EX-99.2 3 qfr_q42015.htm Q4 2015 QUARTERLY FINANCIAL REPORT Exhibit
Exhibit 99.2








CSX Corporation Announces Fourth-Quarter and Full-Year Earnings Results

Highlights:

•
Solid fourth quarter and full-year financial performance, including the company’s first sub-70 full-year operating ratio, despite challenging market conditions

•
Continued focus on pricing, efficiency and resource alignment helped offset market conditions in 2015

•
Impact of continued low commodity prices, strong U.S. dollar and energy market transition is expected to further challenge 2016 performance

JACKSONVILLE, Fla. - January 12, 2016 - CSX Corporation (Nasdaq: CSX) today announced fourth quarter net earnings of $466 million, a 5 percent decline from $491 million in the same period of 2014, or $0.48 per share, down 2 percent from $0.49 in the prior year.

Fourth quarter revenue declined 13 percent as pricing gains were more than offset by the impact of lower fuel recovery, a 6 percent volume decline and continued transition in the company’s business mix. Expenses also decreased 13 percent, primarily reflecting reduced fuel prices, lower volume-related costs and efficiency gains. As a result, operating income declined 12 percent to $791 million, while the operating ratio improved 20 basis points to 71.6 percent.

For the full year 2015, CSX generated $11.8 billion in revenue as growth in intermodal, automotive and minerals markets partially offset continued significant declines in coal. In this environment, the company delivered earnings per share of $2.00, up 4 percent from 2014, on net earnings of $2.0 billion. Improving service, resource alignment and efficiency gains helped generate operating income of nearly $3.6 billion and the company’s first sub-70 full-year operating ratio at 69.7 percent.

“CSX delivered solid results in 2015 by balancing strong service with compelling cost control and efficiency gains despite a market challenged by low commodity prices and global impacts of the strong U.S. dollar.” said Michael J. Ward, chairman and chief executive officer.

“With negative global and industrial market trends projected for 2016, full-year earnings per share are expected to be down compared to 2015. CSX will continue to be rigorous about efficiency, resources and service quality in order to maximize shareholder value and achieve a mid-60s operating ratio longer term.”






Table of Contents
The accompanying unaudited
CSX CORPORATION
CONTACTS:
 
financial information should be
500 Water Street, C900
 
read in conjunction with the
Jacksonville, FL 32202
INVESTOR RELATIONS
Company’s most recent
www.csx.com
David Baggs
Annual Report on Form 10-K,
 
(904) 359-4812
 
Quarterly Reports on Form
 
MEDIA
 
10-Q, and any Current
 
Melanie Cost
 
Reports on Form 8-K.
 
(904) 359-1702

1



CSX executives will conduct a quarterly earnings conference call with the investment community on January 13, 2016, from 8:30 a.m. to 9:30 a.m. Eastern time. Investors, media and the public may listen to the conference call by dialing 1-888-EARN-CSX (888-327-6279) and asking for the CSX earnings call. Callers outside the U.S., dial 1-773-756-0199. Participants should dial in 10 minutes prior to the call. In conjunction with the call, a live webcast will be accessible and presentation materials will be posted on the company's website at http://investors.csx.com. Following the earnings call, an internet replay of the presentation will be archived on the company website.

This earnings announcement, as well as additional detailed financial information, is contained in the CSX Quarterly Financial Report available through the company’s website at http://investors.csx.com and on Form 8-K with the Securities and Exchange Commission.


About CSX and its Disclosures

This announcement, as well as additional financial information, is available on the company's website at http://investors.csx.com. CSX also uses social media channels to communicate information about the company. Although social media channels are not intended to be the primary method of disclosure for material information, it is possible that certain information CSX posts on social media could be deemed to be material. Therefore, we encourage investors, the media, and others interested in the company to review the information we post on Twitter (http://twitter.com/CSX) and on Slideshare (http://www.slideshare.net/HowTomorrowMoves). The social media channels used by CSX may be updated from time to time.

More information about CSX Corporation and its subsidiaries is available at www.csx.com and on Facebook (http://www.facebook.com/OfficialCSX).

CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural, and consumer products. For nearly 190 years, CSX has played a critical role in the nation's economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation's population resides. It also links more than 240 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike.

Forward-looking Statements

This information and other statements by the company may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes, liquidity, capital expenditures, dividends, share repurchases or other financial items, statements of management's plans, strategies and objectives for future operations, and management's expectations as to future performance and operations and the time by which objectives will be achieved, statements concerning proposed new services, and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking statement. If the company updates 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.

Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any forward- looking statements include, among others; (i) the company's success in implementing its financial and operational initiatives; (ii) 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); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) 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 in the company's SEC reports, accessible on the SEC's website at www.sec.gov and the company's website at www.csx.com.



2

CSX Corporation


CONSOLIDATED INCOME STATEMENTS (Unaudited)
(Dollars in millions, except per share amounts)


 
Quarters Ended
 
Years Ended
 
Dec. 25, 2015
Dec. 26, 2014
$ Change
% Change
 
Dec. 25, 2015
Dec. 26, 2014
$ Change
% Change
 
 
 
 
 
 
 
 
 
 
Revenue
$
2,781

$
3,192

$
(411
)
(13
)%
 
$
11,811

$
12,669

$
(858
)
(7
)%
Expense
 
 
 
 
 
 
 
 
 
Labor and Fringe
799

909

110

12

 
3,290

3,377

87

3

Materials, Supplies and Other
570

624

54

9

 
2,336

2,484

148

6

Fuel
201

361

160

44

 
957

1,616

659

41

Depreciation
312

290

(22
)
(8
)
 
1,208

1,151

(57
)
(5
)
Equipment and Other Rents
108

107

(1
)
(1
)
 
436

428

(8
)
(2
)
Total Expense
1,990

2,291

301

13

 
8,227

9,056

829

9

 
 
 
 
 
 
 
 
 
 
Operating Income
791

901

(110
)
(12
)
 
3,584

3,613

(29
)
(1
)
 
 
 
 
 
 
 
 
 
 
Interest Expense
(140
)
(133
)
(7
)
(5
)
 
(544
)
(545
)
1

—

Other Income (Expense) - Net (a)
90

7

83

1,186

 
98

(24
)
122

508

Earnings Before Income Taxes
741

775

(34
)
(4
)
 
3,138

3,044

94

3

 
 
 
 
 
 
 
 
 
 
Income Tax Expense
(275
)
(284
)
9

3

 
(1,170
)
(1,117
)
(53
)
(5
)
Net Earnings
$
466

$
491

$
(25
)
(5
)%
 
$
1,968

$
1,927

$
41

2
 %
 
 
 
 
 
 
 
 
 
 
Operating Ratio
71.6
%
71.8
%
 
 
 
69.7
%
71.5
%
 
 
 
 
 
 
 
 
 
 
 
 
Per Common Share
 
 
 
 
 
 
 
 
 
Net Earnings Per Share, Assuming Dilution
$
0.48

$
0.49

$
(0.01
)
(2
)%
 
$
2.00

$
1.92

$
0.08

4
 %
 
 
 
 
 
 
 
 
 
 
Average Shares Outstanding, Assuming Dilution (millions)
973

995

 
 
 
984

1,002

 
 
 
 
 
 
 
 
 
 
 
 
Cash Dividends Paid Per Common Share
$
0.18

$
0.16

 
 
 
$
0.70

$
0.63

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3
CSX Corporation

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)


 
(Unaudited)
 
 
Dec. 25, 2015
Dec. 26, 2014
ASSETS
 
 
 
Cash and Cash Equivalents
$
628

$
669

Short-term Investments
810

292

Other Current Assets
1,528

1,611

Properties - Net
30,174

28,584

Investment in Affiliates and Other Companies
1,394

1,356

Other Long-term Assets
505

541

Total Assets
$
35,039

$
33,053

 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current Maturities of Long-term Debt
$
20

$
228

Other Current Liabilities
1,932

1,879

Long-term Debt
10,683

9,514

Deferred Income Taxes
9,305

8,858

Other Long-term Liabilities
1,431

1,398

Total Liabilities
23,371

21,877

 
 
 
Total Shareholders' Equity
11,668

11,176

Total Liabilities and Shareholders' Equity
$
35,039

$
33,053


4
CSX Corporation

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)
(Dollars in millions)


 
Years Ended
 
Dec. 25, 2015
Dec. 26, 2014
OPERATING ACTIVITIES
 
 
Net Earnings
$
1,968

$
1,927

Depreciation
1,208

1,151

Deferred Income Taxes
456

298

Gains on Property Dispositions
(90
)
(11
)
Other Operating Activities - Net
(172
)
(22
)
Net Cash Provided by Operating Activities
3,370

3,343

 
 
 
INVESTING ACTIVITIES
 
 
Property Additions
(2,562
)
(2,449
)
Purchase of Short-term Investments
(1,739
)
(1,433
)
Proceeds from Sales of Short-term Investments
1,225

1,674

Proceeds from Property Dispositions
147

62

Other Investing Activities
37

(37
)
Net Cash Used in Investing Activities
(2,892
)
(2,183
)
 
 
 
FINANCING ACTIVITIES
 
 
Long-term Debt Issued
1,200

1,000

Long-term Debt Repaid
(229
)
(933
)
Dividends Paid
(686
)
(629
)
Shares Repurchased (b)
(804
)
(517
)
Other Financing Activities - Net
—

(4
)
Net Cash Used in Financing Activities
(519
)
(1,083
)
 
 
 
Net (Decrease) Increase in Cash and Cash Equivalents
(41
)
77

 
 
 
CASH AND CASH EQUIVALENTS
 
 
Cash and Cash Equivalents at Beginning of Period
669

592

Cash and Cash Equivalents at End of Period
$
628

$
669

 
 
 
 
 
 
SUPPLEMENTAL CASH FLOW INFORMATION
 
 
Interest Paid
$
566

$
475

Income Taxes Paid
$
768

$
741

Seller Financing Assets (c)
$
307

$
—






5
CSX Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Income Statement

a)
Other Income (Expense) - Net: During the quarter, the Company recorded $80 million of earnings, or $0.05 per share, due to a gain on property sale and other related income.

Cash Flow Statement

b)
Shares repurchased: During the fourth quarter and years ended of 2015 and 2014, the Company repurchased the following number of shares:
    
 
Quarters Ended
 
Years Ended
 
Dec. 25, 2015
Dec. 26, 2014
 
Dec. 25, 2015
Dec. 26, 2014
Shares Repurchased (Millions)
9

4

 
26

17

Cost of Shares (Dollars in millions)
$
258

$
129

 
$
804

$
517


c)
Seller Financing Assets: During 2015, the Company purchased 113 locomotives for $307 million, which will be paid for in 2016.

6
CSX Corporation

VOLUME AND REVENUE (Unaudited)
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
 
 
Quarters Ended December 25, 2015 and December 26, 2014
 
 
 
 
 
 
 
 
 
 
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
 
2015
2014
% Change
 
2015
2014
% Change
 
2015
2014
% Change
Agricultural
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural Products
103

110

(6
)%
 
 
$
273

$
301

(9
)%
 
 
$
2,650

$
2,736

(3
)%
 
Phosphates and Fertilizers
74

79

(6
)
 
 
120

130

(8
)
 
 
1,622

1,646

(1
)
 
Food and Consumer
22

23

(4
)
 
 
62

66

(6
)
 
 
2,818

2,870

(2
)
 
Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chemicals
149

158

(6
)
 
 
500

548

(9
)
 
 
3,356

3,468

(3
)
 
Automotive
120

114

5

 
 
308

312

(1
)
 
 
2,567

2,737

(6
)
 
Metals
51

66

(23
)
 
 
131

169

(22
)
 
 
2,569

2,561

—

 
Housing and Construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forest Products
70

77

(9
)
 
 
193

206

(6
)
 
 
2,757

2,675

3

 
Minerals
79

76

4

 
 
115

114

1

 
 
1,456

1,500

(3
)
 
Waste and Equipment
40

41

(2
)
 
 
83

77

8

 
 
2,075

1,878

10

 
Total Merchandise
708

744

(5
)
 
 
1,785

1,923

(7
)
 
 
2,521

2,585

(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coal
218

320

(32
)
 
 
449

722

(38
)
 
 
2,060

2,256

(9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intermodal
729

699

4

 
 
446

465

(4
)
 
 
612

665

(8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
—

—

—

 
 
101

82

23

 
 
—

—

—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
1,655

1,763

(6
)%
 
 
$
2,781

$
3,192

(13
)%
 
 
$
1,680

$
1,811

(7
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years Ended December 25, 2015 and December 26, 2014
 
 
 
 
 
 
 
 
 
 
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
 
2015
2014
% Change
 
2015
2014
% Change
 
2015
2014
% Change
Agricultural
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural Products
411

419

(2
)%
 
 
$
1,087

$
1,130

(4
)%
 
 
$
2,645

$
2,697

(2
)%
 
Phosphates and Fertilizers
301

330

(9
)
 
 
489

534

(8
)
 
 
1,625

1,618

—

 
Food and Consumer
92

94

(2
)
 
 
258

265

(3
)
 
 
2,804

2,819

(1
)
 
Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chemicals
621

620

—

 
 
2,093

2,178

(4
)
 
 
3,370

3,513

(4
)
 
Automotive
450

435

3

 
 
1,175

1,213

(3
)
 
 
2,611

2,789

(6
)
 
Metals
233

276

(16
)
 
 
596

701

(15
)
 
 
2,558

2,540

1

 
Housing and Construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forest Products
290

307

(6
)
 
 
796

819

(3
)
 
 
2,745

2,668

3

 
Minerals
311

293

6

 
 
469

459

2

 
 
1,508

1,567

(4
)
 
Waste and Equipment
151

158

(4
)
 
 
308

309

—

 
 
2,040

1,956

4

 
Total Merchandise
2,860

2,932

(2
)
 
 
7,271

7,608

(4
)
 
 
2,542

2,595

(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coal
1,063

1,262

(16
)
 
 
2,300

2,849

(19
)
 
 
2,164

2,258

(4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intermodal
2,838

2,728

4

 
 
1,762

1,790

(2
)
 
 
621

656

(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
—

—

—

 
 
478

422

13

 
 
—

—

—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
6,761

6,922

(2
)%
 
 
$
11,811

$
12,669

(7
)%
 
 
$
1,747

$
1,830

(5
)%
 



7
CSX Corporation


VOLUME AND REVENUE
Revenue was down by $411 million to $2.8 billion from the prior year's fourth quarter as price gains were more than offset by lower fuel surcharge revenues, volume declines and negative mix.

Same Store Sales Pricing
Year-Over-Year Change
 
% Change
 
All-In
4.1
%
 
Merchandise and Intermodal
4.5
%
 
 
 
 
Same store sales is defined as shipments with the same customer, commodity and car type, and the same origin and destination.
 


Revenue per unit was down 7% as pricing gains in the quarter were more than offset by lower fuel recoveries and negative mix. Same store sales pricing increased across all major markets (coal, merchandise and intermodal).




MERCHANDISE

Agricultural Sector
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2015
2014
% Change
 
2015
2014
% Change
 
2015
2014
% Change
199

212

(6
)
 
 
$
455

$
497

(8
)
 
 
$
2,286

$
2,344

(2
)
 

% of Carloads







 



Agricultural Products - Volume declined due to challenging world market conditions and a strong U.S. dollar. Specifically, high levels of imported ethanol reduced rail moves to eastern markets and export grain was down significantly. These declines were partially offset by strength in domestic soybean moves, reflecting the trade-off between domestic use and export of U.S.-produced grain.

Phosphates and Fertilizers - Volume was down, consistent with producers cutting output and idling plants to match low demand levels resulting from depressed corn prices, combined with a weak export market due to the strength of the U.S. dollar.

Food and Consumer - Excess trucking capacity and lower than expected Western crop yields in produce resulted in lower rail volume.


8
CSX Corporation

Industrial Sector
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2015
2014
% Change
 
2015
2014
% Change
 
2015
2014
% Change
320

338

(5
)
 
 
$
939

$
1,029

(9
)
 
 
$
2,934

$
3,044

(4
)
 
% of Carloads
 





Chemicals - Volume declined, reflecting the reduced movement of crude oil and frac sand due to continued low prices and oversupply of oil and gas. Other chemicals were flat in the quarter.

Automotive - Gains in automotive movement, especially SUVs and trucks, resulted from strong North American light vehicle production and consumer demand.

Metals - Volume was down, as domestic mills cut production in an effort to balance an oversupplied market due to high levels of steel imports.
 

Housing and Construction Sector
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2015
2014
% Change
 
2015
2014
% Change
 
2015
2014
% Change
189

194

(3
)
 
 
$
391

$
397

(2
)
 
 
$
2,069

$
2,046

1
 
% of Carloads
 




Forest Products - Volume was challenged by continued high inventory levels in building products combined with the secular decline in demand for paper products due to electronic substitution.

Minerals - Volume benefited from mild weather allowing for an extended aggregates shipping season in the Mid-Atlantic region.

Waste and Equipment - Despite gains in municipal waste, volume declined due to the conclusion of large remediation projects.





9
CSX Corporation

COAL
        
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2015
2014
% Change
 
2015
2014
% Change
 
2015
2014
% Change
218

320

(32
)
 
 
$
449

$
722

(38
)
 
 
$
2,060

$
2,256

(9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% of Tons
 






Domestic Utility Coal - Volume declined as a result of low natural gas prices favoring natural gas power generation, mild weather and high stockpiles. In addition, damage at several utility plants from flooding in South Carolina negatively impacted volumes.

Domestic Coke, Iron Ore and Other - Declines in the coke and industrial markets reflect the weak metal and coal environment.

Export Coal - Reductions in both metallurgical and thermal coal volume point to an ongoing weak market due to global oversupply and the strength of the U.S. dollar.





 
 
Quarters Ended
 
Years Ended
 
 
Dec. 25, 2015
Dec. 26, 2014
% Change
 
Dec. 25, 2015
Dec. 26, 2014
% Change
(Millions of Tons)
 
 
 
 
 
 
 
 
Domestic
 
 
 
 
 
 
 
 
Utility
 
13.6

19.0

(28
)%
 
66.2

77.8

(15
)%
Coke, Iron Ore and Other
 
5.4

7.8

(31
)
 
24.3

26.1

(7
)
Total Domestic
 
19.0

26.8

(29
)
 
90.5

103.9

(13
)
Export
 
 
 
 
 
 
 
 
Metallurgical
 
3.6

5.9

(39
)
 
18.9

23.4

(19
)
Thermal
 
2.4

3.6

(33
)
 
11.9

15.6

(24
)
Total Export
 
6.0

9.5

(37
)
 
30.8

39.0

(21
)
 
 
 
 
 
 
 
 
 
Total Coal
 
25.0

36.3

(31
)%
 
121.3

142.9

(15
)%

10
CSX Corporation

INTERMODAL
        
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2015
2014
% Change
 
2015
2014
% Change
 
2015
2014
% Change
729

699

4
 
 
$
446

$
465

(4
)
 
 
$
612

$
665

(8
)
 
% of Units
 






Domestic - Domestic volume increased 14% driven by customer growth, continued success with CSX’s highway-to-rail (H2R) conversion program and new service offerings.

International - International volumes declined 9% due to prior competitive losses and a weak peak shipping season.





Intermodal Network


11
CSX Corporation

OTHER REVENUE
Other revenue increased $19 million primarily due to unfavorable prior year adjustments to revenue reserves.
 
FUEL SURCHARGE

Fuel surcharge revenue is included in the individual markets detailed within the volume and revenue explanations above. Fuel lag is the difference between highway diesel prices in the quarter and the prices used for fuel surcharge, which are generally on a two month lag.

 
Quarters Ended
 
Years Ended
(Dollars in millions)
Dec. 25, 2015
Dec. 26, 2014
$ Change
 
Dec. 25, 2015
Dec. 26, 2014
$ Change
Fuel Surcharge Revenue
$
86

$
284

$
(198
)
 
$
538

$
1,184

$
(646
)
Fuel Lag Benefit
$
8

$
23

$
(15
)
 
$
63

$
27

$
36



12
CSX Corporation

EXPENSE
Expenses of $2.0 billion decreased $301 million, or 13% year over year, primarily driven by lower fuel costs of $160 million. Also included in the quarter were lower volume-related costs and efficiency savings. Variances are described below.
LABOR AND FRINGE

 
•
Inflation resulted in $28 million of additional cost driven by wages partially offset by reduced health and welfare costs.
•
Incentive compensation was $53 million lower reflecting the expected award payouts on existing plans.
•
Volume-related costs were $43 million lower.
•
Efficiency savings of $38 million were primarily a result of reduced crew starts due to the Company's train length initiatives, lower operating support costs, and reduced management headcount.
•
Restructuring costs of $37 million related to 2015 workforce reduction initiatives were less than 2014 costs of $39 million.
•
Other costs decreased $2 million.

EMPLOYEE COUNTS (Estimated)
 
 
 
 
 
 
 
2015
 
2014 (a)
 
Change
October
29,960

 
31,906

 
(1,946
)
November
29,913

 
32,170

 
(2,257
)
December
29,410

 
32,287

 
(2,877
)
Average
29,761

 
32,121

 
(2,360
)
(a) 2014 employee counts were corrected by an immaterial omission of approximately 100 employees.
MATERIALS, SUPPLIES AND OTHER
 

•
Inflation resulted in $13 million of additional cost.
•
Restructuring costs of $11 million relate to asset impairment charges on operating facilities which were closed in 2015.
•
Volume-related costs were $29 million lower.
•
Efficiency savings of $20 million were driven by a reduction in professional costs as well as lower operating support costs.
•
Casualty and freight loss expenses decreased by $15 million primarily due to lower injury claim trends and less freight damage claim losses.
•
Other costs decreased $14 million primarily due to decreased terminal expenses.


13
CSX Corporation

FUEL

 


•
Efficiency losses of $7 million were due to unfavorable traffic mix.
•
Locomotive fuel price decreased 39% and reduced expense by $117 million.
•
Volume-related costs were $40 million lower.
•
Other fuel savings of $10 million were primarily due to lower non-locomotive fuel price.




 
 
 
 
 
 
 
 
 
Quarters Ended
 
Years Ended
(Dollars and Gallons In Millions, Except Price per Gallon)
 
Dec. 25, 2015
Dec. 26, 2014
Fav /
(Unfav)
 
Dec. 25, 2015
Dec. 26, 2014
Fav /
(Unfav)
Estimated Locomotive Fuel Consumption (Gallons)
 
116.8

128.2

11.4

 
487.5

507.3

19.8

Price per Gallon (Dollars)
 
$
1.58

$
2.61

$
1.03

 
$
1.80

$
2.95

$
1.15

Total Locomotive Fuel Expense
 
$
185

$
335

$
150

 
$
878

$
1,498

$
620

Other
 
16

26

10

 
79

118

39

Total Fuel Expense
 
$
201

$
361

$
160

 
$
957

$
1,616

$
659


DEPRECIATION
Depreciation expense increased $22 million due to a larger asset base and the cycling of a prior year adjustment related to retirements.

EQUIPMENT AND OTHER RENTS
 

•
Inflation resulted in $6 million additional cost related to rates on automotive and intermodal cars.
•
Volume-related costs were $5 million higher due to increases in automotive and intermodal activity.
•
Efficiency savings of $8 million were due to improved car cycle times.
•
Other costs decreased $2 million.



14
CSX Corporation

OPERATING STATISTICS (Estimated)
TON MILES
 
 
Quarters Ended
 
Years Ended
 
 
Dec. 25, 2015
Dec. 26, 2014
Improvement / (Deterioration)
 
Dec. 25, 2015
Dec. 26, 2014
Improvement / (Deterioration)
Revenue Ton-Miles (Billions)
 
 
 
 
 
 
 
 
Merchandise
 
35.9

37.9

(5
)%
 
144.9

148.6

(2
)%
Coal
 
11.0

17.9

(39
)
 
56.3

69.5

(19
)
Intermodal
 
7.1

7.0

1

 
28.2

27.1

4

Total
 
54.0

62.8

(14
)%
 
229.4

245.2

(6
)%
 
 
 
 
 
 
 
 
 
Gross Ton-Miles (Billions)
 
 
 

 
 
 
 
Total Gross Ton-Miles
 
102.4

114.5

(11
)%
 
426.1

445.9

(4
)%
(Excludes locomotive gross ton-miles)
 

 

 
 
 
 
SAFETY AND SERVICE

While remaining an industry safety leader, CSX’s FRA train accident frequency rate of 2.46 for the quarter is 16% unfavorable and the FRA reportable personal injury frequency index of 1.05 is up 25%.  The Company remains committed to continuous improvement, with safety programs emphasizing avoidance of catastrophic events and minimizing impact to the communities we serve.

CSX’s operating performance continued to improve in the fourth quarter. On-time originations improved to 79%, a 52% improvement year over year, and on-time arrivals increased to 61%, a 42% improvement year over year. Average train velocity and dwell improved to 21.1 miles per hour and 25.4 hours, respectively, both improvements of 3% over prior year.  The Company expects to maintain network fluidity while continuing to drive productivity and resource efficiency. Productivity gains in 2015 were partially a result of an improvement in train length, which increased 12% and 8% over the prior year quarter and prior full year, respectively. The Company will remain focused in 2016 on continuing our train length initiative.
 
 
Quarters Ended
 
Years Ended
 
 
Dec. 25, 2015
Dec. 26, 2014
Improvement / (Deterioration)
 
Dec. 25, 2015
Dec. 26, 2014
Improvement / (Deterioration)
Safety and Service Measurements
 
 
 
 
 
 
 
 
FRA Personal Injury Frequency Index
 
1.05

0.84

(25
)%
 
0.88

0.98

10
 %
(Number of FRA-reportable injuries per 200,000 man-hours)
 
 
 

 
 
 
 
FRA Train Accident Rate
 
2.46

2.12

(16
)%
 
2.44

2.41

(1
)%
(Number of FRA-reportable train accidents per million train miles)
 



 
 
 
 
 
 
 
 
 
 
 
 
 
On-Time Originations
 
79
%
52
%
52
 %
 
67
%
56
%
20
 %
On-Time Arrivals
 
61
%
43
%
42
 %
 
51
%
45
%
13
 %
 
 

 

 
 
 
 
Train Velocity (Miles per hour)
 
21.1

20.4

3
 %
 
20.5

20.1

2
 %
Dwell (Hours)
 
25.4

26.3

3
 %
 
25.8

26.3

2
 %
 
 
 
 
 
 
 
 
 
Cars-On-Line
 
206,088

204,766

(1
)%
 
206,078

203,699

(1
)%
 
 
 
 
 
 
 
 
 


15

CSX Rail Network


16