parties.

CSX 2023 Form 10-K p.84

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 8. Commitments and Contingencies, continued

For the lower eight miles of the Study Area, EPA issued its Record of Decision detailing the
agency’s mandated remedial process in March 2016. Occidental Chemical Corporation ("Occidental") is
performing the remedial design for the lower eight-mile portion of the Study Area pursuant to a consent
order with EPA.

For the remaining upper nine miles of the Study Area, EPA selected an interim remedy in a
Record of Decision dated September 28, 2021. On March 2, 2023, EPA issued an administrative order
requiring Occidental to design the interim remedy for the upper nine miles of the Study Area.

Potentially responsible parties, including Pharmacia, are participating in an EPA-directed
allocation and settlement process to assign responsibility related to the lower river and the entire Study
Area, respectively. CSXT participated in the EPA-directed allocation and settlement process on behalf of
Pharmacia. On March 2, 2022, EPA issued a Notice Letter to Pharmacia, Occidental and eight other
parties alleging they are liable under Section 107(a) of CERCLA for releases or threatened releases of
hazardous substances and requesting each party, individually or collectively, submit good faith offers to
EPA in connection with the entire Study Area. CSXT, on behalf of Pharmacia, responded to the Notice
Letter and submitted a good faith offer to EPA on June 27, 2022, following meetings with a mediator from
EPA’s Conflict Prevention and Resolution Center. On November 21, 2023, EPA notified the United States
District Court for the District of New Jersey that it intended to move to enter a Consent Decree (“CD”) with
a group of potentially responsible parties. On January 31, 2024, EPA filed a motion to enter a modified
CD with 82 potentially responsible parties, requiring payment of $150 million to resolve their liability with
respect to the entire Study Area. Pharmacia is not a participant in the CD settlement. Negotiations with
EPA and other parties to resolve Pharmacia's liability continue.

CSXT is also defending and indemnifying Pharmacia with regard to the Property in litigation filed
by Occidental, which is seeking to recover its past and future costs associated with the remediation of the
entire Study Area. Alternatively, Occidental seeks to compel some, or all, of the defendants to participate
in the remediation of the Study Area. Pharmacia is one of approximately 110 defendants in a federal
lawsuit filed by Occidental on June 30, 2018, and one of 37 defendants in a federal lawsuit filed by
Occidental on March 24, 2023. CSXT is also defending and indemnifying Pharmacia in a cooperative
natural resource damages assessment process related to the Property.

Based on currently available information, the Company does not believe its share of remediation
costs as determined by the EPA-directed allocation with respect to the Property and the Study Area would
be material to the Company's financial condition, results of operations or liquidity.

CSX 2023 Form 10-K p.85

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 9. Employee Benefit Plans

The Company sponsors defined benefit pension plans principally for salaried, management
personnel. For employees hired prior to 2003, the plans provide eligible employees with retirement
benefits based predominantly on years of service and compensation rates near retirement. For
employees hired between 2003 and 2019, benefits are determined based on a cash balance formula,
which provides benefits by utilizing interest and pay credits based upon age, service and compensation.
The CSX Pension Plan, the largest plan based on benefit obligation, was closed to new participants
beginning in 2020.

The Company engages independent actuaries to compute the amounts of liabilities and expenses
relating to these plans subject to the assumptions that the Company determines are appropriate based
on historical trends, current market rates and future projections. These amounts are reviewed by
management. In order to perform this valuation, the actuaries are provided with the details of the
population covered at the beginning of the year, summarized in the table below, and projects that
population forward to the end of the year.

Pension Plan Participants:

Active Employees
Retirees and Beneficiaries
Other(a)
Total

(a) The Other category consists mostly of terminated but vested former employees.

As of
January 1, 2023

2,479
11,294
3,504
17,277

CSX 2023 Form 10-K p.86

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 9. Employee Benefit Plans, continued

The benefit obligation for these plans represents the liability of the Company for current and

former employees and is affected primarily by the following:

•
•
•

•

service cost (benefits attributed to employee service during the period);
interest cost (interest on the liability due to the passage of time);
actuarial gains/losses (experience during the year different from that assumed and changes in
plan assumptions); and
benefits paid to participants.

Cash Flows

Plan assets are amounts that have been segregated and restricted to provide qualified pension
plan benefits and include amounts contributed by the Company and amounts earned from invested
contributions, net of benefits paid. Qualified pension plan obligations are funded in accordance with
regulatory requirements and with an objective of meeting or exceeding minimum funding requirements
necessary to avoid restrictions on flexibility of plan operation and benefit payments. The Company funds
the cost of nonqualified pension benefits on a pay-as-you-go basis. No qualified pension plan
contributions were made during 2023, 2022 and 2021. No contributions to the Company's qualified
pension plans are expected in 2024.

Future expected benefit payments are as follows:

Expected Cash Flows (Dollars in Millions):
2024
2025
2026
2027
2028
2029-2033
Total

Plan Assets

Pension
Benefits

190
186
183
182
181
870
1,792

The Company outsources investment management related to pension plan assets. The CSX
Investment Committee (the “Investment Committee”), whose members are selected by the Executive
Vice President and Chief Financial Officer, is responsible for setting policy and oversight of investment
management. The Investment Committee and investment manager utilize an investment asset allocation
strategy that is monitored on an ongoing basis and updated periodically in consideration of plan or
employee changes, or changing market conditions. Periodic studies provide an extensive modeling of
asset investment return in conjunction with projected plan liabilities and seek to evaluate how to
maximize return within the constraints of acceptable risk.

CSX 2023 Form 10-K p.87

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 9. Employee Benefit Plans, continued

The current asset allocation targets 55% growth-oriented investments and 45% immunizing
investments. The growth-oriented portfolio consists of return-seeking investments that are diversified
across geography, market capitalization, and asset class. The immunizing portfolio is comprised of a
customized mix of fixed income and cash investments designed to reduce liability risk. Allocations are
evaluated for levels within 5% of targeted allocations and are adjusted quarterly as necessary.

The distribution of pension plan assets as of the measurement date is shown in the table below,

and these assets are reported net of pension liabilities on the balance sheet.

(Dollars in Millions)

Equity
Fixed Income
Cash and Cash Equivalents

Growth-Oriented
Fixed Income
Cash and Cash Equivalents

Immunizing
Total

December 2023

December 2022

Amount

Percent of
Total Assets

Amount

$
$

1,142
114
15
1,271
911
240
1,151
2,422

47 % $

4
1

52 % $
38
10
48 % $
100 % $

1,249
144
41
1,434
777
116
893
2,327

Percent of
Total Assets
54 %
6
2
62 %
33
5
38 %
100 %

Under the supervision of the Investment Committee, the investment manager selects investments
or fund managers in accordance with standards of prudence applicable to asset diversification and
investment suitability. The Company also selects fund managers with differing investment styles and
benchmarks their investment returns against appropriate indices. Fund investment performance is
continuously monitored. Acceptable performance is determined in the context of the long-term return
objectives of the fund and appropriate asset class benchmarks.

Within the Company's equity funds, domestic stock is diversified among large and small
capitalization stocks. International stock is diversified in a similar manner as well as in developed versus
emerging markets stocks. Guidelines established with individual managers can limit investment by
industry sectors, individual stock issuer concentration and the use of derivatives and CSX securities.

Fixed income securities guidelines established with individual managers specify the types of
allowable investments, such as government, corporate and asset-backed bonds, target certain allocation
ranges for domestic and foreign investments and limit the use of certain derivatives. Additionally,
guidelines stipulate minimum credit quality constraints and any prohibited securities. For detailed
information regarding the fair value of pension assets, see Note 13, Fair Value Measurements.

CSX 2023 Form 10-K p.88

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 9. Employee Benefit Plans, continued

Benefit Obligation, Plan Assets and Funded Status

Changes in benefit obligation and the fair value of plan assets for the 2023 and 2022 plan years

are as follows:

(Dollars in Millions)
Actuarial Present Value of Benefit Obligation

Accumulated Benefit Obligation

Projected Benefit Obligation

Change in Projected Benefit Obligation:

Projected Benefit Obligation at Beginning of Plan Year
Service Cost (a)
Interest Cost

Actuarial Loss (Gain)

Benefits Paid

Benefit Obligation at End of Plan Year

Change in Plan Assets:

Fair Value of Plan Assets at Beginning of Plan Year

Actual Return (Loss) on Plan Assets

Non-qualified Employer Contributions

Benefits Paid

Fair Value of Plan Assets at End of Plan Year

Funded Status at End of Plan Year

Pension Benefits

Plan Year

2023

2022

2,252 $

2,343

2,285

2,368

2,368 $

3,022

111

(184)

(570)

(184)

2,343 $

2,368

2,327 $

259

(184)

2,422 $

79 $

3,016

(523)

(184)

2,327

(41)

(a) Service cost for 2023 and 2022 includes capitalized service costs of $4 million each year.

In 2023, the $20 million net actuarial loss for pension benefits was driven by a 20 basis point
decrease in the weighted average discount rate, partially offset by changes to census data. The
$570 million net actuarial gain for pension benefits in 2022 was driven by a 224 basis point increase in
the weighted average discount rate.

CSX 2023 Form 10-K p.89

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 9. Employee Benefit Plans, continued

For qualified plan funding purposes, assets and discounted liabilities are measured in accordance
with the Employee Retirement Income Security Act ("ERISA"), as well as other related provisions of the
Internal Revenue Code and related regulations. Under these funding provisions and the alternative
measurements available thereunder, the Company estimates its unfunded obligation for qualified plans
on an annual basis.

In accordance with Compensation-Retirement Benefits Topic in the ASC, an employer must
recognize the funded status of a pension plan by recording a liability (underfunded plan) or asset
(overfunded plan) for the difference between the projected benefit obligation and the fair value of plan
assets at the plan measurement date. Amounts related to pension benefits recorded in other long-term
assets, labor and fringe benefits payable and other long-term liabilities on the balance sheet are as
follows:

(Dollars in Millions)
Amounts Recorded in Consolidated

Balance Sheets:

Long-term Assets
Current Liabilities
Long-term Liabilities
Net Amount Recognized in Consolidated Balance Sheets

Pension Benefits

December
2023

December
2022

277 $
(16)
(182)

79 $

164
(17)
(188)
(41)

Long-term assets as of December 2023 and 2022 in the preceding table relate to qualified
pension plans where assets exceed projected benefit obligations. Current and long-term liabilities relate
to plans where projected benefits obligations exceed assets. The following table shows the value of plan
assets for only those plans with a net liability status.

Aggregate
Fair Value

Aggregate

of Plan Assets Benefit Obligation
$

— $
—

(198)
(188)

(Dollars in Millions)
Benefit Obligations in Excess of Plan Assets
Projected Benefit Obligation
Accumulated Benefit Obligation

CSX 2023 Form 10-K p.90

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 9. Employee Benefit Plans, continued

Net Benefit Expense

Only the service cost component of net periodic benefit costs is included in labor and fringe
expense on the consolidated income statement. All other components of net periodic benefit cost are
included in other income - net. The following table describes the components of expense/(income) related
to net benefit expense recorded on the income statement.

(Dollars in Millions)
Service Cost Included in Labor and Fringe

Interest Cost
Expected Return on Plan Assets
Amortization of Net Loss

Total Income Included in Other Income - Net
Net Periodic Benefit Cost (Credit)

Settlement Loss

Total Periodic Benefit Cost (Credit)

Pension Benefits
Years Ended
2022

2021

2023

24 $

32 $

111
(164)
29
(24) $
— $
—
— $

64
(188)
50
(74) $
(42) $
1
(41) $

55
(186)
73
(58)
(17)
—
(17)

$
$

Pension Adjustments

The following table shows the pre-tax change in other comprehensive loss (income) attributable to
certain components of net benefit expense and the change in benefit obligation for CSX for pension
benefits.

(Dollars in Millions)
Components of Other Comprehensive
Loss (Income)
Recognized in the Balance Sheet

(Gains) Losses

Expense Recognized in the Income Statement

Amortization of Net Losses
Settlement Loss

Pension Benefits
Years Ended

2023

2022

(75) $

141

29 $
—

50
1

As of December 2023, the balance to be amortized related to the Company's pension obligations
is a pre-tax loss of $623 million. This amount is included in accumulated other comprehensive loss, a
component of shareholders’ equity.

CSX 2023 Form 10-K p.91

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 9. Employee Benefit Plans, continued

Assumptions

The expected long-term average rate of return on plan assets reflects the average rate of
earnings expected on the funds invested, or to be invested, to provide for benefits included in the
projected benefit obligation. In estimating that rate, the Company gives appropriate consideration to the
returns being earned by the plan assets in the funds and the rates of return expected to be available for
reinvestment as well as the current and projected asset mix of the funds. Management, with the
assistance of the outsourced investment manager, balances market expectations obtained from various
investment managers with both market and actual plan historical returns to develop a reasonable
estimate of the expected long-term rate of return on assets. This assumption is reviewed annually and
adjusted as deemed appropriate.

The Company measures the service cost and interest cost components of the net pension
benefits expense by using individual spot rates matched with separate cash flows for each future year.
The weighted averages of assumptions used by the Company to value its pension obligations were as
follows:

Expected Long-term Return on Plan Assets:
Benefit Cost for Current Plan Year
Benefit Cost for Subsequent Plan Year

Discount Rates:
Benefit Cost for Plan Year

Service Cost for Plan Year
Interest Cost for Plan Year

Benefit Obligation at End of Plan Year

Salary Scale Inflation
Cash Balance Plan Interest Credit Rate

Pension Benefits
2022
2023

6.75 %
6.75 %

5.09 %
4.90 %
4.82 %

2.98 %
2.18 %
5.02 %

4.80 %
3.75 %

CSX 2023 Form 10-K p.92

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 9. Employee Benefit Plans, continued

Post-retirement Medical Plan

In addition to these plans, the Company sponsors a post-retirement medical plan and a life
insurance plan that provide certain benefits to full-time, salaried, management employees hired prior to
2003 upon their retirement if certain eligibility requirements are met. The accumulated post-retirement
benefit obligation related to this plan was $56 million and $61 million, respectively, as of December 31,
2023 and 2022. Through 2033, total future expected benefit payments related to this plan were
$50 million. Expenses in 2023, 2022 and 2021 related to this plan were not material.

Other Plans

Under collective bargaining agreements, the Company participates in a multi-employer benefit
plan, which provides certain post-retirement health care and life insurance benefits to eligible contract
employees. Premiums under this plan are expensed as incurred and amounted to $11 million, $13 million
and $21 million in 2023, 2022 and 2021, respectively.

The Company maintains savings plans for virtually all full-time salaried employees and certain
employees covered by collective bargaining agreements. Expense associated with these plans was $35
million, $28 million and $29 million for 2023, 2022 and 2021, respectively, and is included in labor and
fringe expense on the consolidated income statement.

Under the terms of collective bargaining agreements that cover union-represented employees,
Quality Carriers contributes to two multi-employer pension plans. These plans provide defined benefits to
retired participants. Both of these pension plans are in Pension Protection Act zone “red”, meaning they
are at least 65% underfunded. Formal rehabilitation plans have been adopted. Based on information
provided to the Company from the administrators of these plans, Quality Carriers’ portion of the
contingent liability in the event of a full withdrawal or termination from these plans is estimated to be
approximately $334 million. Of this amount, $328 million relates to the Central States Southeast and
Southwest Areas Pension Plan and is based on information as of December 31, 2022, which is the latest
information available at the date the financial statements were issued. The Company does not currently
intend to withdraw from any of these multi-employer pension plans. Required monthly contributions to
these plans are not material.

CSX 2023 Form 10-K p.93

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 10. Debt and Credit Agreements

Debt at December 2023 and December 2022 is shown in the table below. For information

regarding the fair value of debt, see Note 13, Fair Value Measurements.

(Dollars in Millions)
Notes
Equipment Obligations(a)
Finance Leases

Maturity at
December
2023
2024-2068
2024-2027
2024-2032

Subtotal Long-term Debt (Including Current
Portion)

Less Debt Due within One Year

Long-term Debt (Excluding Current Portion)

(a) Equipment obligations are secured by an interest in certain railroad equipment.

Average
Interest
Rates at
December December December
2023

2022

2023
4.2%
4.4%
5.9%

$ 18,514 $ 17,877
141
2
29
17

$ 18,533 $ 18,047
(151)

(558)

$ 17,975 $ 17,896

Debt Issuance & Early Redemption of Long-term Debt

On September 7, 2023, CSX issued $600 million of 5.20% notes due 2033. These notes are
included in the consolidated balance sheets under long-term debt and may be redeemed by the
Company at any time, subject to payment of certain make-whole premiums.

In July 2022, CSX issued $950 million aggregate principal amount of 4.10% notes due 2032,
$900 million aggregate principal amount of 4.50% notes due 2052 and $150 million aggregate principal
amount of 4.65% notes due 2068. The 2068 notes are a reopening of existing notes originally issued in
February 2018. These notes are included in the consolidated balance sheets under long-term debt and
may be redeemed by the Company at any time, subject to payment of certain make-whole premiums.

In July 2021, finance lease obligations and debt totaling $68 million were assumed related to the

Company's acquisition of Quality Carriers on July 1, 2021. No debt was issued in 2021.

The net proceeds from debt issuances will be used for general corporate purposes, which may
include debt repayments, repurchases of CSX’s common stock, capital investment and working capital
requirements. For more information regarding a non-cash debt transaction with a related party, see Note
15, Investment in Affiliates and Related-Party Transactions.

CSX 2023 Form 10-K p.94

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 10. Debt and Credit Agreements, continued

Long-term Debt Maturities (Net of Discounts, Premiums and Issuance Costs)

(Dollars in Millions)
Years Ending
2024
2025
2026
2027
2028
Thereafter
Total Long-term Debt Maturities, including current portion

Interest Rate Derivatives
Fair Value Hedges

Maturities at
December 2023

558
606
704
998
1,001
14,666
18,533

In fourth quarter 2023, CSX entered into two separate fixed-to-floating interest rate swaps
classified as fair value hedges. The swaps are designed to hedge 10 years of interest rate risk associated
with market fluctuations attributable to the Secured Overnight Financing Rate ("SOFR") on a cumulative
$250 million of fixed rate outstanding notes which are due in 2033. The cumulative fair value of these
swaps, which is included in other long-term assets on the consolidated balance sheet, was an asset of
$19 million as of December 31, 2023.

In first quarter 2022, CSX entered into five separate fixed-to-floating interest rate swaps classified
as fair value hedges. The swaps are designed to hedge 10 years of interest rate risk associated with
market fluctuations attributable to the SOFR on a cumulative $800 million of fixed rate outstanding notes
which are due between 2036 and 2040. The cumulative fair value of these swaps which is included in
other long-term liabilities on the consolidated balance sheet, was a liability of $107 million and
$118 million as of December 31, 2023, and December 31, 2022, respectively.

The 2022 swaps will expire in 2032 and the 2023 swaps will expire in 2033. If settled early, the
remaining cumulative fair value adjustment to the hedged notes will be amortized over the remaining life
of the associated notes. The cumulative adjustment to the hedged notes is included in long-term debt on
the consolidated balance sheet as shown in the following table.

(Dollars in Millions)
Notional Value of Hedged Notes
Fair Value Asset Adjustment to Hedged Notes
Fair Value Liability Adjustment to Hedged Notes
Carrying Amount of Hedged Notes

December 31, 2023

December 31, 2022

1,050 $
19
(107)
962 $

800
—
(118)
682

CSX 2023 Form 10-K p.95

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 10. Debt and Credit Agreements, continued

Gains and losses resulting from changes in fair value of the interest rate swaps offset changes in
the fair value of the hedged portion of the underlying debt with no gain or loss recognized due to hedge
ineffectiveness. The difference in the net fixed-to-float interest settlement on the derivatives is recognized
in interest expense and is summarized as follows.

(Dollars in Millions)
Interest Expense Impact (Increase) Decrease

2023

2022

(28) $

(1)

2021
N/A

Cash Flow Hedges

In 2020, the Company executed forward starting interest rate swaps, classified as cash flow
hedges, with aggregate notional value of $500 million. These swaps were effected to hedge the
benchmark interest rate associated with future interest payments related to the anticipated refinancing of
$850 million of 3.25% notes due in 2027. In accordance with the Derivatives and Hedging Topic in the
ASC, the Company has designated these swaps as cash flow hedges. Under the terms of the Adjustable
Interest Rate (LIBOR) Act, the reference rate on the swaps were automatically replaced with daily
compounded SOFR plus the fallback spread on July 1, 2023, the LIBOR replacement date.

In fourth quarter 2022, CSX settled a portion equal to $160 million notional value of the aggregate
$500 million cash flow hedges, which resulted in CSX receiving a cash payment of $52 million included in
other operating activities on the consolidated cash flow statement. In second quarter 2023, CSX
executed a partial settlement equal to $113 million notional value of the cash flow hedges, which resulted
in CSX receiving a cash payment of $44 million. In third quarter 2023, CSX partially settled an additional
$113 million notional value of the cash flow hedges and received a cash payment of $51 million included
in other operating activities on the consolidated cash flow statement. The unsettled aggregate notional
value of these swaps was $114 million and $340 million as of December 31, 2023, and December 31,
2022, respectively.

As of December 31, 2023 and 2022, the asset value of the forward starting interest rate swaps
was $48 million and $127 million, respectively, and was recorded in other long-term assets on the
consolidated balance sheet. Unrealized gains or losses associated with changes in the fair value of the
hedge are recorded net of tax in accumulated other comprehensive income (“AOCI”) on the consolidated
balance sheet. The unrealized gain associated with the settled portion of the hedges will continue to be
classified in AOCI until the associated debt instrument is issued in the future. Unless settled early, the
remainder of the swaps will expire in 2027 and the unrealized gain or loss in AOCI will be recognized in
earnings as an adjustment to interest expense over the same period during which the hedged transaction
affects earnings. Unrealized amounts related to the hedge, recorded net of tax in other comprehensive
income, are summarized in the table below.

(Dollars in Millions)
Unrealized Gain - Net

2023

2022

2021

— $

80 $

See Note 13, Fair Value Measurements, and Note 16, Other Comprehensive Income (Loss), for

other information about the Company's hedges.

CSX 2023 Form 10-K p.96

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 10. Debt and Credit Agreements, continued

Credit Facilities

In February 2023, CSX replaced its existing $1.2 billion unsecured revolving credit facility with a
new $1.2 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This facility
allows same-day borrowings at floating interest rates, based on SOFR or an agreed-upon replacement
reference rate, plus a spread that depends upon CSX's senior unsecured debt ratings. This facility
expires in February 2028. As of December 31, 2023, the Company had no outstanding balances under
this facility.

Commitment fees and interest rates payable under the facility were similar to fees and rates
available to comparably rated investment-grade borrowers. As of December 31, 2023, CSX was in
compliance with all covenant requirements under the facility.

Commercial Paper

Under its commercial paper program, which is backed by the revolving credit facility, the Company
may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $1.0
billion. Proceeds from issuances of the notes are expected to be used for general corporate purposes. At
December 31, 2023, the Company had no commercial paper outstanding.

CSX 2023 Form 10-K p.97

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 11. Revenues

The Company’s revenues are primarily derived from the transportation of freight as performance
obligations that arise from its contracts with customers are satisfied. The following table presents the
Company’s revenues disaggregated by market as this best depicts how the nature, amount, timing and
uncertainty of revenue and cash flows are affected by economic factors.

(Dollars in Millions)

Chemicals
Agricultural and Food Products
Automotive
Forest Products
Metals and Equipment
Minerals
Fertilizers
Total Merchandise

Coal

Intermodal

Trucking(a)

Other
Total

Years Ended
2022

2021

2023

2,599 $
1,657
1,219
1,012
917
733
516
8,653

2,584 $
1,664
1,054
996
828
658
455
8,239

2,484

2,434

2,060

2,306

882

578

966

908

$ 14,657 $ 14,853 $

2,421
1,461
886
918
796
587
470
7,539

1,790

2,039

410

744
12,522

(a) Effective third quarter 2021, Trucking revenue is comprised of revenue from the operations of Quality Carriers, which was acquired by CSX

effective July 1, 2021.

Revenue Recognition

The Company generates revenue from rail freight billings under contracts with customers
generally on a rate per carload, container or ton-basis based on length of haul and commodities carried.
The Company’s performance obligation arises when it receives a bill of lading (“BOL”) to transport a
customer's commodities at a negotiated price contained in a transportation services agreement or a
publicly disclosed tariff rate. Once a BOL is received, a contract is formed whereby the parties are
committed to perform, collectability of consideration is probable and the rights of the parties, shipping
terms and conditions, and payment terms are identified. A customer may submit several BOLs for
transportation services at various times throughout a service agreement term, but each shipment
represents a distinct service that is a separately identified performance obligation.

CSX 2023 Form 10-K p.98

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 11. Revenues, continued

The average transit time to complete a rail shipment is between 2 to 7 days depending on market.
Payments for transportation services are normally billed once a BOL is received and are generally due
within 15 days after the invoice date. The Company recognizes revenue over transit time of freight as it
moves from origin to destination. Revenue for services started but not completed at the reporting date is
allocated based on the relative transit time in each reporting period, with the portion allocated for services
subsequent to the reporting date considered remaining performance obligations.

The certain key estimates included in the recognition and measurement of revenue and related

accounts receivable are as follows:

• Revenue associated with shipments in transit, which is recognized ratably over transit time and is
based on average cycle times to move commodities and products from their origin to their final
destination or interchange;

• Adjustments to revenue for billing corrections and billing discounts;
• Adjustments to revenue for overcharge claims filed by customers, which are based on historical

•

payments to customers for rate overcharges as a percentage of total billing; and
Incentive-based refunds to customers, which are primarily volume-related, are recorded as a
reduction to revenue on the basis of the projected liability (this estimate is based on historical
activity, current volume levels and forecasted future volume).

Revenue related to interline transportation services that involve the services of another party, such
as another railroad, is reported on a net basis. The portion of the gross amount billed to customers that is
remitted by the Company to another party is not reflected as revenue.

Effective third quarter 2021, trucking revenue includes revenue from the operations of Quality
Carriers and is mostly comprised of truck shipments of chemicals. A performance obligation arises when
Quality Carriers receives a customer order to transport a commodity at a contracted rate. Revenue is
recorded on a gross basis ratably over transit time.

Other revenue is recorded upon completion of the service and is comprised of revenue from
regional subsidiary railroads and incidental charges, including demurrage, intermodal storage and
equipment usage, and switching. Revenue from regional subsidiary railroads includes shipments by
railroads that the Company does not directly operate. Demurrage represents charges assessed when
freight cars are held by a customer beyond a specified period of time. Intermodal storage represents
charges for customer storage of containers at an intermodal terminal, ramp facility or offsite location
beyond a specified period of time. Switching represents charges assessed when a railroad switches cars
for a customer or another railroad.

During 2023, 2022 and 2021, revenue recognized from performance obligations related to prior

periods was not material.

CSX 2023 Form 10-K p.99

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 11. Revenues, continued

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to future reporting
periods for freight services started but not completed at the reporting date. This includes the unearned
portion of billed and unbilled amounts for cancellable freight shipments in transit. The Company expects
to recognize the unearned portion of revenue for freight services in transit within one week of the
reporting date. As of December 31, 2023, remaining performance obligations were not material.

Contract Balances and Accounts Receivable

The timing of revenue recognition, billings and cash collections results in accounts receivable and
customer advances and deposits (contract liabilities) on the consolidated balance sheets. Contract
assets, contract liabilities and deferred contract costs recorded on the consolidated balance sheet as of
December 31, 2023, and December 31, 2022, were not material.

The Company’s accounts receivable - net consists of freight and non-freight receivables, reduced

by an allowance for credit losses.

(Dollars in Millions)

Freight Receivables
Freight Allowance for Credit Losses

Freight Receivables, net

Non-Freight Receivables
Non-Freight Allowance for Credit Losses

Non-Freight Receivables, net
Total Accounts Receivable, net

December 31,
2023

December 31,
2022

1,047 $
(18)
1,029

378
(14)
364
1,393 $

1,067
(16)
1,051

279
(17)
262
1,313

Freight receivables include amounts earned, billed and unbilled, and currently due from customers
for transportation-related services. Non-freight receivables include amounts billed and unbilled and
currently due related to government reimbursement receivables and other non-revenue receivables. The
Company maintains an allowance for credit losses to provide for the estimated amount of receivables that
will not be collected. The allowance is based upon an assessment of risk characteristics, historical
payment experience, and the age of outstanding receivables adjusted for forward-looking economic
conditions as necessary. Credit losses recognized on the Company’s accounts receivable were not
material in 2023 and 2022.

CSX 2023 Form 10-K p.100

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 12. Income Taxes

Earnings before income taxes of $4.9 billion, $5.4 billion and $5.0 billion for years ended 2023,
2022 and 2021, respectively, represent earnings from domestic operations. The breakdown of income tax
expense between current and deferred is as follows:

(Dollars in Millions)
Current:
Federal
State

Subtotal Current

Deferred:
Federal
State

Subtotal Deferred

Total Income Tax Expense

Years Ended
2022

2023

2021

852 $
184
1,036 $

928 $
203
1,131 $

827
176
1,003

122
18
140 $
1,176 $

166
(49)
117 $
1,248 $

166
1
167
1,170

$
$

The Company recorded a 2023 income tax benefit of $22 million primarily from a change in the
valuation of deferred taxes as a result of filing the 2022 tax returns. In 2022, the Company recorded an
income tax benefit of $78 million primarily as a result of state legislative changes and a change in the
valuation of deferred taxes as a result of filing the 2021 tax returns. In 2021, the Company recorded an
income tax benefit of $48 million primarily as a result of favorable state legislative changes, additional tax
benefits associated with the vesting of share-based awards and adjustments to deferred taxes as a result
of filing the 2020 state tax returns.

Income tax expense reconciled to the tax computed at statutory rates is presented in the following

table.

(Dollars in Millions)
Federal Income Taxes
State Income Taxes
Other

2023

Years Ended
2022

2021

$ 1,027
153
(4)

21.0 % $ 1,137
121
(10)

3.1 %
(0.1) %

21.0 % $ 1,040
139
(9)

2.2 %
(0.1) %

21.0 %
2.8 %
(0.2) %

Income Tax Expense/ Rate

$ 1,176

24.0 % $ 1,248

23.1 % $ 1,170

23.6 %

CSX 2023 Form 10-K p.101

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 12. Income Taxes, continued

The primary factors in the change in year-end net deferred income tax liability balances include
the annual provision for deferred income tax expense and accumulated other comprehensive income
(loss). The significant components of deferred income tax assets and liabilities include:

(Dollars in Millions)
Other Employee Benefit Plans
Accelerated Depreciation
Other
Total
Net Deferred Income Tax Liabilities

2023

2022

Assets

Liabilities

Assets

Liabilities

103 $
—
459
562 $
$

— $

7,678
630
8,308 $
7,746

105 $
—
553
658 $
$

—
7,600
627
8,227
7,569

The Company files a consolidated federal income tax return, which includes its principal domestic
subsidiaries. CSX and its subsidiaries are subject to U.S. federal income tax as well as income tax of
multiple state jurisdictions. CSX participated in a contemporaneous IRS audit of tax years 2023, 2022,
and 2021. Federal examinations of original federal income tax returns for all years through 2020 are
resolved.

As of December 2023 and 2022, the Company had approximately $19 million and $18 million,
respectively, of total unrecognized tax benefits as a result of uncertain tax positions. Net tax benefits of
$15 million and $14 million as of December 2023 and 2022, respectively, could favorably impact the
effective income tax rate in each year. The Company does not expect that unrecognized tax benefits as
of December 2023 for various state and federal income tax matters will significantly change over the next
12 months. The final outcome of these uncertain tax positions is not yet determinable. There were no
material changes to the total gross unrecognized tax benefits and prior year audit resolutions of the
Company during the year ended December 2023.

CSX’s continuing practice is to recognize net interest and penalties related to income tax matters
in income tax expense. Accrued interest and penalties were not material as of December 2023 or 2022.
Additionally, expenses from changes to the reserves for interest and penalties were not material in 2023,
2022 or 2021.

CSX 2023 Form 10-K p.102

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 13. Fair Value Measurements

The Financial Instruments Topic in the ASC requires disclosures about fair value of financial
instruments in annual reports as well as in quarterly reports. For CSX, this statement applies to certain
investments, pension plan assets, long-term debt and interest rate derivatives. Also, the Fair Value
Measurements and Disclosures Topic in the ASC clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional disclosures about the use of fair
value measurements.

Various inputs are considered when determining the value of the Company's investments, pension
plan assets, long-term debt and interest rate derivatives. The inputs or methodologies used for valuing
securities are not necessarily an indication of the risk associated with investing in these securities. These
inputs are summarized in the three broad levels listed below:

•

Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or
liabilities in active markets;
Level 2 – other significant observable inputs (including quoted prices for similar securities,
interest rates, credit risk, etc.); and
Level 3 – significant unobservable inputs (including the Company’s own assumptions about
the assumptions market participants would use in determining the fair value of investments).

The valuation methods described below may produce a fair value calculation that may not be
indicative of net realizable value or reflective of future fair values. Furthermore, while the Company
believes its valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial instruments could
result in a different fair value measurement at the reporting date.

Investments

The Company's investment assets are carried at fair value on the consolidated balance sheet in
accordance with the Fair Value Measurements and Disclosures Topic in the ASC. They are valued with
assistance from a third-party trustee and consist of fixed income mutual funds, corporate bonds and
government securities. The fixed income mutual funds are valued at the net asset value of shares held
based on quoted market prices determined in an active market, which are Level 1 inputs. The corporate
bonds and government securities are valued using broker quotes that utilize observable market inputs,
which are Level 2 inputs. Unrealized losses as of December 31, 2023 and December 31, 2022 were not
material. The Company believes any impairment of investments held with gross unrealized losses to be
temporary and not the result of credit risk.

CSX 2023 Form 10-K p.103

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 13. Fair Value Measurements, continued

The Company's investment assets are carried at fair value on the consolidated balance sheets as

summarized in the following table.

(Dollars in Millions)
Fixed Income Mutual Funds
Corporate Bonds
Government Securities

Total Investments at Fair Value

December 2023
Level 2

December 2022
Level 2

Level 1

Total

— $
60
41
101 $

80 $
60
41
181 $

89 $
—
—
89 $

— $
49
58
107 $

89
49
58
196

Level 1
$

80 $
—
—
80 $

Total Investments at Amortized Cost

184

201

These investments have the following maturities and are represented on the consolidated balance
sheet within short-term investments for investments with maturities of less than one year, and other long-
term assets for investments with maturities of one year and greater.

(Dollars in Millions)
Less than 1 year
1 - 5 years
5 - 10 years
Greater than 10 years

Total investments at fair value

Long-term Debt

December
2023

December
2022

83 $
37
17
44
181 $

129
24
10
33
196

Long-term debt, which includes finance leases, is reported at carrying amount on the consolidated
balance sheets and is the Company's only financial instrument with fair values significantly different from
their carrying amounts. The majority of the Company's long-term debt is valued with assistance from a
third party that utilizes closing transactions, market quotes or market values of comparable debt. For
those instruments not valued by the third party, the fair value has been estimated by applying market
rates of similar instruments to the scheduled contractual debt payments and maturities. These market
rates are provided by the same third party. All of the inputs used to determine the fair value of the
Company's long-term debt are Level 2 inputs.

The fair value of outstanding debt fluctuates with changes in a number of factors. Such factors
include, but are not limited to, interest rates, market conditions, credit ratings, values of similar financial
instruments, size of the instrument, cash flow projections and comparable trades. Fair value will exceed
carrying value when the current market interest rate is lower than the interest rate at which the debt was
originally issued. The fair value of a company's debt is a measure of its current value under present
market conditions. It does not impact the financial statements under current accounting rules.

CSX 2023 Form 10-K p.104

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 13. Fair Value Measurements, continued

The fair value and carrying value of the Company's long-term debt is as follows:

(Dollars in Millions)
Long-term Debt (Including Current Maturities):
Fair Value
Carrying Value

December
2023

December
2022

17,528 $
18,533

16,135
18,047

Interest Rate Derivatives

The Company’s fixed-to-floating and forward starting interest rate swaps are carried at their
respective fair values, which are determined with assistance from a third party based upon pricing models
using inputs observed from actively quoted markets. All of the inputs used to determine the fair value of
the swaps are Level 2 inputs. The fair value of the Company’s fixed-to-floating interest rate swaps was an
asset of $19 million (for swaps entered in 2023) and a liability of $107 million (for swaps entered in 2022)
at December 31, 2023. As of December 31, 2022, the fair value of the fixed-to-floating interest rate swaps
was a liability of $118 million. The fair value of the Company’s forward starting interest rate swaps asset
was $48 million and $127 million at December 31, 2023 and 2022, respectively. See Note 10, Debt and
Credit Agreements, for further information.

Pension Plan Assets

Pension plan assets are reported at fair value, net of pension liabilities, on the consolidated
balance sheet. See Note 9, Employee Benefit Plans, for further information. There are several valuation
methodologies used for those assets as described below.

Investments in the Fair Value Hierarchy

• Common stock (Level 1): Valued at the closing price reported on the active market on which the
individual securities are traded on the last day of the year and classified in Level 1 of the fair value
hierarchy.

• Mutual funds (Level 1): Valued at the net asset value of shares held at year end based on quoted
market prices determined in an active market. These assets are classified in Level 1 of the fair
value hierarchy.

• Cash and cash equivalents (Level 1): Includes cash and short term investments with an original
maturity of three months or less. The carrying value of cash and cash equivalents at year end
approximates fair value. These assets are classified in Level 1 of the fair value hierarchy.

• Corporate bonds, government securities, asset-backed securities and derivatives (Level 2):
Valued using price evaluations reflecting the bid and/or ask sides of the market for a similar
investment at year end. Asset-backed securities include commercial mortgage-backed securities
and collateralized mortgage obligations. These assets are classified in Level 2 of the fair value
hierarchy.

CSX 2023 Form 10-K p.105

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 13. Fair Value Measurements, continued

Investments Measured at Net Asset Value

• Partnerships: Net asset value of private equity is based on the fair market values associated with
the underlying investments at year end. These funds have varying redemption restrictions, but
most require advanced notice of at least 15 business days.

• Commingled and common collective trust funds: This class consists of private funds that invest in
corporate equity and debt securities, government securities and various short-term debt
instruments and are measured at net asset value to estimate the fair value of the investments.
The net asset value of the investments is determined by reference to the fair value of the
underlying securities, which are valued primarily through the use of directly or indirectly
observable inputs. These funds have redemption restrictions that require advanced notice of up to
45 business days.

The pension plan assets at fair value by level, within the fair value hierarchy, as of calendar plan
years 2023 and 2022 are shown in the table below. For additional information related to pension assets,
see Note 9, Employee Benefit Plans.

December 2023

December 2022

Total

Level 1 Level 2

(Dollars in Millions)
Common Stock
32
Mutual Funds
255
Cash and Cash Equivalents
—
Corporate Bonds
—
Government Securities
Asset-backed Securities, Derivatives and Other —
Total Investments in the Fair Value Hierarchy
Investments Measured at Net Asset Value (a)
Investments at Fair Value

Level 1 Level 2
$ 340 $ — $ 340 $ 335 $ — $ 335
29
157
647
88
9
$ 627 $ 782 $ 1,409 $ 521 $ 744 $ 1,265
n/a $ 1,062
$ 627 $ 782 $ 2,422 $ 521 $ 744 $ 2,327

29
157
—
—
—

—
—
647
88
9

—
—
646
126
10

32
255
646
126
10

n/a $ 1,013

Total

n/a

(a) Investments measured at net asset value represent certain investments that have been measured at net asset value per share (or its
equivalent) and thus are not classified in the fair value hierarchy. In accordance with ASC 820, Fair Value Measurements, the fair value
amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the pension assets disclosed in Note 9,
Employee Benefit Plans.

CSX 2023 Form 10-K p.106

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 14. Other Income - Net

The Company derives income from items that are not considered operating activities. Income from
these items is reported net of related expense. All components of net periodic pension and post-
retirement benefit costs, excluding service cost, are included in other income - net on the consolidated
income statement. Miscellaneous income (expense) may fluctuate due to timing and includes investment
gains, losses and interest income as well as other non-operating activities.

For discussion of the drivers of changes in net periodic pension and post-retirement benefit credit
from 2022 to 2023 and from 2021 to 2022, refer to Note 9, Employee Benefit Plans. Interest income
increased from 2022 to 2023 and from 2021 to 2022 primarily as a result of higher average interest rates.
Other income – net consisted of the following:

(Dollars in Millions)
Net Periodic Pension and Post-retirement Benefit Credit (a)
Interest Income
Miscellaneous Income

Total Other Income - Net

(a) Excludes the service cost component of net periodic benefit cost.

Years Ended
2022

2021

2023

29 $
79
31
139 $

79 $
42
12
133 $

64
7
8
79

CSX 2023 Form 10-K p.107

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 15. Investment in Affiliates and Related-Party Transactions

CSX's investments in affiliates are included on the consolidated balance sheet as investments in

affiliates and other companies.

(Dollars in Millions)
Conrail
TTX
Other Equity Method and Cost Method Investments

Total

Conrail

December
2023

December
2022

1,175 $
961
261
2,397 $

1,124
914
254
2,292

Through a limited liability company, CSX and Norfolk Southern Corporation (“NS”) jointly own
Conrail. CSX has a 42% economic interest and 50% voting interest in the jointly-owned entity, and NS
has the remainder of the economic and voting interests. Pursuant to the Investments-Equity Method and
Joint Venture Topic in the ASC, CSX applies the equity method of accounting to its investment in Conrail.

Conrail owns rail infrastructure and operates for the joint benefit of CSX and NS. This is known as
the shared asset area. Conrail charges fees for right-of-way usage, equipment rentals and transportation,
switching and terminal service charges in the shared asset area. These expenses are included in
purchased services and other on the consolidated income statements. Future payments due to Conrail
under the shared asset area agreements are shown in the table below.

(Dollars in Millions)
Years
2024
2025
2026
2027
2028
Thereafter
Total

Conrail Shared
Asset Agreement

32
32
32
32
32
13
173

Also, included in equity earnings of affiliates are CSX’s 42% share of Conrail’s income and its
amortization of the fair value write-up arising from the acquisition of Conrail and certain other
adjustments. The amortization primarily represents the additional after-tax depreciation expense related
to the write-up of Conrail’s fixed assets when the original purchase price, from the 1997 acquisition of
Conrail, was allocated based on fair value. This write-up of fixed assets resulted in a difference between
CSX's investment in Conrail and its share of Conrail's underlying net equity, which is $323 million as of
December 2023.

CSX 2023 Form 10-K p.108

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 15. Investment in Affiliates and Related-Party Transactions, continued

The following table discloses amounts related to Conrail. All amounts in the table below are

included in purchased services and other expenses on the Company’s consolidated income statements.

(Dollars in Millions)

Rents, Fees and Services
Purchase Price Amortization and Other
Equity Earnings of Conrail
Total Conrail Expense

Years Ended
2022

2023

2021

132 $
4
(54)
82 $

130 $
4
(44)
90 $

128
4
(44)
88

As required by the Related Party Disclosures Topic in the ASC, the Company has disclosed
amounts below owed to Conrail, or its subsidiaries, representing liabilities under the operating, equipment
and shared area agreements with Conrail. In 2014, the Company executed two promissory notes with a
subsidiary of Conrail which were included in long-term debt on the consolidated balance sheets. In
December 2020, the Company completed a non-cash conversion of $224 million of 2.89% notes due
2044 as well as its existing payable balance of approximately $217 million into new notes. The new notes
for operation of the shared asset area are $441 million, 1.31% notes due 2050. Interest expense from
these promissory notes was $6 million in each 2023, 2022 and 2021.

(Dollars in Millions)
Balance Sheet Information:
CSX Accounts Payable to Conrail
Promissory Notes Payable to Conrail Subsidiary

December
2023

December
2022

154 $

136

1.31% CSX Promissory Note due December 2050
1.31% CSXT Promissory Note due December 2050

73
368

TTX Company

TTX Company ("TTX") is a privately-held corporation engaged in the business of providing its
owner-railroads with standardized fleets of intermodal, automotive and general use railcars at time and
mileage rates. CSX owns about 20 percent of TTX's common stock, and the remaining is owned by the
other leading North American railroads and their affiliates. Pursuant to the Investments - Equity Method
Topic in the ASC, CSX applies the equity method of accounting to its investment in TTX. As part of the
Pan Am acquisition in June 2022, CSX acquired an immaterial amount of TTX stock, which was
subsequently repurchased by TTX in December 2022.

CSX 2023 Form 10-K p.109

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 15. Investment in Affiliates and Related-Party Transactions, continued

As required by the Related Party Disclosures Topic in the ASC, the following table discloses
amounts related to TTX. Car hire rents and equity earnings are included in equipment and other rents
expense on the Company’s consolidated income statement.

(Dollars in Millions)
Income Statement Information:
Car Hire Rents
Equity Earnings of TTX
Total TTX Expense

2023

Years Ended
2022

2021

249 $
(49)
200 $

241 $
(51)
190 $

221
(52)
169

Also included below is balance sheet information related to CSX's payable to TTX, which

represents car rental liabilities.

(Dollars in Millions)
Balance Sheet Information:
CSX Payable to TTX

December
2023

December
2022

43 $

NOTE 16. Other Comprehensive Income (Loss)

CSX reports comprehensive earnings or loss in accordance with the Comprehensive Income
Topic in the ASC in the consolidated comprehensive income statement. Total comprehensive earnings
are defined as all changes in shareholders' equity during a period, other than those resulting from
investments by and distributions to shareholders (e.g. issuance of equity securities and dividends).
Generally, for CSX, total comprehensive earnings equal net earnings plus or minus adjustments for
pension and other post-retirement liabilities as well as derivative activity and other adjustments. Total
comprehensive earnings represent the activity for a period net of tax and were $3.8 billion, $4.2 billion
and $4.0 billion for 2023, 2022 and 2021, respectively.

While total comprehensive earnings is the activity in a period and is largely driven by net earnings
in that period, AOCI represents the cumulative balance of other comprehensive income, net of tax, as of
the balance sheet date. For CSX, AOCI is primarily the cumulative balance related to pension and other
post-retirement benefit adjustments, interest rate derivatives and CSX's share of AOCI of equity method
investees.

CSX 2023 Form 10-K p.110

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 16. Other Comprehensive Income (Loss), continued

Changes in the AOCI balance by component are shown in the following table. Amounts
reclassified in pension and other post-employment benefits to net earnings relate to the amortization of
actuarial losses and are included in other income - net on the consolidated income statements. See Note
9, Employee Benefit Plans, for further information. Interest rate derivatives consist of forward starting
interest rate swaps classified as cash flow hedges. See Note 10, Debt and Credit Agreements, for further
information. Items classified as other primarily represent CSX's share of AOCI of equity method
investees. Amounts reclassified in other to net earnings are included in purchased services and other or
equipment and other rents on the consolidated income statements.

Pension and
Other Post-
Employment
Benefits

Interest Rate
Derivatives

Other

Accumulated Other
Comprehensive
(Loss) Income

(Dollars in Millions)

Balance December 31, 2020 - Net of Tax

(598) $

62 $

(62) $

Other Comprehensive Income (Loss)

Income Before Reclassifications

Amounts Reclassified to Net Earnings

Tax Expense

Total Other Comprehensive Income

Balance December 31, 2021 - Net of Tax

Other Comprehensive Income (Loss)

(Loss) Income Before Reclassifications

Amounts Reclassified to Net Earnings

Tax Benefit (Expense)

Total Other Comprehensive (Loss) Income $

Balance December 31, 2022 - Net of Tax

Other Comprehensive Income (Loss)

Income Before Reclassifications

Amounts Reclassified to Net Earnings

Tax Expense

Total Other Comprehensive Income

Balance December 31, 2023 - Net of Tax

147

(46)

167 $

(431) $

(129)

(66) $

(497) $

(19)
74 $

(423) $

—

(3)

—

8 $

15 $

70 $

(47) $

—

(8)

—

80 $

6 $

150 $

(41) $

—

(16)
— $

—

(3)
2 $

150 $

(39) $

(598)

158

(49)

190

(408)

(41)

(388)

(38)
76

(312)

CSX 2023 Form 10-K p.111

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 17. Business Combinations

Acquisition of Pan Am Systems, Inc.

On June 1, 2022, CSX completed its acquisition of Pan Am Systems, Inc. (“Pan Am”), which is the
parent company of Pan Am Railways, Inc. who jointly owns Pan Am Southern, LLC with a subsidiary of
Norfolk Southern Corporation. Pan Am owns and operates a highly integrated, nearly 1,200-mile rail
network and has a joint interest in the more than 600-mile Pan Am Southern system. This acquisition
expands CSX’s reach in the Northeastern United States. The results of Pan Am's operations and its cash
flows were consolidated prospectively.

The closing price of $600 million was funded through a combination of common stock valued at
$422 million and cash totaling $178 million. Cash payments are included in investing activities on the
Company's consolidated cash flow statement. Total cash consideration paid to acquire the business
includes a $30 million deposit paid in 2020.

The allocation of total consideration to the fair values of the acquired assets and liabilities of Pan

Am is summarized in the table below.

(Dollars in Millions)

Assets Acquired:

Accounts Receivable, net

Properties and Equipment, net

Goodwill

Investments in Affiliates

Other Assets

Total Assets Acquired

Liabilities Assumed:

Accounts Payable and Accrued Liabilities

Deferred Tax Liabilities

Other Long-term Liabilities

Total Liabilities Assumed

Fair Value of Assets Acquired, Net of Liabilities Assumed:

June 1, 2022

600

764

164

600

Properties and equipment of $600 million include road and track assets, work equipment, land,
buildings and other assets. The investments in affiliates includes the interest in Pan Am Southern, LLC
acquired as part of the purchase as well as other investments.

CSX 2023 Form 10-K p.112

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 17. Business Combinations, continued

The Company incurred costs related to this acquisition of approximately $32 million, of which
$22 million was incurred in 2022 and $10 million was incurred in 2021. All acquisition-related costs were
expensed as incurred and have been recorded in labor and fringe or purchased services and other in the
accompanying consolidated income statements.

This acquisition is not material or significant with respect to the Company’s financial statements
when reviewed under the quantitative and qualitative considerations of Regulation S-X Article 11 and ASC
Topic 805. As the acquisition is not material or significant, CSX has not provided pro forma information
relating to the pre-acquisition period.

Acquisition of Quality Carriers, Inc.

On July 1, 2021, the Company completed its acquisition of Quality Carriers, the largest provider of
bulk liquid chemicals truck transportation in North America, for $544 million in cash, which is presented
on the statement of cash flows net of $3 million cash acquired. Through a network of over 100 company-
owned and affiliate terminals and facilities in key locations throughout the United States, Canada and
Mexico, Quality Carriers provides transportation services to many of the leading chemical producers and
shippers in North America. The results of Quality Carriers' operations and its cash flows were
consolidated prospectively.

The Company accounted for the transaction using the acquisition method in accordance with ASC
Topic 805, Business Combinations. The purchase price allocation was finalized as of December 31,
2021, and total measurement period adjustments to the preliminary allocation were immaterial. The
allocation of total consideration to the fair values of the acquired assets and liabilities of Quality Carriers
is summarized in the table below.

(Dollars in Millions)
Assets Acquired:

Cash and Cash Equivalents

Accounts Receivable, net

Properties and Equipment, net

Goodwill

Intangible Assets
Other Assets

Total Assets Acquired

Liabilities Assumed:

Accounts Payable and Accrued Liabilities

Finance Lease Obligations and Notes Payable

Casualty, Environmental and Other Reserves

Other Long-term Liabilities

Total Liabilities Assumed

Fair Value of Assets Acquired, Net of Liabilities Assumed:

July 1, 2021

113

225

213

180
9

743

199

544

CSX 2023 Form 10-K p.113

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 17. Business Combinations, continued

Cash paid to acquire the business, net of acquired cash and cash equivalents of $3 million, is
included in investing activities on the Company's consolidated statement of cash flows. Properties and
equipment of $225 million include tractors and trailers, equipment, land, buildings and other assets. For
information about goodwill and intangible assets, see Note 18, Goodwill and Other Intangible Assets.

In 2021, the Company incurred costs related to this acquisition of approximately $17 million. All
acquisition-related costs were expensed as incurred and have been recorded in purchased services and
other in the accompanying consolidated income statements.

Other Acquisitions

During 2023 and 2022, Quality Carriers completed several acquisitions of previous independent

affiliates that were immaterial individually and in the aggregate.

CSX 2023 Form 10-K p.114

CSX CORPORATION

PART II
Item 8. Financial Statements and Supplementary Data

NOTE 18. Goodwill and Other Intangible Assets

The following table presents goodwill and other intangible asset balances and adjustments to

those balances for the years ended December 31, 2023 and 2022:

Goodwill

Intangible Assets

Net Carrying
Amount

Cost

Accumulated
Amortization

Net Carrying
Amount

Total Goodwill
and Other
Intangible Assets
- Net

(Dollars in Millions)
Balance at December 31, 2021

Additions

Amortization

276 $

180 $

—

Balance at December, 31, 2022 $

319 $

198 $

Additions

Amortization

—

Balance at December, 31, 2023 $

325 $

206 $

(5) $

—

(10)

(15) $

—

(10)

(25) $

175 $

(10)

183 $

(10)

181 $

451

(10)

502

(10)

506

As a result of the acquisition of Pan Am on June 1, 2022, CSX recognized $17 million of goodwill.
The goodwill was calculated as the excess of the consideration paid over the fair value of net assets
assumed and relates primarily to the ability of CSX to extend the reach of its service to a wider customer
base over an expanded territory, creating new market prospects and efficiencies. Goodwill recognized in
this acquisition is not deductible for tax purposes.

During 2023 and 2022, Quality Carriers completed several acquisitions that were immaterial
individually and in aggregate. The acquisitions resulted in the addition of $6 million and $26 million of
goodwill in 2023 and 2022, respectively. Other intangible assets recognized as part of these acquisitions
were $8 million and $18 million in 2023 and 2022, respectively.

The Company's intangible assets balance primarily relates to intangibles recognized as part of the
acquisition of Quality Carriers in 2021. Intangible assets recognized from the acquisition of $180 million
consist of $150 million of customer relationships and $30 million of trade names that will be amortized
over a weighted-average period of 20 years and 15 years, respectively.

During the fourth quarter 2023, the Company changed the date of its annual assessment of
Goodwill to October 1st for all reporting units. The change in testing date for goodwill is a change in
accounting principle, which management believes is preferable as it will create consistency in the
Company's goodwill impairment testing procedures across its reporting units. This change was not
material to CSX's consolidated financial statements and it did not delay, accelerate, or avoid any potential
goodwill impairment charges. No impairment was recorded as a result of the assessment.

CSX 2023 Form 10-K p.115

CSX CORPORATION
PART II

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of December 31, 2023, under the supervision and with the participation of CSX's Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management has evaluated the
effectiveness of the design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the CEO and CFO concluded that, as of December 31, 2023, the Company's
disclosure controls and procedures were effective at the reasonable assurance level in timely alerting
them to material information required to be included in CSX’s periodic SEC reports.

Management's Report on Internal Control over Financial Reporting

CSX’s management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the
supervision and with the participation of the management of CSX, including CSX’s CEO and CFO, CSX
conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as
of December 31, 2023 based on the 2013 framework in Internal Control – Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission, which is also referred to as
COSO. Based on that evaluation, management of CSX concluded that the Company’s internal control
over financial reporting was effective as of December 31, 2023. Management's assessment of the
effectiveness of internal control over financial reporting is expressed at the level of reasonable assurance
because a control system, no matter how well designed and operated, can provide only reasonable, but
not absolute, assurance that the control system's objectives will be met.

The Company’s internal control over financial reporting as of December 31, 2023 has been
audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report
which is included elsewhere herein.

CSX 2023 Form 10-K p.116

CSX CORPORATION
PART II

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of CSX Corporation

Opinion on Internal Control Over Financial Reporting
We have audited CSX Corporation’s internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our
opinion, CSX Corporation (the Company) maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31,
2023 and 2022, the related consolidated statements of income, comprehensive income, changes in
shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023,
and the related notes and our report dated February 14, 2024, expressed an unqualified opinion thereon.

Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in
the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We
are a public accounting firm registered with the PCAOB and are required to be independent with respect
to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

CSX 2023 Form 10-K p.117

CSX CORPORATION
PART II

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, continued

Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Jacksonville, Florida
February 14, 2024

CSX 2023 Form 10-K p.118

CSX CORPORATION
PART II

Changes in Internal Control over Financial Reporting

There were no material changes in the Company’s internal control over financial reporting.

Item 9B. Other Information

On November 10, 2023, Nathan D. Goldman, Executive Vice President, Chief Legal Officer and
Corporate Secretary, adopted a trading plan intended to satisfy Rule 10b5-1(c) to sell up to 83,000 shares
of CSX common stock and 161,487 employee stock options to be exercised via same-day-sale on or
after February 20, 2024, subject to certain conditions, to be in effect until November 8, 2024 unless
otherwise terminated pursuant to the terms of the trading plan.

During the fourth quarter of 2023, no other Company directors or officers adopted or terminated
any "Rule 10b5-1 trading arrangement" or any "non-Rule 10b5-1 trading arrangement" as each term is
defined in Item 408 of Regulation S-K.

Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers of the Registrant and Corporate Governance

In accordance with Instruction G(3) of Form 10-K, the information required by this item is
incorporated herein by reference to the Proxy Statement. The Proxy Statement will be filed no later than
April 30, 2024 with respect to the 2024 annual meeting of shareholders, except for the information
regarding the executive officers of the Company. Information regarding executive officers is included in
Part I of this report under the caption "Executive Officers of the Registrant."

Item 11. Executive Compensation

In accordance with Instruction G(3) of Form 10-K, the information required by this Item is

incorporated herein by reference to the Proxy Statement (see Item 10 above).

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

In accordance with Instruction G(3) of Form 10-K, the information required by this Item is

incorporated herein by reference to the Proxy Statement (see Item 10 above).

Item 13. Certain Relationships and Related Transactions, and Director Independence

In accordance with Instruction G(3) of Form 10-K, the information required by this Item is

incorporated herein by reference to the Proxy Statement (see Item 10 above).

Item 14. Principal Accounting Fees and Services

In accordance with Instruction G(3) of Form 10-K, the information required by this Item is

incorporated herein by reference to the Proxy Statement (see Item 10 above).

CSX 2023 Form 10-K p.119

CSX CORPORATION
PART IV

Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements

See Index to Consolidated Financial Statements on page 49.

(2) Financial Statement Schedules

The information required by Schedule II, Valuation and Qualifying Accounts, is included in
the Consolidated Financial Statements, Casualty, Environmental and Other

Note 5
Reserves. All other financial statement schedules are not applicable.

(3) Exhibits

See exhibits listed under part (b) below.

(b) The documents listed below are being filed or have previously been filed on behalf of CSX and are
incorporated herein by reference from the documents indicated and made a part hereof. Exhibits not
previously filed are filed herewith. Pursuant to Regulation S-K, Item 601(b)(4)(iii), instruments that define
the rights of holders of the Registrant's long-term debt securities, where the long-term debt securities
authorized under each such instrument do not exceed 10% of the Registrant's total assets, have been
omitted and will be furnished to the Commission upon request.

Exhibit
designation

Nature of exhibit

Distribution Agreement, dated as of July 26, 2004, by and
among CSX Corporation, CSX Transportation, Inc., CSX Rail
Holding Corporation, CSX Northeast Holding Corporation,
Norfolk Southern Corporation, Norfolk Southern Railway
Company, CRR Holdings LLC, Green Acquisition Corp., Conrail
Inc., Consolidated Rail Corporation, New York Central Lines
LLC, Pennsylvania Lines LLC, NYC Newco, Inc. and PRR
Newco, Inc.

Previously filed
as exhibit to

September 2, 2004,
Exhibit 2.1, Form 8-K

Amended and Restated Articles of Incorporation of CSX
Corporation, effective as of December 16, 2014

February 11, 2015,
Exhibit 3.1, Form 10-K

Articles of Amendment to CSX Corporation's Amended and
Restated Articles of Incorporation, as amended

June 7, 2021
Exhibit 3.1, Form 8-K

Amended and Restated Bylaws of CSX Corporation, effective
as of December 7, 2022

December 13, 2022,
Exhibit 3.1, Form 8-K

2.1

3.1

3.2

3.3

Instruments Defining the Rights of Security Holders, Including Debentures:

4.1(a)(P)

4.1(b)(P)

4.1(c)

4.1(d)

4.1(e)

4.1(f)

4.1(g)

Indenture, dated August 1, 1990, between the Registrant and
The Chase Manhattan Bank, as Trustee

September 7, 1990,
Form SE

First Supplemental Indenture, dated as of June 15, 1991,
between the Registrant and The Chase Manhattan Bank, as
Trustee

May 28, 1992,
Exhibit 4(c), Form SE

Second Supplemental Indenture, dated as of May 6, 1997,
between the Registrant and The Chase Manhattan Bank, as
Trustee

June 5, 1997,
Exhibit 4.3, Form S-4
(Registration No. 333-28523)

Third Supplemental Indenture, dated as of April 22, 1998,
between the Registrant and The Chase Manhattan Bank, as
Trustee

May 12, 1998,
Exhibit 4.2, Form 8-K

Fourth Supplemental Indenture, dated as of October 30, 2001,
between the Registrant and The Chase Manhattan Bank, as
Trustee

November 7, 2001,
Exhibit 4.1, Form 10-Q

Fifth Supplemental Indenture, dated as of October 27, 2003
between the Registrant and The Chase Manhattan Bank, as
Trustee

October 27, 2003,
Exhibit 4.1, Form 8-K

Sixth Supplemental Indenture, dated as of September 23, 2004
between the Registrant and JP Morgan Chase Bank, formerly
The Chase Manhattan Bank, as Trustee

November 3, 2004,
Exhibit 4.1, Form 10-Q

CSX 2023 Form 10-K p.120

CSX CORPORATION
PART IV

Exhibit
designation

Nature of exhibit

Seventh Supplemental Indenture, dated as of April 25, 2007,
between the Registrant and The Bank of New York (as
successor to JP Morgan Chase Bank), as Trustee

Previously filed
as exhibit to
April 26, 2007,
Exhibit 4.4, Form 8-K

Eighth Supplemental Indenture, dated as of March 24, 2010,
between the Registrant and The Bank of New York Mellon (as
successor to JP Morgan Chase Bank), as Trustee

April 19, 2010,
Exhibit 4.1, Form 10-Q

Ninth Supplemental Indenture, dated as of February 12, 2019,
between CSX and The Bank of New York Mellon Trust
Company, N.A. (as successor to JPMorgan Chase Bank, N.A.,
formerly The Chase Manhattan Bank), as Trustee (b)
Tenth Supplemental Indenture, dated as of December 10, 2020,
between the Registrant and The Bank of New York Mellon Trust
Company, N.A. (as successor to JPMorgan Chase Bank, N.A.,
formerly The Chase Manhattan Bank), as Trustee
Eleventh Supplemental Indenture, dated as of July 28, 2022,
between the Registrant and The Bank of New York Mellon Trust
Company, N.A. (as successor to JPMorgan Chase Bank, N.A.,
formerly The Chase Manhattan Bank), as Trustee

February 12, 2019,
Exhibit 4.1.10, Form S-3ASR

December 10, 2020
Exhibit 4.3, Form 8-K

July 28, 2022,
Exhibit 4.3, Form 8-K

4.1(h)

4.1(i)

4.1(j)

4.1(k)

4.1(l)

4.2*

Description of Common Stock

Material Contracts:

10.1

10.2

10.3

10.4

10.5

10.6

10.7

Transaction Agreement, dated as of June 10, 1997, by and
among CSX Corporation, CSX Transportation, Inc., Norfolk
Southern Corporation, Norfolk Southern Railway Company,
Conrail Inc., Consolidated Rail Corporation and CRR Holdings
LLC, with certain schedules thereto

Amendment No. 1, dated as of August 22, 1998, to the
Transaction Agreement, dated as of June 10, 1997, by and
among CSX Corporation, CSX Transportation, Inc., Norfolk
Southern Corporation, Norfolk Southern Railway Company,
Conrail Inc., Consolidated Rail Corporation and CRR Holdings,
LLC

Amendment No. 2, dated as of June 1, 1999, to the Transaction
Agreement, dated as of June 10, 1997, by and among CSX
Corporation, CSX Transportation,
Inc., Norfolk Southern
Corporation, Norfolk Southern Railway Company, Conrail Inc.,
Consolidated Rail Corporation and CRR Holdings, LLC

Amendment No. 3, dated as of August 1, 2000, to the
Transaction Agreement by and among CSX Corporation, CSX
Transportation, Inc., Norfolk Southern Corporation, Norfolk
Southern Railway Company, Conrail Inc., Consolidated Rail
Corporation, and CRR Holdings, LLC.

Amendment No. 4, dated and effective as of June 1, 1999, and
executed in April 2004, to the Transaction Agreement, dated as
of June 10, 1997, by and among CSX Corporation, CSX
Transportation, Inc., Norfolk Southern Corporation, Norfolk
Southern Railway Company, Conrail Inc., Consolidated Rail
Corporation and CRR Holdings, LLC

Amendment No. 5, dated as of August 27, 2004, to the
Transaction Agreement, dated as of June 10, 1997, by and
among CSX Corporation, CSX Transportation, Inc., Norfolk
Southern Corporation, Norfolk Southern Railway Company,
Conrail Inc., Consolidated Rail Corporation and CRR Holdings
LLC

Shared Assets Area Operating Agreement for Detroit, dated as
of June 1, 1999, by and among Consolidated Rail Corporation,
CSX Transportation,
Inc. and Norfolk Southern Railway
Corporation, with exhibit thereto

July 8, 1997,
Exhibit 10, Form 8-K

June 11, 1999,
Exhibit 10.1, Form 8-K

June 11, 1999,
Exhibit 10.2, Form 8-K

March 1, 2001,
Exhibit 10.34, Form 10-K

August 6, 2004,
Exhibit 99.1, Form 8-K

September 2, 2004,
Exhibit 10.1, Form 8-K

June 11, 1999,
Exhibit 10.6, Form 8-K

CSX 2023 Form 10-K p.121

CSX CORPORATION
PART IV

Exhibit
designation

Nature of exhibit

10.8

10.9

10.10

10.11

10.12**

10.13**

10.14**

10.15**

10.16**

10.17**

10.18**

10.19**

10.20**

10.21**

10.22

10.23**

10.24**

10.25**

10.26**

Shared Assets Area Operating Agreement for North Jersey,
dated as of June 1, 1999, by and among Consolidated Rail
Corporation, CSX Transportation, Inc. and Norfolk Southern
Railway Company, with exhibit thereto

Shared Assets Area Operating Agreement for South Jersey/
Philadelphia, dated as of June 1, 1999, by and among
Consolidated Rail Corporation, CSX Transportation, Inc. and
Norfolk Southern Railway Company, with exhibit thereto

Monongahela Usage Agreement, dated as of June 1, 1999, by
and among CSX Transportation, Inc., Norfolk Southern Railway
Company, Pennsylvania Lines LLC and New York Central Lines
LLC, with exhibit thereto

Tax Allocation Agreement, dated as of August 27, 2004, by and
among CSX Corporation, Norfolk Southern Corporation, Green
Acquisition Corp., Conrail Inc., Consolidated Rail Corporation,
New York Central Lines LLC and Pennsylvania Lines LLC

Previously filed
as exhibit to

June 11, 1999,
Exhibit 10.4, Form 8-K

June 11, 1999,
Exhibit 10.5, Form 8-K

June 11, 1999,
Exhibit 10.7, Form 8-K

September 2, 2004,
Exhibit 10.2, Form 8-K

CSX Directors’ Deferred Compensation Plan effective January
1, 2005

February 22, 2008,
Exhibit 10.3, Form 10-K

CSX Directors' Matching Gift Plan (as amended through
February 9, 2011)

March 4, 1994,
Exhibit 10.5, Form 10-K

Special Retirement Plan of CSX Corporation and Affiliated
Companies (as amended through February 14, 2001)

March 4, 2002,
Exhibit 10.23, Form 10-K

Supplemental Retirement Benefit Plan of CSX Corporation and
Affiliated Companies (as amended through February 14, 2001)

March 4, 2002,
Exhibit 10.24, Form 10-K

CSX Stock and Incentive Award Plan

May 7, 2010,
Exhibit 10.1, Form 8-K

CSX Executives' Deferred Compensation Plan (as amended
and restated effective January 1, 2021)

December 21, 2020,
Exhibit 99.1, Form S-8

Employment Agreement, effective as of December 22, 2017,
between CSX Corporation and James M. Foote

February 7, 2018
Exhibit 10.42, Form 10-K

CSX 2019 Stock and Incentive Award Plan (incorporated by
reference to Appendix A to the registrant’s Definitive Proxy
Statement on Schedule 14A filed March 22, 2019)

May 8, 2019
Exhibit 10.1, Form 8-K

Employment Agreement, dated August 29, 2022, between CSX
Corporation and Joseph R. Hinrichs

October 21, 2022,
Exhibit 10.1, Form 10-Q

Transition Agreement, dated September 14, 2022, between
CSX Corporation and James M. Foote

October 21, 2022,
Exhibit 10.2, Form 10-Q

$1,200,000,000 Five-Year Revolving Credit Agreement, dated
as of February 28, 2023, among CSX Corporation, as borrower,
the lenders party thereto, and JPMorgan Chase Bank, N.A., as
administrative agent

Form of LTIP Performance Unit Award Agreement

March 3, 2023
Exhibit 10.1, Form 8-K

April 20, 2023,
Exhibit 10.2, Form 10-Q

Form of LTIP Performance Unit Award Agreement for Joseph R.
Hinrichs

April 20, 2023,
Exhibit 10.3, Form 10-Q

Form of LTIP Stock Option Agreement

Form of LTIP Stock Option Agreement for Joseph R. Hinrichs

April 20, 2023,
Exhibit 10.4, Form 10-Q

April 20, 2023,
Exhibit 10.5, Form 10-Q

CSX 2023 Form 10-K p.122

CSX CORPORATION
PART IV

Exhibit
designation

Nature of exhibit

Form of LTIP Restricted Stock Unit Award Agreement

Previously filed
as exhibit to

April 20, 2023,
Exhibit 10.6, Form 10-Q

Form of LTIP Restricted Stock Unit Award Agreement for
Joseph R. Hinrichs

April 20, 2023,
Exhibit 10.7, Form 10-Q

CSX Corporation Executive Severance Plan, amended and
restated as of July 11, 2023

October 20, 2023,
Exhibit 10.1, Form 10-Q

Form of Change of Control Agreement for Chief Executive
Officer, effective as of July 11, 2023

October 20, 2023,
Exhibit 10.2, Form 10-Q

Form of Change of Control Agreement for Executive Vice
President, effective as of July 11, 2023

October 20, 2023,
Exhibit 10.3, Form 10-Q

Form of Change of Control Agreement
President/Vice President, effective as of July 11, 2023

for Senior Vice

October 20, 2023,
Exhibit 10.4, Form 10-Q

Employment Separation Agreement and Release Form,
effective as of August 30, 2023, between CSX and Jamie J.
Boychuk

October 20, 2023,
Exhibit 10.5, Form 10-Q

10.27**

10.28**

10.29**

10.30**

10.31**

10.32**

10.33**

Officer certifications:

31*

32*

Rule 13a-14(a) Certifications

Section 1350 Certifications

Interactive data files:

101*

The following financial information from CSX Corporation’s
Annual Report on Form 10-K for the year ended December 31,
2023 filed with the SEC on February 14, 2024, formatted in
XBRL includes: (i) Consolidated Income Statements for the
years ended December 31, 2023, December 31, 2022, and
December 31, 2021, (ii) Consolidated Comprehensive Income
Statements for the years ended December 31, 2023, December
31, 2022, and December 31, 2021, (iii) Consolidated Balance
Sheets at December 31, 2023 and December 31, 2022, (iv)
Consolidated Cash Flow Statements for the years ended
December 31, 2023, December 31, 2022 and December 31,
2021, (v) Consolidated Statements of Changes in Shareholders'
Equity for the years ended December 31, 2023, December 31,
2022 and December 31, 2021, and (vi)
to
Consolidated Financial Statements.

the Notes

104*

The cover page from CSX Corporation’s Annual Report on Form
10-K for the year ended December 31, 2023 formatted in iXBRL
(Inline eXtensible Business Reporting Language) and contained
in Exhibit 101.

Other exhibits:

21*

23*

24*

97*

Subsidiaries of the Registrant

Consent of Independent Registered Public Accounting Firm

Powers of Attorney

Financial Statement Compensation Recoupment Policy

* Filed herewith

** Management Contract or Compensatory Plan or Arrangement

(P) This Exhibit has been paper filed and is not subject to Item 601 of Reg S-K for hyperlinks.

Note: Items not filed herewith have been submitted in previous SEC filings.

CSX 2023 Form 10-K p.123

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.

CSX CORPORATION
(Registrant)

By: /s/ ANGELA C. WILLIAMS

Angela C. Williams
Vice President and Chief Accounting Officer
(Principal Accounting Officer)

Dated: February 14, 2024

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 indicated on February 14,
2024.

Signature

Title

/s/ JOSEPH R. HINRICHS
Joseph R. Hinrichs

President, Chief Executive Officer and Director
(Principal Executive Officer)

/s/ SEAN R. PELKEY
Sean R. Pelkey

Executive Vice President and Chief Financial
Officer (Principal Financial Officer)

/s/ ANGELA C. WILLIAMS
Angela C. Williams

Vice President and Chief Accounting Officer
(Principal Accounting Officer)

/s/ NATHAN D. GOLDMAN
Nathan D. Goldman

Executive Vice President and Chief Legal Officer,
Corporate Secretary
*Attorney-in-Fact

CSX 2023 Form 10-K p.124

Signature

*
John J. Zillmer

*
Donna M. Alvarado

*
Thomas P. Bostick

*
Steven T. Halverson

*
Paul C. Hilal

*
David M. Moffett

*
Linda H. Riefler

*
Suzanne M. Vautrinot

*
James L. Wainscott

*
J. Steven Whisler

SIGNATURES

Title

Chairman of the Board and Director

Director

CSX 2023 Form 10-K p.125

Corporate Headquarters

500 Water Street
Jacksonville, FL 32202

csx.com