-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, SP7zWSCH7sHSALYetODjET5ZhOjPKZDY2VLwP2nne0m6rj4+fUufivIv1k13tD6k bOd/E6eYJofHdFgb2Mt15A== 0000277948-94-000014.txt : 19940729 0000277948-94-000014.hdr.sgml : 19940729 ACCESSION NUMBER: 0000277948-94-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940701 FILED AS OF DATE: 19940728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSX CORP CENTRAL INDEX KEY: 0000277948 STANDARD INDUSTRIAL CLASSIFICATION: 4011 IRS NUMBER: 621051971 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08022 FILM NUMBER: 94540544 BUSINESS ADDRESS: STREET 1: ONE JAMES CNTR STREET 2: 901 E CARY ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8047821400 10-Q 1 2ND QTR FORM 10Q FOR CSX CORPORATION PAGE 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended July 1, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------- ---------------- Commission File Number 1-8022 CSX CORPORATION (Exact name of registrant as specified in its charter) Virginia 62-1051971 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 901 East Cary Street, Richmond, Virginia 23219-4031 (Address of principal executive offices) (Zip Code) (804) 782-1400 (Registrant's telephone number, including area code) No Change (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of July 1, 1994: 104,731,575 shares. - 1 - PAGE 2 CSX CORPORATION FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JULY 1, 1994 INDEX PART I. FINANCIAL INFORMATION Page Number Item 1: Financial Statements 1. Consolidated Statement of Earnings- Quarters and Six Months Ended July 1, 1994 and June 30, 1993 3 2. Consolidated Statement of Cash Flows- Six Months Ended July 1, 1994 and June 30, 1993 4 3. Consolidated Statement of Financial Position- At July 1, 1994 and December 31, 1993 5 Notes to Consolidated Financial Statements 6 Item 2: Management's Discussion and Analysis of Results of Operations and Financial Condition 10 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 15 Item 6. Exhibits and Reports on Form 8-K 16 Signature 16 - 2 - PAGE 3 CSX CORPORATION AND SUBSIDIARIES Consolidated Statement of Earnings (Millions of Dollars, Except Per Share Amounts) Quarter Ended Six Months Ended ---------------------- ---------------------- July 1, June 30, July 1, June 30, 1994 1993 1994 1993 -------- -------- -------- -------- Operating Revenue Transportation $ 2,324 $ 2,221 $ 4,535 $ 4,329 Non-Transportation 47 43 63 58 ------- ------- -------- -------- Total 2,371 2,264 4,598 4,387 ------- ------- -------- -------- Operating Expense Transportation 2,032 1,952 4,047 3,899 Non-Transportation 35 34 61 54 Restructuring Charge --- --- --- 93 ------- ------- -------- -------- Total 2,067 1,986 4,108 4,046 ------- ------- -------- -------- Operating Income 304 278 490 341 Other Income 18 30 17 29 Interest Expense 71 75 138 149 ------- ------- -------- -------- Earnings before Income Taxes 251 233 369 221 Income Tax Expense 89 79 133 76 ------- ------- -------- -------- Net Earnings $ 162 $ 154 $ 236 $ 145 ======= ======= ======== ======== Earnings Per Share $ 1.55 $ 1.48 $ 2.26 $ 1.39 ======= ======= ======== ======== Average Common Shares Outstanding (Thousands) 104,704 103,905 104,578 103,785 ======= ======= ======== ======== Common Shares Outstanding (Thousands) 104,732 103,972 104,732 103,972 ======= ======= ======== ======== Cash Dividends Paid Per Common Share $ .44 $ .38 $ .88 $ .76 ======= ======= ======== ======== See accompanying Notes to Consolidated Financial Statements. - 3 - PAGE 4 CSX CORPORATION AND SUBSIDIARIES Consolidated Statement of Cash Flows (Millions of Dollars) Six Months Ended --------------------- July 1, June 30, 1994 1993 ------ -------- OPERATING ACTIVITIES Net Earnings $ 236 $ 145 Adjustments to Reconcile Earnings to Cash Provided Depreciation 288 286 Deferred Income Taxes 69 42 Restructuring Charge -- Provision --- 93 Productivity/Restructuring Charge -- Payments (72) (66) Other Operating Activities 23 (27) Changes in Operating Assets and Liabilities Accounts Receivable (2) (30) Materials and Supplies (17) (21) Other Current Assets 10 (20) Accounts Payable and Other Current Liabilities (154) (49) ----- ---- Cash Provided by Operating Activities 381 353 ----- ---- INVESTING ACTIVITIES Property Additions (320) (326) Short-Term Investments - Net 60 (33) Purchases of Long-Term Marketable Securities (22) (100) Other Investing Activities 30 66 ----- ---- Cash Used by Investing Activities (252) (393) ----- ---- FINANCING ACTIVITIES Short-Term Debt - Net 144 204 Long-Term Debt Issued 53 81 Long-Term Debt Repaid (216) (143) Dividends Paid (92) (79) Other Financing Activities 3 1 ----- ----- Cash (Used) Provided by Financing Activities (108) 64 ----- ----- CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Increase in Cash and Cash Equivalents 21 24 Cash and Cash Equivalents at Beginning of Period 298 374 ----- ----- Cash and Cash Equivalents at End of Period 319 398 Short-Term Investments at End of Period 159 189 ----- ----- Cash, Cash Equivalents and Short-Term Investments at End of Period $ 478 $ 587 ===== ===== See accompanying Notes to Consolidated Financial Statements. -4- PAGE 5 CSX CORPORATION AND SUBSIDIARIES Consolidated Statement of Financial Position (Millions of Dollars) July 1, December 31, 1994 1993 -------- ------------ ASSETS Current Assets Cash, Cash Equivalents and Short-Term Investments $ 478 $ 499 Accounts Receivable 680 668 Materials and Supplies 216 199 Deferred Income Taxes 87 108 Other Current Assets 123 97 ------- ------- Total Current Assets 1,584 1,571 ------- ------- Properties and Other Assets Properties 16,019 15,853 Less Accumulated Depreciation 5,202 5,065 ------- ------- Properties - Net 10,817 10,788 Affiliates and Other Companies 278 268 Other Assets 766 793 ------- ------- Total Properties and Other Assets 11,861 11,849 ------- ------- Total Assets $13,445 $13,420 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable and Other Current Liabilities $ 1,790 $ 1,965 Current Maturities of Long-Term Debt 140 146 Short-Term Debt 308 164 ------- ------- Total Current Liabilities 2,238 2,275 ------- ------- Long-Term Debt 2,978 3,133 ------- ------- Long-Term Liabilities and Deferred Gains 2,464 2,491 ------- ------- Deferred Income Taxes 2,389 2,341 ------- ------- Shareholders' Equity Common Stock 105 104 Other Capital 1,359 1,307 Retained Earnings 2,070 1,927 Minimum Pension Liability Adjustment (158) (158) ------- ------- Total Shareholders' Equity 3,376 3,180 ------- ------- Total Liabilities and Shareholders' Equity $13,445 $13,420 ======= ======= See accompanying Notes to Consolidated Financial Statements. - 5 - PAGE 6 CSX CORPORATION AND SUBSIDIARIES -------------------------------- Notes to Consolidated Financial Statements (All Tables in Millions of Dollars, Except Per Share Amounts) NOTE 1. BASIS OF PRESENTATION In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary to present fairly the company's financial position as of July 1, 1994, and December 31, 1993, and the results of operations for the quarters and six months ended July 1, 1994 and June 30, 1993, and its cash flows for the six months ended July 1, 1994 and June 30, 1993, such adjustments being of a normal recurring nature. Earnings per share are based on the weighted average of common shares outstanding for the second quarter and six months ended July 1, 1994 and June 30, 1993. Dilution for the quarters and six months ended July 1, 1994 and June 30, 1993, which could result if all outstanding common stock equivalents were exercised, is not significant. While the company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these financial statements be read in conjunction with the financial statements and the notes included in the company's latest Annual Report and Form 10-K. Certain prior-year data have been reclassified to conform to the 1994 presentation. NOTE 2. CHANGE IN FISCAL REPORTING PERIODS Effective January 1, 1994, the company changed its fiscal reporting periods from four calendar quarters to four 13-week quarters. Fiscal 1994 began on January 1, 1994, and will include 52 weeks. The four 13-week quarters will end on April 1, July 1, September 30 and December 30, 1994. NOTE 3. ACCOUNTING AND REPORTING CHANGES Effective January 1, 1994, the company adopted Statement of Financial Accounting Standards ("SFAS") No. 112, "Employers' Accounting for Post- employment Benefits." SFAS No. 112 requires that certain benefits provided to former or inactive employees, after employment but before retirement, such as workers' compensation and disability benefits, be accrued if attributable to employees' service already rendered. The financial statement impact of adopting SFAS No. 112 was not significant. Effective January 1, 1994, the company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires that investments that have readily determinable fair values be classified as "held-to-maturity," "trading," or "available-for-sale" securities. Investments in debt securities have been classified as "held-to- maturity," or "available-for-sale," and reported at amortized cost, which approximates fair value, in the consolidated statement of financial position. The financial statement impact of adopting SFAS No. 115 was not significant. - 6 - PAGE 7 CSX CORPORATION AND SUBSIDIARIES -------------------------------- Notes to Consolidated Financial Statements, Continued (All Tables in Millions of Dollars, Except Per Share Amounts) NOTE 4. RESTRUCTURING CHARGE The company recorded a $93 million pretax charge in the first quarter of 1993 to recognize the estimated costs of restructuring certain operations and functions at its container-shipping unit. The restructuring charge reduced net earnings for the first six months of 1993 by $61 million, 59 cents per share. As of July 1, 1994, payments totaling $49 million have been recorded as a reduction of the liability for the restructuring charge. NOTE 5. ACCOUNTS RECEIVABLE During 1993, the company issued $200 million of Trade Receivable Participation Certificates ("Certificates"), at 5.05%, due September 1998. The Certificates are collateralized by $234 million of accounts receivable held in a master trust. The proceeds from the issuance of the Certificates were used to reduce the amount of accounts receivable sold under a previous agreement. In addition, the company has a five-year revolving agreement with a financial institution to sell with recourse on a monthly basis an undivided percentage ownership interest in designated pools of accounts receivable up to a maximum of $200 million. CSX has retained the collection and servicing responsibility with respect to accounts receivable held in trust or sold. At July 1, 1994 and December 31, 1993, accounts receivable have been reduced by $372 million and $380 million, respectively, representing Certificates and accounts receivable sold. NOTE 6. OPERATING EXPENSE Quarter Ended Six Months Ended ------------------ ------------------ July 1, June 30, July 1, June 30, 1994 1993 1994 1993 -------- -------- -------- -------- Labor and Fringe Benefits $ 769 $ 746 $1,552 $1,514 Materials, Supplies and Other 565 544 1,109 1,050 Building and Equipment Rent 291 269 571 543 Inland Transportation 198 178 388 344 Depreciation 145 143 288 286 Fuel 99 106 200 216 Restructuring Charge --- --- --- 93 ------ ------ ------ ------ Total $2,067 $1,986 $4,108 $4,046 ====== ====== ====== ====== - 7 - PAGE 8 CSX CORPORATION AND SUBSIDIARIES -------------------------------- Notes to Consolidated Financial Statements, Continued (All Tables in Millions of Dollars, Except Per Share Amounts) NOTE 7. OTHER INCOME Quarter Ended Six Months Ended ------------------ ----------------- July 1, June 30, July 1, June 30, 1994 1993 1994 1993 -------- -------- ------- -------- Interest Income $ 16 $ 13 $ 28 $ 25 Gain on South Florida Track Sale 22 20 22 20 Net Gain on Investment Transactions 2 15 2 15 Discount on and Servicing of Accounts Receivable Sold (8) (4) (15) (8) Minority Interest (4) (3) (8) (5) Miscellaneous (10) (11) (12) (18) ------ ------ ------ ------ Total $ 18 $ 30 $ 17 $ 29 ====== ====== ====== ====== NOTE 8. INCOME TAXES The effective income tax rate for the second quarter and first six months of 1994 reflects the federal statutory rate of 35 percent. The federal statutory rate for the second quarter and first six months of 1993 was 34 percent. NOTE 9. ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES July 1, December 31, 1994 1993 ------- ------------ Trade Accounts Payable $ 836 $ 917 Labor and Fringe Benefits 495 523 Income Taxes and Other 258 332 Casualty Reserves 201 193 ------ ------ Total $1,790 $1,965 ====== ====== NOTE 10. COMMITMENTS AND CONTINGENCIES Sea-Land Service, Inc. ("Sea-Land"), the container-shipping unit of CSX, has entered into agreements for the construction of four high- performance, fuel-efficient container vessels and the modification of three Atlantic Class vessels in its current fleet. Estimated capital expenditures for the total program are approximately $250 million over the next three years. Although the company obtains substantial amounts of commercial insurance for potential losses for third-party liability and property damage, reasonable levels of risk are retained on a self-insurance basis. A substantial portion of the insurance coverage, up to $250 million from rail operations and up to $175 million from certain other operations, is provided by insurance companies owned or partially owned by CSX. - 8 - PAGE 9 CSX CORPORATION AND SUBSIDIARIES -------------------------------- Notes to Consolidated Financial Statements, Continued (All Tables in Millions of Dollars, Except Per Share Amounts) NOTE 10. COMMITMENTS AND CONTINGENCIES, Continued CSX Transportation, Inc. ("CSXT") is a party to various proceedings brought both by private parties and regulatory agencies related to environmental issues. CSXT has been identified as a potentially responsible party in a number of governmental investigations and actions relating to environmentally impaired sites that are or may be subject to remedial action under the Federal Superfund Statute ("Superfund") or corresponding state statutes. The majority of these proceedings are based on allegations that CSXT, or its railroad predecessors, sent hazardous substances to the facilities in question for disposal. Such proceedings arising under Superfund typically involve numerous other waste generators and disposal companies and seek to allocate or recover costs associated with site investigation and cleanup, which could be substantial. The assessment of the required response and remedial costs associated with these sites is extremely complex. Among the variables that management must assess are imprecise and changing remedial cost estimates and continually evolving governmental standards. CSXT frequently reviews its role, if any, with respect to each such location, giving consideration to the nature of CSXT's alleged connection to the location (e.g., generator, owner or operator), the extent of CSXT's alleged connection (e.g., volume of waste sent to the location and other relevant factors), the accuracy and strength of evidence connecting CSXT to the location, and the number, connection and financial position of other named and unnamed potentially responsible parties at the location. Further, CSXT periodically reviews its exposure in all non-Superfund environmental proceedings with which it is involved. Based upon such reviews and updates of the sites with which it is involved, CSXT has recorded, and periodically reviews for adequacy, reserves to cover estimated contingent future environmental costs with respect to such sites. Liabilities are recorded when the company's responsibility for environmental remedial efforts is deemed probable, and the costs can be reasonably estimated. Generally, the timing of these accruals coincides with the completion of a feasibility study or the company's commitment to a formal plan of action. The company does not currently possess sufficient information to reasonably estimate the amounts of additional liabilities, if any, on some sites until completion of future environmental studies. Such additional liabilities could be significant to future consolidated results of operations and cash flows. Based upon information currently available, however, the company believes that its environmental reserves are adequate to accomplish remedial actions to comply with present laws and regulations. A number of legal actions, other than environmental, are pending against CSX and certain subsidiaries in which claims are made in substantial amounts. While the ultimate results of environmental investigations, lawsuits and claims involving the company cannot be predicted with certainty, management does not currently expect that these matters will have a material adverse effect on the consolidated financial position, results of operations and cash flows of the company. - 9 - PAGE 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS - --------------------- Second-Quarter 1994 Compared With 1993 - -------------------------------------- The company reported net earnings for the second quarter ended July 1, 1994, of $162 million, $1.55 per share, versus $154 million, $1.48 per share for the second quarter ended June 30, 1993. Operating revenue for the second quarter of 1994 was $2.4 billion, 5 percent above the prior-year quarter of $2.3 billion. Operating expense was $2.1 billion for the second quarter of 1994, compared with $2 billion for the second quarter of 1993. Operating income for the second quarter of 1994 was $304 million versus $278 million in the second quarter of 1993. Rail Unit Results - ----------------- Operating income at the rail unit rose $47 million or 22 percent, to $261 million for the second quarter of 1994, from $214 million in the prior- year quarter. The results were driven by a 5 percent increase in revenue and continued commitment to cost-cutting programs. For the second quarter of 1994, merchandise traffic grew 7 percent, with gains in metals, minerals, autos, and food and consumer products. Rail revenue, at $1.2 billion for the second quarter of 1994, rose $54 million, or 5 percent, from the prior-year quarter. Domestic coal demand offset continued weakness in export coal to raise volume to 38.6 million tons, 2 percent above 1993's second quarter level. Coal shipments to utility, industrial and cogeneration users increased to 35.4 million tons in the second quarter of 1994, up from 33.3 million tons in the second quarter of 1993. Export coal totaled 3.2 million tons for the second quarter of 1994, compared with 4.4 million tons in the prior-year quarter. The decline in export coal was due to decreased foreign demand, more attractive domestic markets and increased foreign competition. Rail operating expense was $914 million in the second quarter of 1994 compared with $907 million in the second quarter of 1993. Despite higher traffic levels, rail operating expense was held nearly flat at $914 million, just $7 million, or less than 1 percent, over the expense level in the prior- year quarter. Labor and fringe benefit expense increased about 2 percent due to the greater number of train crews required to handle the higher traffic as well as a modest wage increase mandated by the Presidential Emergency Board No. 219. - 10 - PAGE 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION, CONTINUED RESULTS OF OPERATIONS, Continued - -------------------------------- Rail Unit Results, Continued - ---------------------------- RAIL OPERATING INCOME (Millions of Dollars) ----------------------------- Quarter Ended Year-To-Date Ended ------------------ ------------------ July 1, June 30, Percent July 1, June 30, Percent 1994 1993 Change 1994 1993 Change -------- -------- ------- ------- -------- ------- Operating Revenue Merchandise $ 786 $ 739 6% $ 1,544 $ 1,459 6% Coal 363 354 3% 702 694 1% Other 26 28 (7%) 49 54 (9%) ------ ------ ------- -------- Total 1,175 1,121 5% 2,295 2,207 4% Operating Expense 914 907 1% 1,854 1,840 1% ------ ------ ------- -------- Operating Income $ 261 $ 214 22% $ 441 $ 367 20% ====== ====== ======= ======== Operating Ratio 77.8% 80.9% 80.9% 83.4% ====== ====== ======= ======== Container Shipping Unit Results - ------------------------------- CSX's container-shipping unit regained momentum late in the second quarter of 1994 to generate $15 million in operating income despite the three- week nationwide Teamsters' strike in April, which closed Sea-Land's West Coast operations and disrupted shipments to and from Alaska, Hawaii and Asia. Operating revenue for the second quarter of 1994 was $826 million, compared with $815 million in the 1993 second quarter, as the volume of containers handled rose 2 percent to 309,000 loads. Surging traffic in the Asia/Middle East/Europe and Latin America trade lanes, coupled with the unit's success in regaining customers' shipments in the Pacific markets after the strike, drove the increased volume and revenue. Container-shipping operating expense rose to $811 million for the second quarter of 1994, an increase of $50 million from the 1993 second quarter as a result of handling increased volume, rerouting containers and ships during the work stoppage, and repositioning equipment for normal operations. Intermodal Unit Results - ----------------------- Intermodal operating income climbed 33 percent to $16 million in the second quarter of 1994 from 1993's second-quarter level of $12 million on a 19 percent rise in operating revenue. The unit experienced double-digit growth - 11 - PAGE 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION, CONTINUED RESULTS OF OPERATIONS, Continued - -------------------------------- Intermodal Unit Results, Continued - ---------------------------------- across all types of traffic, including shipments from international ocean carriers, truck partners and direct shippers. Traffic increased to 321,000 loads in the second quarter of 1994, 17 percent above 1993's second quarter. Barge Unit Results - ------------------ The barge unit capitalized on strong northbound back-haul shipments of steel and bulk commodities to temper the impact of a weak export grain market in the second quarter of 1994. These actions, coupled with ongoing cost-control efforts, resulted in barge operating income in the second quarter of 1994 of $11 million, slightly below the results of $12 million in 1993's second quarter. Other Income - ------------ Other income declined to $18 million in the second quarter of 1994 from the 1993 second-quarter level of $30 million, primarily the result of a one-time gain on the sale of a real estate partnership interest in the 1993 period. First Six Months 1994 Compared to 1993 - -------------------------------------- For the first six months ended July 1, 1994, the company reported net earnings of $236 million, $2.26 per share versus $145 million, $1.39 per share for the six months ended June 30, 1993. The six months results for 1993 included a pretax charge of $93 million, $61 million after tax, 59 cents per share, which solely related to the restructuring of certain operations and functions at Sea-Land Service Inc., CSX's wholly-owned container-shipping subsidiary. Excluding the after-tax restructuring charge, earnings for the first six months of 1993 would have been $206 million, $1.98 per share. FINANCIAL CONDITION - ------------------- Cash, cash equivalents and short-term investments totaled $478 million at July 1, 1994, a decrease of $21 million since December 31, 1993. Primary uses of cash, cash equivalents and short-term investments were property additions, repayment of long-term debt, payment of dividends and payments relating to productivity/restructuring charge liabilities. Primary sources of cash, cash equivalents and short-term investments were operations, issuance of short-term debt and a net decrease in short-term investments. - 12 - PAGE 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION, CONTINUED FINANCIAL CONDITION, Continued - ------------------------------ During the first six months of 1994, net investing activities consumed $252 million of cash and cash equivalents compared with $393 million consumed in the first six months of 1993. The changes in investing activities were primarily due to an increase in cash proceeds from net short-term investment activity and a lower level of purchases of long-term marketable securities compared to the six months ended June 30, 1993. Financing activities used $108 million of cash and cash equivalents for the six months ended July 1, 1994. This was a $172 million decrease from the $64 million of cash provided by financing activities in the first six months of 1993. The change was primarily due to a reduction in proceeds from net short-term borrowings, an increase in the company's cash dividends paid per common share, and a partial redemption of the company's 9 1/2% Sinking Fund Debentures due July 1, 2016. The company redeemed $100 million of the $250 million principal amount outstanding on July 1, 1994. The working capital deficit decreased $50 million during the six months ended July 1, 1994. The decrease in the working capital deficit was primarily due to increased customer accounts receivables for the first six months of 1994, related to increased revenue. A working capital deficit is not unusual for CSX and does not indicate a lack of liquidity. CSX continues to maintain adequate current assets to satisfy current liabilities when they are due and has sufficient liquidity and financial resources to manage its day-to-day cash needs. For the full year, CSX does not expect significant changes in working capital, property additions, or debt levels from the prior year. FINANCIAL DATA - -------------- (Millions of Dollars) ----------------------------- July 1, December 31, 1994 1993 -------- ------------ Cash, Cash Equivalents and Short-Term Investments $ 478 $ 499 Commercial Paper Outstanding - Short-Term $ 308 $ 164 Commercial Paper Outstanding - Long-Term $ 300 $ 300 Working Capital (Deficit) $(654) $(704) Current Ratio .71 .69 Debt Ratio 46% 49% Ratio of Earnings to Fixed Charges 2.5x 2.3x - 13 - PAGE 14 OUTLOOK - ------- For the balance of 1994, each of CSX's major transportation units anticipates favorable revenue levels compared with 1993. The higher revenue levels are anticipated to result from the strong domestic economy. The company also plans to continue the intense focus on productivity improvements and expense control throughout its transportation units over the next six months. Entering the second half of 1994, CSXT is experiencing solid demand for coal shipments as U.S. utilities rebuild inventories depleted by 1993's United Mine Workers strikes and unusually high demand during severe winter weather. Export coal shipments, however, remain weak, as a result of depressed demand from abroad, foreign competition and the strong domestic market. CSXT merchandise traffic, reflecting the underlying strength of the U.S. industrial sector, is expected to trend with the economy. CSXT experienced only slight interruptions of service and no structural damage during mid-July flooding in the southeastern U.S. Sea-Land anticipates traffic flows in nearly all of its trade lanes will surpass prior year levels during the balance of the year. While the nationwide Teamsters' strike disrupted Sea-Land's operations during the second quarter, the unit quickly regained customer confidence following the strike and has seen no permanent traffic loss. Strong demand for ocean transportation should allow Sea-Land to select higher-rated traffic. A more stable rate environment is expected throughout the industry. CSX Intermodal expects sustained strong levels of shipments and revenue during the remaining months of 1994. The unit continues to benefit from growth in the general economy as well as market share gains. With the expectation of a healthy grain harvest in the second half of the year, American Commercial Lines anticipates stronger demand for its services and with this demand, recovery of barge rates. CSXT will monitor and be actively involved in industrywide labor contract negotiations which are expected to begin in late 1994. These negotiations have traditionally taken place over a number of months and have not resulted in any extended work stoppages. - 14 - PAGE 15 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) Annual meeting held May 3, 1994. (b) Not applicable. (c) There were 104,648,925 shares of CSX common stock outstanding as of March 4, 1994, the record date for the 1994 annual meeting of shareholders. A total of 88,818,478 shares were voted. All of management's nominees for directors of the corporation were elected with the following vote: Votes Broker Nominee Votes For Withheld Non-Votes Edward L. Addison 88,359,100 404,182 55,196 Elizabeth E. Bailey 88,359,789 403,493 55,196 Robert L. Burrus, Jr. 88,320,788 442,494 55,196 Bruce C. Gottwald 88,372,498 390,784 55,196 John R. Hall 88,367,703 395,579 55,196 Robert D. Kunisch 88,372,642 390,640 55,196 Hugh L. McColl, Jr. 88,344,110 419,172 55,196 James W. McGlothlin 88,393,628 369,654 55,196 Southwood J. Morcott 88,375,416 387,806 55,256 Charles E. Rice 88,377,331 385,951 55,196 William C. Richardson 88,302,868 460,414 55,196 Frank S. Royal, M.D. 88,293,084 470,198 55,196 John W. Snow 88,374,093 389,189 55,196 William B. Sturgill 88,340,174 423,108 55,196 The appointment of Ernst & Young as independent auditors to audit and report on CSX's financial statements for the year 1994 was ratified by the shareholders with the following vote: Broker Votes For Votes Against Abstentions Non-Votes 88,261,199 153,961 333,549 69,769 Amendments to the 1987 Long-Term Performance Stock Plan were approved by the shareholders with the following vote: Broker Votes For Votes Against Abstentions Non-Votes 64,002,177 18,519,777 1,045,905 5,250,619 The 1994 Senior Management Incentive Compensation Plan was approved by the shareholders with the following vote: Broker Votes For Votes Against Abstentions Non-Votes 84,431,961 3,211,886 1,104,860 69,771 (d) Not applicable. - 15 - PAGE 16 PART II. OTHER INFORMATION, Continued Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 1. None. (b) Reports on Form 8-K 1. None. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CSX CORPORATION (Registrant) By: GREGORY R. WEBER ------------------------------ Gregory R. Weber Vice President, Controller and Treasurer Dated: July 28, 1994 (Principal Accounting Officer) - 16- -----END PRIVACY-ENHANCED MESSAGE-----