10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2012

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-8022
CSX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia			62-1051971
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
500 Water Street, 15th Floor, Jacksonville, FL		32202	(904) 359-3200
(Address of principal executive offices)		(Zip Code)	(Telephone number, including area code)
	No Change
(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes (X) No ( )

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes (X) No ( )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer", "accelerated filer” and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (check one)

Large Accelerated Filer (X)	Accelerated Filer ( )
Non-accelerated Filer ( )	Smaller Reporting Company ( )

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ( ) No (X)

There were 1,031,377,919 shares of common stock outstanding on September 28, 2012 (the latest practicable date that is closest to the filing date).

1

CSX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 2012

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Income Statements (Unaudited) - Quarters and Nine Months Ended September 28, 2012 and September 30, 2011	3
	Consolidated Comprehensive Income Statements (Unaudited) - Quarters and Nine Months Ended September 28, 2012 and September 30, 2011	3
	Consolidated Balance Sheets - At September 28, 2012 (Unaudited) and December 30, 2011	4
	Consolidated Cash Flow Statements (Unaudited) - Nine Months Ended September 28, 2012 and September 30, 2011	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	43
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	CSX Purchases of Equity Securities	44
Item 3.	Defaults upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44
Signature		44

2

CSX CORPORATION

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENTS (Unaudited)

(Dollars in millions, except per share amounts)

	Third Quarters						Nine Months
	2012			2011			2012			2011
Revenue	$	2,894		$	2,963		$	8,872		$	8,792
Expense
Labor and Fringe	754			765			2,268			2,294
Materials, Supplies and Other	525			562			1,617			1,649
Fuel	397			412			1,251			1,245
Depreciation	268			251			788			740
Equipment and Other Rents	96			95			295			287
Total Expense	2,040			2,085			6,219			6,215
Operating Income	854			878			2,653			2,577
Interest Expense	(138		)	(138		)	(421		)	(412		)
Other Income - Net (Note 8)	5			6			14			11
Earnings Before Income Taxes	721			746			2,246			2,176
Income Tax Expense	(266		)	(282		)	(830		)	(811		)
Net Earnings	$	455		$	464		$	1,416		$	1,365
Per Common Share (Note 2)
Net Earnings Per Share, Basic	$	0.44		$	0.43		$	1.36		$	1.25
Net Earnings Per Share, Assuming Dilution	$	0.44		$	0.43		$	1.36		$	1.24
Average Shares Outstanding (In millions)	1,038			1,071			1,042			1,094
Average Shares Outstanding, Assuming Dilution (In millions)	1,040			1,077			1,044			1,100
Cash Dividends Paid Per Common Share	$	0.14		$	0.12		$	0.40		$	0.33

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

Total Comprehensive Earnings (Note 1) $ 471 $ 473 $ 1,458 $ 1,398

See accompanying notes to consolidated financial statements.

3

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except per share amounts)

	(Unaudited)
	September 28, 2012			December 30, 2011
ASSETS
Current Assets
Cash and Cash Equivalents	$	693		$	783
Short-term Investments	35			523
Accounts Receivable - Net (Note 1)	1,163			1,129
Materials and Supplies	264			240
Deferred Income Taxes	134			182
Other Current Assets	104			78
Total Current Assets	2,393			2,935
Properties	35,020			33,704
Accumulated Depreciation	(9,088		)	(8,730		)
Properties - Net	25,932			24,974
Investment in Conrail	693			678
Affiliates and Other Companies	502			493
Other Long-term Assets	410			393
Total Assets	$	29,930		$	29,473
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	1,197		$	1,147
Labor and Fringe Benefits Payable	416			541
Casualty, Environmental and Other Reserves (Note 4)	169			167
Current Maturities of Long-term Debt (Note 7)	806			507
Income and Other Taxes Payable	261			129
Other Current Liabilities	172			196
Total Current Liabilities	3,021			2,687
Casualty, Environmental and Other Reserves (Note 4)	319			352
Long-term Debt (Note 7)	8,257			8,734
Deferred Income Taxes	8,018			7,601
Other Long-term Liabilities	1,284			1,631
Total Liabilities	20,899			21,005
Common Stock $1 Par Value	1,031			1,049
Other Capital	20			6
Retained Earnings	8,798			8,275
Accumulated Other Comprehensive Loss (Note 1)	(833		)	(875		)
Noncontrolling Interest	15			13
Total Shareholders' Equity	9,031			8,468
Total Liabilities and Shareholders' Equity	$	29,930		$	29,473

Certain prior year data has been reclassified to conform to the current presentation.

See accompanying notes to consolidated financial statements.

4

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)

(Dollars in millions)

	Nine Months
	2012			2011
OPERATING ACTIVITIES
Net Earnings	$	1,416		$	1,365
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation	788			740
Deferred Income Taxes	456			486
Contributions to Qualified Pension Plans	(275		)	—
Other Operating Activities	(111		)	(6		)
Changes in Operating Assets and Liabilities:
Accounts Receivable	—			(149		)
Other Current Assets	(57		)	(37		)
Accounts Payable	60			117
Income and Other Taxes Payable	148			83
Other Current Liabilities	(121		)	(14		)
Net Cash Provided by Operating Activities	2,304			2,585
INVESTING ACTIVITIES
Property Additions	(1,830		)	(1,436		)
Purchase of Short-term Investments	(78		)	(14		)
Proceeds from Sales of Short-term Investments	573			66
Other Investing Activities	10			(17		)
Net Cash Used in Investing Activities	(1,325		)	(1,401		)
FINANCING ACTIVITIES
Long-term Debt Issued (Note 7)	300			600
Long-term Debt Repaid (Note 7)	(481		)	(595		)
Dividends Paid	(415		)	(354		)
Stock Options Exercised (Note 3)	11			27
Shares Repurchased	(500		)	(1,564		)
Other Financing Activities	16			(10		)
Net Cash Used in Financing Activities	(1,069		)	(1,896		)
Net Decrease in Cash and Cash Equivalents	(90		)	(712		)
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period	783			1,292
Cash and Cash Equivalents at End of Period	$	693		$	580

Certain amounts have been reclassified to conform to the current year presentation.

See accompanying notes to consolidated financial statements.

5

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Nature of Operations and Significant Accounting Policies

Background

CSX Corporation (“CSX”), and together with its subsidiaries (the “Company”), based in Jacksonville, Florida, is one of the nation's leading transportation companies. The Company provides rail-based transportation services including traditional rail service and the transport of intermodal containers and trailers.

CSX's principal operating subsidiary, CSX Transportation, Inc. (“CSXT”), provides an important link to the transportation supply chain through its approximately 21,000 route mile rail network, which serves major population centers in 23 states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec. The Company's intermodal business, also part of CSXT, links customers to railroads via trucks and terminals.

Other entities

In addition to CSXT, the Company’s subsidiaries include CSX Intermodal Terminals, Inc. (“CSX Intermodal Terminals”), Total Distribution Services, Inc. (“TDSI”), Transflo Terminal Services, Inc. (“Transflo”), CSX Technology, Inc. (“CSX Technology”) and other subsidiaries. CSX Intermodal Terminals owns and operates a system of intermodal terminals, predominantly in the eastern United States and also performs drayage services (the pickup and delivery of intermodal shipments) for certain CSXT customers and trucking dispatch operations. TDSI serves the automotive industry with distribution centers and storage locations. Transflo connects non-rail served customers to the many benefits of rail by transferring products from rail to trucks. Today, the biggest Transflo markets are chemicals and agriculture, such as minerals and ethanol. CSX Technology and other subsidiaries provide support services for the Company.

CSX’s other holdings include CSX Real Property, Inc., a subsidiary responsible for the Company’s real estate sales, leasing, acquisition and management and development activities. These activities are classified in other income - net because they are not considered to be operating activities by the Company. Results of these activities fluctuate with the timing of non-operating real estate transactions.

Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements contain all normal, recurring adjustments necessary to fairly present the following:

• Consolidated income statements for the quarters and nine months endedSeptember 28, 2012 and September 30, 2011;

• Consolidated comprehensive income statements for the quarters and nine months endedSeptember 28, 2012 and September 30, 2011;

• Consolidated balance sheets at September 28, 2012 and December 30, 2011; and

• Consolidated cash flow statements for the nine months endedSeptember 28, 2012 and September 30, 2011.

6

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted from these interim financial statements. CSX suggests that these financial statements be read in conjunction with the audited financial statements and the notes included in CSX's most recent annual report on Form 10-K and any subsequently filed current reports on Form 8-K.

Fiscal Year

CSX follows a 52/53 week fiscal reporting calendar with the last day of each reporting period ending on a Friday:

• The third fiscal quarters of 2012 and 2011 consisted of 13 weeks ending on September 28, 2012 and September 30, 2011, respectively.

• The nine month periods of 2012 and 2011 consisted of 39 weeks ending on September 28, 2012 and September 30, 2011, respectively.

• Fiscal year 2012 and 2011 will each consist of 52 weeks ending on December 28, 2012 and December 30, 2011, respectively.

Except as otherwise specified, references to “third quarter(s)” or “nine months” indicate CSX's fiscal periods ending September 28, 2012 and September 30, 2011, and references to "year-end" indicate the fiscal year ended December 30, 2011.

Comprehensive Earnings

CSX reports comprehensive earnings or loss in accordance with the Comprehensive Income Topic in the Accounting Standards Codification (“ASC”). Total comprehensive earnings are defined as all changes in shareholders' equity during a period, other than those resulting from investments by and distributions to shareholders (e.g., issuance of equity securities and dividends).  Generally, for CSX, total comprehensive earnings equals net earnings plus or minus adjustments for pension and other post-retirement liabilities. Total comprehensive earnings represent the activity for a period net of tax and were $471 million and $473 million for third quarters 2012 and 2011, respectively, and $1.5 billion and $1.4 billion for nine months 2012 and 2011, respectively.

While total comprehensive earnings is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income or loss, net of tax, as of the balance sheet date.  For CSX, AOCI is primarily the cumulative balance related to pension and other post-retirement adjustments and reduced overall equity by $833 million and $875 million as of the end of third quarter 2012 and December 2011, respectively.

See the New Accounting Pronouncements section below for information related to the change in presentation requirements.

7

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts on uncollectible amounts related to freight receivables, government reimbursement receivables, claims for damages and other various receivables. The allowance is based upon the credit worthiness of customers, historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account. Allowance for doubtful accounts of $36 million and $43 million is included in the consolidated balance sheets as of the end of third quarter 2012 and December 2011, respectively.

New Accounting Pronouncements

In 2011, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update to the Comprehensive Income Topic in the ASC aimed at increasing the prominence of items reported in other comprehensive income in the financial statements. This requirement became effective for CSX beginning with the first quarter 2012 10-Q filing. This update required companies to present comprehensive income in a single statement below net income or in a separate statement of comprehensive income immediately following the income statement. This update required retrospective application for all periods presented.

Other Items

Share repurchases

In third quarter 2012, CSX repurchased $200 million in shares. In accordance with the Equity Topic in the ASC, the excess of repurchase price over par value is recorded in retained earnings. Generally, retained earnings is only impacted by net earnings and dividends. As of September 2012, the Company had remaining authority of $234 million under the $2 billion share repurchase program which is expected to be used to complete purchases by the end of 2012, based on market and business conditions.

Amortization of Gain from Property Disposition

In November 2011, the Company sold approximately 61 miles of operating rail corridor to the Florida Department of Transportation for a new commuter rail operation known as SunRail. As part of the transaction, the Company received $173 million in proceeds and will receive up to $259 million in government grants for a total of $432 million. This agreement also obligated the Company to invest a total of $500 million in routine capital expenditures and maintenance related to transportation capacity, facilities or equipment in Florida, including diversion and relocation costs related to this transaction within the eight year period following the transaction.

8

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

In accordance with the Real Estate Sales Topic in the ASC, the sale of real estate resulted in a deferred gain of $160 million. The deferred gain is recognized into income ratably as the investment obligation is fulfilled. The Company recognized a gain of $30 million and $69 million in the third quarter and nine months period ended September 2012, respectively. This gain is included in materials, supplies and other in the consolidated income statements. The deferred gain balance included in the consolidated balance sheets is presented in the table below.

	Deferred gain as of
(Dollars in Millions)	September 2012		December 2011
Current portion, included in Other Current Liabilities	$	68	$	95
Long term portion, included in Other Long-Term Liabilities	9		37
Total	$	77	$	132

NOTE 2.    Earnings Per Share

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:

	Third Quarters				Nine Months
	2012		2011		2012		2011
Numerator (Dollars in millions):
Net Earnings	$	455	$	464	$	1,416	$	1,365
Denominator (Units in millions):
Average Common Shares Outstanding	1,038		1,071		1,042		1,094
Other Potentially Dilutive Common Shares(a)	2		6		2		6
Average Common Shares Outstanding, Assuming Dilution	1,040		1,077		1,044		1,100
Net Earnings Per Share, Basic	$	0.44	$	0.43	$	1.36	$	1.25
Net Earnings Per Share, Assuming Dilution	$	0.44	$	0.43	$	1.36	$	1.24

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

Basic earnings per share is based on the weighted-average number of common shares outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of common shares 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.

9

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2.    Earnings Per Share, continued

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 represent the number of shares that would be issued if all of the above potentially dilutive instruments were converted into CSX common stock.

When calculating diluted earnings per share, 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.

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 third quarters 2012 and 2011, approximately $62 thousand and $700 thousand of face value convertible debentures were converted into 7 thousand and 73 thousand shares of CSX common stock, respectively. As of the end of third quarter 2012, approximately $2 million of convertible debentures at face value remained outstanding, which are convertible into approximately 245 thousand shares of CSX common stock.

NOTE 3. Share-Based Compensation

Under CSX's share-based compensation plans, awards primarily consist of performance grants, restricted stock awards, restricted stock units, stock options and stock grants for directors. CSX has not granted stock options since 2003. Awards granted under the various programs are determined and approved by the Compensation Committee of the Board of Directors or, in certain circumstances, by the Chief Executive Officer for awards to management employees other than senior executives. The Board of Directors approves awards granted to the Company's non-management directors upon recommendation of the Governance Committee.

In May 2012, approximately 1.3 million performance units were granted to key members of management under a new long-term incentive plan ("LTIP") adopted under the CSX Stock and Incentive Award Plan.  This LTIP provides for a three-year cycle ending in fiscal year 2014.  Similar to the two existing plans, the financial target upon which payments are based is operating ratio, which is defined as operating expenses divided by operating revenue and is calculated excluding certain non-recurring items.  Grants were made in performance units, with each unit being equivalent to one share of CSX common stock, and payouts will be made in CSX common stock.  The payout range for participants will be between 0% and 200% of the original grant based upon CSX's attainment of pre-established operating ratio targets for fiscal year 2014.  Payouts to certain senior executive officers are subject to a reduction of up to 30% at the discretion of the Compensation Committee of the Board of Directors based upon Company performance against certain CSX strategic initiatives.

10

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3. Share-Based Compensation, continued

Additionally, as part of the 2012 long-term incentive compensation program, the Company granted approximately 433 thousand time-based restricted stock units to key members of management.  The restricted stock units vest three years after the date of grant and participants receive cash dividend equivalents on the unvested shares during the restriction period.  These awards are time-based and support retention objectives.

     For information related to the Company's other outstanding long-term incentive compensation, see CSX's most recent annual report on Form 10-K.

Total pre-tax expense associated with all share-based compensation and the related income tax benefit are as follows:

	Third Quarters				Nine Months
(Dollars in millions)	2012		2011		2012		2011
Share-Based Compensation Expense	$	6	$	7	$	10	$	30
Income Tax Benefit	3		3		4		11

The following table provides information about stock options exercised and expired.

	Third Quarters		Nine Months
(In thousands)	2012	2011	2012	2011
Number of Stock Options Exercised	273	589	1,891	4,543
Number of Stock Options Expired	—	6	15	27

As of December 2009, all outstanding options were vested, and therefore, there will be no future expense related to these options.  As of the end of third quarter 2012, CSX had approximately 2.2 million stock options outstanding. 

NOTE 4. Casualty, Environmental and Other Reserves

Casualty, environmental and other reserves are considered critical accounting estimates due to the need for significant management judgments. They are provided for in the consolidated balance sheets as follows:

	September 28, 2012						December 30, 2011
(Dollars in millions)	Current		Long-term		Total		Current		Long-term		Total
Casualty:
Personal Injury	$	93	$	151	$	244	$	93	$	168	$	261
Occupational	6		31		37		6		37		43
Asbestos	11		52		63		11		57		68
Total Casualty	110		234		344		110		262		372
Environmental	39		40		79		31		52		83
Other(a)	20		45		65		26		38		64
Total	$	169	$	319	$	488	$	167	$	352	$	519

(a) Separation liabilities and freight rate dispute reserves have been reclassified to other current and long-term liabilities.

11

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4. Casualty, Environmental and Other Reserves, continued

These liabilities are accrued when estimable and probable in accordance with the Contingencies Topic in the ASC. Actual settlements and claims received could differ. The final outcome of these matters cannot be predicted with certainty. Considering the legal defenses currently available, the liabilities that have been recorded and other factors, it is the opinion of management that none of these items, when finally resolved, will have a material effect on the Company's financial condition, results of operations or liquidity. Should a number of these items occur in the same period, however, they could have a material effect on the Company's financial condition, results of operations or liquidity in that particular period.

Casualty

Casualty reserves represent accruals for personal injury, occupational injury and asbestos claims. During 2010, the Company increased its self-insured retention amount for these claims from $25 million to $50 million per occurrence for claims occurring on or after June 1, 2010. Currently, no individual claim is expected to exceed the self-insured retention amount. In accordance with the Contingencies Topic in the ASC, to the extent the value of an individual claim exceeds the self-insured retention amount, the Company would present the liability on a gross basis with a corresponding receivable for insurance recoveries. These reserves fluctuate based upon the timing of payments as well as changes in independent third-party estimates, which are reviewed by management. Actual results may vary from estimates due to the number, type and severity of the injury, costs of medical treatments and uncertainties in litigation. Most of the claims relate to CSXT unless otherwise noted below. Defense and processing costs, which historically have been insignificant and are anticipated to be insignificant in the future, are not included in the recorded liabilities.

Personal Injury

Personal injury reserves represent liabilities for employee work-related and third-party injuries. Work-related injuries for CSXT employees are primarily subject to the Federal Employers’ Liability Act (“FELA”). In addition to FELA liabilities, current or former employees of other CSX subsidiaries are covered by various state workers’ compensation laws, the Federal Longshore and Harbor Workers’ Compensation Program or the Maritime Jones Act.

CSXT retains an independent actuarial firm to assist management in assessing the value of personal injury claims. An analysis is performed by the independent actuarial firm quarterly and is reviewed by management. The methodology used by the actuary includes a development factor to reflect growth or reduction in the value of these personal injury claims. It is based largely on CSXT's historical claims and settlement experience.

Occupational and Asbestos

Occupational claims arise from allegations of exposures to certain materials in the workplace, such as solvents, soaps, chemicals (collectively referred to as “irritants”) and diesel fuels (like exhaust fumes) or allegations of chronic physical injuries resulting from work conditions, such as repetitive stress injuries, carpal tunnel syndrome and hearing loss. The Company is also party to a number of asbestos claims by current or former employees alleging exposure to asbestos in the workplace.

12

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4. Casualty, Environmental and Other Reserves, continued

An analysis of occupational claims is performed quarterly by an independent third-party actuarial firm and reviewed by management. Management performs a quarterly review of asserted asbestos claims, and an analysis is performed annually by an independent third-party specialist and reviewed by management. The objective of the occupational and asbestos claims analyses performed by the third-party actuarial firm and specialist (the "third-party specialists") is to determine the number of incurred but not reported (“IBNR”) claims. The third-party specialists analyze CSXT's historical claim filings, settlement amounts, and dismissal rates to determine future anticipated claim filing rates and average settlement values for occupational and asbestos claims reserves. The potentially exposed population is estimated by using CSX's employment records and industry data. From this analysis, the third-party specialists provide an estimate of the IBNR claims liability.

Environmental

The Company is a party to various proceedings related to environmental issues, including administrative and judicial proceedings involving private parties and regulatory agencies. The Company has been identified as a potentially responsible party at approximately 256 environmentally impaired sites. Many of these are, or may be, subject to remedial action under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, also known as the Superfund Law, or similar state statutes. Most of these proceedings arose from environmental conditions on properties used for ongoing or discontinued railroad operations. A number of these proceedings, however, are based on allegations that the Company, or its predecessors, sent hazardous substances to facilities owned or operated by others for treatment, recycling or disposal. In addition, some of the Company's land holdings were leased to others for commercial or industrial uses that may have resulted in releases of hazardous substances or other regulated materials onto the property and could give rise to proceedings against the Company.

In any such proceedings, the Company is subject to environmental clean-up and enforcement actions under the Superfund Law, as well as similar state laws that may impose joint and several liability for clean-up and enforcement costs on current and former owners and operators of a site without regard to fault or the legality of the original conduct. These costs could be substantial.

In accordance with the Asset Retirement and Environmental Obligations Topic in the ASC, the Company reviews its role with respect to each site identified at least quarterly, giving consideration to a number of factors such as:

• type of clean-up required;

• nature of the Company's alleged connection to the location (e.g., generator of waste sent to the site or owner or operator of the site);

• extent of the Company's alleged connection (e.g., volume of waste sent to the location and other relevant factors); and

• number, connection and financial viability of other named and unnamed potentially responsible parties at the location.

13

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4.    Casualty, Environmental and Other Reserves, continued

Based on the review process, the Company has recorded amounts to cover contingent anticipated future environmental remediation costs with respect to each site to the extent such costs are estimable and probable. The recorded liabilities for estimated future environmental costs are undiscounted. The liability includes future costs for remediation and restoration of sites as well as any significant ongoing monitoring costs, but excludes any anticipated insurance recoveries. Payments related to these liabilities are expected to be made over the next several years.

Currently, the Company does not possess sufficient information to reasonably estimate the amounts of additional liabilities, if any, on some sites until completion of future environmental studies. In addition, conditions that are currently unknown could, at any given location, result in additional exposure, the amount and materiality of which cannot presently be reliably estimated. Based upon information currently available, however, the Company believes its environmental reserves are adequate to cover remedial actions to comply with present laws and regulations.

Other

Other reserves include liabilities for various claims, such as longshoremen disability claims, and claims for property, automobile and general liability. Separation liabilities and freight rate dispute reserves have been reclassified to other current and long-term liabilities.

NOTE 5.    Commitments and Contingencies

Insurance

The Company maintains numerous insurance programs with substantial limits for property damage (which includes business interruption) and third-party liability.  A certain amount of risk is retained by the Company on each of the liability and property programs.  The Company has a $25 million retention per occurrence for the non-catastrophic property program (such as a derailment) and a $50 million retention per occurrence for the liability and catastrophic property programs (such as hurricanes and floods).

While the Company believes its current insurance coverage is adequate to cover its damages, future claims could exceed existing insurance coverage or insurance may not continue to be available at commercially reasonable rates.

Legal

The Company is involved in litigation incidental to its business and is a party to a number of legal actions and claims, various governmental proceedings and private civil lawsuits, including, but not limited to, those related to environmental and hazardous material exposure matters, FELA claims by employees, other personal injury claims and disputes and complaints involving certain transportation rates and charges. Some of the legal proceedings include claims for compensatory as well as punitive damages and others are, or are purported to be, class actions. While the final outcome of these matters cannot be reasonably determined, considering, among other things, the legal defenses available and liabilities that have been recorded along with applicable insurance, it is currently the opinion of CSX management that none of these pending items will have a material adverse effect on the Company's financial condition, results of operations or liquidity. An unexpected adverse resolution of one or more of these items, however, could have a material adverse effect on the Company's financial condition, results of operations or liquidity in that particular period.

14

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5.    Commitments and Contingencies, continued

The Company is able to estimate a range of possible loss for certain legal proceedings for which a loss is reasonably possible in excess of reserves established. The Company has estimated this range to be $2 million to approximately $20 million in aggregate at September 28, 2012. This estimated aggregate range is based upon currently available information and is subject to significant judgment and a variety of assumptions. Accordingly, the Company's estimate will change from time to time, and actual losses may vary significantly from the current estimate.

Fuel Surcharge Antitrust Litigation

In May 2007, class action lawsuits were filed against CSXT and three other U.S.-based Class I railroads alleging that the defendants' fuel surcharge practices relating to contract and unregulated traffic resulted from an illegal conspiracy in violation of antitrust laws. The suit seeks treble damages allegedly sustained by purported class members as well as attorneys' fees and other relief. While we believe the case is without merit and recovery unlikely, plaintiffs are expected to allege damages at least equal to the fuel surcharges at issue. In November 2007, the class action lawsuits were consolidated and are now pending in federal court in the District of Columbia.

On June 21, 2012, the court certified the case as a class action. The decision was not a ruling on the merits of plaintiffs' claims, rather a decision to allow the plaintiffs to seek to prove the case as a class. The defendant railroads have petitioned the U.S. Court of Appeals for the D.C. Circuit for permission to appeal the District Court's class certification decision. On August 28, 2012, the Court of Appeals referred the petition to a merits panel, and directed that the parties to the case submit briefs addressing both the petition and the merits of the appeal. The District Court currently is deciding whether to stay some or all proceedings pending the appellate court's decision on the defendants' petition for an appeal.

CSXT believes that its fuel surcharge practices were arrived at and applied lawfully and that the case is without merit. Accordingly, the Company intends to defend itself vigorously. However, penalties for violating antitrust laws can be severe, and an unexpected adverse decision on the merits could have a material adverse effect on the Company's financial condition, results of operations or liquidity in that particular period or for the full year.

NOTE 6.    Employee Benefit Plans

The Company sponsors defined benefit pension plans principally for salaried, management personnel.  For employees hired on or before December 31, 2002, the plans provide eligible employees with retirement benefits based predominantly on years of service and compensation rates near retirement.  For employees hired in 2003 or thereafter, benefits are determined based on a cash balance formula, which provides benefits by utilizing interest and pay credits based upon age, service and compensation. 

In addition to these plans, the Company sponsors a self-insured, post-retirement medical plan and a life insurance plan that provide benefits to full-time, salaried, management employees, hired prior to January 1, 2003, upon their retirement if certain eligibility requirements are met.  Medicare-eligible retirees are covered by a health reimbursement arrangement, which is an employer-funded account that can be used for reimbursement of eligible medical expenses. Non-Medicare eligible retirees will continue to be covered by the existing self-insured program.  The life insurance plan is non-contributory.

15

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6.    Employee Benefit Plans, continued

The Company engages independent actuaries to compute the amounts of liabilities and expenses relating to these plans subject to the assumptions that the Company selects.  These amounts are reviewed by management.  The following table describes the components of expense / (income) related to net benefit expense:

	Pension Benefits
(Dollars in millions)	Third Quarters						Nine Months
	2012			2011			2012			2011
Service Cost	$	11		$	10		$	33		$	30
Interest Cost	31			30			92			90
Expected Return on Plan Assets	(43		)	(39		)	(124		)	(118		)
Amortization of Net Loss	21			18			62			54
Total Expense	$	20		$	19		$	63		$	56

	Other Post-retirement Benefits
(Dollars in millions)	Third Quarters				Nine Months
	2012		2011		2012			2011
Service Cost	$	1	$	1	$	3		$	3
Interest Cost	4		4		12			10
Amortization of Net Loss	2		2		7			5
Amortization of Prior Service Costs	—		—		(1		)	(1		)
Total Expense	$	7	$	7	$	21		$	17

Qualified pension plan obligations are funded in accordance with prescribed regulatory requirements and with an objective of meeting minimum funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments.  During first quarter 2012, the Company made a contribution of $275 million to its qualified pension plans, of which $25 million was the required minimum contribution. At this time, the Company anticipates that no further contributions to its qualified pension plans will be required in 2012. For further details, see Note 8, Employee Benefit Plans, in CSX's most recent annual report on Form 10-K.

NOTE 7.    Debt and Credit Agreements

Total activity related to long-term debt as of the end of third quarter 2012 was as follows:

(Dollars in millions)	Current Portion			Long-term Portion			Total
Long-term debt as of December 2011	$	507		$	8,734		$	9,241
2012 activity:
Long-term debt issued	—			300			300
Long-term debt repaid	(481		)	—			(481		)
Reclassifications	781			(781		)	—
Capital lease additions	—			8			8
Debt conversions to CSX stock	(1		)	—			(1		)
Discount and premium activity	—			(4		)	(4		)
Long-term debt as of the end of third quarter 2012	$	806		$	8,257		$	9,063

16

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7.    Debt and Credit Agreements, continued

For fair value information related to the Company's long-term debt, see Note 10, Fair Value Measurements.

Debt Issuance

During first quarter 2012, CSX issued $300 million of 4.4% notes due 2043. These notes are 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 issuance were used primarily in connection with a $275 million contribution to the Company's qualified pension plan.

Credit Facility

CSX has a $1 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This 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. As of third quarter 2012, CSX was in compliance with all covenant requirements under this facility.

Receivables Securitization Facility

The Company's $250 million receivables securitization facility has a 364-day term and expires in June 2013. The Company's intention is to continue 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. As of the date of this filing, the Company has no outstanding balances under this facility.

NOTE 8.    Other Income - Net

The Company derives income from items that are not considered operating activities. Income from these items is reported net of related expense. Other income - net consisted of the following:

	Third Quarters						Nine Months
(Dollars in millions)	2012			2011			2012			2011
Interest Income	$	1		$	1		$	4		$	3
Income from Real Estate	9			6			17			14
Miscellaneous Income (Expense)	(5		)	(1		)	(7		)	(6		)
Total Other Income - Net	$	5		$	6		$	14		$	11

Note 9.    Income Taxes

There have been no material changes to the balance of unrecognized tax benefits during the third quarter 2012 and 2011.

17

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 10.    Fair Value Measurements

The Financial Instruments Topic in the ASC requiresdisclosures about fair value of financial instruments in annual reports as well as in quarterly reports. For CSX, this statement applies to certain investments and long-term debt. Disclosure of the fair value of pension plan assets is only required annually. Also, this rule clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.

Various inputs are considered when determining the value of the Company's investments, pension plan assets and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.

• Level 1 - observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets

• Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.)

• Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments)

The valuation methods described below may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Investments

The Company's investment assets, valued with the assistance of a third-party trustee, consist of certificates of deposits, corporate bonds, U.S. government securities and auction rate securities and are carried at fair value on the consolidated balance sheet per the Fair Value Measurements and Disclosures Topic in theASC. There are several valuation methodologies used for those assets as described below.

• Certificates of Deposit (Level 2): Valued by discounting the related cash flows based on current yields of similar instruments with comparable durations.

• Corporate Bonds and U.S. Treasury Obligations (Level 2): Valued using price evaluations reflecting the bid and/or ask sides of the market for a similar investment as of the last day of the fiscal period.

• Auction Rate Securities (Level 3): Valued using a discounted cash flow model, because there is currently no active market for trading.

18

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 10.    Fair Value Measurements, continued

The Company's investment assets are carried at fair value on the consolidated balance sheets as summarized in the tables below. Additionally, the amortized cost basis of these investments was $168 million and $643 million as of September 28, 2012 and December 30, 2011, respectively.

	September 2012								December 2011
(Dollars in Millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Certificates of Deposit	$	—	$	—	$	—	$	—	$	—	$	477	$	—	$	477
Corporate Bonds	—		123		—		123		—		98		—		98
U.S. Treasury Obligations	—		31		—		31		—		53		—		53
Auction Rate Securities	—		—		15		15		—		—		15		15
Total investments at fair value	$	—	$	154	$	15	$	169	$	—	$	628	$	15	$	643

These investments have the following maturities:

(Dollars in millions)	September 28, 2012		December 30, 2011
Less than 1 year	$	35	$	523
1 - 2 years	56		32
2 - 5 years	58		73
Greater than 5 years	20		15
Total	$	169	$	643

Long-term Debt

Long-term debt is reported at carrying amount on the consolidated balance sheets and is the Company's only financial instrument with fair values significantly different from their carrying amounts. The majority of the Company's long-term debt is valued with the assistance of an independent third party who utilizes closing transactions, market quotes or market values of comparable debt. For those instruments not valued by the third party, the fair value has been estimated by applying market rates of similar instruments to the scheduled contractual debt payments and maturities. These market rates are provided by the same third party. All of the inputs used to determine the fair value of the Company's long-term debt are Level 2 inputs.

The fair value of outstanding debt fluctuates with changes in a number of factors. Such factors include, but are not limited to, interest rates, market conditions, values of similar financial instruments, size of the transaction, cash flow projections and comparable trades. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The fair value of a company's debt is a measure of its current value under present market conditions. It does not impact the financial statements under current accounting rules.

19

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 10.    Fair Value Measurements, continued

The fair value and carrying value of the Company's long-term debt is as follows:

(Dollars in millions)	September 28, 2012		December 30, 2011
Long-term Debt Including Current Maturities:
Fair Value	$	10,870	$	10,708
Carrying Value	$	9,063	$	9,241

NOTE 11.    Summarized Consolidating Financial Data

In 2007, CSXT sold secured equipment notes maturing in 2023, and in 2008, CSXT sold additional secured equipment notes maturing in 2014 in registered public offerings. CSX has fully and unconditionally guaranteed the notes. In connection with the notes, the Company is providing the following condensed consolidating financial information in accordance with SEC disclosure requirements. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation and the allocation of certain expenses of CSX incurred for the benefit of its subsidiaries.

Condensed consolidating financial information for the obligor, CSXT, and parent guarantor, CSX, is as follows:

20

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.Summarized Consolidating Financial Data, continued

Consolidating Income Statements
(Dollars in millions)
Third Quarter 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,878		$	16		$	2,894
Expense	(90		)	2,166			(36		)	2,040
Operating Income	90			712			52			854
Equity in Earnings of Subsidiaries	478			—			(478		)	—
Interest (Expense) / Benefit	(126		)	(17		)	5			(138		)
Other Income / (Expense) - Net	(1		)	2			4			5
Earnings Before Income Taxes	441			697			(417		)	721
Income Tax (Expense) / Benefit	14			(262		)	(18		)	(266		)
Net Earnings	$	455		$	435		$	(435	)	$	455
Total Comprehensive Earnings	$	471		$	437		$	(437	)	$	471
Third Quarter 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,946		$	17		$	2,963
Expense	(77		)	2,220			(58		)	2,085
Operating Income	77			726			75			878
Equity in Earnings of Subsidiaries	500			(1		)	(499		)	—
Interest (Expense) / Benefit	(123		)	(19		)	4			(138		)
Other Income / (Expense) - Net	—			6			—			6
Earnings Before Income Taxes	454			712			(420		)	746
Income Tax (Expense) / Benefit	10			(266		)	(26		)	(282		)
Net Earnings	$	464		$	446		$	(446	)	$	464
Total Comprehensive Earnings	$	473		$	448		$	(448	)	$	473

21

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.Summarized Consolidating Financial Data, continued

Consolidating Income Statements
(Dollars in millions)
Nine Months Ended September 28, 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	8,823		$	49		$	8,872
Expense	(266		)	6,587			(102		)	6,219
Operating Income	266			2,236			151			2,653
Equity in Earnings of Subsidiaries	1,512			(1		)	(1,511		)	—
Interest (Expense) / Benefit	(381		)	(53		)	13			(421		)
Other Income / (Expense) - Net	(3		)	6			11			14
Earnings Before Income Taxes	1,394			2,188			(1,336		)	2,246
Income Tax (Expense) / Benefit	22			(795		)	(57		)	(830		)
Net Earnings	$	1,416		$	1,393		$	(1,393	)	$	1,416
Total Comprehensive Earnings	$	1,458		$	1,393		$	(1,393	)	$	1,458
Nine Months Ended September 30, 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	8,743		$	49		$	8,792
Expense	(210		)	6,584			(159		)	6,215
Operating Income	210			2,159			208			2,577
Equity in Earnings of Subsidiaries	1,472			2			(1,474		)	—
Interest (Expense) / Benefit	(370		)	(64		)	22			(412		)
Other Income / (Expense) - Net	3			8			—			11
Earnings Before Income Taxes	1,315			2,105			(1,244		)	2,176
Income Tax (Expense) / Benefit	50			(782		)	(79		)	(811		)
Net Earnings	$	1,365		$	1,323		$	(1,323	)	$	1,365
Total Comprehensive Earnings	$	1,398		$	1,325		$	(1,325	)	$	1,398

22

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.Summarized Consolidating Financial Data, continued

Consolidating Balance Sheet
(Dollars in millions)
As of Third Quarter 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	458		$	153		$	82		$	693
Short-term Investments	—			—			35			35
Accounts Receivable - Net	1			559			603			1,163
Receivable from Affiliates	992			1,636			(2,628		)	—
Materials and Supplies	—			264			—			264
Deferred Income Taxes	65			74			(5		)	134
Other Current Assets	14			78			12			104
Total Current Assets	1,530			2,764			(1,901		)	2,393
Properties	8			33,146			1,866			35,020
Accumulated Depreciation	(8		)	(8,106		)	(974		)	(9,088		)
Properties - Net	—			25,040			892			25,932
Investments in Conrail	—			—			693			693
Affiliates and Other Companies	(39		)	584			(43		)	502
Investments in Consolidated Subsidiaries	18,515			—			(18,515		)	—
Other Long-term Assets	172			300			(62		)	410
Total Assets	$	20,178		$	28,688		$	(18,936	)	$	29,930
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	150		$	1,004		$	43		$	1,197
Labor and Fringe Benefits Payable	36			345			35			416
Payable to Affiliates	2,488			364			(2,852		)	—
Casualty, Environmental and Other Reserves	—			153			16			169
Current Maturities of Long-term Debt	700			105			1			806
Income and Other Taxes Payable	(40		)	308			(7		)	261
Other Current Liabilities	(1		)	172			1			172
Total Current Liabilities	3,333			2,451			(2,763		)	3,021
Casualty, Environmental and Other Reserves	—			247			72			319
Long-term Debt	7,208			1,049			—			8,257
Deferred Income Taxes	(149		)	8,067			100			8,018
Other Long-term Liabilities	770			605			(91		)	1,284
Total Liabilities	$	11,162		$	12,419		$	(2,682	)	$	20,899
Shareholders' Equity
Common Stock, $1 Par Value	$	1,031		$	181		$	(181	)	$	1,031
Other Capital	20			5,669			(5,669		)	20
Retained Earnings	8,798			10,475			(10,475		)	8,798
Accumulated Other Comprehensive Loss	(833		)	(79		)	79			(833		)
Noncontrolling Interest	—			23			(8		)	15
Total Shareholders' Equity	$	9,016		$	16,269		$	(16,254	)	$	9,031
Total Liabilities and Shareholders' Equity	$	20,178		$	28,688		$	(18,936	)	$	29,930

23

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.Summarized Consolidating Financial Data, continued

Consolidating Balance Sheet (Dollars in millions)
As of December 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	549		$	154		$	80		$	783
Short-term Investments	475			—			48			523
Accounts Receivable - Net	4			468			657			1,129
Receivable from Affiliates	1,025			1,772			(2,797		)	—
Materials and Supplies	—			240			—			240
Deferred Income Taxes	10			173			(1		)	182
Other Current Assets	17			64			(3		)	78
Total Current Assets	2,080			2,871			(2,016		)	2,935
Properties	8			31,958			1,738			33,704
Accumulated Depreciation	(8		)	(7,795		)	(927		)	(8,730		)
Properties - Net	—			24,163			811			24,974
Investments in Conrail	—			—			678			678
Affiliates and Other Companies	(39		)	574			(42		)	493
Investment in Consolidated Subsidiaries	17,519			—			(17,519		)	—
Other Long-term Assets	176			109			108			393
Total Assets	$	19,736		$	27,717		$	(17,980	)	$	29,473
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	114		$	978		$	55		$	1,147
Labor and Fringe Benefits Payable	41			458			42			541
Payable to Affiliates	2,566			374			(2,940		)	—
Casualty, Environmental and Other Reserves	—			151			16			167
Current Maturities of Long-term Debt	400			105			2			507
Income and Other Taxes Payable	(60		)	189			—			129
Other Current Liabilities	(1		)	194			3			196
Total Current Liabilities	3,060			2,449			(2,822		)	2,687
Casualty, Environmental and Other Reserves	—			284			68			352
Long-term Debt	7,609			1,124			1			8,734
Deferred Income Taxes	(246		)	7,800			47			7,601
Other Long-term Liabilities	858			667			106			1,631
Total Liabilities	$	11,281		$	12,324		$	(2,600	)	$	21,005
Shareholders' Equity
Common Stock, $1 Par Value	$	1,049		$	181		$	(181	)	$	1,049
Other Capital	6			5,652			(5,652		)	6
Retained Earnings	8,275			9,618			(9,618		)	8,275
Accumulated Other Comprehensive Loss	(875		)	(79		)	79			(875		)
Noncontrolling Minority Interest	—			21			(8		)	13
Total Shareholders' Equity	$	8,455		$	15,393		$	(15,380	)	$	8,468
Total Liabilities and Shareholders' Equity	$	19,736		$	27,717		$	(17,980	)	$	29,473

24

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Nine months ended September 28, 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	429		$	2,202		$	(327	)	$	2,304
Investing Activities
Property Additions	—			(1,669		)	(161		)	(1,830		)
Purchases of Short-term Investments	(50		)	—			(28		)	(78		)
Proceeds from Sales of Short-term Investments	525			—			48			573
Other Investing Activities	(6		)	78			(62		)	10
Net Cash Provided by (Used in) Investing Activities	469			(1,591		)	(203		)	(1,325		)
Financing Activities
Long-term Debt Issued	300			—			—			300
Long-term Debt Repaid	(400		)	(79		)	(2		)	(481		)
Dividends Paid	(415		)	(536		)	536			(415		)
Stock Options Exercised	11			—			—			11
Shares Repurchased	(500		)	—			—			(500		)
Other Financing Activities	15			3			(2		)	16
Net Cash Provided by (Used in) Financing Activities	(989		)	(612		)	532			(1,069		)
Net Increase (Decrease) in Cash and Cash Equivalents	(91		)	(1		)	2			(90		)
Cash and Cash Equivalents at Beginning of Period	549			154			80			783
Cash and Cash Equivalents at End of Period	$	458		$	153		$	82		$	693

25

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Nine months ended September 30, 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	1,054		$	2,014		$	(483	)	$	2,585
Investing Activities
Property Additions	—			(1,285		)	(151		)	(1,436		)
Purchases of Short-term Investments	—			—			(14		)	(14		)
Proceeds from Sales of Short-term Investments	—			—			66			66
Other Investing Activities	(19		)	(90		)	92			(17		)
Net Cash Provided by (Used in) Investing Activities	(19		)	(1,375		)	(7		)	(1,401		)
Financing Activities
Long-term Debt Issued	600			—			—			600
Long-term Debt Repaid	(507		)	(86		)	(2		)	(595		)
Dividends Paid	(354		)	(510		)	510			(354		)
Stock Options Exercised	27			—			—			27
Shares Repurchased	(1,564		)	—			—			(1,564		)
Other Financing Activities	30			(21		)	(19		)	(10		)
Net Cash Provided by (Used in) Financing Activities	(1,768		)	(617		)	489			(1,896		)
Net Increase (Decrease) in Cash and Cash Equivalents	(733		)	22			(1		)	(712		)
Cash and Cash Equivalents at Beginning of Period	1,100			118			74			1,292
Cash and Cash Equivalents at End of Period	$	367		$	140		$	73		$	580

26

CSX CORPORATION

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

STRATEGIC OVERVIEW

CSX provides rail-based freight transportation services including traditional rail service and the transport of intermodal containers and trailers. The Company and the rail industry provide customers with access to an expansive and interconnected transportation network that plays a key role in North American commerce and is critical to the economic success and global competitiveness of the United States. This global competitiveness and the expected growth in manufacturing is beneficial to the rail industry. The U.S. demand to move more goods by rail is expected to rise along with the need to reduce highway congestion and greenhouse gas emissions. CSX and freight railroads are the best way to meet this demand while reducing environmental impacts. CSX can move a ton of freight almost 500 miles on one gallon of fuel and, on average, over three times more fuel efficient than trucks. Also, one rail car can move the equivalent of 3 truckloads which aids in alleviating highway congestion.

CSX's network is positioned to reach nearly two-thirds of Americans, who account for the majority of the nation's consumption of goods. Through this network, the Company transports a diverse portfolio of products and commodities to meet the country's needs. These products range from energy sources like coal, ethanol and crude oil, to automobiles, chemicals, building materials, paper, metals, grains and consumer products. The Company categorizes these products into three primary lines of business: merchandise, coal and intermodal. CSX's transportation solutions connect industries across the United States with each other and with global markets by meeting the transportation needs of port facilities, energy producers, manufacturers, industrial producers, construction companies, farmers and feed mills, wholesalers and retailers and the United States armed forces.

CSX services are delivered by dedicated employees whose jobs cannot be exported overseas. Railroad jobs are among some of the nation's highest paying. In 2011, CSX hired more than 4,000 new employees. Additionally, in 2012, the Company has been hiring and expects new employees for the full year to reach nearly 2,500. This hiring is primarily offsetting attrition.

Strategic Growth Initiatives

As CSX continues to strengthen its core business, the Company is focusing on three key strategic growth initiatives related to intermodal, export coal and an initiative to enhance customer service quality also known to CSX as Total Service Integration. The Company believes these initiatives will allow it to capture additional domestic and international volume, while improving service offerings to its customers in a cost-effective manner.

Intermodal

The Company's intermodal business is an economical, environmentally-friendly alternative to transporting freight on highways via truck. CSX is capitalizing on this opportunity by building new terminals and increasing network capacity. Major terminal expansion projects in Winter Haven, Florida, Worcester, Massachusetts and Columbus, Ohio are currently underway. During 2012, the Company completed construction of a new intermodal terminal in Louisville, Kentucky. These investments are in addition to the Company's new Northwest Ohio intermodal terminal that became operational in 2011. This high-capacity terminal, which is part of CSX's National Gateway initiative discussed below, expands service offerings to customers as well as improves market access to and from east coast ports.

27

Export Coal

Economic expansion in developing countries has generated a growth cycle in export coal demand.    Over the long term, demand for coal in these countries is expected to remain high due to rising consumption as they become more urbanized, which is increasing the need for electric power generation and steel production.  These increases in global coal demand are likely to be met by shipments from coal producing countries, including the U.S.  In addition to the Company's ready access to large U.S. coal suppliers and multiple port facilities, CSX continues to enhance the capacity and operating efficiency of its export coal network, which favorably positions the Company to capitalize on this growth opportunity. In the long term, this export coal demand is expected to partially offset declines in utility coal volume that has resulted from low natural gas prices and environmental regulation.  Although the Company expects long-term growth in the export coal market, CSX export traffic volumes will be subject to a high degree of volatility as a result of changes in the global economy and competition from foreign coal producers. 

Total Service Integration

CSX's Total Service Integration (“TSI”) initiative, which was launched in 2006, supports growth by improving service, optimizing train size, and increasing asset utilization for unit train shipments from origin to destination. CSX is now advancing this initiative to enhance service quality for customers who ship by the carload. This program, TSI Carload, focuses where the customer is impacted most - during the first and last mile of service. These enhancements aim to improve service levels and reliability of rail transportation over other modes of transportation. These improvements to operational processes, customer communication and service will better align the Company's operating capabilities with customers' needs.

Balanced Approach to Capital Deployment

CSX remains highly committed to delivering value to shareholders through a balanced approach to deploying capital that includes investments in infrastructure, dividend growth and share repurchases. In 2011, the Company invested $2.3 billion to further enhance the capacity, quality, safety and flexibility of its network. Included in this amount is approximately $100 million of investments related to reimbursable public-private partnerships where reimbursements may not be fully received in a given year. In addition, CSX continues to return value to its shareholders in the form of dividends and share repurchases. The Company has increased its quarterly cash dividend ten times over the last seven years which represents a 32 percent compounded annual growth rate. Also during 2011, CSX announced a new $2 billion share repurchase authority expected to be completed by the end of 2012 based on market and business conditions. While delivering shareholder value through this balanced approach to capital deployment, the Company remains committed to an improving investment grade credit profile.

Public-Private Partnerships

Expanding capacity on U.S. rail networks will provide substantial public benefits including job creation, increased business activity at U.S. ports, reduced highway congestion and lower air emissions. Therefore, CSX and its government partners are working jointly to invest in multi-year rail infrastructure projects such as the National Gateway. This initiative is a public-private partnership which will increase intermodal capacity on key corridors between Mid-Atlantic ports and the Midwest. Current projects related to the National Gateway include the expansion of the Virginia Avenue Tunnel in Washington, D.C. and construction for double-stack train clearances in Ohio, West Virginia, Pennsylvania, Maryland and the District of Columbia.

28

CSX is engaged in another major partnership initiative with the Commonwealth of Massachusetts to expand freight and commuter rail service. Currently, CSX provides service to and from New England. To further improve that service offering to customers, CSX is expanding its intermodal terminal footprint in Worcester, Massachusetts and, with the Commonwealth, is clearing the route from Worcester to the New York state line for double-stack intermodal service. At the beginning of fourth quarter 2012, CSX sold its corridor between Boston and Worcester to the Commonwealth, while retaining the right to utilize this corridor for freight service.  The Commonwealth intends to expand commuter rail service in the greater Boston area. 

In 2011, CSX entered into a transaction with the state of Florida to help alleviate highway congestion through a new commuter rail operation known as SunRail. CSX sold a portion of its track to the state for its new commuter rail and will invest the proceeds in additional freight rail capacity and infrastructure within the state. CSX retains the right to utilize this corridor with freight service to serve its customers. This includes a new automotive and intermodal facility in central Florida.

In summary, these long-term investments discussed above provide a foundation for volume growth and productivity improvement, enhanced customer service and continued advancements in the safety and reliability of operations. To continue these types of investments, the Company must be able to operate in an environment in which it can generate adequate returns and drive shareholder value. CSX will continue to advocate for a fair and balanced regulatory environment to ensure that the value of the Company's rail service would be reflected in any potential new legislation or policies.

29

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

Third Quarter 2012 Highlights

• Revenue decreased$69 million to $2.9 billion.

• Expenses decreased$45 million or 2% to $2.0 billion.

• Operating income decreased$24 million or 3% to $854 million.

• Operating ratio increased to 70.5%.

	Third Quarters						Nine Months
(In thousands)	2012			2011			2012			2011
Volume	1,600			1,619			4,842			4,857
(In millions)
Revenue	$	2,894		$	2,963		$	8,872		$	8,792
Expense	2,040			2,085			6,219			6,215
Operating Income	$	854		$	878		$	2,653		$	2,577
Operating Ratio	70.5		%	70.4		%	70.1		%	70.7		%

Total revenue for the Company declined 2% year-over-year due to lower volume, primarily in coal, lower fuel surcharge recoveries partially offset by pricing gains. Expenses decreased 2% versus the prior year reflecting the continued recognition of a deferred gain and lower fuel costs related to volume and efficiency. Additionally, overtime crew savings were realized from improvements in network efficiency.

For additional information, refer to Results of Operations discussed on pages 33 through 38.

30

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

In addition to the financial highlights described above, the Company measures and reports safety and service performance. The Company strives for continuous improvement in these measures through training, initiatives and investment. For example, the Company's safety and train accident prevention programs rely on broad employee involvement. The programs utilize operating rules training, compliance measurement, root cause analysis and communication that are intended to create a safer environment for employees and the public. Continued capital investment in the Company's assets, including track, bridges, signals, equipment and detection technology also supports safety performance.

The Company routinely collaborates with the Federal Railroad Administration ("FRA") and industry organizations as well as federal, state and local governments on the development and implementation of safety programs and initiatives. For example, CSX, Operation Lifesaver, Inc., the U.S. Department of Transportation and other major railroads from across the country have partnered in the Common Sense campaign to reduce the number of injuries and deaths around tracks and trains. In addition to these initiatives, CSXT also has an ongoing public safety program to clear-cut trees and vegetation at public passive highway-rail intersections (crossings with no flashing lights or gates) to improve the public's ability to discern rail hazards.

At CSX, operational success is built on employee commitment to customer service while at the same time maintaining a constant focus on safety. During third quarter 2012, both key safety measures improved versus 2011. The FRA reportable personal injury frequency index significantly improved by 35 percent year over year to 0.70, showing extraordinary employee dedication to the Company's safety initiative.  The reported FRA train accident frequency rate improved 3 percent year over year to 1.94.

Network reliability and service metrics showed strong improvements during the third quarter 2012. On-time originations improved 25 percent to a record 90 percent, and on-time arrivals improved 31 percent to 80 percent.  Average train velocity increased 10 percent to 22.6 miles per hour, while dwell improved 9 percent to 23.2 hours.

31

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

Operating Statistics (Estimated)

		Third Quarters
		2012		2011		Improvement
Safety and Service Measurements	FRA Personal Injury Frequency Index	0.70		1.07		35%
	FRA Train Accident Rate	1.94		1.99		3%
	On-Time Train Originations	90	%	72	%	25%
	On-Time Destination Arrivals	80	%	61	%	31%
	Dwell	23.2		25.5		9%
	Cars-On-Line	188,907		204,649		8%
	Train Velocity	22.6		20.6		10%
						Increase
Resources	Route Miles	21,007		21,043		—%
	Locomotives (owned and long-term leased)	4,164		4,069		2%
	Freight Cars (owned and long-term leased)	70,368		67,289		5%

Key Performance Measures Definitions

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.

On-Time Train Originations - Average percent of scheduled road trains that depart the origin yard on-time or ahead of schedule.

On-Time Destination Arrivals - Average percent of scheduled road trains that arrive at the destination yard on-time to two hours late (30 minutes for intermodal trains).

Dwell - Average amount of time in hours between car arrival at and departure from the yard. It does not include cars moving through the yard on the same train.

Cars-On-Line - An average count of all cars on the network (does not include locomotives, cabooses, trailers, containers or maintenance equipment).

Train Velocity - Average train speed between terminals in miles per hour (does not include locals, yard jobs, work trains or passenger trains).

32

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

FINANCIAL RESULTS OF OPERATIONS

	Third Quarters										Nine Months
	2012			2011			$ Change			% Change	2012			2011			$ Change			% Change
Revenue	$	2,894		$	2,963		$	(69	)	(2)%	$	8,872		$	8,792		$	80		1%
Expense
Labor and Fringe	754			765			11			1	2,268			2,294			26			1
Materials, Supplies and Other	525			562			37			7	1,617			1,649			32			2
Fuel	397			412			15			4	1,251			1,245			(6		)	—
Depreciation	268			251			(17		)	(7)	788			740			(48		)	(6)
Equipment and Other Rents	96			95			(1		)	(1)	295			287			(8		)	(3)
Total Expense	2,040			2,085			45			2	6,219			6,215			(4		)	—
Operating Income	854			878			(24		)	(3)	2,653			2,577			76			3
Interest Expense	(138		)	(138		)	—			—	(421		)	(412		)	(9		)	(2)
Other Income - Net	5			6			(1		)	—	14			11			3			27
Income Tax Expense	(266		)	(282		)	16			6	(830		)	(811		)	(19		)	(2)
Net Earnings	$	455		$	464		$	(9	)	(2)	$	1,416		$	1,365		$	51		4%
Earnings Per Diluted Share	$	0.44		$	0.43		$	0.01		2%	$	1.36		$	1.24		$	0.12		10%
Operating Ratio	70.5		%	70.4		%	(10		)	bps	70.1		%	70.7		%	60			bps

Volume and Revenue (Unaudited)
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Third Quarters
	Volume				Revenue						Revenue Per Unit
	2012	2011	% Change		2012		2011		% Change		2012		2011		% Change
Agricultural
Agricultural Products	88	96	(8	)%	$	220	$	234	(6	)%	$	2,500	$	2,438	3	%
Phosphates and Fertilizers	80	80	—		123		118		5		1,538		1,475		4
Food and Consumer	25	24	2		67		64		5		2,680		2,667		3
Industrial
Chemicals	118	116	2		424		407		4		3,593		3,509		3
Automotive	100	86	17		270		228		18		2,700		2,651		1
Metals	64	66	(3	)	155		155		—		2,422		2,348		3
Housing and Construction
Emerging Markets	107	116	(8	)	168		180		(7	)	1,570		1,552		1
Forest Products	73	73	—		182		179		2		2,493		2,452		2
Total Merchandise	655	657	—		1,609		1,565		3		2,456		2,382		3
Coal	323	386	(16	)	791		957		(17	)	2,449		2,479		(1	)
Intermodal (a)	622	576	8		399		363		10		641		630		2
Other	—	—	—		95		78		23		—		—		—
Total	1,600	1,619	(1	)%	$	2,894	$	2,963	(2	)%	$	1,809	$	1,830	(1	)%

(a) 2011 intermodal revenue has been reduced by $6 million for the quarter ended September 30, 2011 from what was previously reported to correct for certain interline business and the corresponding intermodal revenue per unit has been reduced for this as well. The offsetting adjustment is presented in other revenue.

33

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

Third Quarter 2012 Results of Operations

Volume declined 1% year-over-year as lower coal shipments were partially offset by the increase in intermodal and automotive volume. Pricing gains drove increases in revenue per unit in nearly all markets. Total revenue for the Company declined 2% year-over-year due to lower volume, lower fuel surcharge recoveries, partially offset by pricing gains.

Merchandise

Agricultural

Agricultural Products - Volume decreased due to lower shipments of corn and ethanol. Corn shipments for animal feed declined as the extreme drought in the Midwest impacted harvest levels and drove corn prices higher. Further contributing to this decline, customers in the Southeast took advantage of a strong local crop which was delivered by truck. Ethanol shipments were lower as a result of a reduction in gasoline demand.

Phosphates and Fertilizers - Fertilizer volume was flat as increased domestic shipments were offset by lower export volume. Domestic shipments increased as some business shifted to rail from barge transportation due to the low river levels. Increased shipments to domestic markets limited the availability of fertilizer for exports.

Food and Consumer - Volume increased due to a larger year-over-year potato crop and increased rail shipments of western apples to replace the weak crop in the Midwest which is typically moved by truck to customers.

Industrial

Chemicals - Volume growth was driven by an increase in plastics shipments to support growth in a broad base of end-use markets including packaging and automotive. Additionally, frac sand and petroleum oil shipments increased from shale drilling related activity.

Automotive - Automotive volume grew as North American light vehicle production increased to meet pent up demand as the average vehicle age in the U.S. reached record highs.

Metals - Scrap volume declined due to lower steel mill utilization rates resulting from decreased demand and falling scrap prices.

Housing and Construction

Emerging Markets - Volume declined due to reduced shipments of salt as inventories remain high due to reduced road application during the previous mild winter. Additionally, waste volume declined due to the conclusion of several remediation projects and an increase of local landfill disposal options that favor truck.

Forest Products - Strength in building products from the slowly-recovering demand for housing and construction was offset by weakness in the paper markets, which continue to be affected by electronic media substitution.

34

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

Coal

Shipments of utility coal declined primarily driven by low natural gas prices and utility stockpiles above target levels. This decrease was partially offset by higher export volume driven by increased shipments of U.S. thermal coal primarily to Europe.

Intermodal

Domestic growth was driven by highway-to-rail conversions, the addition of service lanes and growth with existing business partners. International growth was driven by a new customer and growth from expanded service offerings primarily enabled by the Northwest Ohio terminal.

Other

Other revenue increased due to lower volume-based incentives paid to customers and higher revenue from customers who did not meet minimum contractual volumes.

Expense

Expenses in the quarter decreased$45 million from last year's third quarter. Significant variances are described below.

Labor and Fringeexpense decreased$11 million due to the following:

• Cycling of prior year expense of $14 million for guarantee payments for a closed facility.

• Lower crew costs of $7 million due to improvements in network efficiency that generated a reduction of overtime hours and relief crews.

• Offsetting these decreases:

◦ Inflation-related expenses increased $7 million.

◦ Other related costs increased $3 million

Materials, Supplies and Other expense decreased$37 million due to the following:

• Recognition of $30 million of the deferred gain from the November 2011 sale of an operating rail corridor to the state of Florida.

• Casualty and freight loss expenses decreased $18 million primarily due to improved safety that lowered personal injury claim trends and accident rates.

• Offsetting these decreases:

◦ Volume-related expenses increased $8 million due to terminal-related costs associated with the growth of intermodal, export coal and automotive businesses.

◦ Inflation and other related expenses increased $3 million.

Fuel expense decreased$15 million primarily due to volume and efficiency, partially offset by a 1% increase in the average price per gallon for locomotive fuel.

Depreciation expense increased$17 million due to a larger asset base.

35

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

Consolidated Results of Operations

Interest Expense

Interest expense of $138 million was flat primarily due to higher average debt balances offset by lower interest rates.

Other Income - Net

Other income-net decreased$1 million to $5 million primarily due to higher non-operating expenses partially offset by higher real estate sales.

Income Tax Expense

Income tax expense decreased$16 million to $266 million primarily due to lower earnings in third quarter 2012.

Net Earnings

Net earnings decreased$9 million to $455 million driven by the after-tax impact of business results as discussed above. Earnings per diluted share increased$0.01 to $0.44 as the decrease in business results were offset by lower outstanding shares in the quarter versus a year ago.

36

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)
Nine Months
	Volume				Revenue						Revenue Per Unit
	2012	2011	% Change		2012		2011		% Change		2012		2011		% Change
Agricultural
Agricultural Products	297	314	(5	)%	$	756	$	767	(1	)%	$	2,545	$	2,443	4	%
Phosphates and Fertilizers	239	243	(2	)	379		373		2		1,586		1,535		3
Food and Consumer	75	76	(1	)	202		197		3		2,693		2,592		4
Industrial
Chemicals	355	352	1		1,269		1,214		5		3,575		3,449		4
Automotive	316	262	21		853		673		27		2,699		2,569		5
Metals	203	201	1		489		461		6		2,409		2,294		5
Housing and Construction
Emerging Markets	304	328	(7	)	500		504		(1	)	1,645		1,537		7
Forest Products	217	212	2		547		514		6		2,521		2,425		4
Total Merchandise	2,006	1,988	1		4,995		4,703		6		2,490		2,366		5
Coal	985	1,159	(15	)	2,443		2,794		(13	)	2,480		2,411		3
Intermodal (a)	1,851	1,710	8		1,196		1,059		13		646		619		4
Other	—	—	—		238		236		1		—		—		—
Total	4,842	4,857	—	%	$	8,872	$	8,792	1	%	$	1,832	$	1,810	1	%

(a) 2011 intermodal revenue has been reduced by $18 million for the nine months ended September 30, 2011 from what was previously reported to correct for certain interline business and the corresponding intermodal revenue per unit has been reduced for this as well. The offsetting adjustment is presented in other revenue.

Nine Months Results of Operations

Consolidated Results of Operations

Revenue

Revenue increased$80 million to $8,872 million as strong intermodal and automotive volume growth and strong pricing more than offset the volume declines in coal.

Operating Income

Operating income increased$76 million to $2,653 million primarily due to higher revenue as described above as well as the continued recognition of a deferred gain, lower incentive compensation, and productivity gains. These increases were partially offset by higher inflation and depreciation costs.

Interest Expense

Interest expense increased$9 million to $421 million primarily due to higher average debt balances partially offset by lower interest rates.

37

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

Other Income - Net

Other income-net increased$3 million to $14 million primarily due to higher real estate activity.

Income Tax Expense

Income tax expense increased$19 million to $830 million primarily due to higher earnings in 2012.

Net Earnings

Net earnings increased$51 million to $1,416 million and earnings per diluted share increased$0.12 to $1.36 driven by the after-tax impact of business results as discussed above. Earnings per diluted share was also impacted by lower shares outstanding versus a year ago.

LIQUIDITY AND CAPITAL RESOURCES

The following are material changes in the consolidated balance sheets and sources of liquidity and capital, which provide an update to the discussion included in CSX's most recent annual report on Form 10-K.

Material Changes in Consolidated Balance Sheets and Significant Cash Flows

Consolidated Balance Sheets

Total assets increased$457 million from year end primarily driven by the increase in net properties of $958 million partially offset by net cash outflows (including short-term investment activity) of $578 million.

Total liabilities and shareholders' equity combined increased$457 million from year end. This increase was mostly due to growth in retained earnings of $523 million from net earnings partially offset by share repurchases and dividends paid. Additionally, deferred income tax liabilities increased $417 million resulting from the net impact of bonus depreciation. Partially offsetting these increases was a pension plan contribution of $275 million as well as incentive compensation payments of $121 million.

Significant Cash Flows

Cash and cash equivalents decreased $90 million during the nine months ended 2012 versus the decrease of $712 million for the same period in the prior year primarily due to the following items:

• Lower share repurchases of approximately $1.1 billion

• Higher proceeds from net sales of short-term investments of $443 million

• Higher capital expenditures of $394 million

• Pension plan contribution of $275 million

• Higher debt repayments of $186 million (net of debt issued)

38

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

Planned capital investments for 2012 are $2.25 billion. This amount excludes investments related to reimbursable public-private partnerships where reimbursements may not be fully received in a given year. CSX intends to fund capital investments through cash generated from operations.  Also, the Company expects to incur significant capital costs in connection with the implementation of Positive Train Control ("PTC"). CSX now estimates that the total multi-year cost of PTC implementation will be at least $1.7 billion. This estimate includes costs for installing the new system along tracks, upgrading locomotives, adding communication equipment and developing new technologies. Total PTC spending life-to-date through September 2012 was approximately $500 million.

Liquidity and Working Capital

As of the end of nine months 2012, CSX had $728 million of cash, cash equivalents and short-term investments. CSX has a $1 billion unsecured revolving credit facility backed by a diverse syndicate of banks. This facility expires in September 2016 and as of the date of this filing, the Company has no outstanding balances under this facility. CSX uses current cash balances for general corporate purposes, which may include capital expenditures, working capital requirements, improvements in productivity, dividends to shareholders, debt repayments and repurchases of CSX common stock. See Note 7, Debt and Credit Agreements.

The Company's $250 million receivables securitization facility has a 364-day term and expires in June 2013. The Company's intention is to continue 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. As of the date of this filing, the Company has no outstanding balances under this facility.

Working capital can also be considered a measure of a company's ability to meet its short-term needs. CSX had a working capital deficit of $628 million as of September 2012 and a working capital surplus of $248 million as of December 2011. This decline since year end is primarily due to cash used for property additions, share repurchases, pension plan contributions and dividend payments which more than offset cash from operations. A working capital deficit is not unusual for CSX or other companies in the industry and does not indicate a lack of liquidity.

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 current assets to satisfy current liabilities and maturing obligations when they come due. Furthermore, CSX has sufficient financial capacity, including its revolving credit facility, trade receivable facility 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.

39

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 following areas:

• casualty, environmental and other reserves;

• pension and post-retirement medical plan accounting;

• depreciation policies for assets under the group-life method; and

• income taxes.

For further discussion of CSX's critical accounting estimates, see the Company's most recent annual report on Form 10-K.

FORWARD-LOOKING STATEMENTS

Certain statements in this report and in other materials filed with the SEC, 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, 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.

40

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

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.

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 II, 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, and initiatives to further regulate the rail industry;

• the outcome of litigation and claims, 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 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 or equipment;

• competition from other modes of freight transportation, such as trucking and competition and consolidation within the transportation industry generally;

• the cost of compliance with laws and regulations that differ from expectations (including those associated with Positive Train Control implementation) and costs, penalties and operational 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;

41

CSX CORPORATION

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

AND RESULTS OF OPERATIONS

• the impact of natural gas prices on coal-fired electricity generation;

• 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 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;

• 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;

• changes in operating conditions and costs or commodity concentrations; 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.

42

CSX CORPORATION

PART I

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided under Part II, Item 7A (Quantitative and Qualitative Disclosures about Market Risk) of CSX's most recent annual report on Form 10-K.

Item 4. CONTROLS AND PROCEDURES

As of September 28, 2012, under the supervision and with the participation of CSX's Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the CEO and CFO concluded that, as of September 28, 2012, the Company's disclosure controls and procedures were effective at the reasonable assurance level in timely alerting them to material information required to be included in CSX's periodic SEC reports. There were no changes in the Company's internal controls over financial reporting during the third quarter of 2012 that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Fuel Surcharge Antitrust Litigation

For further details, please refer to Note 5. Commitments and Contingencies of this quarterly report on Form 10-Q.

Item 1A. RISK FACTORS

For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussed under Part II, Item 7 (Management's Discussion and Analysis of Financial Condition and Results of Operations) of CSX's most recent annual report on Form 10-K. See also Part I, Item 2 (Forward-Looking Statements) of this quarterly report on Form 10-Q. There have been no material changes from the risk factors previously disclosed in CSX's most recent annual report on Form 10-K.

43

CSX CORPORATION

PART II

Item 2. CSX Purchases of Equity Securities

CSX is required to disclose any purchases of its own common stock for the most recent quarter. CSX purchases its own shares for two primary reasons: to further its goals under its share repurchase program and to fund the Company’s contribution required to be paid in CSX common stock under a 401(k) plan which covers certain union employees.

In May 2011, CSX announced a new $2 billion share repurchase program. Under this program, the Company may purchase shares from time to time on the open market, through block trades or otherwise. CSX expects to complete these repurchases by the end of 2012 based on market and business conditions.

Share repurchase activity of $200 million for the third quarter 2012 was as follows:

	CSX Purchases of Equity Securities for the Quarter
Third Quarter (a)	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Beginning Balance					$	433,742,153
July	—	$	—	—	433,742,153
August	4,100,000	22.81		4,100,000	340,217,384
September	4,773,830	22.33		4,773,830	233,631,506
Ending Balance	8,873,830	$	22.55	8,873,830	$	233,631,506

(a) Third quarter 2012 consisted of the following fiscal periods: July (June 30, 2012 - July 27, 2012), August (July 28, 2012 - August 24, 2012), September (August 25, 2012 - September 28, 2012).

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

44

CSX CORPORATION

PART II

Item 6. Exhibits

Exhibits

12.1*    Computation of Ratio of Earnings to Fixed Charges

31*     Rule 13a-14(a) Certifications

32*     Section 1350 Certifications

101*    The following financial information from CSX Corporation's Quarterly Report on Form 10-Q for the quarter ended September 28, 2012 filed with the SEC on October 16, 2012, formatted in XBRL includes: (i) consolidated income statements for the fiscal periods ended September 28, 2012 and September 30, 2011, (ii) consolidated balance sheets at September 28, 2012 and December 30, 2011, (iii) consolidated cash flow statements for the fiscal periods ended September 28, 2012 and September 30, 2011, and (iv) the notes to consolidated financial statements.

* Filed herewith

45

CSX CORPORATION

PART II

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CSX CORPORATION

(Registrant)

By:/s/ Carolyn T. Sizemore

Carolyn T. Sizemore

Vice President and Controller

(Principal Accounting Officer)

Dated: October 16, 2012

46

EX-12.1

Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges

CSX Corporation

Ratio of Earnings to Fixed Charges

(Dollars in Millions)

	For the Nine Months Ended		For the Fiscal Years Ended
	Sep. 28, 2012		Dec. 30, 2011		Dec. 31, 2010		Dec. 25, 2009		Dec. 26, 2008		Dec. 28, 2007
EARNINGS:
Earnings before Income Taxes	$	2,246	$	2,888	$	2,546	$	1,746	$	2,332	$	1,935
Interest Expense	421		552		557		558		519		417
Amortization of debt discount	(2)		(3)		(3)		(4)		5		4
Interest Portion of Fixed Rent	15		17		17		23		28		32
Undistributed Earnings of  Unconsolidated Subsidiaries	(18)		(30)		(33)		(42)		(75)		(61)
Earnings, as Adjusted:	$	2,662	$	3,424	$	3,084	$	2,281	$	2,809	$	2,327
FIXED CHARGES:
Interest Expense	$	421	$	552	$	557	$	558	$	519	$	417
Capitalized Interest	14		15		10		8		9		5
Amortization of debt discount	(2)		(3)		(3)		(4)		5		4
Interest Portion of Fixed Rent	15		17		17		23		28		32
Fixed Charges	$	448	$	581	$	581	$	585	$	561	$	458
Ratio of Earnings to Fixed Charges	5.9x		5.9x		5.3x		3.9x		5.0x		5.1x

EX-31

Exhibit 31

CERTIFICATION OF CEO AND CFO PURSUANT TO EXCHANGE ACT RULE

13a - 14(a) OR RULE 15d-14(a)

I, Michael J. Ward, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CSX Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 15, 2012

/s/ MICHAEL J. WARD

Michael J. Ward

Chairman, President and Chief Executive Officer

I, Fredrik J. Eliasson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CSX Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 15, 2012

/s/ FREDRIK J. ELIASSON

Fredrik J. Eliasson

Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF CEO AND CFO REQUIRED BY RULE 13a-14(b) OR RULE 15d-14(b) AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE U.S. CODE

In connection with the Quarterly Report of CSX Corporation on Form 10-Q for the period ending September 28, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael J. Ward, Chief Executive Officer of the registrant, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date: October 15, 2012

/s/ MICHAEL J. WARD

Michael J. Ward

Chairman, President and Chief Executive Officer

In connection with the Quarterly Report of CSX Corporation on Form 10-Q for the period ending September 28, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Fredrik J. Eliasson, Chief Financial Officer of the registrant, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date: October 15, 2012

/s/ FREDRIK J. ELIASSON

Fredrik J. Eliasson

Executive Vice President and Chief Financial Officer

XML

Fair Value Measurements (Details) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Dec. 30, 2011
Fair Value [Member]
Fair Value, by Balance Sheet Grouping
Investments	$ 169	$ 643
Fair Value [Member] | Less than 1 year [Member]
Fair Value, by Balance Sheet Grouping
Investments	35	523
Fair Value [Member] | 1 - 2 years [Member]
Fair Value, by Balance Sheet Grouping
Investments	56	32
Fair Value [Member] | 2 - 5 years [Member]
Fair Value, by Balance Sheet Grouping
Investments	58	73
Fair Value [Member] | Greater than 5 years [Member]
Fair Value, by Balance Sheet Grouping
Investments	20	15
Fair Value [Member] | Certificates of Deposit [Member]
Fair Value, by Balance Sheet Grouping
Investments	0	477
Fair Value [Member] | Corporate Bonds [Member]
Fair Value, by Balance Sheet Grouping
Investments	123	98
Fair Value [Member] | U.S. Treasury Obligations [Member]
Fair Value, by Balance Sheet Grouping
Investments	31	53
Fair Value [Member] | Auction Rate Securities [Member]
Fair Value, by Balance Sheet Grouping
Investments	15	15
Fair Value [Member] | Level 2 [Member]
Fair Value, by Balance Sheet Grouping
Investments	154	628
Long-term Debt Including Current Maturities	10,870	10,708
Fair Value [Member] | Level 2 [Member] | Certificates of Deposit [Member]
Fair Value, by Balance Sheet Grouping
Investments	0	477
Fair Value [Member] | Level 2 [Member] | Corporate Bonds [Member]
Fair Value, by Balance Sheet Grouping
Investments	123	98
Fair Value [Member] | Level 2 [Member] | U.S. Treasury Obligations [Member]
Fair Value, by Balance Sheet Grouping
Investments	31	53
Fair Value [Member] | Level 3 [Member]
Fair Value, by Balance Sheet Grouping
Investments	15	15
Fair Value [Member] | Level 3 [Member] | Auction Rate Securities [Member]
Fair Value, by Balance Sheet Grouping
Investments	15	15
Carrying Value [Member]
Fair Value, by Balance Sheet Grouping
Amortized cost basis of investments	168	643
Carrying Value [Member] | Level 2 [Member]
Fair Value, by Balance Sheet Grouping
Long-term Debt Including Current Maturities	$ 9,063	$ 9,241

XML

Casualty, Environmental and Other Reserves (Details) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012 claims		Dec. 30, 2011		Jun. 01, 2010	May 31, 2010
All Contingencies Reserves [Line Items]
Casualty, environmental and other reserves, current	$ 169		$ 167
Casualty, environmental and other reserves, Long-term	319		352
Casualty, environmental and other reserves, Total	488		519
Casualty [Member]
All Contingencies Reserves [Line Items]
Casualty, environmental and other reserves, current	110		110
Casualty, environmental and other reserves, Long-term	234		262
Casualty, environmental and other reserves, Total	344		372
Self-insured retention amount					50	25
Number of Claims Expected to Exceed Self Insured Retention Amount	0
Personal Injury [Member]
All Contingencies Reserves [Line Items]
Casualty, environmental and other reserves, current	93		93
Casualty, environmental and other reserves, Long-term	151		168
Casualty, environmental and other reserves, Total	244		261
Occupational [Member]
All Contingencies Reserves [Line Items]
Casualty, environmental and other reserves, current	6		6
Casualty, environmental and other reserves, Long-term	31		37
Casualty, environmental and other reserves, Total	37		43
Asbestos [Member]
All Contingencies Reserves [Line Items]
Casualty, environmental and other reserves, current	11		11
Casualty, environmental and other reserves, Long-term	52		57
Casualty, environmental and other reserves, Total	63		68
Environmental [Member]
All Contingencies Reserves [Line Items]
Casualty, environmental and other reserves, current	39		31
Casualty, environmental and other reserves, Long-term	40		52
Casualty, environmental and other reserves, Total	79		83
Environmental impaired sites	256
Other [Member]
All Contingencies Reserves [Line Items]
Casualty, environmental and other reserves, current	20	[1]	26	[1]
Casualty, environmental and other reserves, Long-term	45	[1]	38	[1]
Casualty, environmental and other reserves, Total	$ 65	[1]	$ 64	[1]

[1] Separation liabilities and freight rate dispute reserves have been reclassified to other current and long-term liabilities.

XML

Other Income - Net (Tables)

9 Months Ended

Sep. 28, 2012

Other Income and Expenses [Abstract]

Schedule of other income - net

Other income - net consisted of the following:

	Third Quarters						Nine Months
(Dollars in millions)	2012			2011			2012			2011
Interest Income	$	1		$	1		$	4		$	3
Income from Real Estate	9			6			17			14
Miscellaneous Income (Expense)	(5		)	(1		)	(7		)	(6		)
Total Other Income - Net	$	5		$	6		$	14		$	11

XML

Summarized Consolidating Cash Flow Statements (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$ 2,304	$ 2,585
Investing Activities
Property Additions	(1,830)	(1,436)
Purchases of Short-term Investments	(78)	(14)
Proceeds from Sales of Short-term Investments	573	66
Other Investing Activities	10	(17)
Net Cash Used in Investing Activities	(1,325)	(1,401)
Financing Activities
Long-term Debt Issued	300	600
Long-term Debt Repaid	(481)	(595)
Dividends Paid	(415)	(354)
Stock Options Exercised	11	27
Shares Repurchased	(500)	(1,564)
Other Financing Activities	16	(10)
Net Cash Used in Financing Activities	(1,069)	(1,896)
Net Decrease in Cash and Cash Equivalents	(90)	(712)
Cash and Cash Equivalents at Beginning of Period	783	1,292
Cash and Cash Equivalents at End of Period	693	580
CSX Corporation [Member]
Operating Activities
Net Cash Provided by (Used in) Operating Activities	429	1,054
Investing Activities
Property Additions	0	0
Purchases of Short-term Investments	(50)	0
Proceeds from Sales of Short-term Investments	525	0
Other Investing Activities	(6)	(19)
Net Cash Used in Investing Activities	469	(19)
Financing Activities
Long-term Debt Issued	300	600
Long-term Debt Repaid	(400)	(507)
Dividends Paid	(415)	(354)
Stock Options Exercised	11	27
Shares Repurchased	(500)	(1,564)
Other Financing Activities	15	30
Net Cash Used in Financing Activities	(989)	(1,768)
Net Decrease in Cash and Cash Equivalents	(91)	(733)
Cash and Cash Equivalents at Beginning of Period	549	1,100
Cash and Cash Equivalents at End of Period	458	367
CSX Transportation [Member]
Operating Activities
Net Cash Provided by (Used in) Operating Activities	2,202	2,014
Investing Activities
Property Additions	(1,669)	(1,285)
Purchases of Short-term Investments	0	0
Proceeds from Sales of Short-term Investments	0	0
Other Investing Activities	78	(90)
Net Cash Used in Investing Activities	(1,591)	(1,375)
Financing Activities
Long-term Debt Issued	0	0
Long-term Debt Repaid	(79)	(86)
Dividends Paid	(536)	(510)
Stock Options Exercised	0	0
Shares Repurchased	0	0
Other Financing Activities	3	(21)
Net Cash Used in Financing Activities	(612)	(617)
Net Decrease in Cash and Cash Equivalents	(1)	22
Cash and Cash Equivalents at Beginning of Period	154	118
Cash and Cash Equivalents at End of Period	153	140
Eliminations and Other [Member]
Operating Activities
Net Cash Provided by (Used in) Operating Activities	(327)	(483)
Investing Activities
Property Additions	(161)	(151)
Purchases of Short-term Investments	(28)	(14)
Proceeds from Sales of Short-term Investments	48	66
Other Investing Activities	(62)	92
Net Cash Used in Investing Activities	(203)	(7)
Financing Activities
Long-term Debt Issued	0	0
Long-term Debt Repaid	(2)	(2)
Dividends Paid	536	510
Stock Options Exercised	0	0
Shares Repurchased	0	0
Other Financing Activities	(2)	(19)
Net Cash Used in Financing Activities	532	489
Net Decrease in Cash and Cash Equivalents	2	(1)
Cash and Cash Equivalents at Beginning of Period	80	74
Cash and Cash Equivalents at End of Period	$ 82	$ 73

XML

Debt and Credit Agreements - Line of Credit Facility (Details) (USD $)	Sep. 28, 2012
Revolving credit facility
Line of Credit Facility
Line of credit facility, current borrowing capacity	$ 1,000,000,000
Line of credit facility, amount outstanding	0
Receivable securitization facility
Line of Credit Facility
Line of credit facility, current borrowing capacity	250,000,000
Line of credit facility, amount outstanding	$ 0

XML

Share-Based Compensation

9 Months Ended

Sep. 28, 2012

Share-based Compensation [Abstract]

Share-Based Compensation

Share-Based Compensation

Under CSX's share-based compensation plans, awards primarily consist of performance grants, restricted stock awards, restricted stock units, stock options and stock grants for directors. CSX has not granted stock options since 2003. Awards granted under the various programs are determined and approved by the Compensation Committee of the Board of Directors or, in certain circumstances, by the Chief Executive Officer for awards to management employees other than senior executives. The Board of Directors approves awards granted to the Company's non-management directors upon recommendation of the Governance Committee.

In May 2012, approximately 1.3 million performance units were granted to key members of management under a new long-term incentive plan ("LTIP") adopted under the CSX Stock and Incentive Award Plan.  This LTIP provides for a three-year cycle ending in fiscal year 2014.  Similar to the two existing plans, the financial target upon which payments are based is operating ratio, which is defined as operating expenses divided by operating revenue and is calculated excluding certain non-recurring items.  Grants were made in performance units, with each unit being equivalent to one share of CSX common stock, and payouts will be made in CSX common stock.  The payout range for participants will be between 0% and 200% of the original grant based upon CSX's attainment of pre-established operating ratio targets for fiscal year 2014.  Payouts to certain senior executive officers are subject to a reduction of up to 30% at the discretion of the Compensation Committee of the Board of Directors based upon Company performance against certain CSX strategic initiatives.

NOTE 3. Share-Based Compensation, continued

Additionally, as part of the 2012 long-term incentive compensation program, the Company granted approximately 433 thousand time-based restricted stock units to key members of management.  The restricted stock units vest three years after the date of grant and participants receive cash dividend equivalents on the unvested shares during the restriction period.  These awards are time-based and support retention objectives.

     For information related to the Company's other outstanding long-term incentive compensation, see CSX's most recent annual report on Form 10-K.

Total pre-tax expense associated with all share-based compensation and the related income tax benefit are as follows:

	Third Quarters				Nine Months
(Dollars in millions)	2012		2011		2012		2011
Share-Based Compensation Expense	$	6	$	7	$	10	$	30
Income Tax Benefit	3		3		4		11

The following table provides information about stock options exercised and expired.

	Third Quarters		Nine Months
(In thousands)	2012	2011	2012	2011
Number of Stock Options Exercised	273	589	1,891	4,543
Number of Stock Options Expired	—	6	15	27

As of December 2009, all outstanding options were vested, and therefore, there will be no future expense related to these options.  As of the end of third quarter 2012, CSX had approximately 2.2 million stock options outstanding.

XML

Nature of Operations and Significant Accounting Policies (Amortization of Gain from Property Disposition) (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended	9 Months Ended
	Nov. 30, 2011 mi	Sep. 28, 2012	Sep. 28, 2012	Mar. 30, 2012	Dec. 30, 2011
Significant Acquisitions and Disposals [Line Items]
Total number of rail route miles		21,000	21,000
SunRail Transaction - Sale of Corridor [Member]
Significant Acquisitions and Disposals [Line Items]
Total number of rail route miles	61
Proceeds from sale of operating rail corridor	$ 173
Gain on sale of real estate		30	69
Deferred gain on sale of real estate	160			77	132
SunRail Transaction - Sale of Corridor [Member] | Current portion, included in Other Current Liabilities [Member]
Significant Acquisitions and Disposals [Line Items]
Deferred gain on sale of real estate				68	95
SunRail Transaction - Sale of Corridor [Member] | Long term portion, included in Other Long-term Liabilities [Member]
Significant Acquisitions and Disposals [Line Items]
Deferred gain on sale of real estate				9	37
SunRail Transaction - Sale of Corridor [Member] | Maximum [Member]
Significant Acquisitions and Disposals [Line Items]
Governmental grants received from sale of operating rail corridor	259
Total consideration given from sale of operating rail corridor	432
Capital Additions [Member] | SunRail Transaction - Sale of Corridor [Member]
Significant Acquisitions and Disposals [Line Items]
Obligation to invest in routine captial expenditures and maintenance			$ 500
Obligation to invest in routine captial expenditures and maintenance, term (in years)			8 years

XML

Nature of Operations and Significant Accounting Policies (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 28, 2012 states mi	Sep. 30, 2011	Sep. 28, 2012 states mi	Sep. 30, 2011	Dec. 30, 2011
Background
Total number of rail route miles	21,000		21,000
Rail network states number	23		23
Fiscal Year
Number of weeks in fiscal year			P52W	P52W
Number of weeks in fiscal quarter	P13W	P13W	P39W	P39W
Comprehensive Earnings
Total comprehensive earnings, net of tax	$ 471,000,000	$ 473,000,000	$ 1,458,000,000	$ 1,398,000,000
Accumulated other comprehensive loss	(833,000,000)		(833,000,000)		(875,000,000)
Allowance for Doubtful Accounts
Allowance for doubtful accounts	36,000,000		36,000,000		43,000,000
Other Items - Share Repurchases
Stock repurchased during period	200,000,000
Stock repurchases, remaining authority			234,000,000
Stock repurchases, share repurchase program			$ 2,000,000,000

XML

Earnings Per Share (Details) (USD $)	3 Months Ended				9 Months Ended
	Sep. 28, 2012		Sep. 30, 2011		Sep. 28, 2012		Sep. 30, 2011
Numerator:
Net Earnings	$ 455,000,000		$ 464,000,000		$ 1,416,000,000		$ 1,365,000,000
Denominator:
Average Common Shares Outstanding (in shares)	1,038,000,000		1,071,000,000		1,042,000,000		1,094,000,000
Other Potentially Dilutive Common Shares (in shares)	2,000,000	[1]	6,000,000	[1]	2,000,000	[1]	6,000,000	[1]
Average Common Shares Outstanding, Assuming Dilution (in shares)	1,040,000,000		1,077,000,000		1,044,000,000		1,100,000,000
Net Earnings Per Share, Basic (in dollars per share):	$ 0.44		$ 0.43		$ 1.36		$ 1.25
Net Earnings Per Share, Assuming Dilution (in dollars per share):	$ 0.44		$ 0.43		$ 1.36		$ 1.24
Number of stock options excluded from the diluted earnings per share					0
Face value of convertible debentures					1,000,000
Convertible Debt [Member]
Denominator:
Face value of convertible debentures	62,000		700,000
Face value of convertible debentures still outstanding at the end of the period	$ 2,000,000				$ 2,000,000
Common Stock [Member]
Denominator:
Number of shares of common stock converted from convetible debentures	7,000		73,000
Number of shares of common stock converted from outstanding convetible debentures					245,000

[1] Other potentially dilutive common shares include convertible debt, stock options, common stock equivalents and performance units granted under a long-term management incentive compensation plan.

XML

Share-Based Compensation Share-based Compensation, LTIP (Details) In Thousands, unless otherwise specified	9 Months Ended	1 Months Ended	9 Months Ended
	Sep. 28, 2012 Long-term Incentive Plans [Member]	May 31, 2012 Long Term Incentive Plan Year Two [Member] Performance Units [Member]	Sep. 28, 2012 Long Term Incentive Plan Year Two [Member] Restricted Stock Units (RSUs) [Member]	Sep. 28, 2012 Long Term Incentive Plan Year Two [Member] Restricted Stock Units (RSUs) [Member] Minimum [Member]	Sep. 28, 2012 Long Term Incentive Plan Year Two [Member] Restricted Stock Units (RSUs) [Member] Maximum [Member]
Share-based Compensation
Equity instruments, other than options, granted in period (in units)		1,300	433
Payout range				0.00%	200.00%
Percentage of payout subject to reduction	30.00%
Restricted stock units, vesting period			3 years

XML

Earnings Per Share

9 Months Ended

Sep. 28, 2012

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:

	Third Quarters				Nine Months
	2012		2011		2012		2011
Numerator (Dollars in millions):
Net Earnings	$	455	$	464	$	1,416	$	1,365
Denominator (Units in millions):
Average Common Shares Outstanding	1,038		1,071		1,042		1,094
Other Potentially Dilutive Common Shares(a)	2		6		2		6
Average Common Shares Outstanding, Assuming Dilution	1,040		1,077		1,044		1,100
Net Earnings Per Share, Basic	$	0.44	$	0.43	$	1.36	$	1.25
Net Earnings Per Share, Assuming Dilution	$	0.44	$	0.43	$	1.36	$	1.24

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

Basic earnings per share is based on the weighted-average number of common shares outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of common shares 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.

NOTE 2.    Earnings Per Share, continued

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 represent the number of shares that would be issued if all of the above potentially dilutive instruments were converted into CSX common stock.

When calculating diluted earnings per share, 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.

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 third quarters 2012 and 2011, approximately $62 thousand and $700 thousand of face value convertible debentures were converted into 7 thousand and 73 thousand shares of CSX common stock, respectively. As of the end of third quarter 2012, approximately $2 million of convertible debentures at face value remained outstanding, which are convertible into approximately 245 thousand shares of CSX common stock.

XML

Share-Based Compensation (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011	Dec. 25, 2009
Share-based Compensation
Share-Based Compensation Expense	6,000,000	7,000,000	10,000,000	30,000,000
Income Tax Benefit	3,000,000	3,000,000	4,000,000	11,000,000
Stock Options [Member]
Share-based Compensation
Number of Stock Options Exercised	273,000	589,000	1,891,000	4,543,000
Number of Stock Options Expired	0	6,000	15,000	27,000
Future expense related to vested options					$ 0
Number of Stock Options Outstanding	2,200,000		2,200,000

XML

Summarized Consolidating Income Statements (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Consolidated Income Statement
Revenue	$ 2,894	$ 2,963	$ 8,872	$ 8,792
Expense	2,040	2,085	6,219	6,215
Operating Income	854	878	2,653	2,577
Equity in Earnings of Subsidiaries	0	0	0	0
Interest (Expense) / Benefit	(138)	(138)	(421)	(412)
Other Income - Net	5	6	14	11
Earnings Before Income Taxes	721	746	2,246	2,176
Income Tax (Expense) / Benefit	(266)	(282)	(830)	(811)
Net Earnings	455	464	1,416	1,365
Total Comprehensive Earnings	471	473	1,458	1,398
CSX Corporation [Member]
Consolidated Income Statement
Revenue	0	0	0	0
Expense	(90)	(77)	(266)	(210)
Operating Income	90	77	266	210
Equity in Earnings of Subsidiaries	478	500	1,512	1,472
Interest (Expense) / Benefit	(126)	(123)	(381)	(370)
Other Income - Net	(1)	0	(3)	3
Earnings Before Income Taxes	441	454	1,394	1,315
Income Tax (Expense) / Benefit	14	10	22	50
Net Earnings	455	464	1,416	1,365
Total Comprehensive Earnings	471	473	1,458	1,398
CSX Transportation [Member]
Consolidated Income Statement
Revenue	2,878	2,946	8,823	8,743
Expense	2,166	2,220	6,587	6,584
Operating Income	712	726	2,236	2,159
Equity in Earnings of Subsidiaries	0	(1)	(1)	2
Interest (Expense) / Benefit	(17)	(19)	(53)	(64)
Other Income - Net	2	6	6	8
Earnings Before Income Taxes	697	712	2,188	2,105
Income Tax (Expense) / Benefit	(262)	(266)	(795)	(782)
Net Earnings	435	446	1,393	1,323
Total Comprehensive Earnings	437	448	1,393	1,325
Eliminations and Other [Member]
Consolidated Income Statement
Revenue	16	17	49	49
Expense	(36)	(58)	(102)	(159)
Operating Income	52	75	151	208
Equity in Earnings of Subsidiaries	(478)	(499)	(1,511)	(1,474)
Interest (Expense) / Benefit	5	4	13	22
Other Income - Net	4	0	11	0
Earnings Before Income Taxes	(417)	(420)	(1,336)	(1,244)
Income Tax (Expense) / Benefit	(18)	(26)	(57)	(79)
Net Earnings	(435)	(446)	(1,393)	(1,323)
Total Comprehensive Earnings	$ (437)	$ (448)	$ (1,393)	$ (1,325)

XML

CONSOLIDATED INCOME STATEMENTS (Unaudited) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Income Statement
Revenue	$ 2,894	$ 2,963	$ 8,872	$ 8,792
Expense
Labor and Fringe	754	765	2,268	2,294
Materials, Supplies and Other	525	562	1,617	1,649
Fuel	397	412	1,251	1,245
Depreciation	268	251	788	740
Equipment and Other Rents	96	95	295	287
Total Expense	2,040	2,085	6,219	6,215
Operating Income	854	878	2,653	2,577
Interest Expense	(138)	(138)	(421)	(412)
Other Income - Net (Note 8)	5	6	14	11
Earnings Before Income Taxes	721	746	2,246	2,176
Income Tax Expense	(266)	(282)	(830)	(811)
Net Earnings	$ 455	$ 464	$ 1,416	$ 1,365
Per Common Share (Note 2)
Net Earnings Per Share, Basic (in dollars per share)	$ 0.44	$ 0.43	$ 1.36	$ 1.25
Net Earnings Per Share, Assuming Dilution (in dollars per share)	$ 0.44	$ 0.43	$ 1.36	$ 1.24
Average Shares Outstanding (in shares)	1,038	1,071	1,042	1,094
Average Shares Outstanding, Assuming Dilution (in shares)	1,040	1,077	1,044	1,100
Cash Dividends Paid Per Common Share (in dollars per share)	$ 0.14	$ 0.12	$ 0.40	$ 0.33

XML

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011
OPERATING ACTIVITIES
Net Earnings	$ 1,416	$ 1,365
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation	788	740
Deferred Income Taxes	456	486
Contributions to Qualified Pension Plans	(275)	0
Other Operating Activities	(111)	(6)
Changes in Operating Assets and Liabilities:
Accounts Receivable	0	(149)
Other Current Assets	(57)	(37)
Accounts Payable	60	117
Income and Other Taxes Payable	148	83
Other Current Liabilities	(121)	(14)
Net Cash Provided by Operating Activities	2,304	2,585
INVESTING ACTIVITIES
Property Additions	(1,830)	(1,436)
Purchases of Short-term Investments	(78)	(14)
Proceeds from Sales of Short-term Investments	573	66
Other Investing Activities	10	(17)
Net Cash Used in Investing Activities	(1,325)	(1,401)
FINANCING ACTIVITIES
Long-term Debt Issued (Note 7)	300	600
Long-term Debt Repaid (Note 7)	(481)	(595)
Dividends Paid	(415)	(354)
Stock Options Exercised (Note 3)	11	27
Shares Repurchased	(500)	(1,564)
Other Financing Activities	16	(10)
Net Cash Used in Financing Activities	(1,069)	(1,896)
Net Decrease in Cash and Cash Equivalents	(90)	(712)
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period	783	1,292
Cash and Cash Equivalents at End of Period	$ 693	$ 580

XML

Employee Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			9 Months Ended		3 Months Ended		9 Months Ended
	Mar. 30, 2012	Sep. 28, 2012 Pension Benefits [Member]	Sep. 30, 2011 Pension Benefits [Member]	Sep. 28, 2012 Pension Benefits [Member]	Sep. 30, 2011 Pension Benefits [Member]	Sep. 28, 2012 Other Post-retirement Benefits [Member]	Sep. 30, 2011 Other Post-retirement Benefits [Member]	Sep. 28, 2012 Other Post-retirement Benefits [Member]	Sep. 30, 2011 Other Post-retirement Benefits [Member]
Components of expense/ (income) related to net benefit expense:
Service Cost		$ 11	$ 10	$ 33	$ 30	$ 1	$ 1	$ 3	$ 3
Interest Cost		31	30	92	90	4	4	12	10
Expected Return on Plan Assets		(43)	(39)	(124)	(118)
Amortization of Net Loss		21	18	62	54	2	2	7	5
Amortization of Prior Service Costs						0	0	(1)	(1)
Net Periodic Benefit Cost		20	19	63	56	7	7	21	17
Employer contribution to qualified pension plans	275
Employer contribution to qualified pension plans, required minimum amount	$ 25

XML

Casualty, Environmental and Other Reserves (Tables)

9 Months Ended

Sep. 28, 2012

Casualty, Environmental and Other Reserves [Abstract]

Casualty, environmental and other reserves

Casualty, environmental and other reserves are considered critical accounting estimates due to the need for significant management judgments. They are provided for in the consolidated balance sheets as follows:

	September 28, 2012						December 30, 2011
(Dollars in millions)	Current		Long-term		Total		Current		Long-term		Total
Casualty:
Personal Injury	$	93	$	151	$	244	$	93	$	168	$	261
Occupational	6		31		37		6		37		43
Asbestos	11		52		63		11		57		68
Total Casualty	110		234		344		110		262		372
Environmental	39		40		79		31		52		83
Other(a)	20		45		65		26		38		64
Total	$	169	$	319	$	488	$	167	$	352	$	519

(a) Separation liabilities and freight rate dispute reserves have been reclassified to other current and long-term liabilities.

XML

Debt and Credit Agreements (Details) (USD $)	3 Months Ended	9 Months Ended
	Mar. 30, 2012	Sep. 28, 2012
Movement, Debt Instruments [Roll Forward]
Current Portion	$ 507,000,000	$ 507,000,000
Long-term Portion	8,734,000,000	8,734,000,000
Long-term Debt	9,241,000,000	9,241,000,000
Long-term debt repaid		(481,000,000)
Reclassifications		0
Debt conversions to CSX stock		(1,000,000)
Discount and premium activity		(4,000,000)
Current Portion		806,000,000
Long-term Debt Portion		8,257,000,000
Long-term Debt		9,063,000,000
Employer contribution to qualified pension plans	275,000,000
Notes Payable [Member]
Movement, Debt Instruments [Roll Forward]
Long-term debt issued / Capital lease additions		300,000,000
Notes Payable [Member] | 4.4% Notes Due 2043 [Member]
Movement, Debt Instruments [Roll Forward]
Notes issued, face amount	300,000,000
Notes issued, interest rate	4.40%
Capital Lease Obligations [Member]
Movement, Debt Instruments [Roll Forward]
Long-term debt issued / Capital lease additions		8,000,000
Current Liabilities [Member]
Movement, Debt Instruments [Roll Forward]
Current Portion	507,000,000	507,000,000
Long-term debt repaid		(481,000,000)
Reclassifications		781,000,000
Debt conversions to CSX stock		(1,000,000)
Discount and premium activity		0
Current Portion		806,000,000
Current Liabilities [Member] | Notes Payable [Member]
Movement, Debt Instruments [Roll Forward]
Long-term debt issued / Capital lease additions		0
Current Liabilities [Member] | Capital Lease Obligations [Member]
Movement, Debt Instruments [Roll Forward]
Long-term debt issued / Capital lease additions		0
Long Term Liabilities [Member]
Movement, Debt Instruments [Roll Forward]
Long-term Portion	8,734,000,000	8,734,000,000
Long-term debt repaid		0
Reclassifications		(781,000,000)
Debt conversions to CSX stock		0
Discount and premium activity		(4,000,000)
Long-term Debt Portion		8,257,000,000
Long Term Liabilities [Member] | Notes Payable [Member]
Movement, Debt Instruments [Roll Forward]
Long-term debt issued / Capital lease additions		300,000,000
Long Term Liabilities [Member] | Capital Lease Obligations [Member]
Movement, Debt Instruments [Roll Forward]
Long-term debt issued / Capital lease additions		$ 8,000,000

XML

Debt and Credit Agreements (Tables)

9 Months Ended

Sep. 28, 2012

Debt Disclosure [Abstract]

Activity related to long-term debt

Total activity related to long-term debt as of the end of third quarter 2012 was as follows:

(Dollars in millions)	Current Portion			Long-term Portion			Total
Long-term debt as of December 2011	$	507		$	8,734		$	9,241
2012 activity:
Long-term debt issued	—			300			300
Long-term debt repaid	(481		)	—			(481		)
Reclassifications	781			(781		)	—
Capital lease additions	—			8			8
Debt conversions to CSX stock	(1		)	—			(1		)
Discount and premium activity	—			(4		)	(4		)
Long-term debt as of the end of third quarter 2012	$	806		$	8,257		$	9,063

XML

Nature of Operations and Significant Accounting Policies

9 Months Ended

Sep. 28, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Significant Accounting Policies

Nature of Operations and Significant Accounting Policies

Background

CSX Corporation (“CSX”), and together with its subsidiaries (the “Company”), based in Jacksonville, Florida, is one of the nation's leading transportation companies. The Company provides rail-based transportation services including traditional rail service and the transport of intermodal containers and trailers.

CSX's principal operating subsidiary, CSX Transportation, Inc. (“CSXT”), provides an important link to the transportation supply chain through its approximately 21,000 route mile rail network, which serves major population centers in 23 states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec. The Company's intermodal business, also part of CSXT, links customers to railroads via trucks and terminals.

Other entities

In addition to CSXT, the Company’s subsidiaries include CSX Intermodal Terminals, Inc. (“CSX Intermodal Terminals”), Total Distribution Services, Inc. (“TDSI”), Transflo Terminal Services, Inc. (“Transflo”), CSX Technology, Inc. (“CSX Technology”) and other subsidiaries. CSX Intermodal Terminals owns and operates a system of intermodal terminals, predominantly in the eastern United States and also performs drayage services (the pickup and delivery of intermodal shipments) for certain CSXT customers and trucking dispatch operations. TDSI serves the automotive industry with distribution centers and storage locations. Transflo connects non-rail served customers to the many benefits of rail by transferring products from rail to trucks. Today, the biggest Transflo markets are chemicals and agriculture, such as minerals and ethanol. CSX Technology and other subsidiaries provide support services for the Company.

CSX’s other holdings include CSX Real Property, Inc., a subsidiary responsible for the Company’s real estate sales, leasing, acquisition and management and development activities. These activities are classified in other income - net because they are not considered to be operating activities by the Company. Results of these activities fluctuate with the timing of non-operating real estate transactions.

Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements contain all normal, recurring adjustments necessary to fairly present the following:

• Consolidated income statements for the quarters and nine months endedSeptember 28, 2012 and September 30, 2011;

• Consolidated comprehensive income statements for the quarters and nine months endedSeptember 28, 2012 and September 30, 2011;

• Consolidated balance sheets at September 28, 2012 and December 30, 2011; and

• Consolidated cash flow statements for the nine months endedSeptember 28, 2012 and September 30, 2011.

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted from these interim financial statements. CSX suggests that these financial statements be read in conjunction with the audited financial statements and the notes included in CSX's most recent annual report on Form 10-K and any subsequently filed current reports on Form 8-K.

Fiscal Year

CSX follows a 52/53 week fiscal reporting calendar with the last day of each reporting period ending on a Friday:

• The third fiscal quarters of 2012 and 2011 consisted of 13 weeks ending on September 28, 2012 and September 30, 2011, respectively.

• The nine month periods of 2012 and 2011 consisted of 39 weeks ending on September 28, 2012 and September 30, 2011, respectively.

• Fiscal year 2012 and 2011 will each consist of 52 weeks ending on December 28, 2012 and December 30, 2011, respectively.

Except as otherwise specified, references to “third quarter(s)” or “nine months” indicate CSX's fiscal periods ending September 28, 2012 and September 30, 2011, and references to "year-end" indicate the fiscal year ended December 30, 2011.

Comprehensive Earnings

CSX reports comprehensive earnings or loss in accordance with the Comprehensive Income Topic in the Accounting Standards Codification (“ASC”). Total comprehensive earnings are defined as all changes in shareholders' equity during a period, other than those resulting from investments by and distributions to shareholders (e.g., issuance of equity securities and dividends).  Generally, for CSX, total comprehensive earnings equals net earnings plus or minus adjustments for pension and other post-retirement liabilities. Total comprehensive earnings represent the activity for a period net of tax and were $471 million and $473 million for third quarters 2012 and 2011, respectively, and $1.5 billion and $1.4 billion for nine months 2012 and 2011, respectively.

While total comprehensive earnings is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income or loss, net of tax, as of the balance sheet date.  For CSX, AOCI is primarily the cumulative balance related to pension and other post-retirement adjustments and reduced overall equity by $833 million and $875 million as of the end of third quarter 2012 and December 2011, respectively.

See the New Accounting Pronouncements section below for information related to the change in presentation requirements.

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts on uncollectible amounts related to freight receivables, government reimbursement receivables, claims for damages and other various receivables. The allowance is based upon the credit worthiness of customers, historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account. Allowance for doubtful accounts of $36 million and $43 million is included in the consolidated balance sheets as of the end of third quarter 2012 and December 2011, respectively.

New Accounting Pronouncements

In 2011, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update to the Comprehensive Income Topic in the ASC aimed at increasing the prominence of items reported in other comprehensive income in the financial statements. This requirement became effective for CSX beginning with the first quarter 2012 10-Q filing. This update required companies to present comprehensive income in a single statement below net income or in a separate statement of comprehensive income immediately following the income statement. This update required retrospective application for all periods presented.

Other Items

Share repurchases

In third quarter 2012, CSX repurchased $200 million in shares. In accordance with the Equity Topic in the ASC, the excess of repurchase price over par value is recorded in retained earnings. Generally, retained earnings is only impacted by net earnings and dividends. As of September 2012, the Company had remaining authority of $234 million under the $2 billion share repurchase program which is expected to be used to complete purchases by the end of 2012, based on market and business conditions.

Amortization of Gain from Property Disposition

In November 2011, the Company sold approximately 61 miles of operating rail corridor to the Florida Department of Transportation for a new commuter rail operation known as SunRail. As part of the transaction, the Company received $173 million in proceeds and will receive up to $259 million in government grants for a total of $432 million. This agreement also obligated the Company to invest a total of $500 million in routine capital expenditures and maintenance related to transportation capacity, facilities or equipment in Florida, including diversion and relocation costs related to this transaction within the eight year period following the transaction.

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

In accordance with the Real Estate Sales Topic in the ASC, the sale of real estate resulted in a deferred gain of $160 million. The deferred gain is recognized into income ratably as the investment obligation is fulfilled. The Company recognized a gain of $30 million and $69 million in the third quarter and nine months period ended September 2012, respectively. This gain is included in materials, supplies and other in the consolidated income statements. The deferred gain balance included in the consolidated balance sheets is presented in the table below.

	Deferred gain as of
(Dollars in Millions)	September 2012		December 2011
Current portion, included in Other Current Liabilities	$	68	$	95
Long term portion, included in Other Long-Term Liabilities	9		37
Total	$	77	$	132

XML

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Total Comprehensive Earnings (Note 1)	$ 471	$ 473	$ 1,458	$ 1,398

XML

Summarized Consolidating Financial Data

9 Months Ended

Sep. 28, 2012

Summarized Consolidating Financial Data [Abstract]

Summarized Consolidating Financial Data

Summarized Consolidating Financial Data

In 2007, CSXT sold secured equipment notes maturing in 2023, and in 2008, CSXT sold additional secured equipment notes maturing in 2014 in registered public offerings. CSX has fully and unconditionally guaranteed the notes. In connection with the notes, the Company is providing the following condensed consolidating financial information in accordance with SEC disclosure requirements. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation and the allocation of certain expenses of CSX incurred for the benefit of its subsidiaries.

Condensed consolidating financial information for the obligor, CSXT, and parent guarantor, CSX, is as follows:

Consolidating Income Statements
(Dollars in millions)
Third Quarter 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,878		$	16		$	2,894
Expense	(90		)	2,166			(36		)	2,040
Operating Income	90			712			52			854
Equity in Earnings of Subsidiaries	478			—			(478		)	—
Interest (Expense) / Benefit	(126		)	(17		)	5			(138		)
Other Income / (Expense) - Net	(1		)	2			4			5
Earnings Before Income Taxes	441			697			(417		)	721
Income Tax (Expense) / Benefit	14			(262		)	(18		)	(266		)
Net Earnings	$	455		$	435		$	(435	)	$	455
Total Comprehensive Earnings	$	471		$	437		$	(437	)	$	471
Third Quarter 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,946		$	17		$	2,963
Expense	(77		)	2,220			(58		)	2,085
Operating Income	77			726			75			878
Equity in Earnings of Subsidiaries	500			(1		)	(499		)	—
Interest (Expense) / Benefit	(123		)	(19		)	4			(138		)
Other Income / (Expense) - Net	—			6			—			6
Earnings Before Income Taxes	454			712			(420		)	746
Income Tax (Expense) / Benefit	10			(266		)	(26		)	(282		)
Net Earnings	$	464		$	446		$	(446	)	$	464
Total Comprehensive Earnings	$	473		$	448		$	(448	)	$	473

Consolidating Income Statements
(Dollars in millions)
Nine Months Ended September 28, 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	8,823		$	49		$	8,872
Expense	(266		)	6,587			(102		)	6,219
Operating Income	266			2,236			151			2,653
Equity in Earnings of Subsidiaries	1,512			(1		)	(1,511		)	—
Interest (Expense) / Benefit	(381		)	(53		)	13			(421		)
Other Income / (Expense) - Net	(3		)	6			11			14
Earnings Before Income Taxes	1,394			2,188			(1,336		)	2,246
Income Tax (Expense) / Benefit	22			(795		)	(57		)	(830		)
Net Earnings	$	1,416		$	1,393		$	(1,393	)	$	1,416
Total Comprehensive Earnings	$	1,458		$	1,393		$	(1,393	)	$	1,458
Nine Months Ended September 30, 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	8,743		$	49		$	8,792
Expense	(210		)	6,584			(159		)	6,215
Operating Income	210			2,159			208			2,577
Equity in Earnings of Subsidiaries	1,472			2			(1,474		)	—
Interest (Expense) / Benefit	(370		)	(64		)	22			(412		)
Other Income / (Expense) - Net	3			8			—			11
Earnings Before Income Taxes	1,315			2,105			(1,244		)	2,176
Income Tax (Expense) / Benefit	50			(782		)	(79		)	(811		)
Net Earnings	$	1,365		$	1,323		$	(1,323	)	$	1,365
Total Comprehensive Earnings	$	1,398		$	1,325		$	(1,325	)	$	1,398

Consolidating Balance Sheet
(Dollars in millions)
As of Third Quarter 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	458		$	153		$	82		$	693
Short-term Investments	—			—			35			35
Accounts Receivable - Net	1			559			603			1,163
Receivable from Affiliates	992			1,636			(2,628		)	—
Materials and Supplies	—			264			—			264
Deferred Income Taxes	65			74			(5		)	134
Other Current Assets	14			78			12			104
Total Current Assets	1,530			2,764			(1,901		)	2,393
Properties	8			33,146			1,866			35,020
Accumulated Depreciation	(8		)	(8,106		)	(974		)	(9,088		)
Properties - Net	—			25,040			892			25,932
Investments in Conrail	—			—			693			693
Affiliates and Other Companies	(39		)	584			(43		)	502
Investments in Consolidated Subsidiaries	18,515			—			(18,515		)	—
Other Long-term Assets	172			300			(62		)	410
Total Assets	$	20,178		$	28,688		$	(18,936	)	$	29,930
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	150		$	1,004		$	43		$	1,197
Labor and Fringe Benefits Payable	36			345			35			416
Payable to Affiliates	2,488			364			(2,852		)	—
Casualty, Environmental and Other Reserves	—			153			16			169
Current Maturities of Long-term Debt	700			105			1			806
Income and Other Taxes Payable	(40		)	308			(7		)	261
Other Current Liabilities	(1		)	172			1			172
Total Current Liabilities	3,333			2,451			(2,763		)	3,021
Casualty, Environmental and Other Reserves	—			247			72			319
Long-term Debt	7,208			1,049			—			8,257
Deferred Income Taxes	(149		)	8,067			100			8,018
Other Long-term Liabilities	770			605			(91		)	1,284
Total Liabilities	$	11,162		$	12,419		$	(2,682	)	$	20,899
Shareholders' Equity
Common Stock, $1 Par Value	$	1,031		$	181		$	(181	)	$	1,031
Other Capital	20			5,669			(5,669		)	20
Retained Earnings	8,798			10,475			(10,475		)	8,798
Accumulated Other Comprehensive Loss	(833		)	(79		)	79			(833		)
Noncontrolling Interest	—			23			(8		)	15
Total Shareholders' Equity	$	9,016		$	16,269		$	(16,254	)	$	9,031
Total Liabilities and Shareholders' Equity	$	20,178		$	28,688		$	(18,936	)	$	29,930

Consolidating Balance Sheet (Dollars in millions)
As of December 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	549		$	154		$	80		$	783
Short-term Investments	475			—			48			523
Accounts Receivable - Net	4			468			657			1,129
Receivable from Affiliates	1,025			1,772			(2,797		)	—
Materials and Supplies	—			240			—			240
Deferred Income Taxes	10			173			(1		)	182
Other Current Assets	17			64			(3		)	78
Total Current Assets	2,080			2,871			(2,016		)	2,935
Properties	8			31,958			1,738			33,704
Accumulated Depreciation	(8		)	(7,795		)	(927		)	(8,730		)
Properties - Net	—			24,163			811			24,974
Investments in Conrail	—			—			678			678
Affiliates and Other Companies	(39		)	574			(42		)	493
Investment in Consolidated Subsidiaries	17,519			—			(17,519		)	—
Other Long-term Assets	176			109			108			393
Total Assets	$	19,736		$	27,717		$	(17,980	)	$	29,473
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	114		$	978		$	55		$	1,147
Labor and Fringe Benefits Payable	41			458			42			541
Payable to Affiliates	2,566			374			(2,940		)	—
Casualty, Environmental and Other Reserves	—			151			16			167
Current Maturities of Long-term Debt	400			105			2			507
Income and Other Taxes Payable	(60		)	189			—			129
Other Current Liabilities	(1		)	194			3			196
Total Current Liabilities	3,060			2,449			(2,822		)	2,687
Casualty, Environmental and Other Reserves	—			284			68			352
Long-term Debt	7,609			1,124			1			8,734
Deferred Income Taxes	(246		)	7,800			47			7,601
Other Long-term Liabilities	858			667			106			1,631
Total Liabilities	$	11,281		$	12,324		$	(2,600	)	$	21,005
Shareholders' Equity
Common Stock, $1 Par Value	$	1,049		$	181		$	(181	)	$	1,049
Other Capital	6			5,652			(5,652		)	6
Retained Earnings	8,275			9,618			(9,618		)	8,275
Accumulated Other Comprehensive Loss	(875		)	(79		)	79			(875		)
Noncontrolling Minority Interest	—			21			(8		)	13
Total Shareholders' Equity	$	8,455		$	15,393		$	(15,380	)	$	8,468
Total Liabilities and Shareholders' Equity	$	19,736		$	27,717		$	(17,980	)	$	29,473

Consolidating Cash Flow Statements
(Dollars in millions)
Nine months ended September 28, 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	429		$	2,202		$	(327	)	$	2,304
Investing Activities
Property Additions	—			(1,669		)	(161		)	(1,830		)
Purchases of Short-term Investments	(50		)	—			(28		)	(78		)
Proceeds from Sales of Short-term Investments	525			—			48			573
Other Investing Activities	(6		)	78			(62		)	10
Net Cash Provided by (Used in) Investing Activities	469			(1,591		)	(203		)	(1,325		)
Financing Activities
Long-term Debt Issued	300			—			—			300
Long-term Debt Repaid	(400		)	(79		)	(2		)	(481		)
Dividends Paid	(415		)	(536		)	536			(415		)
Stock Options Exercised	11			—			—			11
Shares Repurchased	(500		)	—			—			(500		)
Other Financing Activities	15			3			(2		)	16
Net Cash Provided by (Used in) Financing Activities	(989		)	(612		)	532			(1,069		)
Net Increase (Decrease) in Cash and Cash Equivalents	(91		)	(1		)	2			(90		)
Cash and Cash Equivalents at Beginning of Period	549			154			80			783
Cash and Cash Equivalents at End of Period	$	458		$	153		$	82		$	693

NOTE 11.Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Nine months ended September 30, 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	1,054		$	2,014		$	(483	)	$	2,585
Investing Activities
Property Additions	—			(1,285		)	(151		)	(1,436		)
Purchases of Short-term Investments	—			—			(14		)	(14		)
Proceeds from Sales of Short-term Investments	—			—			66			66
Other Investing Activities	(19		)	(90		)	92			(17		)
Net Cash Provided by (Used in) Investing Activities	(19		)	(1,375		)	(7		)	(1,401		)
Financing Activities
Long-term Debt Issued	600			—			—			600
Long-term Debt Repaid	(507		)	(86		)	(2		)	(595		)
Dividends Paid	(354		)	(510		)	510			(354		)
Stock Options Exercised	27			—			—			27
Shares Repurchased	(1,564		)	—			—			(1,564		)
Other Financing Activities	30			(21		)	(19		)	(10		)
Net Cash Provided by (Used in) Financing Activities	(1,768		)	(617		)	489			(1,896		)
Net Increase (Decrease) in Cash and Cash Equivalents	(733		)	22			(1		)	(712		)
Cash and Cash Equivalents at Beginning of Period	1,100			118			74			1,292
Cash and Cash Equivalents at End of Period	$	367		$	140		$	73		$	580

XML

Document And Entity Information	9 Months Ended
	Sep. 28, 2012
Entity Information
Entity Registrant Name	CSX CORP
Entity Central Index Key	0000277948
Current Fiscal Year End Date	--12-28
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	1,031,377,919
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 28, 2012

XML

Nature of Operations and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 28, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Fiscal Year

CSX follows a 52/53 week fiscal reporting calendar with the last day of each reporting period ending on a Friday:

• The third fiscal quarters of 2012 and 2011 consisted of 13 weeks ending on September 28, 2012 and September 30, 2011, respectively.

• The nine month periods of 2012 and 2011 consisted of 39 weeks ending on September 28, 2012 and September 30, 2011, respectively.

• Fiscal year 2012 and 2011 will each consist of 52 weeks ending on December 28, 2012 and December 30, 2011, respectively.

Except as otherwise specified, references to “third quarter(s)” or “nine months” indicate CSX's fiscal periods ending September 28, 2012 and September 30, 2011, and references to "year-end" indicate the fiscal year ended December 30, 2011.

Allowance for Doubtfull Accounts

The Company maintains an allowance for doubtful accounts on uncollectible amounts related to freight receivables, government reimbursement receivables, claims for damages and other various receivables. The allowance is based upon the credit worthiness of customers, historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account.

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Dec. 30, 2011	Sep. 30, 2011	Dec. 31, 2010
Current Assets
Cash and Cash Equivalents	$ 693	$ 783	$ 580	$ 1,292
Short-term Investments	35	523
Accounts Receivable - Net (Note 1)	1,163	1,129
Materials and Supplies	264	240
Deferred Income Taxes	134	182
Other Current Assets	104	78
Total Current Assets	2,393	2,935
Properties	35,020	33,704
Accumulated Depreciation	(9,088)	(8,730)
Properties - Net	25,932	24,974
Other Long-term Assets	410	393
Total Assets	29,930	29,473
Current Liabilities
Accounts Payable	1,197	1,147
Labor and Fringe Benefits Payable	416	541
Casualty, Environmental and Other Reserves (Note 4)	169	167
Current Maturities of Long-term Debt (Note 7)	806	507
Income and Other Taxes Payable	261	129
Other Current Liabilities	172	196
Total Current Liabilities	3,021	2,687
Casualty, Environmental and Other Reserves (Note 4)	319	352
Long-term Debt (Note 7)	8,257	8,734
Deferred Income Taxes	8,018	7,601
Other Long-term Liabilities	1,284	1,631
Total Liabilities	20,899	21,005
Common Stock $1 Par Value	1,031	1,049
Other Capital	20	6
Retained Earnings	8,798	8,275
Accumulated Other Comprehensive Loss (Note 1)	(833)	(875)
Noncontrolling Interest	15	13
Total Shareholders' Equity	9,031	8,468
Total Liabilities and Shareholders' Equity	29,930	29,473
Investments in Conrail [Member]
Current Assets
Investment in Affiliates and Joint Ventures	693	678
Affiliates and Other Companies [Member]
Current Assets
Investment in Affiliates and Joint Ventures	$ 502	$ 493

XML

Employee Benefit Plans

9 Months Ended

Sep. 28, 2012

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The Company sponsors defined benefit pension plans principally for salaried, management personnel.  For employees hired on or before December 31, 2002, the plans provide eligible employees with retirement benefits based predominantly on years of service and compensation rates near retirement.  For employees hired in 2003 or thereafter, benefits are determined based on a cash balance formula, which provides benefits by utilizing interest and pay credits based upon age, service and compensation. 

In addition to these plans, the Company sponsors a self-insured, post-retirement medical plan and a life insurance plan that provide benefits to full-time, salaried, management employees, hired prior to January 1, 2003, upon their retirement if certain eligibility requirements are met.  Medicare-eligible retirees are covered by a health reimbursement arrangement, which is an employer-funded account that can be used for reimbursement of eligible medical expenses. Non-Medicare eligible retirees will continue to be covered by the existing self-insured program.  The life insurance plan is non-contributory.

NOTE 6.    Employee Benefit Plans, continued

The Company engages independent actuaries to compute the amounts of liabilities and expenses relating to these plans subject to the assumptions that the Company selects.  These amounts are reviewed by management.  The following table describes the components of expense / (income) related to net benefit expense:

	Pension Benefits
(Dollars in millions)	Third Quarters						Nine Months
	2012			2011			2012			2011
Service Cost	$	11		$	10		$	33		$	30
Interest Cost	31			30			92			90
Expected Return on Plan Assets	(43		)	(39		)	(124		)	(118		)
Amortization of Net Loss	21			18			62			54
Total Expense	$	20		$	19		$	63		$	56

	Other Post-retirement Benefits
(Dollars in millions)	Third Quarters				Nine Months
	2012		2011		2012			2011
Service Cost	$	1	$	1	$	3		$	3
Interest Cost	4		4		12			10
Amortization of Net Loss	2		2		7			5
Amortization of Prior Service Costs	—		—		(1		)	(1		)
Total Expense	$	7	$	7	$	21		$	17

Qualified pension plan obligations are funded in accordance with prescribed regulatory requirements and with an objective of meeting minimum funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments.  During first quarter 2012, the Company made a contribution of $275 million to its qualified pension plans, of which $25 million was the required minimum contribution. At this time, the Company anticipates that no further contributions to its qualified pension plans will be required in 2012. For further details, see Note 8, Employee Benefit Plans, in CSX's most recent annual report on Form 10-K.

XML

Commitments and Contingencies

9 Months Ended

Sep. 28, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Insurance

The Company maintains numerous insurance programs with substantial limits for property damage (which includes business interruption) and third-party liability.  A certain amount of risk is retained by the Company on each of the liability and property programs.  The Company has a $25 million retention per occurrence for the non-catastrophic property program (such as a derailment) and a $50 million retention per occurrence for the liability and catastrophic property programs (such as hurricanes and floods).

While the Company believes its current insurance coverage is adequate to cover its damages, future claims could exceed existing insurance coverage or insurance may not continue to be available at commercially reasonable rates.

Legal

The Company is involved in litigation incidental to its business and is a party to a number of legal actions and claims, various governmental proceedings and private civil lawsuits, including, but not limited to, those related to environmental and hazardous material exposure matters, FELA claims by employees, other personal injury claims and disputes and complaints involving certain transportation rates and charges. Some of the legal proceedings include claims for compensatory as well as punitive damages and others are, or are purported to be, class actions. While the final outcome of these matters cannot be reasonably determined, considering, among other things, the legal defenses available and liabilities that have been recorded along with applicable insurance, it is currently the opinion of CSX management that none of these pending items will have a material adverse effect on the Company's financial condition, results of operations or liquidity. An unexpected adverse resolution of one or more of these items, however, could have a material adverse effect on the Company's financial condition, results of operations or liquidity in that particular period.

NOTE 5.    Commitments and Contingencies, continued

The Company is able to estimate a range of possible loss for certain legal proceedings for which a loss is reasonably possible in excess of reserves established. The Company has estimated this range to be $2 million to approximately $20 million in aggregate at September 28, 2012. This estimated aggregate range is based upon currently available information and is subject to significant judgment and a variety of assumptions. Accordingly, the Company's estimate will change from time to time, and actual losses may vary significantly from the current estimate.

Fuel Surcharge Antitrust Litigation

In May 2007, class action lawsuits were filed against CSXT and three other U.S.-based Class I railroads alleging that the defendants' fuel surcharge practices relating to contract and unregulated traffic resulted from an illegal conspiracy in violation of antitrust laws. The suit seeks treble damages allegedly sustained by purported class members as well as attorneys' fees and other relief. While we believe the case is without merit and recovery unlikely, plaintiffs are expected to allege damages at least equal to the fuel surcharges at issue. In November 2007, the class action lawsuits were consolidated and are now pending in federal court in the District of Columbia.

On June 21, 2012, the court certified the case as a class action. The decision was not a ruling on the merits of plaintiffs' claims, rather a decision to allow the plaintiffs to seek to prove the case as a class. The defendant railroads have petitioned the U.S. Court of Appeals for the D.C. Circuit for permission to appeal the District Court's class certification decision. On August 28, 2012, the Court of Appeals referred the petition to a merits panel, and directed that the parties to the case submit briefs addressing both the petition and the merits of the appeal. The District Court currently is deciding whether to stay some or all proceedings pending the appellate court's decision on the defendants' petition for an appeal.

CSXT believes that its fuel surcharge practices were arrived at and applied lawfully and that the case is without merit. Accordingly, the Company intends to defend itself vigorously. However, penalties for violating antitrust laws can be severe, and an unexpected adverse decision on the merits could have a material adverse effect on the Company's financial condition, results of operations or liquidity in that particular period or for the full year.

XML

Employee Benefit Plans (Tables)

9 Months Ended

Sep. 28, 2012

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

Components of expense/(income) related to net benefit expense

The following table describes the components of expense / (income) related to net benefit expense:

	Pension Benefits
(Dollars in millions)	Third Quarters						Nine Months
	2012			2011			2012			2011
Service Cost	$	11		$	10		$	33		$	30
Interest Cost	31			30			92			90
Expected Return on Plan Assets	(43		)	(39		)	(124		)	(118		)
Amortization of Net Loss	21			18			62			54
Total Expense	$	20		$	19		$	63		$	56

	Other Post-retirement Benefits
(Dollars in millions)	Third Quarters				Nine Months
	2012		2011		2012			2011
Service Cost	$	1	$	1	$	3		$	3
Interest Cost	4		4		12			10
Amortization of Net Loss	2		2		7			5
Amortization of Prior Service Costs	—		—		(1		)	(1		)
Total Expense	$	7	$	7	$	21		$	17

XML

Nature of Operations and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 28, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of deferred gain on sale of real estate

The deferred gain balance included in the consolidated balance sheets is presented in the table below.

	Deferred gain as of
(Dollars in Millions)	September 2012		December 2011
Current portion, included in Other Current Liabilities	$	68	$	95
Long term portion, included in Other Long-Term Liabilities	9		37
Total	$	77	$	132

XML

Income Taxes

9 Months Ended

Sep. 28, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

There have been no material changes to the balance of unrecognized tax benefits during the third quarter 2012 and 2011.

XML

Debt and Credit Agreements

9 Months Ended

Sep. 28, 2012

Debt Disclosure [Abstract]

Debt and Credit Agreements

Debt and Credit Agreements

Total activity related to long-term debt as of the end of third quarter 2012 was as follows:

(Dollars in millions)	Current Portion			Long-term Portion			Total
Long-term debt as of December 2011	$	507		$	8,734		$	9,241
2012 activity:
Long-term debt issued	—			300			300
Long-term debt repaid	(481		)	—			(481		)
Reclassifications	781			(781		)	—
Capital lease additions	—			8			8
Debt conversions to CSX stock	(1		)	—			(1		)
Discount and premium activity	—			(4		)	(4		)
Long-term debt as of the end of third quarter 2012	$	806		$	8,257		$	9,063

NOTE 7.    Debt and Credit Agreements, continued

For fair value information related to the Company's long-term debt, see Note 10, Fair Value Measurements.

Debt Issuance

During first quarter 2012, CSX issued $300 million of 4.4% notes due 2043. These notes are 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 issuance were used primarily in connection with a $275 million contribution to the Company's qualified pension plan.

Credit Facility

CSX has a $1 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This 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. As of third quarter 2012, CSX was in compliance with all covenant requirements under this facility.

Receivables Securitization Facility

The Company's $250 million receivables securitization facility has a 364-day term and expires in June 2013. The Company's intention is to continue 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. As of the date of this filing, the Company has no outstanding balances under this facility.

XML

Other Income - Net

9 Months Ended

Sep. 28, 2012

Other Income and Expenses [Abstract]

Other Income - Net

Other Income - Net

The Company derives income from items that are not considered operating activities. Income from these items is reported net of related expense. Other income - net consisted of the following:

	Third Quarters						Nine Months
(Dollars in millions)	2012			2011			2012			2011
Interest Income	$	1		$	1		$	4		$	3
Income from Real Estate	9			6			17			14
Miscellaneous Income (Expense)	(5		)	(1		)	(7		)	(6		)
Total Other Income - Net	$	5		$	6		$	14		$	11

XML

Fair Value Measurements

9 Months Ended

Sep. 28, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Financial Instruments Topic in the ASC requiresdisclosures about fair value of financial instruments in annual reports as well as in quarterly reports. For CSX, this statement applies to certain investments and long-term debt. Disclosure of the fair value of pension plan assets is only required annually. Also, this rule clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.

Various inputs are considered when determining the value of the Company's investments, pension plan assets and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.

• Level 1 - observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets

• Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.)

• Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments)

The valuation methods described below may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Investments

The Company's investment assets, valued with the assistance of a third-party trustee, consist of certificates of deposits, corporate bonds, U.S. government securities and auction rate securities and are carried at fair value on the consolidated balance sheet per the Fair Value Measurements and Disclosures Topic in theASC. There are several valuation methodologies used for those assets as described below.

• Certificates of Deposit (Level 2): Valued by discounting the related cash flows based on current yields of similar instruments with comparable durations.

• Corporate Bonds and U.S. Treasury Obligations (Level 2): Valued using price evaluations reflecting the bid and/or ask sides of the market for a similar investment as of the last day of the fiscal period.

• Auction Rate Securities (Level 3): Valued using a discounted cash flow model, because there is currently no active market for trading.

NOTE 10.    Fair Value Measurements, continued

The Company's investment assets are carried at fair value on the consolidated balance sheets as summarized in the tables below. Additionally, the amortized cost basis of these investments was $168 million and $643 million as of September 28, 2012 and December 30, 2011, respectively.

	September 2012								December 2011
(Dollars in Millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Certificates of Deposit	$	—	$	—	$	—	$	—	$	—	$	477	$	—	$	477
Corporate Bonds	—		123		—		123		—		98		—		98
U.S. Treasury Obligations	—		31		—		31		—		53		—		53
Auction Rate Securities	—		—		15		15		—		—		15		15
Total investments at fair value	$	—	$	154	$	15	$	169	$	—	$	628	$	15	$	643

These investments have the following maturities:

(Dollars in millions)	September 28, 2012		December 30, 2011
Less than 1 year	$	35	$	523
1 - 2 years	56		32
2 - 5 years	58		73
Greater than 5 years	20		15
Total	$	169	$	643

Long-term Debt

Long-term debt is reported at carrying amount on the consolidated balance sheets and is the Company's only financial instrument with fair values significantly different from their carrying amounts. The majority of the Company's long-term debt is valued with the assistance of an independent third party who utilizes closing transactions, market quotes or market values of comparable debt. For those instruments not valued by the third party, the fair value has been estimated by applying market rates of similar instruments to the scheduled contractual debt payments and maturities. These market rates are provided by the same third party. All of the inputs used to determine the fair value of the Company's long-term debt are Level 2 inputs.

The fair value of outstanding debt fluctuates with changes in a number of factors. Such factors include, but are not limited to, interest rates, market conditions, values of similar financial instruments, size of the transaction, cash flow projections and comparable trades. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The fair value of a company's debt is a measure of its current value under present market conditions. It does not impact the financial statements under current accounting rules.

NOTE 10.    Fair Value Measurements, continued

The fair value and carrying value of the Company's long-term debt is as follows:

(Dollars in millions)	September 28, 2012		December 30, 2011
Long-term Debt Including Current Maturities:
Fair Value	$	10,870	$	10,708
Carrying Value	$	9,063	$	9,241

XML

Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended
	May 31, 2007 entity	Sep. 28, 2012
Insurance
Non-catastrophic property deductible		$ 25
Casualty and catastrophic property deductible		50
Legal
Range of possible loss for certain legal proceedings, minimum		2
Range of possible loss for certain legal proceedings, maximum		$ 20
Class action lawsuits filed against U.S.-based Class I railroads, excluding CSXT (number of entities)	3

XML

Share-Based Compensation (Tables)

9 Months Ended

Sep. 28, 2012

Share-based Compensation [Abstract]

Share-based compensation and related income tax benefit

Total pre-tax expense associated with all share-based compensation and the related income tax benefit are as follows:

	Third Quarters				Nine Months
(Dollars in millions)	2012		2011		2012		2011
Share-Based Compensation Expense	$	6	$	7	$	10	$	30
Income Tax Benefit	3		3		4		11

Stock options exercised

The following table provides information about stock options exercised and expired.

	Third Quarters		Nine Months
(In thousands)	2012	2011	2012	2011
Number of Stock Options Exercised	273	589	1,891	4,543
Number of Stock Options Expired	—	6	15	27

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 28, 2012

Fair Value Disclosures [Abstract]

Schedule of fair value of investment assets

The Company's investment assets are carried at fair value on the consolidated balance sheets as summarized in the tables below. Additionally, the amortized cost basis of these investments was $168 million and $643 million as of September 28, 2012 and December 30, 2011, respectively.

	September 2012								December 2011
(Dollars in Millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Certificates of Deposit	$	—	$	—	$	—	$	—	$	—	$	477	$	—	$	477
Corporate Bonds	—		123		—		123		—		98		—		98
U.S. Treasury Obligations	—		31		—		31		—		53		—		53
Auction Rate Securities	—		—		15		15		—		—		15		15
Total investments at fair value	$	—	$	154	$	15	$	169	$	—	$	628	$	15	$	643

Schedule of investment maturities

These investments have the following maturities:

(Dollars in millions)	September 28, 2012		December 30, 2011
Less than 1 year	$	35	$	523
1 - 2 years	56		32
2 - 5 years	58		73
Greater than 5 years	20		15
Total	$	169	$	643

Schedule of fair value and carrying value of long-term debt

The fair value and carrying value of the Company's long-term debt is as follows:

(Dollars in millions)	September 28, 2012		December 30, 2011
Long-term Debt Including Current Maturities:
Fair Value	$	10,870	$	10,708
Carrying Value	$	9,063	$	9,241

XML

Summarized Consolidating Balance Sheet (Details) (USD $) In Millions, unless otherwise specified	Sep. 28, 2012	Dec. 30, 2011	Sep. 30, 2011	Dec. 31, 2010
Current Assets
Cash and Cash Equivalents	$ 693	$ 783	$ 580	$ 1,292
Short-term Investments	35	523
Accounts Receivable - Net	1,163	1,129
Receivable from Affiliates	0	0
Materials and Supplies	264	240
Deferred Income Taxes	134	182
Other Current Assets	104	78
Total Current Assets	2,393	2,935
Properties	35,020	33,704
Accumulated Depreciation	(9,088)	(8,730)
Properties - Net	25,932	24,974
Other Long-term Assets	410	393
Total Assets	29,930	29,473
Current Liabilities
Accounts Payable	1,197	1,147
Labor and Fringe Benefits Payable	416	541
Payable to Affiliates	0	0
Casualty, Environmental and Other Reserves	169	167
Current Maturities of Long-term Debt	806	507
Income and Other Taxes Payable	261	129
Other Current Liabilities	172	196
Total Current Liabilities	3,021	2,687
Casualty, Evironmental and Other Reserves	319	352
Long-term Debt	8,257	8,734
Deferred Income Taxes	8,018	7,601
Other Long-term Liabilities	1,284	1,631
Total Liabilities	20,899	21,005
Shareholders' Equity
Common Stock, $1 Par Value	1,031	1,049
Other Capital	20	6
Retained Earnings	8,798	8,275
Accumulated Other Comprehensive Loss	(833)	(875)
Noncontrolling Interest	15	13
Total Shareholders' Equity	9,031	8,468
Total Liabilities and Shareholders' Equity	29,930	29,473
Investments in Conrail [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	693	678
Affiliates and Other Companies [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	502	493
Investments in Consolidated Subsidiaries [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	0	0
CSX Corporation [Member]
Current Assets
Cash and Cash Equivalents	458	549	367	1,100
Short-term Investments	0	475
Accounts Receivable - Net	1	4
Receivable from Affiliates	992	1,025
Materials and Supplies	0	0
Deferred Income Taxes	65	10
Other Current Assets	14	17
Total Current Assets	1,530	2,080
Properties	8	8
Accumulated Depreciation	(8)	(8)
Properties - Net	0	0
Other Long-term Assets	172	176
Total Assets	20,178	19,736
Current Liabilities
Accounts Payable	150	114
Labor and Fringe Benefits Payable	36	41
Payable to Affiliates	2,488	2,566
Casualty, Environmental and Other Reserves	0	0
Current Maturities of Long-term Debt	700	400
Income and Other Taxes Payable	(40)	(60)
Other Current Liabilities	(1)	(1)
Total Current Liabilities	3,333	3,060
Casualty, Evironmental and Other Reserves	0	0
Long-term Debt	7,208	7,609
Deferred Income Taxes	(149)	(246)
Other Long-term Liabilities	770	858
Total Liabilities	11,162	11,281
Shareholders' Equity
Common Stock, $1 Par Value	1,031	1,049
Other Capital	20	6
Retained Earnings	8,798	8,275
Accumulated Other Comprehensive Loss	(833)	(875)
Noncontrolling Interest	0	0
Total Shareholders' Equity	9,016	8,455
Total Liabilities and Shareholders' Equity	20,178	19,736
CSX Corporation [Member] | Investments in Conrail [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	0	0
CSX Corporation [Member] | Affiliates and Other Companies [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	(39)	(39)
CSX Corporation [Member] | Investments in Consolidated Subsidiaries [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	18,515	17,519
CSX Transportation [Member]
Current Assets
Cash and Cash Equivalents	153	154	140	118
Short-term Investments	0	0
Accounts Receivable - Net	559	468
Receivable from Affiliates	1,636	1,772
Materials and Supplies	264	240
Deferred Income Taxes	74	173
Other Current Assets	78	64
Total Current Assets	2,764	2,871
Properties	33,146	31,958
Accumulated Depreciation	(8,106)	(7,795)
Properties - Net	25,040	24,163
Other Long-term Assets	300	109
Total Assets	28,688	27,717
Current Liabilities
Accounts Payable	1,004	978
Labor and Fringe Benefits Payable	345	458
Payable to Affiliates	364	374
Casualty, Environmental and Other Reserves	153	151
Current Maturities of Long-term Debt	105	105
Income and Other Taxes Payable	308	189
Other Current Liabilities	172	194
Total Current Liabilities	2,451	2,449
Casualty, Evironmental and Other Reserves	247	284
Long-term Debt	1,049	1,124
Deferred Income Taxes	8,067	7,800
Other Long-term Liabilities	605	667
Total Liabilities	12,419	12,324
Shareholders' Equity
Common Stock, $1 Par Value	181	181
Other Capital	5,669	5,652
Retained Earnings	10,475	9,618
Accumulated Other Comprehensive Loss	(79)	(79)
Noncontrolling Interest	23	21
Total Shareholders' Equity	16,269	15,393
Total Liabilities and Shareholders' Equity	28,688	27,717
CSX Transportation [Member] | Investments in Conrail [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	0	0
CSX Transportation [Member] | Affiliates and Other Companies [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	584	574
CSX Transportation [Member] | Investments in Consolidated Subsidiaries [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	0	0
Eliminations and Other [Member]
Current Assets
Cash and Cash Equivalents	82	80	73	74
Short-term Investments	35	48
Accounts Receivable - Net	603	657
Receivable from Affiliates	(2,628)	(2,797)
Materials and Supplies	0	0
Deferred Income Taxes	(5)	(1)
Other Current Assets	12	(3)
Total Current Assets	(1,901)	(2,016)
Properties	1,866	1,738
Accumulated Depreciation	(974)	(927)
Properties - Net	892	811
Other Long-term Assets	(62)	108
Total Assets	(18,936)	(17,980)
Current Liabilities
Accounts Payable	43	55
Labor and Fringe Benefits Payable	35	42
Payable to Affiliates	(2,852)	(2,940)
Casualty, Environmental and Other Reserves	16	16
Current Maturities of Long-term Debt	1	2
Income and Other Taxes Payable	(7)	0
Other Current Liabilities	1	3
Total Current Liabilities	(2,763)	(2,822)
Casualty, Evironmental and Other Reserves	72	68
Long-term Debt	0	1
Deferred Income Taxes	100	47
Other Long-term Liabilities	(91)	106
Total Liabilities	(2,682)	(2,600)
Shareholders' Equity
Common Stock, $1 Par Value	(181)	(181)
Other Capital	(5,669)	(5,652)
Retained Earnings	(10,475)	(9,618)
Accumulated Other Comprehensive Loss	79	79
Noncontrolling Interest	(8)	(8)
Total Shareholders' Equity	(16,254)	(15,380)
Total Liabilities and Shareholders' Equity	(18,936)	(17,980)
Eliminations and Other [Member] | Investments in Conrail [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	693	678
Eliminations and Other [Member] | Affiliates and Other Companies [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	(43)	(42)
Eliminations and Other [Member] | Investments in Consolidated Subsidiaries [Member]
Current Assets
Investment in Affiliates, Subsidiaries, and Joint Ventures	$ (18,515)	$ (17,519)

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 28, 2012	Dec. 30, 2011
Stockholders' Equity:
Common stock, par value (in dollars per share)	$ 1	$ 1

XML

Casualty, Environmental and Other Reserves

9 Months Ended

Sep. 28, 2012

Casualty, Environmental and Other Reserves [Abstract]

Casualty, Environmental and Other Reserves

Casualty, Environmental and Other Reserves

Casualty, environmental and other reserves are considered critical accounting estimates due to the need for significant management judgments. They are provided for in the consolidated balance sheets as follows:

	September 28, 2012						December 30, 2011
(Dollars in millions)	Current		Long-term		Total		Current		Long-term		Total
Casualty:
Personal Injury	$	93	$	151	$	244	$	93	$	168	$	261
Occupational	6		31		37		6		37		43
Asbestos	11		52		63		11		57		68
Total Casualty	110		234		344		110		262		372
Environmental	39		40		79		31		52		83
Other(a)	20		45		65		26		38		64
Total	$	169	$	319	$	488	$	167	$	352	$	519

(a) Separation liabilities and freight rate dispute reserves have been reclassified to other current and long-term liabilities.

NOTE 4. Casualty, Environmental and Other Reserves, continued

These liabilities are accrued when estimable and probable in accordance with the Contingencies Topic in the ASC. Actual settlements and claims received could differ. The final outcome of these matters cannot be predicted with certainty. Considering the legal defenses currently available, the liabilities that have been recorded and other factors, it is the opinion of management that none of these items, when finally resolved, will have a material effect on the Company's financial condition, results of operations or liquidity. Should a number of these items occur in the same period, however, they could have a material effect on the Company's financial condition, results of operations or liquidity in that particular period.

Casualty

Casualty reserves represent accruals for personal injury, occupational injury and asbestos claims. During 2010, the Company increased its self-insured retention amount for these claims from $25 million to $50 million per occurrence for claims occurring on or after June 1, 2010. Currently, no individual claim is expected to exceed the self-insured retention amount. In accordance with the Contingencies Topic in the ASC, to the extent the value of an individual claim exceeds the self-insured retention amount, the Company would present the liability on a gross basis with a corresponding receivable for insurance recoveries. These reserves fluctuate based upon the timing of payments as well as changes in independent third-party estimates, which are reviewed by management. Actual results may vary from estimates due to the number, type and severity of the injury, costs of medical treatments and uncertainties in litigation. Most of the claims relate to CSXT unless otherwise noted below. Defense and processing costs, which historically have been insignificant and are anticipated to be insignificant in the future, are not included in the recorded liabilities.

Personal Injury

Personal injury reserves represent liabilities for employee work-related and third-party injuries. Work-related injuries for CSXT employees are primarily subject to the Federal Employers’ Liability Act (“FELA”). In addition to FELA liabilities, current or former employees of other CSX subsidiaries are covered by various state workers’ compensation laws, the Federal Longshore and Harbor Workers’ Compensation Program or the Maritime Jones Act.

CSXT retains an independent actuarial firm to assist management in assessing the value of personal injury claims. An analysis is performed by the independent actuarial firm quarterly and is reviewed by management. The methodology used by the actuary includes a development factor to reflect growth or reduction in the value of these personal injury claims. It is based largely on CSXT's historical claims and settlement experience.

Occupational and Asbestos

Occupational claims arise from allegations of exposures to certain materials in the workplace, such as solvents, soaps, chemicals (collectively referred to as “irritants”) and diesel fuels (like exhaust fumes) or allegations of chronic physical injuries resulting from work conditions, such as repetitive stress injuries, carpal tunnel syndrome and hearing loss. The Company is also party to a number of asbestos claims by current or former employees alleging exposure to asbestos in the workplace.

NOTE 4. Casualty, Environmental and Other Reserves, continued

An analysis of occupational claims is performed quarterly by an independent third-party actuarial firm and reviewed by management. Management performs a quarterly review of asserted asbestos claims, and an analysis is performed annually by an independent third-party specialist and reviewed by management. The objective of the occupational and asbestos claims analyses performed by the third-party actuarial firm and specialist (the "third-party specialists") is to determine the number of incurred but not reported (“IBNR”) claims. The third-party specialists analyze CSXT's historical claim filings, settlement amounts, and dismissal rates to determine future anticipated claim filing rates and average settlement values for occupational and asbestos claims reserves. The potentially exposed population is estimated by using CSX's employment records and industry data. From this analysis, the third-party specialists provide an estimate of the IBNR claims liability.

Environmental

The Company is a party to various proceedings related to environmental issues, including administrative and judicial proceedings involving private parties and regulatory agencies. The Company has been identified as a potentially responsible party at approximately 256 environmentally impaired sites. Many of these are, or may be, subject to remedial action under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, also known as the Superfund Law, or similar state statutes. Most of these proceedings arose from environmental conditions on properties used for ongoing or discontinued railroad operations. A number of these proceedings, however, are based on allegations that the Company, or its predecessors, sent hazardous substances to facilities owned or operated by others for treatment, recycling or disposal. In addition, some of the Company's land holdings were leased to others for commercial or industrial uses that may have resulted in releases of hazardous substances or other regulated materials onto the property and could give rise to proceedings against the Company.

In any such proceedings, the Company is subject to environmental clean-up and enforcement actions under the Superfund Law, as well as similar state laws that may impose joint and several liability for clean-up and enforcement costs on current and former owners and operators of a site without regard to fault or the legality of the original conduct. These costs could be substantial.

In accordance with the Asset Retirement and Environmental Obligations Topic in the ASC, the Company reviews its role with respect to each site identified at least quarterly, giving consideration to a number of factors such as:

• type of clean-up required;

• nature of the Company's alleged connection to the location (e.g., generator of waste sent to the site or owner or operator of the site);

• extent of the Company's alleged connection (e.g., volume of waste sent to the location and other relevant factors); and

• number, connection and financial viability of other named and unnamed potentially responsible parties at the location.

NOTE 4.    Casualty, Environmental and Other Reserves, continued

Based on the review process, the Company has recorded amounts to cover contingent anticipated future environmental remediation costs with respect to each site to the extent such costs are estimable and probable. The recorded liabilities for estimated future environmental costs are undiscounted. The liability includes future costs for remediation and restoration of sites as well as any significant ongoing monitoring costs, but excludes any anticipated insurance recoveries. Payments related to these liabilities are expected to be made over the next several years.

Currently, the Company does not possess sufficient information to reasonably estimate the amounts of additional liabilities, if any, on some sites until completion of future environmental studies. In addition, conditions that are currently unknown could, at any given location, result in additional exposure, the amount and materiality of which cannot presently be reliably estimated. Based upon information currently available, however, the Company believes its environmental reserves are adequate to cover remedial actions to comply with present laws and regulations.

Other

Other reserves include liabilities for various claims, such as longshoremen disability claims, and claims for property, automobile and general liability. Separation liabilities and freight rate dispute reserves have been reclassified to other current and long-term liabilities.

XML

Summarized Consolidating Financial Data (Tables)

9 Months Ended

Sep. 28, 2012

Summarized Consolidating Financial Data [Abstract]

Consolidating Income Statements

Consolidating Income Statements
(Dollars in millions)
Third Quarter 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,878		$	16		$	2,894
Expense	(90		)	2,166			(36		)	2,040
Operating Income	90			712			52			854
Equity in Earnings of Subsidiaries	478			—			(478		)	—
Interest (Expense) / Benefit	(126		)	(17		)	5			(138		)
Other Income / (Expense) - Net	(1		)	2			4			5
Earnings Before Income Taxes	441			697			(417		)	721
Income Tax (Expense) / Benefit	14			(262		)	(18		)	(266		)
Net Earnings	$	455		$	435		$	(435	)	$	455
Total Comprehensive Earnings	$	471		$	437		$	(437	)	$	471
Third Quarter 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,946		$	17		$	2,963
Expense	(77		)	2,220			(58		)	2,085
Operating Income	77			726			75			878
Equity in Earnings of Subsidiaries	500			(1		)	(499		)	—
Interest (Expense) / Benefit	(123		)	(19		)	4			(138		)
Other Income / (Expense) - Net	—			6			—			6
Earnings Before Income Taxes	454			712			(420		)	746
Income Tax (Expense) / Benefit	10			(266		)	(26		)	(282		)
Net Earnings	$	464		$	446		$	(446	)	$	464
Total Comprehensive Earnings	$	473		$	448		$	(448	)	$	473

Consolidating Income Statements
(Dollars in millions)
Nine Months Ended September 28, 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	8,823		$	49		$	8,872
Expense	(266		)	6,587			(102		)	6,219
Operating Income	266			2,236			151			2,653
Equity in Earnings of Subsidiaries	1,512			(1		)	(1,511		)	—
Interest (Expense) / Benefit	(381		)	(53		)	13			(421		)
Other Income / (Expense) - Net	(3		)	6			11			14
Earnings Before Income Taxes	1,394			2,188			(1,336		)	2,246
Income Tax (Expense) / Benefit	22			(795		)	(57		)	(830		)
Net Earnings	$	1,416		$	1,393		$	(1,393	)	$	1,416
Total Comprehensive Earnings	$	1,458		$	1,393		$	(1,393	)	$	1,458
Nine Months Ended September 30, 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	8,743		$	49		$	8,792
Expense	(210		)	6,584			(159		)	6,215
Operating Income	210			2,159			208			2,577
Equity in Earnings of Subsidiaries	1,472			2			(1,474		)	—
Interest (Expense) / Benefit	(370		)	(64		)	22			(412		)
Other Income / (Expense) - Net	3			8			—			11
Earnings Before Income Taxes	1,315			2,105			(1,244		)	2,176
Income Tax (Expense) / Benefit	50			(782		)	(79		)	(811		)
Net Earnings	$	1,365		$	1,323		$	(1,323	)	$	1,365
Total Comprehensive Earnings	$	1,398		$	1,325		$	(1,325	)	$	1,398

Consolidating Balance Sheet

Consolidating Balance Sheet
(Dollars in millions)
As of Third Quarter 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	458		$	153		$	82		$	693
Short-term Investments	—			—			35			35
Accounts Receivable - Net	1			559			603			1,163
Receivable from Affiliates	992			1,636			(2,628		)	—
Materials and Supplies	—			264			—			264
Deferred Income Taxes	65			74			(5		)	134
Other Current Assets	14			78			12			104
Total Current Assets	1,530			2,764			(1,901		)	2,393
Properties	8			33,146			1,866			35,020
Accumulated Depreciation	(8		)	(8,106		)	(974		)	(9,088		)
Properties - Net	—			25,040			892			25,932
Investments in Conrail	—			—			693			693
Affiliates and Other Companies	(39		)	584			(43		)	502
Investments in Consolidated Subsidiaries	18,515			—			(18,515		)	—
Other Long-term Assets	172			300			(62		)	410
Total Assets	$	20,178		$	28,688		$	(18,936	)	$	29,930
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	150		$	1,004		$	43		$	1,197
Labor and Fringe Benefits Payable	36			345			35			416
Payable to Affiliates	2,488			364			(2,852		)	—
Casualty, Environmental and Other Reserves	—			153			16			169
Current Maturities of Long-term Debt	700			105			1			806
Income and Other Taxes Payable	(40		)	308			(7		)	261
Other Current Liabilities	(1		)	172			1			172
Total Current Liabilities	3,333			2,451			(2,763		)	3,021
Casualty, Environmental and Other Reserves	—			247			72			319
Long-term Debt	7,208			1,049			—			8,257
Deferred Income Taxes	(149		)	8,067			100			8,018
Other Long-term Liabilities	770			605			(91		)	1,284
Total Liabilities	$	11,162		$	12,419		$	(2,682	)	$	20,899
Shareholders' Equity
Common Stock, $1 Par Value	$	1,031		$	181		$	(181	)	$	1,031
Other Capital	20			5,669			(5,669		)	20
Retained Earnings	8,798			10,475			(10,475		)	8,798
Accumulated Other Comprehensive Loss	(833		)	(79		)	79			(833		)
Noncontrolling Interest	—			23			(8		)	15
Total Shareholders' Equity	$	9,016		$	16,269		$	(16,254	)	$	9,031
Total Liabilities and Shareholders' Equity	$	20,178		$	28,688		$	(18,936	)	$	29,930

Consolidating Balance Sheet (Dollars in millions)
As of December 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	549		$	154		$	80		$	783
Short-term Investments	475			—			48			523
Accounts Receivable - Net	4			468			657			1,129
Receivable from Affiliates	1,025			1,772			(2,797		)	—
Materials and Supplies	—			240			—			240
Deferred Income Taxes	10			173			(1		)	182
Other Current Assets	17			64			(3		)	78
Total Current Assets	2,080			2,871			(2,016		)	2,935
Properties	8			31,958			1,738			33,704
Accumulated Depreciation	(8		)	(7,795		)	(927		)	(8,730		)
Properties - Net	—			24,163			811			24,974
Investments in Conrail	—			—			678			678
Affiliates and Other Companies	(39		)	574			(42		)	493
Investment in Consolidated Subsidiaries	17,519			—			(17,519		)	—
Other Long-term Assets	176			109			108			393
Total Assets	$	19,736		$	27,717		$	(17,980	)	$	29,473
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	114		$	978		$	55		$	1,147
Labor and Fringe Benefits Payable	41			458			42			541
Payable to Affiliates	2,566			374			(2,940		)	—
Casualty, Environmental and Other Reserves	—			151			16			167
Current Maturities of Long-term Debt	400			105			2			507
Income and Other Taxes Payable	(60		)	189			—			129
Other Current Liabilities	(1		)	194			3			196
Total Current Liabilities	3,060			2,449			(2,822		)	2,687
Casualty, Environmental and Other Reserves	—			284			68			352
Long-term Debt	7,609			1,124			1			8,734
Deferred Income Taxes	(246		)	7,800			47			7,601
Other Long-term Liabilities	858			667			106			1,631
Total Liabilities	$	11,281		$	12,324		$	(2,600	)	$	21,005
Shareholders' Equity
Common Stock, $1 Par Value	$	1,049		$	181		$	(181	)	$	1,049
Other Capital	6			5,652			(5,652		)	6
Retained Earnings	8,275			9,618			(9,618		)	8,275
Accumulated Other Comprehensive Loss	(875		)	(79		)	79			(875		)
Noncontrolling Minority Interest	—			21			(8		)	13
Total Shareholders' Equity	$	8,455		$	15,393		$	(15,380	)	$	8,468
Total Liabilities and Shareholders' Equity	$	19,736		$	27,717		$	(17,980	)	$	29,473

Consolidating Cash Flow Statements

Consolidating Cash Flow Statements
(Dollars in millions)
Nine months ended September 28, 2012	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	429		$	2,202		$	(327	)	$	2,304
Investing Activities
Property Additions	—			(1,669		)	(161		)	(1,830		)
Purchases of Short-term Investments	(50		)	—			(28		)	(78		)
Proceeds from Sales of Short-term Investments	525			—			48			573
Other Investing Activities	(6		)	78			(62		)	10
Net Cash Provided by (Used in) Investing Activities	469			(1,591		)	(203		)	(1,325		)
Financing Activities
Long-term Debt Issued	300			—			—			300
Long-term Debt Repaid	(400		)	(79		)	(2		)	(481		)
Dividends Paid	(415		)	(536		)	536			(415		)
Stock Options Exercised	11			—			—			11
Shares Repurchased	(500		)	—			—			(500		)
Other Financing Activities	15			3			(2		)	16
Net Cash Provided by (Used in) Financing Activities	(989		)	(612		)	532			(1,069		)
Net Increase (Decrease) in Cash and Cash Equivalents	(91		)	(1		)	2			(90		)
Cash and Cash Equivalents at Beginning of Period	549			154			80			783
Cash and Cash Equivalents at End of Period	$	458		$	153		$	82		$	693

NOTE 11.Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Nine months ended September 30, 2011	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	1,054		$	2,014		$	(483	)	$	2,585
Investing Activities
Property Additions	—			(1,285		)	(151		)	(1,436		)
Purchases of Short-term Investments	—			—			(14		)	(14		)
Proceeds from Sales of Short-term Investments	—			—			66			66
Other Investing Activities	(19		)	(90		)	92			(17		)
Net Cash Provided by (Used in) Investing Activities	(19		)	(1,375		)	(7		)	(1,401		)
Financing Activities
Long-term Debt Issued	600			—			—			600
Long-term Debt Repaid	(507		)	(86		)	(2		)	(595		)
Dividends Paid	(354		)	(510		)	510			(354		)
Stock Options Exercised	27			—			—			27
Shares Repurchased	(1,564		)	—			—			(1,564		)
Other Financing Activities	30			(21		)	(19		)	(10		)
Net Cash Provided by (Used in) Financing Activities	(1,768		)	(617		)	489			(1,896		)
Net Increase (Decrease) in Cash and Cash Equivalents	(733		)	22			(1		)	(712		)
Cash and Cash Equivalents at Beginning of Period	1,100			118			74			1,292
Cash and Cash Equivalents at End of Period	$	367		$	140		$	73		$	580

XML

Other Income - Net (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 28, 2012	Sep. 30, 2011	Sep. 28, 2012	Sep. 30, 2011
Component of Other Income, Nonoperating
Total Other Income - Net	$ 5	$ 6	$ 14	$ 11
Interest Income [Member]
Component of Other Income, Nonoperating
Total Other Income - Net	1	1	4	3
Income from Real Estate [Member]
Component of Other Income, Nonoperating
Total Other Income - Net	9	6	17	14
Miscellaneous Income (Expense) [Member]
Component of Other Income, Nonoperating
Total Other Income - Net	$ (5)	$ (1)	$ (7)	$ (6)

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 28, 2012

Earnings Per Share [Abstract]

Computation of basic and diluted earnings per share

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:

	Third Quarters				Nine Months
	2012		2011		2012		2011
Numerator (Dollars in millions):
Net Earnings	$	455	$	464	$	1,416	$	1,365
Denominator (Units in millions):
Average Common Shares Outstanding	1,038		1,071		1,042		1,094
Other Potentially Dilutive Common Shares(a)	2		6		2		6
Average Common Shares Outstanding, Assuming Dilution	1,040		1,077		1,044		1,100
Net Earnings Per Share, Basic	$	0.44	$	0.43	$	1.36	$	1.25
Net Earnings Per Share, Assuming Dilution	$	0.44	$	0.43	$	1.36	$	1.24

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