Debt and Credit Agreements

Debt was as follows:



	Maturity at December	Average Interest Rates at December	December			December
(Dollars in Millions)	2011	2011	2011			2010
Notes	2012-2043	6.1%	$	8,486		$	7,817
Equipment Obligations	2012-2023	7.1%	741			823
Capital Leases	2012-2017	6.3%	10			15
Convertible Debentures ^(a)	2021	1.0%	4			9
Total Long-term Debt (including current portion)			$	9,241		$	8,664
Less Debt Due within One Year			(507		)	(613		)
Long-term Debt (excluding current portion)			$	8,734		$	8,051

(a) Convertible debentures are net of $1 million discount in 2010.

For information regarding the fair value of debt, see Note 14, Fair Value Measurements.

Debt Issuance

In 2011, CSX issued $600 million of 4.75% notes due 2042, $350 million of 4.25% notes due 2021, and $250 million of 5.5% notes due 2041. These notes were included in the consolidated balance sheets under long-term debt and may be redeemed by the Company at any time. The net proceeds from the sale of the notes will be used for general corporate purposes, which may include debt repayments from time to time, repurchases of CSX's common stock, capital expenditures, working capital requirements, improvements in productivity and other cost reductions.

Convertible Debentures

In 2001, CSX issued $564 million aggregate principal amount at maturity in unsubordinated zero coupon convertible debentures (the "debentures") due in 2021 for an initial offering price of approximately $462 million. The carrying value of outstanding debentures was $4 million and $9 million, at December 2011 and December 2010, respectively. Previously, these debentures had accreted (increased) in value at a rate of 2.1% per year. In 2011, the accretion rate was reset to 1.0%. The accretion rate may be reset again in October 2016 to a rate based on five-year United States Treasury Notes minus 2.8%. In no event will the yield to maturity be reset below 1.0% or above 3.0% per annum. Accretion in value on the debentures is recorded in each month but will not be paid prior to maturity.

The debentures allow holders to require CSX to purchase their debentures in October 2016, at a purchase price equal to the accreted value of the debentures at the time. CSX may redeem the debentures for cash at any time at a redemption price equal to the accreted value of the debentures.

NOTE 9. Debt and Credit Agreements, continued

Holders currently may convert their debentures into shares of CSX common stock at a conversion rate of 106.48 common shares per $1,000 principal amount at maturity of debentures. During 2011 and 2010, $6 million and $21 million face value of debentures was converted into 1 million and 2 million shares of CSX common stock, respectively. At December 2011, $4 million face value debentures remained outstanding, convertible into 401 thousand shares of CSX common stock.

Debt Exchange

In March 2010, CSX exchanged $660 million of notes of multiple series (the “Existing Notes”), bearing interest at an average annual rate of 7.74% with maturities ranging from 2017 to 2038. These Existing Notes were exchanged for $660 million of debt securities (the “New Notes”) bearing interest at 6.22% and due April 30, 2040. In addition, CSX paid approximately $141 million to the debtholders as cash consideration. CSX also paid the debtholders any accrued and unpaid interest on the Existing Notes. In accordance with the Debt Topic in the ASC, this transaction has been accounted for as a debt exchange. As such, the $141 million of cash consideration paid to the debtholders was recorded in other long-term assets. This cash consideration and the unamortized discount and issue costs from the Existing Notes are being amortized as an adjustment of interest expense over the term of the New Notes. There was no gain or loss recognized as a result of this exchange. However, all costs related to the debt exchange and due to parties other than the debtholders were included in interest expense during first quarter 2010. These costs totaled approximately $3 million.

In July 2010, CSX exchanged the New Notes for substantially identical notes registered under the Securities Act of 1933, as amended, pursuant to a registration rights agreement entered into in connection with the exchange offer.

Long-term Debt Maturities



(Dollars in Millions)	Maturities as of
Fiscal Years Ending	December 2011
2012	$	507
2013	780
2014	527
2015	628
2016	23
2017 and Thereafter	6,776
Total Long-term Debt Maturities (including current portion)	$	9,241

NOTE 9. Debt and Credit Agreements, continued

Credit Facilities

During 2011, CSX replaced its existing $1.25 billion credit facility that was set to expire in May 2012 with a new $1 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This new facility expires in September 2016, and as of the date of this filing, the Company has no outstanding balances under this facility. The facility allows borrowings at floating (LIBOR-based) interest rates, plus a spread, depending upon CSX's senior unsecured debt ratings. LIBOR is the London Interbank Offered Rate which is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds.

Commitment fees and interest rates payable under the facility were similar to fees and rates available to comparably rated investment-grade borrowers. At December 2011, CSX was in compliance with all covenant requirements under the facilities.

Receivables Securitization Facility

The Company's $250 million receivables securitization facility has a 364-day term and expires in December 2012. The Company plans to renew this facility prior to its expiration. The purpose of this facility is to provide an alternative to commercial paper and a low cost source of short-term liquidity. Under the terms of this facility, CSX Transportation transfers eligible third-party receivables to CSX Trade Receivables, LLC ("CSX Trade Receivables"), a bankruptcy-remote special purpose subsidiary. A separate subsidiary of CSX services the receivables. Upon transfer, the receivables become assets of CSX Trade Receivables and are not available to the creditors of CSX or any of its other subsidiaries. In the event CSX Trade Receivables draws under this facility, the Company will record an equivalent amount of debt on its consolidated financial statements. As of the date of this filing, the Company has no outstanding balances under this facility.