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Earnings Per Share
 6 Months Ended
Jul. 01, 2011
Earnings Per Share [Abstract]  
Earnings Per Share
Earnings Per Share


In May 2011, CSX announced a three-for-one split of its common stock. All shareholders of record on May 31, 2011 received two additional shares of CSX common stock that were distributed on June 15, 2011. Pursuant to the Earnings Per Share Topic in the ASC, all share and per share disclosures have been retroactively restated to reflect the stock split.


The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:
 
Second Quarters
Six Months
 
2011
2010
2011
2010
Numerator (Dollars in millions):
 
 
 
 
Net Earnings
$
506


$
414


$
901


$
719


 
 
 
 
 
Denominator (Units in millions):
 
 
 
 
Average Common Shares Outstanding
1,102


1,149


1,105


1,161


Other Potentially Dilutive Common Shares (a)
7


10


7


10


Average Common Shares Outstanding, Assuming Dilution
1,109


1,159


1,112


1,171


 
 
 
 
 
Net Earnings Per Share, Basic
$
0.46


$
0.36


$
0.81


$
0.62


Net Earnings Per Share, Assuming Dilution
$
0.46


$
0.36


$
0.81


$
0.61




(a)
Other potentially dilutive common shares include convertible debt, stock options, common stock equivalents and performance units granted under a management incentive compensation plan.


Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock outstanding adjusted for the effects of common stock that may be issued as a result of the following types of potentially dilutive instruments:


•
convertible debt;
•
employee stock options; and
•
other equity awards, which include long-term incentive awards.


The Earnings Per Share Topic in the ASC requires CSX to include additional shares in the computation of earnings per share, assuming dilution. The additional shares included in diluted earnings per share represents the number of shares that would be issued if all of the above potentially dilutive instruments were converted into CSX common stock.


Other potentially dilutive common shares include convertible debt, stock options, stock option common stock equivalents and performance units granted under a management incentive compensation plan. When calculating diluted earnings per share for stock option common stock equivalents, the Earnings Per Share Topic in the ASC requires CSX to include the potential shares that would be outstanding if all outstanding stock options were exercised. This is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. This number is different from outstanding stock options, which is included in Note 3, Share-Based Compensation. All stock options were dilutive for the periods presented; therefore, no stock options were excluded from the diluted earnings per share calculation.


NOTE 2.
Earnings Per Share, continued


As a result, diluted shares outstanding are not impacted when debentures are converted into CSX common stock because those shares were already included in the diluted shares calculation. Shares outstanding for basic earnings per share, however, are impacted on a weighted-average basis when conversions occur.  During second quarters 2011 and 2010, approximately $5 million and $200 thousand of face value of convertible debentures were converted into 178 thousand and 7 thousand shares of CSX common stock, respectively. As of the end of the second quarter 2011, approximately $5 million of convertible debentures at face value remained outstanding, which are convertible into approximately 542 thousand shares of CSX common stock.