10-KPeriod: FY2009

CSX CORP Annual Report, Year Ended Dec 25, 2009

Filed February 19, 2010For Securities:CSX

Summary

CSX Corporation's 2009 10-K filing reveals a challenging year marked by a significant 20% revenue decline due to the economic recession, impacting all business segments except domestic intermodal. Despite this, the company demonstrated resilience through aggressive cost management and productivity gains, achieving a record operating ratio of 74.7%. Key initiatives included workforce adjustments, network optimization, and continued investment in safety and service improvements, such as the Total Service Integration (TSI) program. The company's financial position remains strong, with substantial cash reserves and access to credit facilities, enabling continued capital investments. CSX plans significant capital expenditures for 2010, focusing on infrastructure sustainment, regulatory projects like Positive Train Control (PTC), and growth initiatives like the National Gateway project. The report also highlights the company's commitment to shareholder returns through consistent dividend payments and an ongoing share repurchase program.

Financial Highlights

49 data points
Beta

Revenue

$9.04B

Net Income

$1.14B

12.6% Net Margin

EPS (Diluted)

$0.32

Total Assets

$26.89B

Cash & Equivalents

$1.03B

Free Cash Flow

$613.00M

Financial Statements
Beta
Revenue$9.04B
Operating Expenses$6.77B
Operating Income$2.27B
Interest Expense$558.00M
Net Income$1.14B
EPS (Basic)$0.32
EPS (Diluted)$0.32
Shares Outstanding (Basic)3.53B
Shares Outstanding (Diluted)3.56B

Key Highlights

  • 1Revenue decreased by 20% to $9.0 billion in 2009 due to lower volumes and reduced fuel surcharges, driven by a broad economic recession.
  • 2Operating expenses were reduced by 20% to $6.8 billion, a result of lower fuel costs, productivity gains, and cost-control measures.
  • 3CSX achieved a record operating ratio of 74.7% in 2009, reflecting improved operational efficiency and cost management.
  • 4Despite a challenging year, the company continued to invest in its network, with capital additions of $1.4 billion in 2009 and planned expenditures of $1.7 billion for 2010.
  • 5The company is committed to implementing Positive Train Control (PTC) by the mandated 2015 deadline, with an estimated total cost exceeding $750 million.
  • 6CSX maintained its quarterly dividend of $0.22 per share throughout 2009 and has authorization for an additional $1.75 billion in share repurchases.
  • 7Risk factors include potential adverse effects from new legislation and regulations, competition, environmental compliance, and general economic conditions.

Frequently Asked Questions

The primary driver for CSX's financial performance in 2009 was the significant economic recession, which led to a 20% decrease in revenue due to lower freight volumes across most segments. However, the company's focus on cost control and productivity initiatives helped mitigate the impact, resulting in a record operating ratio.

For 2010, CSX plans to invest $1.7 billion in capital. The majority will be allocated to sustaining core infrastructure (68%), with significant portions dedicated to regulatory projects like Positive Train Control (PTC) (approximately $200 million) and growth or productivity investments such as the National Gateway initiative (20%).

Key risks identified include potential negative impacts from new legislation or regulatory changes, such as proposed re-regulation of the rail industry, increased environmental regulations, and the costs associated with implementing Positive Train Control (PTC). Other risks include competition from other transportation modes, general economic conditions affecting freight demand, and potential disruptions due to severe weather or security threats.

CSX implemented aggressive cost-saving measures, including right-sizing the labor force through furloughs, adjusting its train network (ONE Plan), reducing active locomotives and freight cars, and focusing on productivity initiatives. These actions, combined with lower fuel prices, resulted in a 20% decrease in operating expenses.