THIRD QUARTER 2021 HIGHLIGHTS



•Revenue increased $644 million, or 24% year over year.
•Expenses increased $349 million, or 23% year over year.
•Operating income of $1.4 billion increased $295 million, or 26%, year over
year.
•Operating ratio of 56.4% improved 50 basis points versus last year's quarter.
•Earnings per diluted share of $0.43 increased $0.11, or 34% year over year.

                                                       Third Quarters                                                 Nine Months
                                                               Fav /                                                        Fav /
                                      2021       2020         (Unfav)         % Change             2021       2020         (Unfav)          % Change
Volume (in thousands)                1,563      1,522                   41       3%               4,683         4,293                390       9%

(in millions)
Revenue                            $ 3,292    $ 2,648    $             644       24             $ 9,095    $    7,758 $            1,337       17
Expense                              1,856      1,507                (349)      (23)              4,867         4,611              (256)      (6)
Operating Income                   $ 1,436    $ 1,141    $             295      26%             $ 4,228    $    3,147 $            1,081 34%

Operating Ratio                       56.4  %    56.9  %                50  bps                    53.5  %    59.4  %                590  bps

Earnings Per Diluted Share         $  0.43    $  0.32    $            0.11      34%             $  1.26    $  0.87    $             0.39      45%



Acquisition of Quality Carriers, Inc.
On July 1, 2021, CSX acquired Quality Carriers, Inc. ("Quality Carriers").
Accordingly, the consolidated third quarter and nine months 2021 results include
the results of Quality Carriers' operations after the acquisition date. For
further details, refer to Note 12, Business Combinations.

COVID-19 Update
Demand for rail services has improved from steep declines in the first half of
2020, but the effects of the disruption of global manufacturing, supply chains
and consumer spending as a result of the COVID-19 global pandemic are ongoing.
Future impacts of the pandemic on the Company's financial and operating results
will be determined by its duration, effects on the demand for the Company's
transportation services and the supply chain, as well as the effect of
governmental regulations imposed and legislative stimulus packages passed in
response to the pandemic. The duration of the pandemic is dependent on several
factors, including the impacts of virus mutations and case resurgences across
the country.

CSX employees that provide efficient and reliable rail service are essential to
keeping supply chains fluid in response to this challenge. Accordingly, business
operations have been modified to ensure the safety of employees across the
network while continuing to provide a high level of service to customers. The
Company is strongly encouraging employees to get vaccinated. A cross-functional
task force continues to monitor and coordinate the Company's response to
COVID-19.
                           CSX Q3 2021 Form 10-Q p.30

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS

Volume and Revenue (Unaudited)


                                                      Volume (Thousands of 

units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)


                                                                                          Third Quarters
                                                        Volume                                                 Revenue                                            Revenue Per Unit
                                      2021              2020             % Change             2021             2020             % Change             2021              2020             % Change
Chemicals                                166             165                    1  %       $   624          $   566                   10  %       $  3,759          $ 3,430                   10  %
Agricultural and Food Products           109             115                   (5)             343              335                    2             3,147            2,913                    8
Minerals                                  90              86                    5              162              144                   13             1,800            1,674                    8
Automotive                                75             102                  (26)             209              271                  (23)            2,787            2,657                    5
Forest Products(a)                        75              70                    7              231              209                   11             3,080            2,986                    3
Metals and Equipment                      70              58                   21              206              159                   30             2,943            2,741                    7
Fertilizers(a)                            54              54                    -              106               93                   14             1,963            1,722                   14
Total Merchandise                        639             650                   (2)           1,881            1,777                    6             2,944            2,734                    8
Intermodal                               744             717                    4              509              445                   14               684              621                   10
Coal                                     180             155                   16              460              330                   39             2,556            2,129                   20
Trucking(b)                                -               -                    -              200                -                NM                    -                -                    -
Other                                      -               -                    -              242               96                  152                 -                -                    -
Total                                  1,563           1,522                    3  %       $ 3,292          $ 2,648                   24  %       $  2,106          $ 1,740                   21  %

                                                                                            Nine Months
                                                        Volume                                                 Revenue                                            Revenue Per Unit
                                      2021              2020             % Change             2021             2020             % Change             2021              2020             % Change
Chemicals                                496             495                    -  %       $ 1,810          $ 1,723                    5  %       $  3,649          $ 3,481                    5  %
Agricultural and Food Products           342             338                    1            1,062            1,011                    5             3,105            2,991                    4
Minerals                                 244             243                    -              439              405                    8             1,799            1,667                    8
Automotive                               239             241                   (1)             661              645                    2             2,766            2,676                    3
Forest Products(a)                       223             209                    7              684              625                    9             3,067            2,990                    3
Metals and Equipment                     209             173                   21              596              500                   19             2,852            2,890                   (1)
Fertilizers(a)                           173             168                    3              350              303                   16             2,023            1,804                   12
Total Merchandise                      1,926           1,867                    3            5,602            5,212                    7             2,909            2,792                    4
Intermodal                             2,222           1,963                   13            1,488            1,226                   21               670              625                    7
Coal                                     535             463                   16            1,267            1,022                   24             2,368            2,207                    7
Trucking(b)                                -               -                    -              200                -                NM                    -                -                    -
Other                                      -               -                    -              538              298                   81                 -                -                    -
Total                                  4,683           4,293                    9  %       $ 9,095          $ 7,758                   17  %       $  1,942          $ 1,807                    7  %


NM - not meaningful
(a) Effective first quarter 2021, changes were made in the categorization of
certain lines of business, impacting Forest Products and Fertilizers. The
impacts were not material and prior periods have been reclassified to conform to
the current presentation.
(b) 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.
                           CSX Q3 2021 Form 10-Q p.31

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
Third Quarter 2021

Revenue

Total revenue increased 24% in third quarter 2021 when compared to third quarter 2020 due to the inclusion of Quality Carriers' results, increases in other revenue, higher fuel recovery, pricing gains and volume growth.

Merchandise Volume Chemicals - Increased due to higher shipments of plastics, sand, waste, and other core chemicals, partially offset by lower shipments of crude oil.

Agricultural and Food Products - Decreased as a result of lower shipments of export grain and ethanol.

Minerals - Increased as a result of higher shipments of aggregates, cement, lime and limestone.

Automotive - Decreased due to lower North American vehicle production, which continues to be impacted by shortages of semi-conductors and other parts.

Forest Products - Increased primarily due to higher shipments of pulpboard, woodpulp and building products.

Metals and Equipment - Increased as growth across the metals markets was partially offset by reduced equipment shipments.

Fertilizers - Increased long-haul fertilizer shipments were offset by declines in short-haul phosphate shipments.



Intermodal Volume
Increased due to higher international shipments as a result of strong demand,
inventory replenishments and growth in rail volumes from east coast ports.

Coal Volume
Domestic coal increased due to higher shipments of utility coal as well as
higher steel and industrial shipments. The increase in export coal was driven by
higher international shipments of both thermal and metallurgical coal.

Trucking Revenue
Trucking revenue increased $200 million versus prior year due to the inclusion
of Quality Carriers' results.

Other Revenue
Other revenue increased $146 million versus prior year due to increases in
revenue for intermodal storage and equipment usage as well as higher demurrage
and affiliate revenue.
                           CSX Q3 2021 Form 10-Q p.32

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS

Expenses

Expenses of $1.9 billion increased $349 million, or 23%, in third quarter 2021 when compared to third quarter 2020.



Labor and Fringe expense increased $57 million due to the following:
•The acquisition of Quality Carriers resulted in increased costs of $30 million.
•Inflation and higher volume resulted in $23 million of increased expenses.
•Other expenses increased $4 million primarily driven by $16 million in costs
for hiring and retention programs, partially offset by other non-significant
items.

Purchased Services and Other expense increased $195 million due to the
following:
•The inclusion of Quality Carriers' operations drove $126 million of additional
costs.
•Higher operating support costs, primarily due to an increased locomotive fleet,
as well as higher intermodal terminal costs drove an increase of $31 million.
•Other costs increased $38 million due to $14 million of acquisition-related
costs, inflation and other non-significant items.

Depreciation expense increased $19 million primarily due to a larger asset base, which includes Quality Carriers' assets.

Fuel expense increased $128 million primarily resulting from a 77% increase in locomotive fuel prices and the inclusion of non-locomotive fuel used for trucking.



Equipment and Other Rents expense was $6 million higher primarily due to the
addition of Quality Carriers' costs as increased car hire was offset by other
items.

Gains on Property Dispositions increased to $60 million in 2021 from $4 million in 2020.



Interest Expense
Interest expense decreased $10 million primarily due to lower average interest
rates.

Other Income - Net Other income - net increased $6 million primarily due to an increase in net pension benefit credits.



Income Tax Expense
Income tax expense increased $79 million primarily due to higher earnings before
income taxes.

                           CSX Q3 2021 Form 10-Q p.33

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS

Nine Months Results of Operations



Revenue increased $1.3 billion primarily due to volume growth, increases in
other revenue driven by intermodal storage and equipment usage, trucking revenue
from the acquisition of Quality Carriers, pricing gains across all markets, and
higher fuel recovery.

Total expense increased $256 million primarily driven by rising fuel prices, the
inclusion of Quality Carriers' operations, higher volume-related costs and
increased incentive compensation, partially offset by higher gains on property
dispositions.

Interest expense decreased $23 million primarily as a result of lower average interest rates.

Other income - net increased $9 million primarily due to an increase in net pension benefit credits, partially offset by lower interest income.

Income tax expense increased $271 million primarily due to higher earnings before income taxes.


                           CSX Q3 2021 Form 10-Q p.34

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS

Non-GAAP Measures - Unaudited


  CSX reports its financial results in accordance with accounting principles
generally accepted in the United States of America (U.S. 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 U.S. 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.

Free Cash Flow


  Management believes that free cash flow is supplemental information 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 certain other investing activities,
which includes proceeds from property dispositions. Free cash flow should be
considered in addition to, rather than a substitute for, cash provided by
operating activities. The increase in free cash flow before dividends from the
prior year of $958 million is primarily due to higher cash from operating
activities and increased proceeds from property dispositions. For the nine
months 2021, other investing activities include $200 million of proceeds related
to the conveyance of a permanent land easement to the Commonwealth of Virginia.

The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow, before dividends (non-GAAP measure).


                                                              Nine Months
           (Dollars in millions)                            2021      2020
           Net cash provided by operating activities      $ 3,819   $ 3,128
           Property Additions                              (1,220)  

(1,209)


           Other Investing Activities                         297        19
           Free Cash Flow (before payment of dividends)   $ 2,896   $ 1,938



Operating Statistics (Estimated)
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.

In third quarter 2021, velocity decreased by 10% and dwell increased by 8%
versus prior year. Both metrics were consistent with second quarter 2021 levels.
Intermodal trip plan performance remained strong at 88% and carload trip plan
performance of 68% was consistent with second quarter 2021 levels. CSX expects
both network fluidity and trip plan performance to improve commensurate with
ongoing hiring efforts and actions being taken to offset the current supply
chain challenges.

                           CSX Q3 2021 Form 10-Q p.35

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
The FRA train accident rate of 3.09 in third quarter 2021 improved 7% year over
year. The personal injury frequency index of 0.85 degraded 12% versus the prior
year. Safety remains a top priority at CSX, and the Company is committed to
reducing risk and enhancing the overall safety of its employees, customers and
communities in which the Company operates.

                                                         Third Quarters                                                          Nine Months
                                                                              Improvement/                                                         Improvement/
                                        2021               2020             (Deterioration)                   2021              2020             (Deterioration)
Operations Performance
Train Velocity (Miles per
hour)(a)                                     17.7              19.6                        (10) %                 18.1              20.7                        (13) %
Dwell (Hours)(a)                             10.5               9.7                         (8) %                 10.6               9.0                        (18) %
Cars Online(a)                            130,841           115,823                        (13) %              130,273           108,437                        (20) %
On-Time Originations                           71  %             85  %                     (16) %                   76  %             88  %                     (14) %
On-Time Arrivals                               62  %             71  %                     (13) %                   66  %             80  %                     (18) %
Carload Trip Plan Performance                  68  %             73  %                      (7) %                   68  %             78  %                     (13) %
Intermodal Trip Plan
Performance                                    88  %             87  %                       1  %                   87  %             92  %                      (5) %
Fuel Efficiency                              0.92              0.93                          1  %                 0.96              0.97                          1  %

Revenue Ton-Miles (Billions)
Merchandise                                  30.8              31.0                         (1) %                 94.2              91.9                          3  %
Coal                                          8.9               7.1                         25  %                 26.9              21.7                         24  %
Intermodal                                    7.8               7.4                          5  %                 23.6              20.3                         16  %
Total Revenue Ton-Miles                      47.5              45.5                          4  %                144.7             133.9                          8  %

Total Gross Ton-Miles
(Billions)                                   92.9              90.3                          3  %                282.3             262.6                          8  %

Safety
FRA Personal Injury Frequency
Index                                        0.85              0.76                        (12) %                 0.94              0.84                        (12) %
FRA Train Accident Rate                      3.09              3.31                          7  %                 2.81              2.83                          1  %


(a) The methodologies for calculating train velocity, dwell and cars online
differ from those prescribed by the STB as the Company believes these numbers
more accurately reflect railroad performance. CSXT will continue to report these
metrics, using the prescribed methodology, to the STB on a weekly basis. See
additional discussion on the Company's website.
Certain operating statistics are estimated and can continue to be updated as
actuals settle.

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 the profiled schedule of trains (from departure to
arrival and all interim time), and train profiles are periodically updated to
align with a changing operation.
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 destined for a customer that arrive
at or ahead of the original estimated time of arrival, notification or
interchange (as applicable).
Intermodal Trip Plan Performance - Percent of measured containers destined for a
customer that arrive 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 Q3 2021 Form 10-Q p.36

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
                        LIQUIDITY AND CAPITAL RESOURCES
The following are material changes in the significant cash flows, sources of
cash and liquidity, capital investments, consolidated balance sheets and working
capital, which provide an update to the discussion included in CSX's most recent
annual report on Form 10-K.

Material Changes in Significant Cash Flows
Significant Cash Flows

The following chart highlights the operating, investing and financing components of the net decrease of $950 million and net increase of $1.9 billion in cash and cash equivalents for nine months ended 2021 and 2020, respectively.



[[Image Removed: csx-20210930_g2.jpg]] [[Image Removed: csx-20210930_g3.jpg]]
[[Image Removed: csx-20210930_g4.jpg]]
•Cash provided by operating activities increased $691 million primarily driven
by higher cash-generating income and higher net favorable working capital.
•Cash used in investing activities increased $1.3 billion primarily as a result
of decreased net sales of short-term investments and net cash paid to acquire
Quality Carriers, partially offset by higher proceeds from property
dispositions.
•Cash used in financing activities increased $2.3 billion driven by higher share
repurchases, lower proceeds from debt issuances and increased long-term debt
repayments.

Sources of Cash and Liquidity and Uses of Cash
As of the end of third quarter 2021, CSX had nearly $2.2 billion of cash, cash
equivalents and short-term investments. 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. See Note 7, Debt and Credit Agreements.

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 12, 2019, which is unlimited as to amount and
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. During the nine months ended 2021, CSX did not
issue any new long-term debt.

                           CSX Q3 2021 Form 10-Q p.37

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
CSX has a $1.2 billion unsecured, revolving credit facility backed by a diverse
syndicate of banks that expires in March 2024. At September 30, 2021, 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. At September 30,
2021, the Company had no outstanding debt under the commercial paper program.

  Planned capital investments for 2021 are expected to be between $1.7 billion
and $1.8 billion. Of the total 2021 investment, the majority will be used to
sustain the core infrastructure and the remaining amounts will be allocated to
projects supporting service enhancements, productivity initiatives and
profitable growth. CSX intends to fund capital investments through cash
generated from operations.

Material Changes in the Consolidated Balance Sheets and Working Capital Consolidated Balance Sheets


  Total assets increased $336 million from year end primarily due to a $414
million increase in accounts receivable, the recognition of $390 million of
goodwill and intangible assets related to the acquisition of Quality Carriers
and net property increases of $370 million, partially offset by the $950 million
decrease in cash described above. The increase in accounts receivable was driven
by the Virginia easement conveyance and increased trade accounts receivable
commensurate with higher revenue, including trucking. Of the increase in net
property, $225 million was the result of consolidating Quality Carriers'
properties. See Note 12, Business Combinations, for more details on purchase
accounting.

Total liabilities increased $274 million from year end primarily due to an
increase in income and other taxes payable of $165 million driven by the timing
of estimated income tax payments, an increase in accounts payable of $163
million and a $130 million increase in deferred tax liabilities primarily driven
by accelerated tax depreciation. These increases were offset by debt repayments
of $390 million. Total shareholders' equity increased $62 million from year end
primarily driven by total comprehensive earnings of $2.9 billion, mostly offset
by share repurchases of $2.3 billion and dividends paid of $633 million.

Working capital is considered a measure of a company's ability to meet its
short-term needs. CSX had a working capital surplus of $1.6 billion as of
September 30, 2021 and $2.4 billion as of December 31, 2020, a decrease of $793
million since year end. The decrease in current assets was primarily due to the
$950 million decrease in cash, partially offset by a $414 million increase in
accounts receivable described above. The increase in current liabilities was
primarily the result of a $165 million increase in income and other taxes
payable and a $163 million increase in accounts payable, partially offset by
$190 million decrease in current maturities of long term debt. 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 as discussed
above. The Company continues to maintain adequate liquidity to satisfy current
liabilities and maturing obligations when they come due. 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.

CSX is committed to returning cash to shareholders and maintaining an
investment-grade credit profile. Capital structure, capital investments and cash
distributions, including dividends and share repurchases, are reviewed at least
annually by the Board of Directors. 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.

                           CSX Q3 2021 Form 10-Q p.38

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
Completed and Pending Transactions
Acquisition of Quality Carriers, Inc.
On July 1, 2021, CSX acquired Quality Carriers, Inc. from Quality Distribution,
Inc. for a purchase price of $546 million in cash, subject to certain customary
purchase price adjustments. This transaction was funded by cash on hand. For
further details, please refer to Note 12, Business Combinations.

Proposed Acquisition of Pan Am Systems, Inc.
On November 30, 2020, CSX signed a definitive agreement to acquire 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, if approved, will expand CSX's reach in the
Northeastern United States. Assets and facilities to be acquired as part of the
proposed transaction include road and track assets, work equipment, land,
buildings and other assets. On February 25, 2021, the Company began the process
of seeking approval from the STB with a decision expected by April 1, 2022. This
proposed acquisition is not expected to be material with respect to the
Company's financial statements when reviewed under the quantitative and
qualitative considerations of Regulation S-X Article 11 and ASC 805, 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 for a total of $525 million.

In April 2021, in the first phase of the transaction, the Company closed on the
conveyance of a permanent land easement for passenger rail operations, resulting
in a $349 million gain recognized in gains on property dispositions on the
consolidated income statement. Upon closing of the first phase, cash proceeds of
$200 million were received and a receivable was recorded in the amount of $168
million. The Company expects to collect proceeds of $200 million in fourth
quarter 2021, partly attributable to the first phase with the remainder towards
the next phase. Additional future proceeds and related gains attributable to
this conveyance are subject to state funding.

The Company anticipates closing on the remaining conveyances by the end of 2022,
which will result in future cash proceeds and gains. The timing of future gain
recognition is dependent upon the timing of future conveyances as well as
collectability. As of September 30, 2021, the carrying values of the remaining
assets subject to this transaction were not material.

                           CSX Q3 2021 Form 10-Q p.39

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
Guaranteed Notes Issued By CSXT
In 2007, CSXT, a wholly-owned subsidiary of CSX Corporation, issued in a
registered public offering $381 million of secured equipment notes maturing in
2023. CSX Corporation has fully and unconditionally guaranteed the notes. At
CSXT's option, CSXT may redeem any or all of the notes, in whole or in part, at
any time, at the redemption price including premium. In the case of loss or
destruction of any item of equipment securing the notes, if CSXT does not
substitute another item of equipment for the item suffering such loss or
destruction, CSXT will be required to redeem the notes in part at par. The
guarantee of the notes will rank equally in right of payment with all existing
and future senior obligations of CSX Corporation and will be effectively
subordinated to all future secured indebtedness of CSX Corporation to the extent
of the assets securing such indebtedness. The guarantee is subject to release in
limited circumstances only upon the occurrence of certain customary conditions.
As of September 30, 2021, the principal balance of these secured equipment notes
was $149 million.

In accordance with SEC rules, including amendments adopted in 2020, CSX is not
required to present separate condensed consolidating financial information for
wholly-owned subsidiaries who issued or guaranteed notes. Additionally,
presentation of combined summary financial information regarding subsidiary
issuers and guarantors is not required because the assets, liabilities and
results of operations of the combined issuers and guarantors of the notes are
not materially different from the corresponding amounts presented in the
consolidated financial statements.

                                LABOR AGREEMENTS
  Approximately 15,500 of the Company's approximately 20,500 employees are
members of a labor union. For the 13 rail unions that participate in national
bargaining, a round of negotiations for benefits, wages and work rules is
underway. Typically, these negotiations take several years. Current agreements
remain in place until modified by new agreements.
                           CSX Q3 2021 Form 10-Q p.40

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
                         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. Consistent
with the prior year, significant estimates using management judgment are made
for the areas below. For further discussion of CSX's critical accounting
estimates, see the Company's most recent annual report on Form 10-K.

•personal injury, environmental and legal reserves; •pension and post-retirement medical plan accounting; and •depreciation policies for assets under the group-life method.


                           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.

                           CSX Q3 2021 Form 10-Q p.41

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
  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 I, Item 1A Risk Factors of CSX's most recent annual
report on Form 10-K 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) and
the level of demand for products carried by CSXT;
•natural events such as severe weather conditions, including floods, fire,
hurricanes and earthquakes, a pandemic crisis, including the outbreak of
COVID-19, 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 CSXT's export coal
market;

                           CSX Q3 2021 Form 10-Q p.42

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CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


                                 OF OPERATIONS
•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 vulnerability 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 or commodity concentrations;
•the continued and uncertain impact of the COVID-19 pandemic; 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 quarterly report on Form
10-Q.
                           CSX Q3 2021 Form 10-Q p.43

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CSX CORPORATION

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