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 June 30, 2018

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 ( ) Emerging growth company ( )

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ( )

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 858,810,557 shares of common stock outstanding on June 30, 2018 (the latest practicable date that is closest to the filing date).

CSX Q2 2018 Form 10-Q p.1

CSX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2018

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Income Statements (Unaudited) - Quarters Ended June 30, 2018 and June 30, 2017	3
	Condensed Consolidated Comprehensive Income Statements (Unaudited) - Quarters Ended June 30, 2018 and June 30, 2017	3
	Consolidated Balance Sheets - At June 30, 2018 (Unaudited) and December 31, 2017	4
	Consolidated Cash Flow Statements (Unaudited) - Six Months Ended June 30, 2018 and June 30, 2017	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.	Controls and Procedures	45
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	CSX Purchases of Equity Securities	46
Item 3.	Defaults upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
Signature		48

CSX Q2 2018 Form 10-Q p.2

CSX CORPORATION

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENTS (Unaudited)

(Dollars in millions, except per share amounts)

	Second Quarters						Six Months
	2018			2017			2018			2017
Revenue	$	3,102		$	2,933		$	5,978		$	5,802
Expense
Labor and Fringe	669			751			1,365			1,546
Materials, Supplies and Other	469			496			951			1,067
Depreciation	329			327			652			647
Fuel	270			198			525			416
Equipment and Other Rents	112			105			213			204
Restructuring Charge (Note 1)	—			115			—			225
Equity Earnings of Affiliates	(30		)	(16		)	(55		)	(29		)
Total Expense	1,819			1,976			3,651			4,076
Operating Income	1,283			957			2,327			1,726
Interest Expense	(157		)	(137		)	(306		)	(274		)
Restructuring Charge - Non-Operating (Note 1)	—			(7		)	—			(70		)
Other Income - Net	18			14			35			27
Earnings Before Income Taxes	1,144			827			2,056			1,409
Income Tax Expense	(267		)	(317		)	(484		)	(537		)
Net Earnings	$	877		$	510		$	1,572		$	872
Per Common Share (Note 2)
Net Earnings Per Share, Basic	$	1.02		$	0.55		$	1.80		$	0.94
Net Earnings Per Share, Assuming Dilution	$	1.01		$	0.55		$	1.79		$	0.94
Average Shares Outstanding (In millions)	864			920			875			923
Average Shares Outstanding, Assuming Dilution (In millions)	868			924			878			926
Cash Dividends Paid Per Common Share	$	0.22		$	0.20		$	0.44		$	0.38

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

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited)

(Dollars in millions, except per share amounts)

	Second Quarters				Six Months
	2018		2017		2018		2017
Total Comprehensive Earnings (Note 10)	$	881	$	575	$	1,477	$	943

See accompanying notes to consolidated financial statements.

CSX Q2 2018 Form 10-Q p.3

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

	(Unaudited)
	June 30, 2018			December 31, 2017
ASSETS
Current Assets:
Cash and Cash Equivalents	$	1,320		$	401
Short-term Investments	83			18
Accounts Receivable - Net (Note 11)	1,036			970
Materials and Supplies	326			372
Other Current Assets	116			154
Total Current Assets	2,881			1,915
Properties	44,306			44,324
Accumulated Depreciation	(12,459		)	(12,560		)
Properties - Net	31,847			31,764
Investment in Conrail	931			907
Affiliates and Other Companies	810			779
Other Long-term Assets	455			374
Total Assets	$	36,924		$	35,739
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	852		$	847
Labor and Fringe Benefits Payable	486			602
Casualty, Environmental and Other Reserves (Note 4)	114			108
Current Maturities of Long-term Debt (Note 7)	19			19
Income and Other Taxes Payable	123			157
Other Current Liabilities	138			161
Total Current Liabilities	1,732			1,894
Casualty, Environmental and Other Reserves (Note 4)	232			266
Long-term Debt (Note 7)	13,769			11,790
Deferred Income Taxes - Net	6,532			6,418
Other Long-term Liabilities	636			650
Total Liabilities	22,901			21,018
Shareholders' Equity:
Common Stock, $1 Par Value	859			890
Other Capital	127			217
Retained Earnings	13,604			14,084
Accumulated Other Comprehensive Loss (Note 10)	(581		)	(486		)
Noncontrolling Interest	14			16
Total Shareholders' Equity	14,023			14,721
Total Liabilities and Shareholders' Equity	$	36,924		$	35,739

See accompanying notes to consolidated financial statements.

CSX Q2 2018 Form 10-Q p.4

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)

(Dollars in millions)

	Six Months
	2018			2017
OPERATING ACTIVITIES
Net Earnings	$	1,572		$	872
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation	652			647
Deferred Income Taxes	98			112
Gain on Property Dispositions	(69		)	(4		)
Equity Earnings of Affiliates	(55		)	(29		)
Restructuring Charge	—			295
Cash Payments for Restructuring Charge	(13		)	(129		)
Other Operating Activities	(15		)	18
Changes in Operating Assets and Liabilities:
Accounts Receivable	(47		)	(103		)
Other Current Assets	14			12
Accounts Payable	11			6
Income and Other Taxes Payable	(24		)	(46		)
Other Current Liabilities	(115		)	(85		)
Net Cash Provided by Operating Activities	2,009			1,566
INVESTING ACTIVITIES
Property Additions	(823		)	(955		)
Proceeds from Property Dispositions	141			16
Purchase of Short-term Investments	(77		)	(545		)
Proceeds from Sales of Short-term Investments	12			492
Other Investing Activities	(8		)	25
Net Cash Used In Investing Activities	(755		)	(967		)
FINANCING ACTIVITIES
Long-term Debt Issued (Note 7)	2,000			850
Long-term Debt Repaid (Note 7)	—			(313		)
Dividends Paid	(384		)	(350		)
Shares Repurchased	(1,810		)	(757		)
Accelerated Share Repurchase Pending Final Settlement (Note 2)	(90		)	—
Other Financing Activities	(51		)	(12		)
Net Cash Used in Financing Activities	(335		)	(582		)
Net Increase in Cash and Cash Equivalents	919			17
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period	401			603
Cash and Cash Equivalents at End of Period	$	1,320		$	620

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

See accompanying notes to consolidated financial statements.

CSX Q2 2018 Form 10-Q p.5

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.Nature of Operations and Significant Accounting Policies

Background

CSX Corporation (“CSX”), 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 links customers to railroads via trucks and terminals.

After a merger on July 1, 2017 with CSX Real Property, Inc., a former wholly-owned CSX subsidiary, CSXT is now responsible for the Company's real estate sales, leasing, acquisition and management and development activities. In addition, as substantially all real estate sales, leasing, acquisition and management and development activities are focused on supporting railroad operations, all results of these activities are included in operating income beginning in 2017. Previously, the results of these activities were classified as operating or non-operating based on the nature of the activity and were not material for any periods presented.

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 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. The biggest Transflo markets are chemicals and agriculture, which include shipments of plastics and ethanol. CSX Technology and other subsidiaries provide support services for the Company.

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 quarter and six months ended June 30, 2018 and June 30, 2017;

• Condensed consolidated comprehensive income statements for the quarter and six months ended June 30, 2018 and June 30, 2017;

• Consolidated balance sheets at June 30, 2018 and December 31, 2017; and

• Consolidated cash flow statements for the six months ended June 30, 2018 and June 30, 2017.

CSX Q2 2018 Form 10-Q p.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

Through the second quarter 2017, CSX followed a 52/53 week fiscal reporting calendar with the last day of each reporting period ending on a Friday. On July 7, 2017 the Board of Directors of CSX approved a change in the fiscal reporting calendar from a 52/53 week year ending on the last Friday of December to a calendar year ending on December 31 each year, effective beginning with fiscal third quarter 2017. Related to the change in the fiscal calendar:

• Fiscal year 2018 (January 1, 2018 through December 31, 2018) will contain 365 days, and fiscal year 2017 (December 31, 2016 through December 31, 2017) contained 366 days

• Fiscal first quarter 2018 (January 1, 2018 through March 31, 2018) contained 90 days, and fiscal first quarter 2017 (December 31, 2016 through March 31, 2017) contained 91 days

• Fiscal second quarter 2018 (April 1, 2018 through June 30, 2018) contained 91 days, and fiscal second quarter 2017 (April 1, 2017 through June 30, 2017) contained 91 days

This change did not materially impact the comparability of the Company’s financial results. Accordingly, the change to a calendar fiscal year was made on a prospective basis and operating results for prior periods were not adjusted. The Company was not required to file a transition report because this change was not deemed a change in fiscal year for purposes of reporting subject to Rule 13a-10 or Rule 15d-10 of the Securities Exchange Act of 1934 as the new fiscal year commenced with the end of the prior fiscal year end and within seven days of the prior fiscal year end.

Except as otherwise specified, references to “second quarter(s)” or “six months” indicate CSX's fiscal periods ending June 30, 2018 and June 30, 2017, and references to "year-end" indicate the fiscal year ended December 31, 2017.

New Accounting Pronouncements

Pronouncements adopted in 2018    

In February 2018, the FASB issued Accounting Standard Update ("ASU") Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income. The Company adopted this standard update in first quarter 2018 and applied it prospectively. Adoption resulted in the reclassification of $107 million in tax effects related to employee benefit plans from accumulated other comprehensive loss, increasing retained earnings by the same amount.

CSX Q2 2018 Form 10-Q p.7

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

In March 2017, the FASB issued ASU Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, whichrequires that only the service cost component of net periodic benefit costs be recorded as compensation cost in operating expense on the consolidated income statement. All other components of net periodic benefit cost (interest cost, expected return on plan assets, amortization of net loss, special termination benefits and settlement and curtailment effects) should be presented as non-operating charges on the consolidated income statement. These non-operating charges are presented as restructuring charge - non-operating, if related to prior year restructuring activities, or as other income - net as appropriate. The Company adopted the provisions of this standard during first quarter 2018 and applied them retrospectively. The retrospective impact of adoption for second quarter and six months 2017 is shown in the following table.

	Second Quarter 2017								Six Months 2017
(Dollars in millions)	As Previously Reported		Reclass			As Reclassified			As Previously Reported		Reclass			As Reclassified
Operating Expense:
Labor and Fringe	$	743	$	8		$	751		$	1,532	$	14		$	1,546
Restructuring Charge	122		(7		)	115			295		(70		)	225
Non-Operating Income (Expense):
Restructuring Charge - Non-Operating	$	—	$	(7	)	$	(7	)	$	—	$	(70	)	$	(70	)
Other Income - Net	6		8			14			13		14			27

In May 2014, the FASB issued ASU Revenue from Contracts with Customers, which supersedes previous revenue recognition guidance. The new standard requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. In-depth reviews of commercial contracts were completed and changes to processes and internal controls to meet the standard’s reporting and disclosure requirements were implemented. The Company adopted the guidance effective January 1, 2018 using the modified retrospective approach. The adoption did not affect the Company’s financial condition, results of operations or liquidity. Disclosures related to the nature, amount and timing of revenue and cash flows arising from contracts with customers are included in Note 11, Revenues.

CSX Q2 2018 Form 10-Q p.8

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

Pronouncements to be adopted    

In February 2016, the FASB issued ASU, Leases, which will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required. This standard update is effective for CSX beginning with the first quarter 2019 and currently requires the use of a modified retrospective adoption approach. In March 2018, the FASB tentatively approved a new, optional transition method that would instead allow companies to adopt using a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to elect the cumulative-effect adjustment transition method. Changes to processes and internal controls to meet the standard’s reporting and disclosure requirements have been identified and are being implemented. Software has been implemented that will assist in the recognition of additional assets and liabilities to be included on the balance sheet related to leases currently classified as operating leases with durations greater than twelve months, with certain allowable exceptions. In addition to lease agreements, service contracts and other agreements are also being reviewed to determine if they contain an embedded lease. The Company continues to evaluate the expected impact of this standard update on disclosures, but does not anticipate any material changes to operating results or liquidity as a result of right-of-use assets and corresponding lease liabilities that will be recorded.

In January 2018, the FASB issued ASU Leases - Land Easement Practical Expedient, which permits entities to forgo the evaluation of existing land easement arrangements to determine if they contain a lease as part of the adoption of the Leases ASU issued in February 2016. Accordingly, the Company’s accounting treatment of existing land easements will not change. CSX will adopt this standard update concurrently with the Leases ASU issued in February 2016. New land easement arrangements, or modifications to existing arrangements, after the adoption of the standard update will still be evaluated to determine if they meet the definition of a lease.

In March 2017, the FASB issued ASU Simplifying the Test for Goodwill Impairment, which eliminates step two, the calculation of the implied fair value of goodwill, from the goodwill impairment test. Impairment will be quantified in step one of the test as the amount by which the carrying amount exceeds the fair value. This standard update is effective beginning first quarter 2020 and must be applied prospectively. The Company does not believe this standard update will have a material effect on its financial condition, results of operations or liquidity.

CSX Q2 2018 Form 10-Q p.9

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

Restructuring Charge

The prior year restructuring charge includes costs related to the management workforce reduction program completed in 2017, reimbursement arrangements with MR Argent Advisor LLC (“Mantle Ridge”) and the Company’s former President and Chief Executive Officer, E. Hunter Harrison, the proration of equity awards and other advisory costs related to the leadership transition. Payments related to the 2017 restructuring charge were substantially complete as of March 31, 2018. For further details on the charge, see the Company's most recent annual report on Form 10-K. Expenses related to the management workforce reduction and other costs are shown in the following table.

	Second Quarter 2017
(Dollars in millions)	As Previously Reported		Operating Restructuring Charge		Non-Operating Restructuring Charge
Severance and Pension	$	13	$	10	$	3
Other Post-Retirement Benefits Curtailment	4		—		4
Employee Equity Awards Proration and Other	5		5		—
Subtotal Management Workforce Reduction	$	22	$	15	$	7
Reimbursement Arrangements	84		84		—
Executive Equity Awards Proration	16		16		—
Total Restructuring Charge	$	122	$	115	$	7

	Six Months 2017
(Dollars in millions)	As Previously Reported		Operating Restructuring Charge		Non-Operating Restructuring Charge
Severance and Pension	$	144	$	91	$	53
Other Post-Retirement Benefits Curtailment	17		—		17
Employee Equity Awards Proration and Other	16		16		—
Subtotal Management Workforce Reduction	$	177	$	107	$	70
Reimbursement Arrangements	84		84		—
Executive Equity Awards Proration	24		24		—
Advisory Fees Related to Shareholder Matters	10		10		—
Total Restructuring Charge	$	295	$	225	$	70

CSX Q2 2018 Form 10-Q p.10

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2.    Earnings Per Share

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

	Second Quarters				Six Months
	2018		2017		2018		2017
Numerator (Dollars in millions):
Net Earnings	$	877	$	510	$	1,572	$	872
Denominator (Units in millions):
Average Common Shares Outstanding	864		920		875		923
Other Potentially Dilutive Common Shares	4		4		3		3
Average Common Shares Outstanding, Assuming Dilution	868		924		878		926
Net Earnings Per Share, Basic	$	1.02	$	0.55	$	1.80	$	0.94
Net Earnings Per Share, Assuming Dilution	$	1.01	$	0.55	$	1.79	$	0.94

Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock equivalents outstanding adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards, which include long-term incentive awards and employee stock options.

The Earnings Per Share Topic in the FASB's 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, this rule requires CSX to include the potential shares that would be outstanding if all outstanding stock options were exercised. This number is different from outstanding stock options because it is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. Approximately one millionand10 million of total average outstanding stock options for the second quarters ended June 30, 2018 and June 30, 2017, respectively, were excluded from the diluted earnings per share calculation because their effect was antidilutive.

Share Repurchases

In February 2018, the Company announced an increase to the $1.5 billion share repurchase program first announced in October 2017, bringing the total authorized to $5 billion. This program is expected to be completed by the end of first quarter 2019. During the second quartersof 2018 and 2017, the Company repurchased approximately $974 million, or 16 million shares, and $499 million, or 9 million shares, respectively. During the six months of 2018 and 2017, the Company repurchased $1.8 billion, or 31 million shares, and $757 million, or 15 million shares, respectively.

CSX Q2 2018 Form 10-Q p.11

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2.    Earnings Per Share, continued

On April 20, 2018, the Company entered into an accelerated share repurchase agreement to repurchase shares of the Company’s common stock. Under this agreement, the Company made a prepayment of $450 million to a financial institution and received an initial delivery of shares valued at $360 million, or 6 million shares. The remaining balance of $90 million was settled through receipt of additional shares on July 17, 2018, with the final net number of shares calculated based on the volume-weighted average price of the Company's common stock over the term of the agreement, less a discount. Approximately 7 million total shares were repurchased under the agreement.

Under an accelerated share repurchase agreement in January 2018, the Company made a prepayment of $150 million to a financial institution and received an initial delivery of shares valued at $120 million. The remaining balance of $30 million was settled through receipt of additional shares in February 2018 with the final net number of shares calculated based on the volume-weighted average price of the Company's common stock over the term of the agreement, less a discount. Approximately 3 million total shares were repurchased under the agreement.

Management's assessment of market conditions and other factors guides the timing and volume of repurchases. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the ASC, the excess of repurchase price over par value is recorded in retained earnings.

NOTE 3.     Share-Based Compensation

Under CSX's share-based compensation plans, awards consist of performance units, restricted stock awards, restricted stock units and stock options for management and stock grants for directors. 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 CSX's non-management directors upon recommendation of the Governance Committee.

Share-based compensation expense is measured using the fair value of the award on the grant date and is recognized on a straight-line basis over the service period of the respective award. Total pre-tax expense associated with share-based compensation and its related income tax benefit is shown in the table below. The year over year decrease in expense related to performance units, stock options and restricted stock units and awards is primarily due to modifications to the terms of awards in 2017 (see Equity Award Modifications below) and the prior year expense related to 9 million stock options granted in February 2017 to former President and CEO E. Hunter Harrison which were forfeited upon his death in December 2017.

	Second Quarters				Six Months
(Dollars in millions)	2018		2017		2018		2017
Share-Based Compensation Expense:
Performance Units	$	8	$	18	$	14	$	39
Stock Options	2		21		6		32
Restricted Stock Units and Awards	2		5		3		9
Stock Awards for Directors	—		—		2		2
Total Share-Based Compensation Expense	$	12	$	44	$	25	$	82
Income Tax Benefit	$	9	$	13	$	17	$	29

CSX Q2 2018 Form 10-Q p.12

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3.     Share-Based Compensation, continued

Long-term Incentive Plan

In February 2018, the Company granted approximately 350 thousand performance units to certain employees under a new long-term incentive plan ("LTIP") for the years 2018 through 2020, which was adopted under the CSX Stock and Incentive Award Plan. Payouts of performance units for the cycle ending with fiscal year 2020 will be based on the achievement of goals related to both operating ratio and free cash flow, in each case excluding non-recurring items as disclosed in the Company's financial statements. The final year operating ratio and cumulative free cash flow over the plan period will each comprise 50% of the payout and will be measured independently of the other.

Grants were made in performance units, with each unit representing the right to receive 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 target awards depending on Company performance against predetermined goals. Payouts for certain executive officers are subject to upward or downward adjustment by up to 25%, capped at an overall payout of 200%, based upon the Company's total shareholder return relative to specified comparable groups over the performance period. The fair value of these performance units awarded in February 2018 was calculated using a Monte-Carlo simulation model with the following weighted-average assumptions:

	Six Months
	2018
Weighted-average assumptions used:
Annual dividend yield	1.6	%
Risk-free interest rate	2.3	%
Annualized volatility	29.2	%
Expected life (in years)	2.9

Stock Options

Also, in February 2018, the Company granted approximately 950 thousand stock options along with the corresponding LTIP. The fair value of stock options on the date of grant was $14.55 per option which was calculated using the Black-Scholes valuation model. Stock options have been granted with ten-year terms and vest three years after the date of grant. The exercise price for stock options granted equals the closing market price of the underlying stock on the date of grant. These awards are time-based and are not based upon attainment of performance goals. During second quarters 2018 and 2017, there were immaterial grants of stock options to certain members of management.

CSX Q2 2018 Form 10-Q p.13

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3.     Share-Based Compensation, continued

The fair values of all stock option awards during the quarters and six months ended June 30, 2018 and June 30, 2017 were estimated at the grant date with the following weighted average assumptions:

	Second Quarters						Six Months
	2018			2017			2018			2017
Weighted-average grant date fair value	$	17.62		$	12.27		$	14.64		$	12.83
Stock options valuation assumptions:
Annual dividend yield	1.3		%	1.5		%	1.5		%	1.5		%
Risk-free interest rate	2.8		%	2.1		%	2.6		%	2.2		%
Annualized volatility	25.8		%	27.0		%	27.0		%	27.1		%
Expected life (in years)	6.5			6.5			6.5			6.3
Other pricing model inputs:
Weighted-average grant-date market price of CSX stock (strike price)	$	65.44		$	47.80		$	54.14		$	49.60

Restricted Stock Units

Finally, in February 6, 2018, the Company granted approximately 85 thousand restricted stock units along with the corresponding LTIP. The restricted stock units vest three years after the date of grant. Participants receive cash dividend equivalents on the unvested shares during the restriction period. These awards are time-based and are not based upon attainment of performance goals. Restricted stock units were not granted to certain executive officers under the new LTIP. For information related to the Company's other outstanding long-term incentive compensation, see CSX's most recent annual report on Form 10-K.

Equity Award Modifications    

In 2017, as part of an enhanced severance benefit under the management streamlining and realignment initiative discussed in Note 1, unvested performance units, restricted stock units and stock options for separated employees not eligible for retirement were permitted to vest on a pro-rata basis. Additionally, the terms of unvested equity awards for the former Chief Executive Officer, Michael J. Ward, and former President, Clarence W. Gooden, were modified prior to their retirements on March 6, 2017 to permit prorated vesting through May 31, 2018.

The award modifications noted above impacted approximately 70 employees and resulted in an increase to share-based compensation expense for revaluation of the affected awards of $19 million for the second quarter and $31 million for the six months ended June 30, 2017. The expense associated with these award modifications was included in the 2017 restructuring charge. There have been no significant award modifications in 2018.

CSX Q2 2018 Form 10-Q p.14

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4.    Casualty, Environmental and Other Reserves

Personal injury and environmental reserves are considered critical accounting estimates due to the need for significant management judgment. Casualty, environmental and other reserves are provided for in the consolidated balance sheets as shown in the table below.

	June 30, 2018						December 31, 2017
(Dollars in millions)	Current		Long-term		Total		Current		Long-term		Total
Casualty:
Personal Injury	$	42	$	105	$	147	$	43	$	125	$	168
Occupational	7		47		54		6		54		60
Total Casualty	49		152		201		49		179		228
Environmental	37		54		91		31		59		90
Other	28		26		54		28		28		56
Total	$	114	$	232	$	346	$	108	$	266	$	374

These liabilities are accrued when reasonably estimable and probable in accordance with the Contingencies Topic in the ASC. Actual settlements and claims received could differ, and final outcomes 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 individually, when finally resolved, will have a material adverse effect on the Company's financial condition, results of operations or liquidity. Should a number of these items occur in the same period, however, their combined effect could be material in that particular period.

Casualty

Casualty reserves of $201 million and $228 million as of June 30, 2018 and December 31, 2017, respectively, represent accruals for personal injury, occupational disease and occupational injury claims. During the second quarter the Company increased its self-insured retention amount for these claims from $50 million to $75 million per occurrence for claims occurring on or after June 1, 2018. 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 estimate. 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 Company's casualty 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”). CSXT retains an independent actuary to assist management in assessing the value of personal injury claims. An analysis is performed by the actuary quarterly and is reviewed by management. This analysis for the quarter resulted in an immaterial adjustment to the personal injury reserve. The methodology used by the actuary includes a development factor to reflect growth or reduction in the value of these personal injury claims based largely on CSXT's historical claims and settlement experience.

CSX Q2 2018 Form 10-Q p.15

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4.    Casualty, Environmental and Other Reserves, continued

Occupational

Occupational reserves represent liabilities for occupational disease and injury claims. Occupational disease claims arise primarily from allegations of exposure to asbestos in the workplace. Occupational injury claims arise from allegations of exposure to certain other 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.

Environmental

Environmental reserves were $91 million and $90 million as of June 30, 2018 and December 31, 2017, respectively. 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 218 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 ("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.

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 reasonably 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. Environmental remediation costs are included in materials, supplies and other on the consolidated income statements.

CSX Q2 2018 Form 10-Q p.16

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4.    Casualty, Environmental and Other Reserves, continued

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 reasonably estimated. Based upon information currently available, however, the Company believes its environmental reserves accurately reflect the estimated cost of remedial actions currently required.

Other

Other reserves of $54 million and $56 million as of June 30, 2018 and December 31, 2017, respectively, include liabilities for various claims, such as property, automobile and general liability. Also included in other reserves are longshoremen disability claims related to a previously owned international shipping business (these claims are in runoff) as well as claims for current port employees.

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 property and liability programs. The Company has a $50 million per occurrence retention for floods and named windstorms and a $25 million per occurrence retention for property losses other than floods and named windstorms. For claims occurring on or after June 1, 2018, the Company increased its self-insured retention for third-party liability claims from $50 million to $75 million per occurrence. While the Company believes its insurance coverage is adequate, 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 fuel surcharge practices, tax matters, environmental and hazardous material exposure matters, FELA and labor claims by current or former employees, other personal injury or property 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 management that none of these pending items is likely to 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.

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 $117 million in aggregate at June 30, 2018. 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.

CSX Q2 2018 Form 10-Q p.17

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5.    Commitments and Contingencies, continued

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. In November 2007, the class action lawsuits were consolidated in federal court in the District of Columbia, where they are now pending. The suit seeks treble damages allegedly sustained by purported class members as well as attorneys' fees and other relief. Plaintiffs are expected to allege damages at least equal to the fuel surcharges at issue.

In June 2012, the District Court certified the case as a class action. The decision was not a ruling on the merits of plaintiffs' claims, but rather a decision to allow the plaintiffs to seek to prove the case as a class. The defendant railroads petitioned the U.S. Court of Appeals for the D.C. Circuit for permission to appeal the District Court's class certification decision. In August 2013, the D.C. Circuit issued a decision vacating the class certification decision and remanded the case to the District Court to reconsider its class certification decision. On October 10, 2017, the District Court issued an order denying class certification. The U.S. Court of Appeals for the D.C. Circuit is reviewing the District Court's denial of class certification and has scheduled oral argument to take place on September 28, 2018. The District Court has delayed proceedings on the merits of the case pending the outcome of the class certification remand proceedings.

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 resolution of this matter or 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.

Environmental

CSXT is indemnifying Pharmacia LLC (formerly known as Monsanto Company) for certain liabilities associated with real estate located in Kearny, New Jersey along the Lower Passaic River (the “Property”). The Property, which was formerly owned by Pharmacia, is now owned by CSXT. CSXT's indemnification and defense duties arise with respect to several matters. The U.S. Environmental Protection Agency ("EPA"), using its CERCLA authority, seeks cleanup and removal costs and other damages associated with the presence of hazardous substances in the 17-mile Lower Passaic River Study Area (the "Study Area”). CSXT, on behalf of Pharmacia, and a significant number of other potentially responsible parties are together conducting a Remedial Investigation and Feasibility Study of the Study Area pursuant to an Administrative Settlement Agreement and Order on Consent with the EPA.

In March 2016, EPA issued its Record of Decision detailing the agency’s mandated remedial process for the lower 8 miles of the Study Area. Approximately 80 parties, including Pharmacia, are participating in an EPA-directed allocation process to assign responsibility for costs to be incurred implementing the remedy selected for the lower 8 miles of the Study Area. CSXT is participating in the allocation process on behalf of Pharmacia. At a later date, EPA will select a remedy for the remainder of the Study Area and is expected to again seek the participation of private parties to implement the selected remedy using EPA’s CERCLA authority to compel such participation, if necessary.

CSXT is also defending and indemnifying Pharmacia in a cooperative natural resource damages assessment process related to the Property. Based on currently available information, the Company does not believe any indemnification or remediation costs potentially allocable to CSXT with respect to the Property and the Study Area would be material to the Company's financial condition, results of operations or liquidity.

CSX Q2 2018 Form 10-Q p.18

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6.    Employee Benefit Plans

The Company sponsors defined benefit pension plans principally for salaried, management personnel. CSX also sponsors a post-retirement medical plan and a life insurance plan that provide certain benefits to eligible employees hired prior to January 1, 2003. Independent actuaries compute the amounts of liabilities and expenses relating to these plans subject to the assumptions that the Company determines are appropriate based on historical trends, current market rates and future projections. These amounts are reviewed by management.

Only the service cost component of net periodic benefit costs is included in labor and fringe expense on the consolidated income statement. All other components of net periodic benefit cost are included in other income - net or, if related to prior year restructuring activities, as restructuring charge - non-operating.

	Pension Benefits
(Dollars in millions)	Second Quarters						Six Months
	2018			2017			2018			2017
Service Cost Included in Labor and Fringe	$	7		$	9		$	16		$	20
Interest Cost	23			23			46			46
Expected Return on Plan Assets	(43		)	(43		)	(87		)	(85		)
Amortization of Net Loss	10			10			20			21
Total Income Included in Other Income - Net	(10		)	(10		)	(21		)	(18		)
Net Periodic Benefit Cost	$	(3	)	$	(1	)	$	(5	)	$	2
Restructuring Charges - Non Operating (a)	—			7			—			57
Total (Income) Expense	$	(3	)	$	6		$	(5	)	$	59
	Other Post-retirement Benefits
(Dollars in millions)	Second Quarters						Six Months
	2018			2017			2018			2017
Service Cost Included in Labor and Fringe	$	1		$	1		$	1		$	1
Interest Cost	1			2			3			4
Total Expense Included in Other Income - Net	1			2			3			4
Net Periodic Benefit Cost	$	2		$	3		$	4		$	5
Restructuring Charges - Non Operating  (a)	—			—			—			13
Total Expense	$	2		$	3		$	4		$	18

(a) Charges related to special termination benefits and curtailment costs were the result of the management workforce reductions in first quarter 2017. See Management Workforce Reductions in Note 1. Nature of Operations and Significant Accounting Policies.

Qualified pension plan obligations are funded in accordance with regulatory requirements and with an objective of meeting or exceeding minimum funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments. No contributions to the Company's qualified pension plans are required in 2018.

CSX Q2 2018 Form 10-Q p.19

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7.    Debt and Credit Agreements

Total activity related to long-term debt as of the end of second quarter 2018 is shown in the table below. For fair value information related to the Company's long-term debt, see Note 9, Fair Value Measurements.

(Dollars in millions)	Current Portion		Long-term Portion			Total
Long-term debt as of December 31, 2017	$	19	$	11,790		$	11,809
2018 activity:
Long-term debt issued	—		2,000			2,000
Discount, premium and other activity			(21		)	(21		)
Long-term debt as of June 30, 2018	$	19	$	13,769		$	13,788

Debt Issuance

    On February 20, 2018, CSX issued $800 million of 3.80% notes due 2028, $850 million of 4.30% notes due 2048, and $350 million of 4.65% notes due 2068. These notes are included in the consolidated balance sheets under long-term debt and may be redeemed by the Company at any time, subject to payment of certain make-whole premiums. The net proceeds will be used for general corporate purposes, which may include repurchases of CSX's common stock, capital investment, working capital requirements, improvements in productivity and other cost reductions at the Company’s major transportation units.

Credit Facility

CSX has a $1 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This facility expires in May 2020, and as of the date of this filing, the Company has no outstanding balances under this facility. The facility allows borrowings at floating (LIBOR-based) interest rates, plus a spread, depending upon CSX's senior unsecured debt ratings. LIBOR is the London Interbank Offered Rate which is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds.

Commitment fees and interest rates payable under the facility were similar to fees and rates available to comparably rated investment-grade borrowers. As of second quarter 2018, CSX was in compliance with all covenant requirements under this facility.

Receivables Securitization Facility

The Company has a receivables securitization facility with a three-year term scheduled to expire in September 2019. The purpose of this facility is to provide an alternative to commercial paper and a low cost source of short-term liquidity of up to $200 million, depending on eligible receivables balances. As of the date of this filing, the Company has no outstanding balances under this facility.

CSX Q2 2018 Form 10-Q p.20

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 8.    Income Taxes

The effective tax rate decreased to 23.5% from 38.1% for the six months ended June 30, 2018 and June 30, 2017, respectively, primarily as a result of the significant reduction in the federal corporate income tax rate effective January 1, 2018. In its initial analysis of the impacts of the Tax Cuts and Job Act (the “Act” or “tax reform”), the Company made certain estimates that may be adjusted in future periods as required. The Act has significant complexity and implementation guidance from the Internal Revenue Service, clarifications of state tax law and the completion of the Company’s 2017 tax return filings, among other things, could all impact these estimates. The Company does not believe potential adjustments in future periods would materially impact the Company's financial condition or results of operations.

There have been no material changes to the balance of unrecognized tax benefits reported at December 31, 2017.

NOTE 9.    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.); and

• Level 3 - significant unobservable inputs (including the Company's own assumptions about the assumptions market participants would use in determining the fair value of investments).

The valuation methods described below may produce a fair value calculation that may not be 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 assistance from a third-party trustee, consist of certificates of deposits, commercial paper, corporate bonds and government 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 and Commercial Paper (Level 2): Valued at amortized cost, which approximates fair value; and

• Corporate Bonds and Government Securities (Level 2): Valued using broker quotes that utilize observable market inputs.

CSX Q2 2018 Form 10-Q p.21

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9.    Fair Value Measurements, continued

The Company's investment assets are carried at fair value on the consolidated balance sheets as summarized in the following table. All of the inputs used to determine the fair value of the Company's investments are Level 2 inputs. The amortized cost basis of these investments was $170 million and $95 million as of June 30, 2018 and December 31, 2017, respectively.

(Dollars in Millions)	June 30, 2018		December 31, 2017
Certificates of Deposit and Commercial Paper	$	75	$	—
Corporate Bonds	57		61
Government Securities	39		34
Total investments at fair value	$	171	$	95

These investments have the following maturities:

(Dollars in millions)	June 30, 2018		December 31, 2017
Less than 1 year	$	82	$	18
1 - 5 years	16		11
5 - 10 years	27		26
Greater than 10 years	46		40
Total investments at fair value	$	171	$	95

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 assistance from an independent third party adviser that utilizes closing transactions, market quotes or market values of comparable debt. For those instruments not valued by the independent adviser, 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 independent adviser. 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, credit ratings, 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.

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

(Dollars in millions)	June 30, 2018		December 31, 2017
Long-term Debt (Including Current Maturities):
Fair Value	$	14,069	$	13,220
Carrying Value	13,788		11,809

CSX Q2 2018 Form 10-Q p.22

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 10.     Other Comprehensive Income (Loss)

CSX reports comprehensive earnings or loss in accordance with the Comprehensive Income Topic in the ASC in the Consolidated Comprehensive Income Statement. 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 equal 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 $881 million and $575 million for second quarters and $1.5 billion and $943 millionfor six months2018 and 2017, 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, net of tax, as of the balance sheet date. For CSX, AOCI is primarily the cumulative balance related to pension and other post-retirement benefit adjustments and CSX's share of AOCI of equity method investees.

Changes in the AOCI balance by component are shown in the table below. Amounts reclassified in pension and other post-employment benefits to net earnings relate to the amortization of actuarial losses and are included in labor and fringe on the consolidated income statements. See Note 6, Employee Benefit Plans, for further information. Other primarily represents CSX's share of AOCI of equity method investees. Amounts reclassified in other to net earnings are included in equity earnings of affiliates on the consolidated income statements.

	Pension and Other Post-Employment Benefits			Other			Accumulated Other Comprehensive Income (Loss)
(Dollars in millions)
Balance December 31, 2017, Net of Tax	$	(440	)	$	(46	)	$	(486	)
Other Comprehensive Income (Loss)
Loss Before Reclassifications	—			(1		)	(1		)
Amounts Reclassified to Net Earnings	20			(3		)	17
Tax (Expense) Benefit	(5		)	1			(4		)
Reclassification of Stranded Tax Effects	(108		)	1			(107		)
Total Other Comprehensive Loss	(93		)	(2		)	(95		)
Balance June 30, 2018, Net of Tax	$	(533	)	$	(48	)	$	(581	)

CSX Q2 2018 Form 10-Q p.23

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.     Revenues

The Company’s revenues are primarily derived from the transportation of freight as performance obligations that arise from its contracts with customers are satisfied. The following table presents the Company’s revenues disaggregated by lines of business as they best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors:

	Second Quarters				Six Months
(Dollars in millions)	2018		2017		2018		2017
Chemicals	$	588	$	552	$	1,145	$	1,118
Automotive	330		307		634		623
Agricultural and Food Products	327		321		634		653
Forest Products	215		194		410		386
Metals and Equipment	198		178		384		368
Minerals	137		128		251		242
Fertilizers	112		118		228		247
Total Merchandise	1,907		1,798		3,686		3,637
Domestic Coal	317		350		590		680
Export Coal	252		180		482		372
Total Coal	569		530		1,072		1,052
Domestic Intermodal	323		308		617		599
International Intermodal	167		140		322		283
Total Intermodal	490		448		939		882
Other	136		157		281		231
Total	$	3,102	$	2,933	$	5,978	$	5,802

Revenue Recognition

The Company generates revenue from freight billings under contracts with customers generally on a rate per carload, container or ton-basis based on origin to destination and commodities carried. The Company’s performance obligation arises when it receives a bill of lading (“BOL”) to transport a customer's commodities at a negotiated price contained in a transportation services agreement or a publicly disclosed tariff rate. Once a BOL is received, a contract is formed whereby the parties are committed to perform, collectability of consideration is probable and the rights of the parties, shipping terms and conditions, and payment terms are identified. A customer may submit several BOLs for transportation services at various times throughout a service agreement term but each shipment represents a distinct service that is a separately identified performance obligation. The average transit time to complete a shipment is between 3 to 8 days and payments for transportation services are normally billed once a BOL is received and are generally due within 15 days after the invoice date. The Company recognizes revenue over transit time of freight as it moves from origin to destination. Revenue for services started but not completed at the reporting date is allocated based on the relative transit time in each reporting period, with the portion allocated for services subsequent to the reporting date considered remaining performance obligations.

CSX Q2 2018 Form 10-Q p.24

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.     Revenues, continued

The certain key estimates included in the recognition and measurement of revenue and related accounts receivable are as follows:

• Revenue associated with shipments in transit is recognized ratably over transit time and is based on average cycle times to move commodities and products from their origin to their final destination or interchange;

• Adjustments to revenue for billing corrections and billing discounts;

• Adjustments to revenue for overcharge claims filed by customers, which are based on historical payments to customers for rate overcharges as a percentage of total billing;

• Incentive-based refunds to customers, which are primarily volume-related, are recorded as a reduction to revenue on the basis of the projected liability (this estimate is based on historical activity, current volume levels and forecasted future volume).

Revenue related to interline transportation services that involve the services of another party, such as another railroad, is reported on a net basis. The portion of the gross amount billed to customers that is remitted by the Company to another party is not reflected as revenue.

Other revenue, which includes revenue from regional subsidiary railroads, demurrage, switching and other incidental charges, is recorded upon completion of the service and accounted for 4%of the Company’s total revenue in the second quarter and 5% for the six months ended June 30, 2018. Revenue from regional subsidiary railroads includes shipments by railroads that the Company does not directly operate. Demurrage represents charges assessed when freight cars are held beyond a specified period of time. Switching revenue is primarily generated when the Company switches cars for a customer or another railroad.

During the second quarters of 2018 and 2017, revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price), was not material.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to future reporting periods for freight services started but not completed at the reporting date. This includes the unearned portion of billed and unbilled amounts for cancellable freight shipments in transit that the Company expects to recognize as revenue in the period subsequent to the reporting date, which is on average less than one week. As of June 30, 2018, the Company had no material remaining performance obligations.

Contract Balances and Accounts Receivable

The timing of revenue recognition, billings and cash collections results in accounts receivable and customer advances and deposits (contract liabilities) on the consolidated balance sheets. The Company had no material contract assets, contract liabilities or deferred contract costs recorded on the consolidated balance sheet as of June 30, 2018.

CSX Q2 2018 Form 10-Q p.25

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11.     Revenues, continued

The Company’s accounts receivable - net consists of freight and non-freight receivables, reduced by an allowance for doubtful accounts.

(Dollars in millions)	June 30, 2018			December 31, 2017
Freight Receivables	$	844		$	810
Freight Allowance for Doubtful Accounts	(17		)	(17		)
Freight Receivables, net	827			793
Non-Freight Receivables	218			186
Non-Freight Allowance for Doubtful Accounts	(9		)	(9		)
Non-Freight Receivables, net	209			177
Total Accounts Receivable, net	$	1,036		$	970

Freight receivables include amounts earned, billed and unbilled, and currently due from customersfor transportation-related services. Non-freight receivables include amounts billed and unbilled and currently due related to government reimbursement receivables and other non-revenue receivables. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and economic conditions.Impairment losses recognized on the Company’s accounts receivable were not material in the second quarters of 2018 and 2017.

NOTE 12.    Summarized Consolidating Financial Data

In 2007, CSXT, a wholly-owned subsidiary of CSX Corporation, sold secured equipment notes maturing in 2023 in a registered public offering. 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 shown in the following tables.

CSX Q2 2018 Form 10-Q p.26

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 12.Summarized Consolidating Financial Data, continued

Consolidating Income Statements
(Dollars in millions)
Second Quarter 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	3,083		$	19		$	3,102
Expense	(84		)	1,948			(45		)	1,819
Operating Income	84			1,135			64			1,283
Equity in Earnings of Subsidiaries	942			—			(942		)	—
Interest (Expense) / Benefit	(181		)	(8		)	32			(157		)
Other Income / (Expense) - Net	6			29			(17		)	18
Earnings Before Income Taxes	851			1,156			(863		)	1,144
Income Tax Benefit / (Expense)	26			(274		)	(19		)	(267		)
Net Earnings	$	877		$	882		$	(882	)	$	877
Total Comprehensive Earnings	$	881		$	881		$	(881	)	$	881
Second Quarter 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,914		$	19		$	2,933
Expense	6			2,024			(54		)	1,976
Operating Income	(6		)	890			73			957
Equity in Earnings of Subsidiaries	612			—			(612		)	—
Interest (Expense) / Benefit	(143		)	(8		)	14			(137		)
Other Income / (Expense) - Net	2			7			(2		)	7
Earnings Before Income Taxes	465			889			(527		)	827
Income Tax Benefit / (Expense)	45			(332		)	(30		)	(317		)
Net Earnings	$	510		$	557		$	(557	)	$	510
Total Comprehensive Earnings	$	575		$	558		$	(558	)	$	575

CSX Q2 2018 Form 10-Q p.27

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 12.Summarized Consolidating Financial Data, continued

Consolidating Income Statements
(Dollars in millions)
Six Months 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	5,940		$	38		$	5,978
Expense	(162		)	3,891			(78		)	3,651
Operating Income	162			2,049			116			2,327
Equity in Earnings of Subsidiaries	1,700			—			(1,700		)	—
Interest (Expense) / Benefit	(345		)	(17		)	56			(306		)
Other Income / (Expense) - Net	10			52			(27		)	35
Earnings Before Income Taxes	1,527			2,084			(1,555		)	2,056
Income Tax (Expense) / Benefit	45			(498		)	(31		)	(484		)
Net Earnings	$	1,572		$	1,586		$	(1,586	)	$	1,572
Total Comprehensive Earnings	$	1,477		$	1,581		$	(1,581	)	$	1,477
Six Months 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	5,765		$	37		$	5,802
Expense	(42		)	4,194			(76		)	4,076
Operating Income	42			1,571			113			1,726
Equity in Earnings of Subsidiaries	1,034			—			(1,034		)	—
Interest (Expense) / Benefit	(285		)	(18		)	29			(274		)
Other Income / (Expense) - Net	5			(40		)	(8		)	(43		)
Earnings Before Income Taxes	796			1,513			(900		)	1,409
Income Tax (Expense) / Benefit	76			(567		)	(46		)	(537		)
Net Earnings	$	872		$	946		$	(946	)	$	872
Total Comprehensive Earnings	$	943		$	945		$	(945	)	$	943

CSX Q2 2018 Form 10-Q p.28

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 12.Summarized Consolidating Financial Data, continued

Consolidating Balance Sheet
(Dollars in millions)
June 30, 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	1,172		$	143		$	5		$	1,320
Short-term Investments	75			—			8			83
Accounts Receivable - Net	(6		)	271			771			1,036
Receivable from Affiliates	1,005			4,360			(5,365		)	—
Materials and Supplies	—			326			—			326
Other Current Assets	—			98			18			116
Total Current Assets	2,246			5,198			(4,563		)	2,881
Properties	1			41,492			2,813			44,306
Accumulated Depreciation	(1		)	(10,928		)	(1,530		)	(12,459		)
Properties - Net	—			30,564			1,283			31,847
Investments in Conrail	—			—			931			931
Affiliates and Other Companies	(39		)	832			17			810
Investments in Consolidated Subsidiaries	30,585			—			(30,585		)	—
Other Long-term Assets	65			630			(240		)	455
Total Assets	$	32,857		$	37,224		$	(33,157	)	$	36,924
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	93		$	710		$	49		$	852
Labor and Fringe Benefits Payable	38			381			67			486
Payable to Affiliates	5,536			441			(5,977		)	—
Casualty, Environmental and Other Reserves	—			101			13			114
Current Maturities of Long-term Debt	—			18			1			19
Income and Other Taxes Payable	(389		)	480			32			123
Other Current Liabilities	2			126			10			138
Total Current Liabilities	5,280			2,257			(5,805		)	1,732
Casualty, Environmental and Other Reserves	—			190			42			232
Long-term Debt	13,039			730			—			13,769
Deferred Income Taxes - Net	(109		)	6,436			205			6,532
Other Long-term Liabilities	638			305			(307		)	636
Total Liabilities	$	18,848		$	9,918		$	(5,865	)	$	22,901
Shareholders' Equity
Common Stock, $1 Par Value	$	859		$	181		$	(181	)	$	859
Other Capital	127			5,096			(5,096		)	127
Retained Earnings	13,604			22,025			(22,025		)	13,604
Accumulated Other Comprehensive Loss	(581		)	(10		)	10			(581		)
Noncontrolling Interest	—			14			—			14
Total Shareholders' Equity	$	14,009		$	27,306		$	(27,292	)	$	14,023
Total Liabilities and Shareholders' Equity	$	32,857		$	37,224		$	(33,157	)	$	36,924

CSX Q2 2018 Form 10-Q p.29

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 12.Summarized Consolidating Financial Data, continued

Consolidating Balance Sheet (Dollars in millions)
December 31, 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	274		$	121		$	6		$	401
Short-term Investments	—			—			18			18
Accounts Receivable - Net	(1		)	301			670			970
Receivable from Affiliates	1,226			3,517			(4,743		)	—
Materials and Supplies	—			372			—			372
Other Current Assets	(1		)	145			10			154
Total Current Assets	1,498			4,456			(4,039		)	1,915
Properties	1			41,479			2,844			44,324
Accumulated Depreciation	(1		)	(11,017		)	(1,542		)	(12,560		)
Properties - Net	—			30,462			1,302			31,764
Investments in Conrail	—			—			907			907
Affiliates and Other Companies	(39		)	800			18			779
Investment in Consolidated Subsidiaries	29,405			—			(29,405		)	—
Other Long-term Assets	39			596			(261		)	374
Total Assets	$	30,903		$	36,314		$	(31,478	)	$	35,739
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	105		$	708		$	34		$	847
Labor and Fringe Benefits Payable	52			494			56			602
Payable to Affiliates	4,792			552			(5,344		)	—
Casualty, Environmental and Other Reserves	—			95			13			108
Current Maturities of Long-term Debt	—			19			—			19
Income and Other Taxes Payable	(326		)	455			28			157
Other Current Liabilities	5			153			3			161
Total Current Liabilities	4,628			2,476			(5,210		)	1,894
Casualty, Environmental and Other Reserves	—			222			44			266
Long-term Debt	11,056			733			1			11,790
Deferred Income Taxes - Net	(130		)	6,342			206			6,418
Other Long-term Liabilities	644			320			(314		)	650
Total Liabilities	$	16,198		$	10,093		$	(5,273	)	$	21,018
Shareholders' Equity
Common Stock, $1 Par Value	$	890		$	181		$	(181	)	$	890
Other Capital	217			5,096			(5,096		)	217
Retained Earnings	14,084			20,933			(20,933		)	14,084
Accumulated Other Comprehensive Loss	(486		)	(5		)	5			(486		)
Noncontrolling Minority Interest	—			16			—			16
Total Shareholders' Equity	$	14,705		$	26,221		$	(26,205	)	$	14,721
Total Liabilities and Shareholders' Equity	$	30,903		$	36,314		$	(31,478	)	$	35,739

CSX Q2 2018 Form 10-Q p.30

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 12.Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Six Months 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	1,311		$	1,245		$	(547	)	$	2,009
Investing Activities
Property Additions	—			(762		)	(61		)	(823		)
Proceeds from Property Dispositions	—			141			—			141
Purchases of Short-term Investments	(75		)	—			(2		)	(77		)
Proceeds from Sales of Short-term Investments	—			—			12			12
Other Investing Activities	(1		)	(99		)	92			(8		)
Net Cash Provided by (Used in) Investing Activities	(76		)	(720		)	41			(755		)
Financing Activities
Long-term Debt Issued	2,000			—			—			2,000
Long-term Debt Repaid	—			—			—			—
Dividends Paid	(384		)	(500		)	500			(384		)
Shares Repurchased	(1,810		)	—			—			(1,810		)
Accelerated Share Repurchase Pending Final Settlement	(90		)	—			—			(90		)
Other Financing Activities	(53		)	(3		)	5			(51		)
Net Cash Provided by (Used in) Financing Activities	(337		)	(503		)	505			(335		)
Net Increase (Decrease) in Cash and Cash Equivalents	898			22			(1		)	919
Cash and Cash Equivalents at Beginning of Period	274			121			6			401
Cash and Cash Equivalents at End of Period	$	1,172		$	143		$	5		$	1,320

CSX Q2 2018 Form 10-Q p.31

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 12.Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Six Months 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	814		$	973		$	(221	)	$	1,566
Investing Activities
Property Additions	—			(873		)	(82		)	(955		)
Proceeds from Property Dispositions	—			16			—			16
Purchases of Short-term Investments	(539		)	—			(6		)	(545		)
Proceeds from Sales of Short-term Investments	490			—			2			492
Other Investing Activities	(2		)	35			(8		)	25
Net Cash Used in Investing Activities	(51		)	(822		)	(94		)	(967		)
Financing Activities
Long-term Debt Issued	850			—			—			850
Long-term Debt Repaid	(313		)	—			—			(313		)
Dividends Paid	(350		)	(300		)	300			(350		)
Shares Repurchased	(757		)	—			—			(757		)
Other Financing Activities	(15		)	(4		)	7			(12		)
Net Cash Provided by (Used in) Financing Activities	(585		)	(304		)	307			(582		)
Net Increase (Decrease) in Cash and Cash Equivalents	178			(153		)	(8		)	17
Cash and Cash Equivalents at Beginning of Period	305			281			17			603
Cash and Cash Equivalents at End of Period	$	483		$	128		$	9		$	620

CSX Q2 2018 Form 10-Q p.32

CSX CORPORATION

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

SECOND QUARTER 2018 HIGHLIGHTS

• Revenue increased$169 million to $3.1 billion, or 6% year over year.

• Expenses decreased$157 million to $1.8 billion, or 8% year over year.

• Operating income of $1.3 billionincreased$326 million, or 34% year over year.

• Operating ratio of 58.6%improved880 basis points versus last year's quarter.

• Earnings per diluted share of $1.01increased$0.46, or 84% year over year.

	Second Quarters									Six Months
	2018			2017			Fav / (Unfav)		% Change	2018			2017			Fav / (Unfav)			% Change
Volume (in thousands)	1,646			1,620			26		2%	3,178			3,212			(34		)	(1)%
(in millions)
Revenue	$	3,102		$	2,933		$	169	6%	$	5,978		$	5,802		$	176		3%
Expense	1,819			1,976			157		8%	3,651			4,076			425			10%
Operating Income	$	1,283		$	957		$	326	34%	$	2,327		$	1,726		$	601		35%
Operating Ratio	58.6		%	67.4		%	880		bps	61.1		%	70.3		%	920			bps
Earnings Per Diluted Share	$	1.01		$	0.55		$	0.46	84%	$	1.79		$	0.94		$	0.85		90%

CSX Q2 2018 Form 10-Q p.33

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)
Second Quarters
	Volume				Revenue						Revenue Per Unit
	2018	2017	% Change		2018		2017		% Change		2018		2017		% Change
Chemicals	169	169	—	%	$	588	$	552	7	%	$	3,479	$	3,266	7	%
Automotive	118	116	2		330		307		7		2,797		2,647		6
Agricultural and Food Products	112	114	(2	)	327		321		2		2,920		2,816		4
Minerals	86	83	4		137		128		7		1,593		1,542		3
Forest Products	71	67	6		215		194		11		3,028		2,896		5
Metals and Equipment	69	67	3		198		178		11		2,870		2,657		8
Fertilizers	64	78	(18	)	112		118		(5	)	1,750		1,513		16
Total Merchandise	689	694	(1	)	1,907		1,798		6		2,768		2,591		7
Coal	222	208	7		569		530		7		2,563		2,548		1
Intermodal	735	718	2		490		448		9		667		624		7
Other	—	—	—		136		157		(13	)	—		—		—
Total	1,646	1,620	2	%	$	3,102	$	2,933	6	%	$	1,885	$	1,810	4	%
Six Months
	Volume				Revenue						Revenue Per Unit
	2018	2017	% Change		2018		2017		% Change		2018		2017		% Change
Chemicals	331	344	(4	)%	$	1,145	$	1,118	2	%	$	3,459	$	3,250	6	%
Automotive	230	235	(2	)	634		623		2		2,757		2,651		4
Agricultural and Food Products	219	235	(7	)	634		653		(3	)	2,895		2,779		4
Minerals	152	153	(1	)	251		242		4		1,651		1,582		4
Forest Products	138	134	3		410		386		6		2,971		2,881		3
Metals and Equipment	133	137	(3	)	384		368		4		2,887		2,686		7
Fertilizers	128	155	(17	)	228		247		(8	)	1,781		1,594		12
Total Merchandise	1,331	1,393	(4	)	3,686		3,637		1		2,769		2,611		6
Coal	423	413	2		1,072		1,052		2		2,534		2,547		(1	)
Intermodal	1,424	1,406	1		939		882		6		659		627		5
Other	—	—	—		281		231		22		—		—		—
Total	3,178	3,212	(1	)%	$	5,978	$	5,802	3	%	$	1,881	$	1,806	4	%

CSX Q2 2018 Form 10-Q p.34

CSX CORPORATION

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

Second Quarter 2018

Revenue

Total revenue increased six percent for second quarter 2018 when compared to second quarter 2017, primarily due to increases in fuel recovery, price increases across all markets and volume growth in most markets, partially offset by lower other revenue.

Merchandise

Chemicals - Volume was flat as stronger municipal waste, industrial chemicals and energy shipments were offset by reduced fly ash shipments.

Automotive - Volume increased due to stronger demand for trucks and SUVs, which drove higher North American vehicle production for this segment.

Agricultural and Food Products - Volume declined due to losses in the ethanol market, which were partially offset by gains in the export grain market.

Minerals - Volume increased due to stronger aggregate shipments for construction and paving projects.

Forest Products - Volume increased due to strength in building and paper products.

Metals and Equipment - Volume increased due to stronger metals shipments driven by truck conversions to rail, higher mill capacity utilization and greater demand for construction and pipe.

Fertilizers - Volume declined primarily due to the closure of a customer facility in late 2017 that previously moved short-haul rail shipments.

Coal

Domestic Coal - Utility coal volume declined reflecting strong competition from natural gas. Coke, iron ore and other volume increased primarily driven by stronger river shipments for domestic steel production.

Export Coal - Volume increased as global supply levels and elevated global benchmark prices supported continued demand for U.S. coal.

Intermodal

Domestic - Volume declined slightly as rationalization of low-density lanes in late 2017 more than offset growth with existing customers due to tightening truck capacity.

International - Volume increased driven by new customers and strong performance with existing customers, which more than offset losses from the rationalization of low-density lanes in late 2017.

Other

Other revenue decreased $21 million versus prior year due to a $58 million settlement in 2017 related to a customer that did not meet historical volume commitments. This was partially offset by increases in incidental charges.

CSX Q2 2018 Form 10-Q p.35

CSX CORPORATION

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

Expenses

Expenses of $1.8 billiondecreased$157 million, or eight percent, year over year. Excluding a restructuring charge of $115 million in 2017, expenses decreased $42 million, or two percent, primarily driven by reductions in workforce, crew starts, and the active locomotive fleet as a result of implementing scheduled railroading, partially offset by fuel price increases of $69 million.

Labor and Fringe expense decreased$82 million from 2017 primarily due to reduced headcount and crew starts resulting from the implementation of scheduled railroading and lower operating costs.

Materials, Supplies and Other expense decreased$27 million due to the following:

• Real estate gains were $37 million in 2018, and there were none in second quarter 2017.

• A prior year favorable judgment for a previously condemned property resulted in a $55 million gain in 2017.

• Other costs decreased $45 million primarily related to lower maintenance costs from the reduction in the active locomotive fleet, a reduction in contingent workers, and less operating support costs.

Depreciation expense increased slightly primarily due to impacts from changes in the asset base.

Fuel expense increased$72 million due to the following:

• A 36 percent price increase drove $69 million in additional fuel expense.

• Higher volume-related fuel costs and other non-significant items were partially offset by cost savings from locomotive fuel reduction initiatives.

Equipment and Other Rents expense increased$7 millionprimarily due to higher volume-related costs.

Equity Earnings of Affiliates increased $14 million primarily due to higher net earnings at TTX and Conrail, including an affiliate's property sale in 2018.

Interest expenseincreased$20 million primarily due to higher average debt balances, partially offset by lower average interest rates.

Other income - netincreased$4 million primarily due to increased yields on investment securities.

Income tax expensedecreased$50 million primarily due to the reduction of the federal income tax rate and a benefit related to state legislative changes, partially offset by increased earnings before income taxes. The effective tax rate decreased to 23.3% from 38.3% year over year primarily as a result of the significant reduction in the federal corporate income tax rate due to tax reform effective January 1, 2018.

CSX Q2 2018 Form 10-Q p.36

CSX CORPORATION

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

Six Months Results of Operations

Revenue increased $176 million primarily due to higher fuel recovery, price increases across most markets and an increase in other revenue, partially offset by a slight decline in volume.

Expenses decreased $425 million primarily driven by reductions in workforce, crew starts, and the active locomotive fleet as a result of implementing scheduled railroading and a restructuring charge of $225 million in 2017, partially offset by fuel price increases of $117 million.

Interest expense increased $32 million primarily due to higher average debt balances, partially offset by lower average interest rates.

Other income - net increased $8 million primarily due to increased yields on investment securities.

Income tax expense decreased $53 million primarily due to the reduction of the federal income tax rate, partially offset by increased earnings before income taxes. The effective tax rate decreased to 23.5% from 38.1% year over year primarily as a result of the significant reduction in the federal corporate income tax rate due to tax reform effective January 1, 2018.

CSX Q2 2018 Form 10-Q p.37

CSX CORPORATION

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

Non-GAAP Measures - Unaudited

CSX reports its financial results in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). CSX also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior reported results.  Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP. Therefore, CSX’s non-GAAP measures are unlikely to be comparable to similar measures presented by other companies. The presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with GAAP. Reconciliations of non-GAAP measures to corresponding GAAP measures are below.

Prior Year Adjusted Operating Results

Management believes that adjusted operating income, adjusted operating ratio, adjusted net earnings and adjusted net earnings per share, assuming dilution are important in evaluating the Company’s operating performance and for planning and forecasting future business operations and future profitability. These non-GAAP measures provide meaningful supplemental information regarding operating results because they exclude certain significant items that are not considered indicative of future financial trends.

As noted in Note 1. Nature of Operations and Significant Accounting Policies, the Company adopted the provisions of an accounting standard related to the presentation of net pension and other post-retirement benefit costs during the first quarter 2018 and applied them retrospectively. The retrospective impact of adoption for the second quarter and six months ended 2017 is shown in the following tables.

	Second Quarter 2017
(in millions, except operating ratio and net earnings per share, assuming dilution)	Operating Income			Operating Ratio		Net Earnings		Net Earnings Per Share, Assuming Dilution
As Previously Reported - GAAP	$	958		67.4	%	$	510	$	0.55
Reclassification of Net Pension and Other Post-Retirement Benefit (Expense)	(1		)	—	%	—		—
As Reclassified - GAAP	$	957		67.4	%	$	510	$	0.55
Restructuring Charge (a)(c)	115			(3.9	)%	81		0.09
Adjusted Operating Results (non-GAAP)	$	1,072		63.5	%	$	591	$	0.64

	Six Months 2017
(in millions, except operating ratio and net earnings per share, assuming dilution)	Operating Income		Operating Ratio		Net Earnings		Net Earnings Per Share, Assuming Dilution
As Previously Reported - GAAP	$	1,670	71.2	%	$	872	$	0.94
Reclassification of Net Pension and Other Post-Retirement Benefit (Expense)	56		(0.9	)%	—		—
As Reclassified - GAAP	$	1,726	70.3	%	$	872	$	0.94
Restructuring Charge (b)(c)	225		(3.9	)%	189		0.21
Adjusted Operating Results (non-GAAP)	$	1,951	66.4	%	$	1,061	$	1.15

(a) For second quarter 2017, $7 million of the $122 million restructuring charge was reclassified to non-operating income (expense).

(b) For six months ended 2017, $70 million of the $295 million restructuring charge was reclassified to non-operating income (expense).

(c) The restructuring charge was tax effected using rates reflective of the applicable tax amounts for each component of the restructuring charge.

CSX Q2 2018 Form 10-Q p.38

CSX CORPORATION

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

Adjusted Free Cash Flow

Management believes that free cash flow is supplemental information useful to investors as it is important in evaluating the Company’s financial performance. More specifically, free cash flow measures cash generated by the business after reinvestment. This measure represents cash available for both equity and bond investors to be used for dividends, share repurchases or principal reduction on outstanding debt. Free cash flow should be considered in addition to, rather than a substitute for, cash provided by operating activities. Free cash flow is calculated by using net cash from operations and adjusting for property additions and certain other investing activities. The following table reconciles cash provided by operating activities (GAAP measure) to adjusted free cash flow after restructuring, before dividends (non-GAAP measure). The restructuring charge impact to free cash flow was tax effected using the Company's applicable tax rate.

	Six Months
(Dollars in millions)	2018			2017
Net cash provided by operating activities	$	2,009		$	1,566
Property additions	(823		)	(955		)
Other investing activities	133			41
Free Cash Flow (before payment of dividends)	1,319			652
Add back: Cash Payments for Restructuring Charge (after-tax) (a)	10			85
Adjusted Free Cash Flow Before Dividends (non-GAAP)	$	1,329		$	737

(a) The Company made cash payments related to the restructuring charge of $13 million and $129 million in six months ended 2018 and 2017, respectively. The Company also made a $7 million payment in 2017 to the former CEO and President for previously accrued non-qualified pension benefits that is not included in the restructuring charge.

Operating Statistics (Estimated)

The Company strives for continuous improvement in safety and service performance through training, innovation and investment. Investment in training and technology also is designed to allow the Company's employees to have an additional layer of protection that can detect and avoid many types of human factor incidents. Safety programs are designed to prevent incidents that can adversely impact employees, customers and communities. Continued capital investment in the Company's assets, including track, bridges, signals, equipment and detection technology also supports safety performance.

Effective third quarter 2017, the methodologies for calculating train velocity and terminal dwell were changed in order to more accurately represent operating performance. These revisions are consistent with the principles of scheduled railroading. Updated definitions for each key performance measure are included beneath the Operating Statistics table. Prior periods have been restated to conform to the current methodology. These revisions differ from the methodology prescribed by the Surface Transportation Board ("STB") for reporting train velocity and dwell. Train velocity and dwell will continue to be reported, using the prescribed methodology, to the STB on a weekly basis.

CSX Q2 2018 Form 10-Q p.39

CSX CORPORATION

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

From an operating perspective, train velocity and car dwell improved seven and eleven percent, respectively, to record levels in second quarter 2018. The operational plan is focused on delivering further service gains, improving transit times and driving asset utilization while controlling costs.

From a safety perspective, the FRA reportable personal injury frequency index of 0.91 for second quarter 2018 improved year over year, driven by a reduction in the number of personal injuries. The FRA train accident frequency rate of 3.72 for the quarter was unfavorable, driven by an increase in train accidents as well as fewer train miles due to implementing scheduled railroading and more direct routing across the network.

The Company is committed to continuous safety improvement and remains focused on reducing risk and improving its safety culture. In second quarter 2018, the Company made changes in safety leadership and engaged external resources to enhance the overall safety of its employees, customers, and communities in which the Company operates.

	Second Quarters						Six Months
	2018		2017		Improvement/ (Deterioration)		2018		2017		Improvement/ (Deterioration)
Operations Performance
Train Velocity (Miles per hour)(a)	17.4		16.2		7	%	17.4		15.1		15	%
Dwell (Hours)(a)	9.7		10.9		11	%	10.1		11.2		10	%
Revenue Ton-Miles (Billions)
Merchandise	32.8		31.2		5	%	64.2		63.0		2	%
Coal	11.8		10.6		11	%	22.1		21.2		4	%
Intermodal	7.7		7.3		5	%	14.7		14.3		3	%
Total Revenue Ton-Miles	52.3		49.1		7	%	101.0		98.5		3	%
Total Gross Ton-Miles (Billions)	103.5		100.9		3	%	199.7		202.5		(1	)%
On-Time Originations	85	%	88	%	(3	)%	83	%	85	%	(2	)%
On-Time Arrivals	61	%	69	%	(12	)%	59	%	61	%	(3	)%
Safety
FRA Personal Injury Frequency Index	0.91		1.18		23	%	1.01		1.07		6	%
FRA Train Accident Rate	3.72		2.32		(60	)%	3.66		2.61		(40	)%

(a) The methodology for calculating train velocity and dwell differ from that prescribed by the STB. CSXT will continue to report train velocity and dwell, using the prescribed methodology, to the STB on a weekly basis. This information is available on the Company's website.

Certain operating statistics are estimated and can continue to be updated as actuals settle.

Key Performance Measures Definitions

Train Velocity - Average train speed between origin and destination in miles per hour (does not include locals, yard jobs, work trains or passenger trains). Train velocity measures the profiled schedule of trains (from departure to arrival and all interim time), and train profiles are periodically updated to align with a changing operation.

Dwell - Average amount of time in hours between car arrival to and departure from the yard.

Revenue Ton-Miles (RTM's) - The movement of one revenue-producing ton of freight over a distance of one mile.

Gross Ton-Miles (GTM's) - The movement of one ton of train weight over one mile. GTM's are calculated by multiplying total train weight by distance the train moved. Total train weight is comprised of the weight of the freight cars and their contents.

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

On-Time Arrivals - Percent of scheduled road trains that arrive at the destination yard on-time.

FRA Personal Injury Frequency Index - Number of FRA-reportable injuries per 200,000 man-hours.

FRA Train Accident Rate - Number of FRA-reportable train accidents per million train-miles.

CSX Q2 2018 Form 10-Q p.40

CSX CORPORATION

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

LIQUIDITY AND CAPITAL RESOURCES

The following are material changes in the 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$1.2 billion from year end primarily due to an increase in cash and cash equivalents of $919 million as a result of cash from operations of $2.0 billion and the issuance of $2.0 billion in long-term debt, partially offset by share repurchases of $1.8 billion, property additions of $823 million and dividends paid of $384 million. Total liabilities and shareholders' equity combined increased$1.2 billion from year end primarily due to the issuance of $2.0 billion in long-term debt and net earnings of $1.6 billion, partially offset by share repurchases of $1.8 billion, dividends paid of $384 million and accelerated share repurchase pending final settlement of $90 million.

Significant Cash Flows

The following chart highlights the net increase in cash and cash equivalents of $919 million and $17 million for operating, investing and financing activities for six months ended 2018 and 2017, respectively.

• Cash provided by operating activities increased $443 million primarily driven by higher cash-generating income, including lower tax payments as a result of tax reform.

• Cash used in investing activities decreased $212 million primarily driven by lower property additions and higher proceeds from property dispositions.

• Cash used in financing activities decreased $247 million primarily due to higher net debt issued partially offset by increased share repurchases.

The Company's approved capital plan for 2018 is $1.6 billion, including approximately $200 million for Positive Train Control ("PTC"). Of the 2018 investment, the majority will be used to sustain the core infrastructure. The remaining amounts will be allocated to projects supporting productivity initiatives, service enhancements and profitable growth. CSX intends to fund capital investments through cash generated from operations.

CSX Q2 2018 Form 10-Q p.41

CSX CORPORATION

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

The Company expects to continue incurring significant capital costs in connection with the implementation of PTC. CSX estimates that the total multi-year cost of PTC implementation will be approximately $2.4 billion. This estimate includes costs for installing the new system along tracks, upgrading locomotives, adding communication equipment and developing new technologies. Total PTC spending through June 2018 was $2.1 billion.

Liquidity and Working Capital

As of the end of second quarter 2018, CSX had $1.4 billion of cash, cash equivalents and short-term investments. CSX has a $1.0 billion unsecured revolving credit facility backed by a diverse syndicate of banks. This facility expires in May 2020 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 reduction or refinancing of outstanding indebtedness, capital expenditures, working capital requirements, contributions to the Company's qualified pension plan, redemptions and repurchases of CSX common stock and dividends to shareholders. See Note 7, Debt and Credit Agreements.

The Company has a receivables securitization facility with a three-year term scheduled to expire in September 2019. The purpose of this facility is to provide an alternative to commercial paper and a low cost source of short-term liquidity of up to $200 million, depending on eligible receivables balances. 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 surplus of $1.1 billion and $21 million as of June 30, 2018 and December 31, 2017, respectively. The increase in working capital since year end of $1.1 billion is primarily the result of cash from operations of $2.0 billion, the issuance of $2.0 billion in long-term debt and proceeds from property dispositions of $141 million. These increases were partially offset by cash used for share repurchases of $1.8 billion, property additions of $823 million and dividend payments of $384 million.

The Company's working capital balance varies due to factors such as the timing of scheduled debt payments and changes in cash and cash equivalent balances as discussed above. The Company continues to maintain adequate liquidity to satisfy current liabilities and maturing obligations when they come due. CSX has sufficient financial capacity, including its revolving credit facility, 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. CSX is committed to ongoing shareholder distributions, supported by an investment grade credit profile. Management's assessment of market conditions and other factors guides the timing and volume of repurchases. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Of the $5 billion total share repurchases authorized, $90 million is pending final settlement and the remaining $2.9 billion is expected to be completed by the end of first quarter 2019.

LABOR AGREEMENTS

The U.S. Class I railroads have been in collective bargaining with rail labor unions since January 2015. As of June 30, 2018, 12 of 13 rail unions have reached national agreements with the Class I railroads via ratification, executive action or interest arbitration. All agreements are effective January 1, 2015 through December 31, 2019, and collectively cover approximately 95 percent of CSXT's nearly 20,000 union employees. The Class I railroads remain in mediation with the International Association of Machinist and Aerospace Workers, which represents the remaining 5 percent of CSXT’s employees, and expect to reach a settlement in 2018.

CSX Q2 2018 Form 10-Q p.42

CSX CORPORATION

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

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates in reporting the amounts of certain assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and certain revenues and expenses during the reporting period. Actual results may differ from those estimates. These estimates and assumptions are discussed with the Audit Committee of the Board of Directors on a regular basis. Consistent with the prior year, significant estimates using management judgment are made for the areas below. For further discussion of CSX's critical accounting estimates, see the Company's most recent annual report on Form 10-K.

• personal injury, environmental and legal reserves;

• pension and post-retirement medical plan accounting;

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

• income taxes.

FORWARD-LOOKING STATEMENTS

Certain statements in this report and in other materials filed with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made by the Company, are forward-looking statements. The Company intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements within the meaning of the Private Securities Litigation Reform Act may contain, among others, statements regarding:

• projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes or other financial items;

• expectations as to results of operations and operational initiatives;

• expectations as to the effect of claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements on the Company's financial condition, results of operations or liquidity;

• management's plans, strategies and objectives for future operations, capital expenditures, workforce levels, dividends, share repurchases, safety and service performance, proposed new services and other matters that are not historical facts, and management's expectations as to future performance and operations and the time by which objectives will be achieved; and

• future economic, industry or market conditions or performance and their effect on the Company's financial condition, results of operations or liquidity.

Forward-looking statements are typically identified by words or phrases such as "will," "should," “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. The Company cautions against placing undue reliance on forward-looking statements, which reflect its good faith beliefs with respect to future events and are based on information currently available to it as of the date the forward-looking statement is made. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the timing when, or by which, such performance or results will be achieved.

CSX Q2 2018 Form 10-Q p.43

CSX CORPORATION

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

Forward-looking statements are subject to a number of risks and uncertainties and actual performance or results could differ materially from those anticipated by any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement. If the Company does update any forward-looking statement, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements. The following important factors, in addition to those discussed in Part I, Item 1A Risk Factors of CSX's most recent annual report on Form 10-K and elsewhere in this report, may cause actual results to differ materially from those contemplated by any forward-looking statements:

• legislative, regulatory or legal developments involving transportation, including rail or intermodal transportation, the environment, hazardous materials, taxation, international trade and initiatives to further regulate the rail industry;

• the outcome of litigation, claims and other contingent liabilities, including, but not limited to, those related to fuel surcharge, environmental matters, taxes, shipper and rate claims subject to adjudication, personal injuries and occupational illnesses;

• changes in domestic or international economic, political or business conditions, including those affecting the transportation industry (such as the impact of industry competition, conditions, performance and consolidation) and the level of demand for products carried by CSXT;

• natural events such as severe weather conditions, including floods, fire, hurricanes and earthquakes, a pandemic crisis affecting the health of the Company's employees, its shippers or the consumers of goods, or other unforeseen disruptions of the Company's operations, systems, property, equipment or supply chain;

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

• the cost of compliance with laws and regulations that differ from expectations (including those associated with PTC implementation) as well as costs, penalties and operational and liquidity impacts associated with noncompliance with applicable laws or regulations;

• the impact of increased passenger activities in capacity-constrained areas, including potential effects of high speed rail initiatives, or regulatory changes affecting when CSXT can transport freight or service routes;

• unanticipated conditions in the financial markets that may affect timely access to capital markets and the cost of capital, as well as management's decisions regarding share repurchases;

• changes in fuel prices, surcharges for fuel and the availability of fuel;

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

• the impact of global supply and price of seaborne coal on CSXT's export coal market;

• availability of insurance coverage at commercially reasonable rates or insufficient insurance coverage to cover claims or damages;

• the inherent business risks associated with safety and security, including the transportation of hazardous materials or a cybersecurity attack which would threaten the availability and vulnerability of information technology;

CSX Q2 2018 Form 10-Q p.44

CSX CORPORATION

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

• adverse economic or operational effects from actual or threatened war or terrorist activities and any governmental response;

• loss of key personnel or the inability to hire and retain qualified employees;

• labor and benefit costs and labor difficulties, including stoppages affecting either the Company's operations or customers' ability to deliver goods to the Company for shipment;

• the Company's success in implementing its strategic, financial and operational initiatives;

• the impact of conditions in the real estate market on the Company's ability to sell assets;

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

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 June 30, 2018, 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 June 30, 2018, 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 second quarter of 2018 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

For further details, please refer to Note 5. Commitments and Contingencies of this quarterly report on Form 10-Q. Also refer to Part I, Item 3. Legal Proceedings in CSX's most recent annual report on Form 10-K.

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.

CSX Q2 2018 Form 10-Q p.45

CSX CORPORATION

PART II

Item 2. CSX Purchases of Equity Securities

CSX purchases its own shares for two primary reasons: (1) to further its goals under its share repurchase program and (2) to fund the Company’s contribution required to be paid in CSX common stock under a 401(k) plan that covers certain union employees.     

In February 2018, the Company announced an increase to the $1.5 billion share repurchase program first announced in October 2017, bringing the total authorized to $5 billion. This program is expected to be completed by the end of first quarter 2019. During the second quartersof 2018 and 2017, the Company repurchased approximately $974 million, or 16 million shares, and $499 million, or 9 million shares, respectively.

On April 20, 2018, the Company entered into an accelerated share repurchase agreement to repurchase shares of the Company’s common stock. Under this agreement, the Company made a prepayment of $450 million to a financial institution and received an initial delivery of shares valued at $360 million, or 6 million shares. The remaining balance of $90 million was settled through receipt of additional shares on July 17, 2018 with the final net number of shares calculated based on the volume-weighted average price of the Company's common stock over the term of the agreement, less a discount. Approximately 7 million total shares were repurchased under the agreement.

Management's assessment of market conditions and other factors guides the timing and volume of repurchases. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase.

Share repurchase activity for the second quarter 2018 was as follows:

	CSX Purchases of Equity Securities for the Quarter
Second Quarter	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Beginning Balance					$	3,964,406,369
April 1 - April 30, 2018	12,203,389	$	58.41	12,182,789	3,252,839,006
May 1 - May 31, 2018	3,018,475	61.66		3,018,475	3,066,721,514
June 1 - June 30, 2018	1,185,623	64.61		1,185,443	2,990,125,207
Ending Balance	16,407,487	$	59.46	16,386,707	$	2,990,125,207

(a) The difference of 20,780 shares between the "Total Number of Shares Purchased" and the "Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs" for the quarter represents shares purchased to fund the Company's contribution to a 401(k) plan that covers certain union employees.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

    None

CSX Q2 2018 Form 10-Q p.46

CSX CORPORATION

PART II

Item 6. Exhibits

Exhibit designation	Nature of exhibit	Previously filed as exhibit to
Officer certifications:
31*	Rule13a-14(a) Certifications
32*	Section 1350 Certifications
Interactive data files:
101*	The following financial information from CSX Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed with the SEC on July 17, 2018, formatted in XBRL includes: (i) consolidated income statements for the fiscal periods ended June 30, 2018 and June 30, 2017, (ii) condensed consolidated comprehensive income statements for the fiscal periods ended June 30, 2018 and June 30, 2017 (iii) consolidated balance sheets at June 30, 2018 and December 31, 2017, (iv) consolidated cash flow statements for the fiscal periods ended June 30, 2018 and June 30, 2017, and (v) the notes to consolidated financial statements.
* Filed herewith

CSX Q2 2018 Form 10-Q p.47

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/ ANGELA C. WILLIAMS

Angela C. Williams

Vice President and Controller

(Principal Accounting Officer)

Dated: July 17, 2018

CSX Q2 2018 Form 10-Q p.48

EX-31

Exhibit 31

CERTIFICATION OF CEO AND CFO PURSUANT TO EXCHANGE ACT RULE

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

I, James M. Foote, 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: July 17, 2018

/s/ JAMES M FOOTE

James M. Foote

President and Chief Executive Officer

I, Frank A. Lonegro, 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: July 17, 2018

/s/ FRANK A. LONEGRO

Frank A. Lonegro

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 June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James M. Foote, 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: July 17, 2018

/s/ JAMES M. FOOTE

James M. Foote

President and Chief Executive Officer

In connection with the Quarterly Report of CSX Corporation on Form 10-Q for the period ending June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Frank A. Lonegro, 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 registrant.

Date: July 17, 2018

/s/ FRANK A. LONEGRO

Frank A. Lonegro

Executive Vice President and Chief Financial Officer

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2018 shares
Document and Entity Information [Abstract]
Entity Registrant Name	CSX CORP
Entity Central Index Key	0000277948
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	858,810,557
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018

XML

CONSOLIDATED INCOME STATEMENTS (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement
Revenues	$ 3,102	$ 2,933	$ 5,978	$ 5,802
Expense
Labor and Fringe	669	751	1,365	1,546
Materials, Supplies and Other	469	496	951	1,067
Depreciation	329	327	652	647
Fuel	270	198	525	416
Equipment and Other Rents	112	105	213	204
Restructuring Charge (Note 1)	0	115	0	225
Equity Earnings of Affiliates	(30)	(16)	(55)	(29)
Total Expense	1,819	1,976	3,651	4,076
Operating Income	1,283	957	2,327	1,726
Interest Expense	(157)	(137)	(306)	(274)
Restructuring Charge - Non-Operating (Note 1)	0	(7)	0	(70)
Other Income - Net	18	14	35	27
Earnings Before Income Taxes	1,144	827	2,056	1,409
Income Tax Expense	(267)	(317)	(484)	(537)
Net Earnings	$ 877	$ 510	$ 1,572	$ 872
Per Common Share
Net Earnings Per Share, Basic (in dollars per share)	$ 1.02	$ 0.55	$ 1.80	$ 0.94
Net Earnings Per Share, Assuming Dilution (in dollars per share)	$ 1.01	$ 0.55	$ 1.79	$ 0.94
Average Shares Outstanding (in shares)	864	920	875	923
Average Shares Outstanding, Assuming Dilution (in shares)	868	924	878	926
Cash Dividends Paid Per Common Share (in dollars per share)	$ 0.22	$ 0.20	$ 0.44	$ 0.38

XML

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Total Comprehensive Earnings (Note 10)	$ 881	$ 575	$ 1,477	$ 943

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 30, 2016
Current Assets:
Cash and Cash Equivalents	$ 1,320	$ 401	$ 620	$ 603
Short-term Investments	83	18
Accounts Receivable - Net (Note 11)	1,036	970
Materials and Supplies	326	372
Other Current Assets	116	154
Total Current Assets	2,881	1,915
Properties	44,306	44,324
Accumulated Depreciation	(12,459)	(12,560)
Properties - Net	31,847	31,764
Other Long-term Assets	455	374
Total Assets	36,924	35,739
Current Liabilities:
Accounts Payable	852	847
Labor and Fringe Benefits Payable	486	602
Casualty, Environmental and Other Reserves (Note 4)	114	108
Current Maturities of Long-term Debt (Note 7)	19	19
Income and Other Taxes Payable	123	157
Other Current Liabilities	138	161
Total Current Liabilities	1,732	1,894
Casualty, Environmental and Other Reserves (Note 4)	232	266
Long-term Debt (Note 7)	13,769	11,790
Deferred Income Taxes - Net	6,532	6,418
Other Long-term Liabilities	636	650
Total Liabilities	22,901	21,018
Shareholders' Equity:
Common Stock, $1 Par Value	859	890
Other Capital	127	217
Retained Earnings	13,604	14,084
Accumulated Other Comprehensive Loss (Note 10)	(581)	(486)
Noncontrolling Interest	14	16
Total Shareholders' Equity	14,023	14,721
Total Liabilities and Shareholders' Equity	36,924	35,739
Investments in Conrail
Current Assets:
Investment in Affiliates and Other Companies	931	907
Affiliates and Other Companies
Current Assets:
Investment in Affiliates and Other Companies	$ 810	$ 779

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Shareholders' Equity:
Common stock, par value (in dollars per share)	$ 1	$ 1

XML

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
OPERATING ACTIVITIES
Net Earnings	$ 1,572	$ 872
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation	652	647
Deferred Income Taxes	98	112
Gain on Property Dispositions	(69)	(4)
Equity Earnings of Affiliates	(55)	(29)
Restructuring Charge	0	295
Cash Payments for Restructuring Charge	(13)	(129)
Other Operating Activities	(15)	18
Changes in Operating Assets and Liabilities:
Accounts Receivable	(47)	(103)
Other Current Assets	14	12
Accounts Payable	11	6
Income and Other Taxes Payable	(24)	(46)
Other Current Liabilities	(115)	(85)
Net Cash Provided by Operating Activities	2,009	1,566
INVESTING ACTIVITIES
Property Additions	(823)	(955)
Proceeds from Property Dispositions	141	16
Purchase of Short-term Investments	(77)	(545)
Proceeds from Sales of Short-term Investments	12	492
Other Investing Activities	(8)	25
Net Cash Used In Investing Activities	(755)	(967)
FINANCING ACTIVITIES
Long-term Debt Issued (Note 7)	2,000	850
Long-term Debt Repaid (Note 7)	0	(313)
Dividends Paid	(384)	(350)
Shares Repurchased	(1,810)	(757)
Accelerated Share Repurchase Pending Final Settlement (Note 2)	(90)	0
Other Financing Activities	(51)	(12)
Net Cash Used in Financing Activities	(335)	(582)
Net Increase in Cash and Cash Equivalents	919	17
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period	401	603
Cash and Cash Equivalents at End of Period	$ 1,320	$ 620

XML

Nature of Operations and Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

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”), 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 links customers to railroads via trucks and terminals.

After a merger on July 1, 2017 with CSX Real Property, Inc., a former wholly-owned CSX subsidiary, CSXT is now responsible for the Company's real estate sales, leasing, acquisition and management and development activities. In addition, as substantially all real estate sales, leasing, acquisition and management and development activities are focused on supporting railroad operations, all results of these activities are included in operating income beginning in 2017. Previously, the results of these activities were classified as operating or non-operating based on the nature of the activity and were not material for any periods presented.

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 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. The biggest Transflo markets are chemicals and agriculture, which include shipments of plastics and ethanol. CSX Technology and other subsidiaries provide support services for the Company.

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 quarter and six months ended June 30, 2018 and June 30, 2017;

• Condensed consolidated comprehensive income statements for the quarter and six months ended June 30, 2018 and June 30, 2017;

• Consolidated balance sheets at June 30, 2018 and December 31, 2017; and

• Consolidated cash flow statements for the six months ended June 30, 2018 and June 30, 2017.

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

Through the second quarter 2017, CSX followed a 52/53 week fiscal reporting calendar with the last day of each reporting period ending on a Friday. On July 7, 2017 the Board of Directors of CSX approved a change in the fiscal reporting calendar from a 52/53 week year ending on the last Friday of December to a calendar year ending on December 31 each year, effective beginning with fiscal third quarter 2017. Related to the change in the fiscal calendar:

• Fiscal year 2018 (January 1, 2018 through December 31, 2018) will contain 365 days, and fiscal year 2017 (December 31, 2016 through December 31, 2017) contained 366 days

• Fiscal first quarter 2018 (January 1, 2018 through March 31, 2018) contained 90 days, and fiscal first quarter 2017 (December 31, 2016 through March 31, 2017) contained 91 days

• Fiscal second quarter 2018 (April 1, 2018 through June 30, 2018) contained 91 days, and fiscal second quarter 2017 (April 1, 2017 through June 30, 2017) contained 91 days

This change did not materially impact the comparability of the Company’s financial results. Accordingly, the change to a calendar fiscal year was made on a prospective basis and operating results for prior periods were not adjusted. The Company was not required to file a transition report because this change was not deemed a change in fiscal year for purposes of reporting subject to Rule 13a-10 or Rule 15d-10 of the Securities Exchange Act of 1934 as the new fiscal year commenced with the end of the prior fiscal year end and within seven days of the prior fiscal year end.

Except as otherwise specified, references to “second quarter(s)” or “six months” indicate CSX's fiscal periods ending June 30, 2018 and June 30, 2017, and references to "year-end" indicate the fiscal year ended December 31, 2017.

New Accounting Pronouncements

Pronouncements adopted in 2018    

In February 2018, the FASB issued Accounting Standard Update ("ASU") Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income. The Company adopted this standard update in first quarter 2018 and applied it prospectively. Adoption resulted in the reclassification of $107 million in tax effects related to employee benefit plans from accumulated other comprehensive loss, increasing retained earnings by the same amount.

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

In March 2017, the FASB issued ASU Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, whichrequires that only the service cost component of net periodic benefit costs be recorded as compensation cost in operating expense on the consolidated income statement. All other components of net periodic benefit cost (interest cost, expected return on plan assets, amortization of net loss, special termination benefits and settlement and curtailment effects) should be presented as non-operating charges on the consolidated income statement. These non-operating charges are presented as restructuring charge - non-operating, if related to prior year restructuring activities, or as other income - net as appropriate. The Company adopted the provisions of this standard during first quarter 2018 and applied them retrospectively. The retrospective impact of adoption for second quarter and six months 2017 is shown in the following table.

	Second Quarter 2017								Six Months 2017
(Dollars in millions)	As Previously Reported		Reclass			As Reclassified			As Previously Reported		Reclass			As Reclassified
Operating Expense:
Labor and Fringe	$	743	$	8		$	751		$	1,532	$	14		$	1,546
Restructuring Charge	122		(7		)	115			295		(70		)	225
Non-Operating Income (Expense):
Restructuring Charge - Non-Operating	$	—	$	(7	)	$	(7	)	$	—	$	(70	)	$	(70	)
Other Income - Net	6		8			14			13		14			27

In May 2014, the FASB issued ASU Revenue from Contracts with Customers, which supersedes previous revenue recognition guidance. The new standard requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. In-depth reviews of commercial contracts were completed and changes to processes and internal controls to meet the standard’s reporting and disclosure requirements were implemented. The Company adopted the guidance effective January 1, 2018 using the modified retrospective approach. The adoption did not affect the Company’s financial condition, results of operations or liquidity. Disclosures related to the nature, amount and timing of revenue and cash flows arising from contracts with customers are included in Note 11, Revenues.

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

Pronouncements to be adopted    

In February 2016, the FASB issued ASU, Leases, which will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required. This standard update is effective for CSX beginning with the first quarter 2019 and currently requires the use of a modified retrospective adoption approach. In March 2018, the FASB tentatively approved a new, optional transition method that would instead allow companies to adopt using a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to elect the cumulative-effect adjustment transition method. Changes to processes and internal controls to meet the standard’s reporting and disclosure requirements have been identified and are being implemented. Software has been implemented that will assist in the recognition of additional assets and liabilities to be included on the balance sheet related to leases currently classified as operating leases with durations greater than twelve months, with certain allowable exceptions. In addition to lease agreements, service contracts and other agreements are also being reviewed to determine if they contain an embedded lease. The Company continues to evaluate the expected impact of this standard update on disclosures, but does not anticipate any material changes to operating results or liquidity as a result of right-of-use assets and corresponding lease liabilities that will be recorded.

In January 2018, the FASB issued ASU Leases - Land Easement Practical Expedient, which permits entities to forgo the evaluation of existing land easement arrangements to determine if they contain a lease as part of the adoption of the Leases ASU issued in February 2016. Accordingly, the Company’s accounting treatment of existing land easements will not change. CSX will adopt this standard update concurrently with the Leases ASU issued in February 2016. New land easement arrangements, or modifications to existing arrangements, after the adoption of the standard update will still be evaluated to determine if they meet the definition of a lease.

In March 2017, the FASB issued ASU Simplifying the Test for Goodwill Impairment, which eliminates step two, the calculation of the implied fair value of goodwill, from the goodwill impairment test. Impairment will be quantified in step one of the test as the amount by which the carrying amount exceeds the fair value. This standard update is effective beginning first quarter 2020 and must be applied prospectively. The Company does not believe this standard update will have a material effect on its financial condition, results of operations or liquidity.

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

Restructuring Charge

The prior year restructuring charge includes costs related to the management workforce reduction program completed in 2017, reimbursement arrangements with MR Argent Advisor LLC (“Mantle Ridge”) and the Company’s former President and Chief Executive Officer, E. Hunter Harrison, the proration of equity awards and other advisory costs related to the leadership transition. Payments related to the 2017 restructuring charge were substantially complete as of March 31, 2018. For further details on the charge, see the Company's most recent annual report on Form 10-K. Expenses related to the management workforce reduction and other costs are shown in the following table.

	Second Quarter 2017
(Dollars in millions)	As Previously Reported		Operating Restructuring Charge		Non-Operating Restructuring Charge
Severance and Pension	$	13	$	10	$	3
Other Post-Retirement Benefits Curtailment	4		—		4
Employee Equity Awards Proration and Other	5		5		—
Subtotal Management Workforce Reduction	$	22	$	15	$	7
Reimbursement Arrangements	84		84		—
Executive Equity Awards Proration	16		16		—
Total Restructuring Charge	$	122	$	115	$	7

	Six Months 2017
(Dollars in millions)	As Previously Reported		Operating Restructuring Charge		Non-Operating Restructuring Charge
Severance and Pension	$	144	$	91	$	53
Other Post-Retirement Benefits Curtailment	17		—		17
Employee Equity Awards Proration and Other	16		16		—
Subtotal Management Workforce Reduction	$	177	$	107	$	70
Reimbursement Arrangements	84		84		—
Executive Equity Awards Proration	24		24		—
Advisory Fees Related to Shareholder Matters	10		10		—
Total Restructuring Charge	$	295	$	225	$	70

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Earnings Per Share

6 Months Ended

Jun. 30, 2018

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:

	Second Quarters				Six Months
	2018		2017		2018		2017
Numerator (Dollars in millions):
Net Earnings	$	877	$	510	$	1,572	$	872
Denominator (Units in millions):
Average Common Shares Outstanding	864		920		875		923
Other Potentially Dilutive Common Shares	4		4		3		3
Average Common Shares Outstanding, Assuming Dilution	868		924		878		926
Net Earnings Per Share, Basic	$	1.02	$	0.55	$	1.80	$	0.94
Net Earnings Per Share, Assuming Dilution	$	1.01	$	0.55	$	1.79	$	0.94

Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock equivalents outstanding adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards, which include long-term incentive awards and employee stock options.

The Earnings Per Share Topic in the FASB's 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, this rule requires CSX to include the potential shares that would be outstanding if all outstanding stock options were exercised. This number is different from outstanding stock options because it is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. Approximately one millionand10 million of total average outstanding stock options for the second quarters ended June 30, 2018 and June 30, 2017, respectively, were excluded from the diluted earnings per share calculation because their effect was antidilutive.

Share Repurchases

In February 2018, the Company announced an increase to the $1.5 billion share repurchase program first announced in October 2017, bringing the total authorized to $5 billion. This program is expected to be completed by the end of first quarter 2019. During the second quartersof 2018 and 2017, the Company repurchased approximately $974 million, or 16 million shares, and $499 million, or 9 million shares, respectively. During the six months of 2018 and 2017, the Company repurchased $1.8 billion, or 31 million shares, and $757 million, or 15 million shares, respectively.

NOTE 2.    Earnings Per Share, continued

On April 20, 2018, the Company entered into an accelerated share repurchase agreement to repurchase shares of the Company’s common stock. Under this agreement, the Company made a prepayment of $450 million to a financial institution and received an initial delivery of shares valued at $360 million, or 6 million shares. The remaining balance of $90 million was settled through receipt of additional shares on July 17, 2018, with the final net number of shares calculated based on the volume-weighted average price of the Company's common stock over the term of the agreement, less a discount. Approximately 7 million total shares were repurchased under the agreement.

Under an accelerated share repurchase agreement in January 2018, the Company made a prepayment of $150 million to a financial institution and received an initial delivery of shares valued at $120 million. The remaining balance of $30 million was settled through receipt of additional shares in February 2018 with the final net number of shares calculated based on the volume-weighted average price of the Company's common stock over the term of the agreement, less a discount. Approximately 3 million total shares were repurchased under the agreement.

Management's assessment of market conditions and other factors guides the timing and volume of repurchases. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the ASC, the excess of repurchase price over par value is recorded in retained earnings.

XML

Share-Based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

Under CSX's share-based compensation plans, awards consist of performance units, restricted stock awards, restricted stock units and stock options for management and stock grants for directors. 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 CSX's non-management directors upon recommendation of the Governance Committee.

Share-based compensation expense is measured using the fair value of the award on the grant date and is recognized on a straight-line basis over the service period of the respective award. Total pre-tax expense associated with share-based compensation and its related income tax benefit is shown in the table below. The year over year decrease in expense related to performance units, stock options and restricted stock units and awards is primarily due to modifications to the terms of awards in 2017 (see Equity Award Modifications below) and the prior year expense related to 9 million stock options granted in February 2017 to former President and CEO E. Hunter Harrison which were forfeited upon his death in December 2017.

	Second Quarters				Six Months
(Dollars in millions)	2018		2017		2018		2017
Share-Based Compensation Expense:
Performance Units	$	8	$	18	$	14	$	39
Stock Options	2		21		6		32
Restricted Stock Units and Awards	2		5		3		9
Stock Awards for Directors	—		—		2		2
Total Share-Based Compensation Expense	$	12	$	44	$	25	$	82
Income Tax Benefit	$	9	$	13	$	17	$	29

NOTE 3.     Share-Based Compensation, continued

Long-term Incentive Plan

In February 2018, the Company granted approximately 350 thousand performance units to certain employees under a new long-term incentive plan ("LTIP") for the years 2018 through 2020, which was adopted under the CSX Stock and Incentive Award Plan. Payouts of performance units for the cycle ending with fiscal year 2020 will be based on the achievement of goals related to both operating ratio and free cash flow, in each case excluding non-recurring items as disclosed in the Company's financial statements. The final year operating ratio and cumulative free cash flow over the plan period will each comprise 50% of the payout and will be measured independently of the other.

Grants were made in performance units, with each unit representing the right to receive 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 target awards depending on Company performance against predetermined goals. Payouts for certain executive officers are subject to upward or downward adjustment by up to 25%, capped at an overall payout of 200%, based upon the Company's total shareholder return relative to specified comparable groups over the performance period. The fair value of these performance units awarded in February 2018 was calculated using a Monte-Carlo simulation model with the following weighted-average assumptions:

	Six Months
	2018
Weighted-average assumptions used:
Annual dividend yield	1.6	%
Risk-free interest rate	2.3	%
Annualized volatility	29.2	%
Expected life (in years)	2.9

Stock Options

Also, in February 2018, the Company granted approximately 950 thousand stock options along with the corresponding LTIP. The fair value of stock options on the date of grant was $14.55 per option which was calculated using the Black-Scholes valuation model. Stock options have been granted with ten-year terms and vest three years after the date of grant. The exercise price for stock options granted equals the closing market price of the underlying stock on the date of grant. These awards are time-based and are not based upon attainment of performance goals. During second quarters 2018 and 2017, there were immaterial grants of stock options to certain members of management.

NOTE 3.     Share-Based Compensation, continued

The fair values of all stock option awards during the quarters and six months ended June 30, 2018 and June 30, 2017 were estimated at the grant date with the following weighted average assumptions:

	Second Quarters						Six Months
	2018			2017			2018			2017
Weighted-average grant date fair value	$	17.62		$	12.27		$	14.64		$	12.83
Stock options valuation assumptions:
Annual dividend yield	1.3		%	1.5		%	1.5		%	1.5		%
Risk-free interest rate	2.8		%	2.1		%	2.6		%	2.2		%
Annualized volatility	25.8		%	27.0		%	27.0		%	27.1		%
Expected life (in years)	6.5			6.5			6.5			6.3
Other pricing model inputs:
Weighted-average grant-date market price of CSX stock (strike price)	$	65.44		$	47.80		$	54.14		$	49.60

Restricted Stock Units

Finally, in February 6, 2018, the Company granted approximately 85 thousand restricted stock units along with the corresponding LTIP. The restricted stock units vest three years after the date of grant. Participants receive cash dividend equivalents on the unvested shares during the restriction period. These awards are time-based and are not based upon attainment of performance goals. Restricted stock units were not granted to certain executive officers under the new LTIP. For information related to the Company's other outstanding long-term incentive compensation, see CSX's most recent annual report on Form 10-K.

Equity Award Modifications    

In 2017, as part of an enhanced severance benefit under the management streamlining and realignment initiative discussed in Note 1, unvested performance units, restricted stock units and stock options for separated employees not eligible for retirement were permitted to vest on a pro-rata basis. Additionally, the terms of unvested equity awards for the former Chief Executive Officer, Michael J. Ward, and former President, Clarence W. Gooden, were modified prior to their retirements on March 6, 2017 to permit prorated vesting through May 31, 2018.

The award modifications noted above impacted approximately 70 employees and resulted in an increase to share-based compensation expense for revaluation of the affected awards of $19 million for the second quarter and $31 million for the six months ended June 30, 2017. The expense associated with these award modifications was included in the 2017 restructuring charge. There have been no significant award modifications in 2018.

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Casualty, Environmental and Other Reserves

6 Months Ended

Jun. 30, 2018

Casualty, Environmental and Other Reserves [Abstract]

Casualty, Environmental and Other Reserves

Casualty, Environmental and Other Reserves

Personal injury and environmental reserves are considered critical accounting estimates due to the need for significant management judgment. Casualty, environmental and other reserves are provided for in the consolidated balance sheets as shown in the table below.

	June 30, 2018						December 31, 2017
(Dollars in millions)	Current		Long-term		Total		Current		Long-term		Total
Casualty:
Personal Injury	$	42	$	105	$	147	$	43	$	125	$	168
Occupational	7		47		54		6		54		60
Total Casualty	49		152		201		49		179		228
Environmental	37		54		91		31		59		90
Other	28		26		54		28		28		56
Total	$	114	$	232	$	346	$	108	$	266	$	374

These liabilities are accrued when reasonably estimable and probable in accordance with the Contingencies Topic in the ASC. Actual settlements and claims received could differ, and final outcomes 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 individually, when finally resolved, will have a material adverse effect on the Company's financial condition, results of operations or liquidity. Should a number of these items occur in the same period, however, their combined effect could be material in that particular period.

Casualty

Casualty reserves of $201 million and $228 million as of June 30, 2018 and December 31, 2017, respectively, represent accruals for personal injury, occupational disease and occupational injury claims. During the second quarter the Company increased its self-insured retention amount for these claims from $50 million to $75 million per occurrence for claims occurring on or after June 1, 2018. 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 estimate. 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 Company's casualty 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”). CSXT retains an independent actuary to assist management in assessing the value of personal injury claims. An analysis is performed by the actuary quarterly and is reviewed by management. This analysis for the quarter resulted in an immaterial adjustment to the personal injury reserve. The methodology used by the actuary includes a development factor to reflect growth or reduction in the value of these personal injury claims based largely on CSXT's historical claims and settlement experience.

NOTE 4.    Casualty, Environmental and Other Reserves, continued

Occupational

Occupational reserves represent liabilities for occupational disease and injury claims. Occupational disease claims arise primarily from allegations of exposure to asbestos in the workplace. Occupational injury claims arise from allegations of exposure to certain other 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.

Environmental

Environmental reserves were $91 million and $90 million as of June 30, 2018 and December 31, 2017, respectively. 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 218 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 ("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.

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 reasonably 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. Environmental remediation costs are included in materials, supplies and other on the consolidated income statements.

NOTE 4.    Casualty, Environmental and Other Reserves, continued

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 reasonably estimated. Based upon information currently available, however, the Company believes its environmental reserves accurately reflect the estimated cost of remedial actions currently required.

Other

Other reserves of $54 million and $56 million as of June 30, 2018 and December 31, 2017, respectively, include liabilities for various claims, such as property, automobile and general liability. Also included in other reserves are longshoremen disability claims related to a previously owned international shipping business (these claims are in runoff) as well as claims for current port employees.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

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 property and liability programs. The Company has a $50 million per occurrence retention for floods and named windstorms and a $25 million per occurrence retention for property losses other than floods and named windstorms. For claims occurring on or after June 1, 2018, the Company increased its self-insured retention for third-party liability claims from $50 million to $75 million per occurrence. While the Company believes its insurance coverage is adequate, 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 fuel surcharge practices, tax matters, environmental and hazardous material exposure matters, FELA and labor claims by current or former employees, other personal injury or property 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 management that none of these pending items is likely to 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.

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 $117 million in aggregate at June 30, 2018. 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.

NOTE 5.    Commitments and Contingencies, continued

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. In November 2007, the class action lawsuits were consolidated in federal court in the District of Columbia, where they are now pending. The suit seeks treble damages allegedly sustained by purported class members as well as attorneys' fees and other relief. Plaintiffs are expected to allege damages at least equal to the fuel surcharges at issue.

In June 2012, the District Court certified the case as a class action. The decision was not a ruling on the merits of plaintiffs' claims, but rather a decision to allow the plaintiffs to seek to prove the case as a class. The defendant railroads petitioned the U.S. Court of Appeals for the D.C. Circuit for permission to appeal the District Court's class certification decision. In August 2013, the D.C. Circuit issued a decision vacating the class certification decision and remanded the case to the District Court to reconsider its class certification decision. On October 10, 2017, the District Court issued an order denying class certification. The U.S. Court of Appeals for the D.C. Circuit is reviewing the District Court's denial of class certification and has scheduled oral argument to take place on September 28, 2018. The District Court has delayed proceedings on the merits of the case pending the outcome of the class certification remand proceedings.

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 resolution of this matter or 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.

Environmental

CSXT is indemnifying Pharmacia LLC (formerly known as Monsanto Company) for certain liabilities associated with real estate located in Kearny, New Jersey along the Lower Passaic River (the “Property”). The Property, which was formerly owned by Pharmacia, is now owned by CSXT. CSXT's indemnification and defense duties arise with respect to several matters. The U.S. Environmental Protection Agency ("EPA"), using its CERCLA authority, seeks cleanup and removal costs and other damages associated with the presence of hazardous substances in the 17-mile Lower Passaic River Study Area (the "Study Area”). CSXT, on behalf of Pharmacia, and a significant number of other potentially responsible parties are together conducting a Remedial Investigation and Feasibility Study of the Study Area pursuant to an Administrative Settlement Agreement and Order on Consent with the EPA.

In March 2016, EPA issued its Record of Decision detailing the agency’s mandated remedial process for the lower 8 miles of the Study Area. Approximately 80 parties, including Pharmacia, are participating in an EPA-directed allocation process to assign responsibility for costs to be incurred implementing the remedy selected for the lower 8 miles of the Study Area. CSXT is participating in the allocation process on behalf of Pharmacia. At a later date, EPA will select a remedy for the remainder of the Study Area and is expected to again seek the participation of private parties to implement the selected remedy using EPA’s CERCLA authority to compel such participation, if necessary.

CSXT is also defending and indemnifying Pharmacia in a cooperative natural resource damages assessment process related to the Property. Based on currently available information, the Company does not believe any indemnification or remediation costs potentially allocable to CSXT with respect to the Property and the Study Area would be material to the Company's financial condition, results of operations or liquidity.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The Company sponsors defined benefit pension plans principally for salaried, management personnel. CSX also sponsors a post-retirement medical plan and a life insurance plan that provide certain benefits to eligible employees hired prior to January 1, 2003. Independent actuaries compute the amounts of liabilities and expenses relating to these plans subject to the assumptions that the Company determines are appropriate based on historical trends, current market rates and future projections. These amounts are reviewed by management.

Only the service cost component of net periodic benefit costs is included in labor and fringe expense on the consolidated income statement. All other components of net periodic benefit cost are included in other income - net or, if related to prior year restructuring activities, as restructuring charge - non-operating.

	Pension Benefits
(Dollars in millions)	Second Quarters						Six Months
	2018			2017			2018			2017
Service Cost Included in Labor and Fringe	$	7		$	9		$	16		$	20
Interest Cost	23			23			46			46
Expected Return on Plan Assets	(43		)	(43		)	(87		)	(85		)
Amortization of Net Loss	10			10			20			21
Total Income Included in Other Income - Net	(10		)	(10		)	(21		)	(18		)
Net Periodic Benefit Cost	$	(3	)	$	(1	)	$	(5	)	$	2
Restructuring Charges - Non Operating (a)	—			7			—			57
Total (Income) Expense	$	(3	)	$	6		$	(5	)	$	59
	Other Post-retirement Benefits
(Dollars in millions)	Second Quarters						Six Months
	2018			2017			2018			2017
Service Cost Included in Labor and Fringe	$	1		$	1		$	1		$	1
Interest Cost	1			2			3			4
Total Expense Included in Other Income - Net	1			2			3			4
Net Periodic Benefit Cost	$	2		$	3		$	4		$	5
Restructuring Charges - Non Operating  (a)	—			—			—			13
Total Expense	$	2		$	3		$	4		$	18

(a) Charges related to special termination benefits and curtailment costs were the result of the management workforce reductions in first quarter 2017. See Management Workforce Reductions in Note 1. Nature of Operations and Significant Accounting Policies.

Qualified pension plan obligations are funded in accordance with regulatory requirements and with an objective of meeting or exceeding minimum funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments. No contributions to the Company's qualified pension plans are required in 2018.

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Debt and Credit Agreements

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt and Credit Agreements

Debt and Credit Agreements

Total activity related to long-term debt as of the end of second quarter 2018 is shown in the table below. For fair value information related to the Company's long-term debt, see Note 9, Fair Value Measurements.

(Dollars in millions)	Current Portion		Long-term Portion			Total
Long-term debt as of December 31, 2017	$	19	$	11,790		$	11,809
2018 activity:
Long-term debt issued	—		2,000			2,000
Discount, premium and other activity			(21		)	(21		)
Long-term debt as of June 30, 2018	$	19	$	13,769		$	13,788

Debt Issuance

    On February 20, 2018, CSX issued $800 million of 3.80% notes due 2028, $850 million of 4.30% notes due 2048, and $350 million of 4.65% notes due 2068. These notes are included in the consolidated balance sheets under long-term debt and may be redeemed by the Company at any time, subject to payment of certain make-whole premiums. The net proceeds will be used for general corporate purposes, which may include repurchases of CSX's common stock, capital investment, working capital requirements, improvements in productivity and other cost reductions at the Company’s major transportation units.

Credit Facility

CSX has a $1 billion unsecured, revolving credit facility backed by a diverse syndicate of banks. This facility expires in May 2020, and as of the date of this filing, the Company has no outstanding balances under this facility. The facility allows borrowings at floating (LIBOR-based) interest rates, plus a spread, depending upon CSX's senior unsecured debt ratings. LIBOR is the London Interbank Offered Rate which is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds.

Commitment fees and interest rates payable under the facility were similar to fees and rates available to comparably rated investment-grade borrowers. As of second quarter 2018, CSX was in compliance with all covenant requirements under this facility.

Receivables Securitization Facility

The Company has a receivables securitization facility with a three-year term scheduled to expire in September 2019. The purpose of this facility is to provide an alternative to commercial paper and a low cost source of short-term liquidity of up to $200 million, depending on eligible receivables balances. As of the date of this filing, the Company has no outstanding balances under this facility.

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate decreased to 23.5% from 38.1% for the six months ended June 30, 2018 and June 30, 2017, respectively, primarily as a result of the significant reduction in the federal corporate income tax rate effective January 1, 2018. In its initial analysis of the impacts of the Tax Cuts and Job Act (the “Act” or “tax reform”), the Company made certain estimates that may be adjusted in future periods as required. The Act has significant complexity and implementation guidance from the Internal Revenue Service, clarifications of state tax law and the completion of the Company’s 2017 tax return filings, among other things, could all impact these estimates. The Company does not believe potential adjustments in future periods would materially impact the Company's financial condition or results of operations.

There have been no material changes to the balance of unrecognized tax benefits reported at December 31, 2017.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

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.); and

• Level 3 - significant unobservable inputs (including the Company's own assumptions about the assumptions market participants would use in determining the fair value of investments).

The valuation methods described below may produce a fair value calculation that may not be 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 assistance from a third-party trustee, consist of certificates of deposits, commercial paper, corporate bonds and government 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 and Commercial Paper (Level 2): Valued at amortized cost, which approximates fair value; and

• Corporate Bonds and Government Securities (Level 2): Valued using broker quotes that utilize observable market inputs.

NOTE 9.    Fair Value Measurements, continued

The Company's investment assets are carried at fair value on the consolidated balance sheets as summarized in the following table. All of the inputs used to determine the fair value of the Company's investments are Level 2 inputs. The amortized cost basis of these investments was $170 million and $95 million as of June 30, 2018 and December 31, 2017, respectively.

(Dollars in Millions)	June 30, 2018		December 31, 2017
Certificates of Deposit and Commercial Paper	$	75	$	—
Corporate Bonds	57		61
Government Securities	39		34
Total investments at fair value	$	171	$	95

These investments have the following maturities:

(Dollars in millions)	June 30, 2018		December 31, 2017
Less than 1 year	$	82	$	18
1 - 5 years	16		11
5 - 10 years	27		26
Greater than 10 years	46		40
Total investments at fair value	$	171	$	95

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 assistance from an independent third party adviser that utilizes closing transactions, market quotes or market values of comparable debt. For those instruments not valued by the independent adviser, 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 independent adviser. 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, credit ratings, 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.

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

(Dollars in millions)	June 30, 2018		December 31, 2017
Long-term Debt (Including Current Maturities):
Fair Value	$	14,069	$	13,220
Carrying Value	13,788		11,809

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Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)

CSX reports comprehensive earnings or loss in accordance with the Comprehensive Income Topic in the ASC in the Consolidated Comprehensive Income Statement. 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 equal 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 $881 million and $575 million for second quarters and $1.5 billion and $943 millionfor six months2018 and 2017, 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, net of tax, as of the balance sheet date. For CSX, AOCI is primarily the cumulative balance related to pension and other post-retirement benefit adjustments and CSX's share of AOCI of equity method investees.

Changes in the AOCI balance by component are shown in the table below. Amounts reclassified in pension and other post-employment benefits to net earnings relate to the amortization of actuarial losses and are included in labor and fringe on the consolidated income statements. See Note 6, Employee Benefit Plans, for further information. Other primarily represents CSX's share of AOCI of equity method investees. Amounts reclassified in other to net earnings are included in equity earnings of affiliates on the consolidated income statements.

	Pension and Other Post-Employment Benefits			Other			Accumulated Other Comprehensive Income (Loss)
(Dollars in millions)
Balance December 31, 2017, Net of Tax	$	(440	)	$	(46	)	$	(486	)
Other Comprehensive Income (Loss)
Loss Before Reclassifications	—			(1		)	(1		)
Amounts Reclassified to Net Earnings	20			(3		)	17
Tax (Expense) Benefit	(5		)	1			(4		)
Reclassification of Stranded Tax Effects	(108		)	1			(107		)
Total Other Comprehensive Loss	(93		)	(2		)	(95		)
Balance June 30, 2018, Net of Tax	$	(533	)	$	(48	)	$	(581	)

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Revenues

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

The Company’s revenues are primarily derived from the transportation of freight as performance obligations that arise from its contracts with customers are satisfied. The following table presents the Company’s revenues disaggregated by lines of business as they best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors:

	Second Quarters				Six Months
(Dollars in millions)	2018		2017		2018		2017
Chemicals	$	588	$	552	$	1,145	$	1,118
Automotive	330		307		634		623
Agricultural and Food Products	327		321		634		653
Forest Products	215		194		410		386
Metals and Equipment	198		178		384		368
Minerals	137		128		251		242
Fertilizers	112		118		228		247
Total Merchandise	1,907		1,798		3,686		3,637
Domestic Coal	317		350		590		680
Export Coal	252		180		482		372
Total Coal	569		530		1,072		1,052
Domestic Intermodal	323		308		617		599
International Intermodal	167		140		322		283
Total Intermodal	490		448		939		882
Other	136		157		281		231
Total	$	3,102	$	2,933	$	5,978	$	5,802

Revenue Recognition

The Company generates revenue from freight billings under contracts with customers generally on a rate per carload, container or ton-basis based on origin to destination and commodities carried. The Company’s performance obligation arises when it receives a bill of lading (“BOL”) to transport a customer's commodities at a negotiated price contained in a transportation services agreement or a publicly disclosed tariff rate. Once a BOL is received, a contract is formed whereby the parties are committed to perform, collectability of consideration is probable and the rights of the parties, shipping terms and conditions, and payment terms are identified. A customer may submit several BOLs for transportation services at various times throughout a service agreement term but each shipment represents a distinct service that is a separately identified performance obligation. The average transit time to complete a shipment is between 3 to 8 days and payments for transportation services are normally billed once a BOL is received and are generally due within 15 days after the invoice date. The Company recognizes revenue over transit time of freight as it moves from origin to destination. Revenue for services started but not completed at the reporting date is allocated based on the relative transit time in each reporting period, with the portion allocated for services subsequent to the reporting date considered remaining performance obligations.

NOTE 11.     Revenues, continued

The certain key estimates included in the recognition and measurement of revenue and related accounts receivable are as follows:

• Revenue associated with shipments in transit is recognized ratably over transit time and is based on average cycle times to move commodities and products from their origin to their final destination or interchange;

• Adjustments to revenue for billing corrections and billing discounts;

• Adjustments to revenue for overcharge claims filed by customers, which are based on historical payments to customers for rate overcharges as a percentage of total billing;

• Incentive-based refunds to customers, which are primarily volume-related, are recorded as a reduction to revenue on the basis of the projected liability (this estimate is based on historical activity, current volume levels and forecasted future volume).

Revenue related to interline transportation services that involve the services of another party, such as another railroad, is reported on a net basis. The portion of the gross amount billed to customers that is remitted by the Company to another party is not reflected as revenue.

Other revenue, which includes revenue from regional subsidiary railroads, demurrage, switching and other incidental charges, is recorded upon completion of the service and accounted for 4%of the Company’s total revenue in the second quarter and 5% for the six months ended June 30, 2018. Revenue from regional subsidiary railroads includes shipments by railroads that the Company does not directly operate. Demurrage represents charges assessed when freight cars are held beyond a specified period of time. Switching revenue is primarily generated when the Company switches cars for a customer or another railroad.

During the second quarters of 2018 and 2017, revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price), was not material.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to future reporting periods for freight services started but not completed at the reporting date. This includes the unearned portion of billed and unbilled amounts for cancellable freight shipments in transit that the Company expects to recognize as revenue in the period subsequent to the reporting date, which is on average less than one week. As of June 30, 2018, the Company had no material remaining performance obligations.

Contract Balances and Accounts Receivable

The timing of revenue recognition, billings and cash collections results in accounts receivable and customer advances and deposits (contract liabilities) on the consolidated balance sheets. The Company had no material contract assets, contract liabilities or deferred contract costs recorded on the consolidated balance sheet as of June 30, 2018.

NOTE 11.     Revenues, continued

The Company’s accounts receivable - net consists of freight and non-freight receivables, reduced by an allowance for doubtful accounts.

(Dollars in millions)	June 30, 2018			December 31, 2017
Freight Receivables	$	844		$	810
Freight Allowance for Doubtful Accounts	(17		)	(17		)
Freight Receivables, net	827			793
Non-Freight Receivables	218			186
Non-Freight Allowance for Doubtful Accounts	(9		)	(9		)
Non-Freight Receivables, net	209			177
Total Accounts Receivable, net	$	1,036		$	970

Freight receivables include amounts earned, billed and unbilled, and currently due from customersfor transportation-related services. Non-freight receivables include amounts billed and unbilled and currently due related to government reimbursement receivables and other non-revenue receivables. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and economic conditions.Impairment losses recognized on the Company’s accounts receivable were not material in the second quarters of 2018 and 2017.

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Summarized Consolidating Financial Data

6 Months Ended

Jun. 30, 2018

Condensed Financial Information Disclosure [Abstract]

Summarized Consolidating Financial Data

Summarized Consolidating Financial Data

In 2007, CSXT, a wholly-owned subsidiary of CSX Corporation, sold secured equipment notes maturing in 2023 in a registered public offering. 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 shown in the following tables.

Consolidating Income Statements
(Dollars in millions)
Second Quarter 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	3,083		$	19		$	3,102
Expense	(84		)	1,948			(45		)	1,819
Operating Income	84			1,135			64			1,283
Equity in Earnings of Subsidiaries	942			—			(942		)	—
Interest (Expense) / Benefit	(181		)	(8		)	32			(157		)
Other Income / (Expense) - Net	6			29			(17		)	18
Earnings Before Income Taxes	851			1,156			(863		)	1,144
Income Tax Benefit / (Expense)	26			(274		)	(19		)	(267		)
Net Earnings	$	877		$	882		$	(882	)	$	877
Total Comprehensive Earnings	$	881		$	881		$	(881	)	$	881
Second Quarter 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,914		$	19		$	2,933
Expense	6			2,024			(54		)	1,976
Operating Income	(6		)	890			73			957
Equity in Earnings of Subsidiaries	612			—			(612		)	—
Interest (Expense) / Benefit	(143		)	(8		)	14			(137		)
Other Income / (Expense) - Net	2			7			(2		)	7
Earnings Before Income Taxes	465			889			(527		)	827
Income Tax Benefit / (Expense)	45			(332		)	(30		)	(317		)
Net Earnings	$	510		$	557		$	(557	)	$	510
Total Comprehensive Earnings	$	575		$	558		$	(558	)	$	575

Summarized Consolidating Financial Data, continued

Consolidating Income Statements
(Dollars in millions)
Six Months 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	5,940		$	38		$	5,978
Expense	(162		)	3,891			(78		)	3,651
Operating Income	162			2,049			116			2,327
Equity in Earnings of Subsidiaries	1,700			—			(1,700		)	—
Interest (Expense) / Benefit	(345		)	(17		)	56			(306		)
Other Income / (Expense) - Net	10			52			(27		)	35
Earnings Before Income Taxes	1,527			2,084			(1,555		)	2,056
Income Tax (Expense) / Benefit	45			(498		)	(31		)	(484		)
Net Earnings	$	1,572		$	1,586		$	(1,586	)	$	1,572
Total Comprehensive Earnings	$	1,477		$	1,581		$	(1,581	)	$	1,477
Six Months 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	5,765		$	37		$	5,802
Expense	(42		)	4,194			(76		)	4,076
Operating Income	42			1,571			113			1,726
Equity in Earnings of Subsidiaries	1,034			—			(1,034		)	—
Interest (Expense) / Benefit	(285		)	(18		)	29			(274		)
Other Income / (Expense) - Net	5			(40		)	(8		)	(43		)
Earnings Before Income Taxes	796			1,513			(900		)	1,409
Income Tax (Expense) / Benefit	76			(567		)	(46		)	(537		)
Net Earnings	$	872		$	946		$	(946	)	$	872
Total Comprehensive Earnings	$	943		$	945		$	(945	)	$	943

Summarized Consolidating Financial Data, continued

Consolidating Balance Sheet
(Dollars in millions)
June 30, 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	1,172		$	143		$	5		$	1,320
Short-term Investments	75			—			8			83
Accounts Receivable - Net	(6		)	271			771			1,036
Receivable from Affiliates	1,005			4,360			(5,365		)	—
Materials and Supplies	—			326			—			326
Other Current Assets	—			98			18			116
Total Current Assets	2,246			5,198			(4,563		)	2,881
Properties	1			41,492			2,813			44,306
Accumulated Depreciation	(1		)	(10,928		)	(1,530		)	(12,459		)
Properties - Net	—			30,564			1,283			31,847
Investments in Conrail	—			—			931			931
Affiliates and Other Companies	(39		)	832			17			810
Investments in Consolidated Subsidiaries	30,585			—			(30,585		)	—
Other Long-term Assets	65			630			(240		)	455
Total Assets	$	32,857		$	37,224		$	(33,157	)	$	36,924
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	93		$	710		$	49		$	852
Labor and Fringe Benefits Payable	38			381			67			486
Payable to Affiliates	5,536			441			(5,977		)	—
Casualty, Environmental and Other Reserves	—			101			13			114
Current Maturities of Long-term Debt	—			18			1			19
Income and Other Taxes Payable	(389		)	480			32			123
Other Current Liabilities	2			126			10			138
Total Current Liabilities	5,280			2,257			(5,805		)	1,732
Casualty, Environmental and Other Reserves	—			190			42			232
Long-term Debt	13,039			730			—			13,769
Deferred Income Taxes - Net	(109		)	6,436			205			6,532
Other Long-term Liabilities	638			305			(307		)	636
Total Liabilities	$	18,848		$	9,918		$	(5,865	)	$	22,901
Shareholders' Equity
Common Stock, $1 Par Value	$	859		$	181		$	(181	)	$	859
Other Capital	127			5,096			(5,096		)	127
Retained Earnings	13,604			22,025			(22,025		)	13,604
Accumulated Other Comprehensive Loss	(581		)	(10		)	10			(581		)
Noncontrolling Interest	—			14			—			14
Total Shareholders' Equity	$	14,009		$	27,306		$	(27,292	)	$	14,023
Total Liabilities and Shareholders' Equity	$	32,857		$	37,224		$	(33,157	)	$	36,924

Summarized Consolidating Financial Data, continued

Consolidating Balance Sheet (Dollars in millions)
December 31, 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	274		$	121		$	6		$	401
Short-term Investments	—			—			18			18
Accounts Receivable - Net	(1		)	301			670			970
Receivable from Affiliates	1,226			3,517			(4,743		)	—
Materials and Supplies	—			372			—			372
Other Current Assets	(1		)	145			10			154
Total Current Assets	1,498			4,456			(4,039		)	1,915
Properties	1			41,479			2,844			44,324
Accumulated Depreciation	(1		)	(11,017		)	(1,542		)	(12,560		)
Properties - Net	—			30,462			1,302			31,764
Investments in Conrail	—			—			907			907
Affiliates and Other Companies	(39		)	800			18			779
Investment in Consolidated Subsidiaries	29,405			—			(29,405		)	—
Other Long-term Assets	39			596			(261		)	374
Total Assets	$	30,903		$	36,314		$	(31,478	)	$	35,739
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	105		$	708		$	34		$	847
Labor and Fringe Benefits Payable	52			494			56			602
Payable to Affiliates	4,792			552			(5,344		)	—
Casualty, Environmental and Other Reserves	—			95			13			108
Current Maturities of Long-term Debt	—			19			—			19
Income and Other Taxes Payable	(326		)	455			28			157
Other Current Liabilities	5			153			3			161
Total Current Liabilities	4,628			2,476			(5,210		)	1,894
Casualty, Environmental and Other Reserves	—			222			44			266
Long-term Debt	11,056			733			1			11,790
Deferred Income Taxes - Net	(130		)	6,342			206			6,418
Other Long-term Liabilities	644			320			(314		)	650
Total Liabilities	$	16,198		$	10,093		$	(5,273	)	$	21,018
Shareholders' Equity
Common Stock, $1 Par Value	$	890		$	181		$	(181	)	$	890
Other Capital	217			5,096			(5,096		)	217
Retained Earnings	14,084			20,933			(20,933		)	14,084
Accumulated Other Comprehensive Loss	(486		)	(5		)	5			(486		)
Noncontrolling Minority Interest	—			16			—			16
Total Shareholders' Equity	$	14,705		$	26,221		$	(26,205	)	$	14,721
Total Liabilities and Shareholders' Equity	$	30,903		$	36,314		$	(31,478	)	$	35,739

Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Six Months 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	1,311		$	1,245		$	(547	)	$	2,009
Investing Activities
Property Additions	—			(762		)	(61		)	(823		)
Proceeds from Property Dispositions	—			141			—			141
Purchases of Short-term Investments	(75		)	—			(2		)	(77		)
Proceeds from Sales of Short-term Investments	—			—			12			12
Other Investing Activities	(1		)	(99		)	92			(8		)
Net Cash Provided by (Used in) Investing Activities	(76		)	(720		)	41			(755		)
Financing Activities
Long-term Debt Issued	2,000			—			—			2,000
Long-term Debt Repaid	—			—			—			—
Dividends Paid	(384		)	(500		)	500			(384		)
Shares Repurchased	(1,810		)	—			—			(1,810		)
Accelerated Share Repurchase Pending Final Settlement	(90		)	—			—			(90		)
Other Financing Activities	(53		)	(3		)	5			(51		)
Net Cash Provided by (Used in) Financing Activities	(337		)	(503		)	505			(335		)
Net Increase (Decrease) in Cash and Cash Equivalents	898			22			(1		)	919
Cash and Cash Equivalents at Beginning of Period	274			121			6			401
Cash and Cash Equivalents at End of Period	$	1,172		$	143		$	5		$	1,320

NOTE 12.Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Six Months 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	814		$	973		$	(221	)	$	1,566
Investing Activities
Property Additions	—			(873		)	(82		)	(955		)
Proceeds from Property Dispositions	—			16			—			16
Purchases of Short-term Investments	(539		)	—			(6		)	(545		)
Proceeds from Sales of Short-term Investments	490			—			2			492
Other Investing Activities	(2		)	35			(8		)	25
Net Cash Used in Investing Activities	(51		)	(822		)	(94		)	(967		)
Financing Activities
Long-term Debt Issued	850			—			—			850
Long-term Debt Repaid	(313		)	—			—			(313		)
Dividends Paid	(350		)	(300		)	300			(350		)
Shares Repurchased	(757		)	—			—			(757		)
Other Financing Activities	(15		)	(4		)	7			(12		)
Net Cash Provided by (Used in) Financing Activities	(585		)	(304		)	307			(582		)
Net Increase (Decrease) in Cash and Cash Equivalents	178			(153		)	(8		)	17
Cash and Cash Equivalents at Beginning of Period	305			281			17			603
Cash and Cash Equivalents at End of Period	$	483		$	128		$	9		$	620

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Nature of Operations and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 quarter and six months ended June 30, 2018 and June 30, 2017;

• Condensed consolidated comprehensive income statements for the quarter and six months ended June 30, 2018 and June 30, 2017;

• Consolidated balance sheets at June 30, 2018 and December 31, 2017; and

• Consolidated cash flow statements for the six months ended June 30, 2018 and June 30, 2017.

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

Through the second quarter 2017, CSX followed a 52/53 week fiscal reporting calendar with the last day of each reporting period ending on a Friday. On July 7, 2017 the Board of Directors of CSX approved a change in the fiscal reporting calendar from a 52/53 week year ending on the last Friday of December to a calendar year ending on December 31 each year, effective beginning with fiscal third quarter 2017. Related to the change in the fiscal calendar:

• Fiscal year 2018 (January 1, 2018 through December 31, 2018) will contain 365 days, and fiscal year 2017 (December 31, 2016 through December 31, 2017) contained 366 days

• Fiscal first quarter 2018 (January 1, 2018 through March 31, 2018) contained 90 days, and fiscal first quarter 2017 (December 31, 2016 through March 31, 2017) contained 91 days

• Fiscal second quarter 2018 (April 1, 2018 through June 30, 2018) contained 91 days, and fiscal second quarter 2017 (April 1, 2017 through June 30, 2017) contained 91 days

This change did not materially impact the comparability of the Company’s financial results. Accordingly, the change to a calendar fiscal year was made on a prospective basis and operating results for prior periods were not adjusted. The Company was not required to file a transition report because this change was not deemed a change in fiscal year for purposes of reporting subject to Rule 13a-10 or Rule 15d-10 of the Securities Exchange Act of 1934 as the new fiscal year commenced with the end of the prior fiscal year end and within seven days of the prior fiscal year end.

Except as otherwise specified, references to “second quarter(s)” or “six months” indicate CSX's fiscal periods ending June 30, 2018 and June 30, 2017, and references to "year-end" indicate the fiscal year ended December 31, 2017.

New Accounting Pronouncements

In February 2018, the FASB issued Accounting Standard Update ("ASU") Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income. The Company adopted this standard update in first quarter 2018 and applied it prospectively. Adoption resulted in the reclassification of $107 million in tax effects related to employee benefit plans from accumulated other comprehensive loss, increasing retained earnings by the same amount.

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

In March 2017, the FASB issued ASU Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, whichrequires that only the service cost component of net periodic benefit costs be recorded as compensation cost in operating expense on the consolidated income statement. All other components of net periodic benefit cost (interest cost, expected return on plan assets, amortization of net loss, special termination benefits and settlement and curtailment effects) should be presented as non-operating charges on the consolidated income statement. These non-operating charges are presented as restructuring charge - non-operating, if related to prior year restructuring activities, or as other income - net as appropriate. The Company adopted the provisions of this standard during first quarter 2018 and applied them retrospectively. The retrospective impact of adoption for second quarter and six months 2017 is shown in the following table.

	Second Quarter 2017								Six Months 2017
(Dollars in millions)	As Previously Reported		Reclass			As Reclassified			As Previously Reported		Reclass			As Reclassified
Operating Expense:
Labor and Fringe	$	743	$	8		$	751		$	1,532	$	14		$	1,546
Restructuring Charge	122		(7		)	115			295		(70		)	225
Non-Operating Income (Expense):
Restructuring Charge - Non-Operating	$	—	$	(7	)	$	(7	)	$	—	$	(70	)	$	(70	)
Other Income - Net	6		8			14			13		14			27

In May 2014, the FASB issued ASU Revenue from Contracts with Customers, which supersedes previous revenue recognition guidance. The new standard requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. In-depth reviews of commercial contracts were completed and changes to processes and internal controls to meet the standard’s reporting and disclosure requirements were implemented. The Company adopted the guidance effective January 1, 2018 using the modified retrospective approach. The adoption did not affect the Company’s financial condition, results of operations or liquidity. Disclosures related to the nature, amount and timing of revenue and cash flows arising from contracts with customers are included in Note 11, Revenues.

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

Pronouncements to be adopted    

In February 2016, the FASB issued ASU, Leases, which will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required. This standard update is effective for CSX beginning with the first quarter 2019 and currently requires the use of a modified retrospective adoption approach. In March 2018, the FASB tentatively approved a new, optional transition method that would instead allow companies to adopt using a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to elect the cumulative-effect adjustment transition method. Changes to processes and internal controls to meet the standard’s reporting and disclosure requirements have been identified and are being implemented. Software has been implemented that will assist in the recognition of additional assets and liabilities to be included on the balance sheet related to leases currently classified as operating leases with durations greater than twelve months, with certain allowable exceptions. In addition to lease agreements, service contracts and other agreements are also being reviewed to determine if they contain an embedded lease. The Company continues to evaluate the expected impact of this standard update on disclosures, but does not anticipate any material changes to operating results or liquidity as a result of right-of-use assets and corresponding lease liabilities that will be recorded.

In January 2018, the FASB issued ASU Leases - Land Easement Practical Expedient, which permits entities to forgo the evaluation of existing land easement arrangements to determine if they contain a lease as part of the adoption of the Leases ASU issued in February 2016. Accordingly, the Company’s accounting treatment of existing land easements will not change. CSX will adopt this standard update concurrently with the Leases ASU issued in February 2016. New land easement arrangements, or modifications to existing arrangements, after the adoption of the standard update will still be evaluated to determine if they meet the definition of a lease.

In March 2017, the FASB issued ASU Simplifying the Test for Goodwill Impairment, which eliminates step two, the calculation of the implied fair value of goodwill, from the goodwill impairment test. Impairment will be quantified in step one of the test as the amount by which the carrying amount exceeds the fair value. This standard update is effective beginning first quarter 2020 and must be applied prospectively. The Company does not believe this standard update will have a material effect on its financial condition, results of operations or liquidity.

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Nature of Operations and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Retrospective Impact of Adoption

The retrospective impact of adoption for second quarter and six months 2017 is shown in the following table.

	Second Quarter 2017								Six Months 2017
(Dollars in millions)	As Previously Reported		Reclass			As Reclassified			As Previously Reported		Reclass			As Reclassified
Operating Expense:
Labor and Fringe	$	743	$	8		$	751		$	1,532	$	14		$	1,546
Restructuring Charge	122		(7		)	115			295		(70		)	225
Non-Operating Income (Expense):
Restructuring Charge - Non-Operating	$	—	$	(7	)	$	(7	)	$	—	$	(70	)	$	(70	)
Other Income - Net	6		8			14			13		14			27

Restructuring Charges

Expenses related to the management workforce reduction and other costs are shown in the following table.

	Second Quarter 2017
(Dollars in millions)	As Previously Reported		Operating Restructuring Charge		Non-Operating Restructuring Charge
Severance and Pension	$	13	$	10	$	3
Other Post-Retirement Benefits Curtailment	4		—		4
Employee Equity Awards Proration and Other	5		5		—
Subtotal Management Workforce Reduction	$	22	$	15	$	7
Reimbursement Arrangements	84		84		—
Executive Equity Awards Proration	16		16		—
Total Restructuring Charge	$	122	$	115	$	7

	Six Months 2017
(Dollars in millions)	As Previously Reported		Operating Restructuring Charge		Non-Operating Restructuring Charge
Severance and Pension	$	144	$	91	$	53
Other Post-Retirement Benefits Curtailment	17		—		17
Employee Equity Awards Proration and Other	16		16		—
Subtotal Management Workforce Reduction	$	177	$	107	$	70
Reimbursement Arrangements	84		84		—
Executive Equity Awards Proration	24		24		—
Advisory Fees Related to Shareholder Matters	10		10		—
Total Restructuring Charge	$	295	$	225	$	70

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Computation of Basic Earnings Per Share, Assuming Dilution

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

	Second Quarters				Six Months
	2018		2017		2018		2017
Numerator (Dollars in millions):
Net Earnings	$	877	$	510	$	1,572	$	872
Denominator (Units in millions):
Average Common Shares Outstanding	864		920		875		923
Other Potentially Dilutive Common Shares	4		4		3		3
Average Common Shares Outstanding, Assuming Dilution	868		924		878		926
Net Earnings Per Share, Basic	$	1.02	$	0.55	$	1.80	$	0.94
Net Earnings Per Share, Assuming Dilution	$	1.01	$	0.55	$	1.79	$	0.94

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation and Related Income Tax Benefit

Total pre-tax expense associated with share-based compensation and its related income tax benefit is shown in the table below. The year over year decrease in expense related to performance units, stock options and restricted stock units and awards is primarily due to modifications to the terms of awards in 2017 (see Equity Award Modifications below) and the prior year expense related to 9 million stock options granted in February 2017 to former President and CEO E. Hunter Harrison which were forfeited upon his death in December 2017.

	Second Quarters				Six Months
(Dollars in millions)	2018		2017		2018		2017
Share-Based Compensation Expense:
Performance Units	$	8	$	18	$	14	$	39
Stock Options	2		21		6		32
Restricted Stock Units and Awards	2		5		3		9
Stock Awards for Directors	—		—		2		2
Total Share-Based Compensation Expense	$	12	$	44	$	25	$	82
Income Tax Benefit	$	9	$	13	$	17	$	29

Schedule of Weighted Average Assumptions

The fair value of these performance units awarded in February 2018 was calculated using a Monte-Carlo simulation model with the following weighted-average assumptions:

	Six Months
	2018
Weighted-average assumptions used:
Annual dividend yield	1.6	%
Risk-free interest rate	2.3	%
Annualized volatility	29.2	%
Expected life (in years)	2.9

Summary of Fair Value Assumptions for Stock Option Awards

The fair values of all stock option awards during the quarters and six months ended June 30, 2018 and June 30, 2017 were estimated at the grant date with the following weighted average assumptions:

	Second Quarters						Six Months
	2018			2017			2018			2017
Weighted-average grant date fair value	$	17.62		$	12.27		$	14.64		$	12.83
Stock options valuation assumptions:
Annual dividend yield	1.3		%	1.5		%	1.5		%	1.5		%
Risk-free interest rate	2.8		%	2.1		%	2.6		%	2.2		%
Annualized volatility	25.8		%	27.0		%	27.0		%	27.1		%
Expected life (in years)	6.5			6.5			6.5			6.3
Other pricing model inputs:
Weighted-average grant-date market price of CSX stock (strike price)	$	65.44		$	47.80		$	54.14		$	49.60

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Casualty, Environmental and Other Reserves (Tables)

6 Months Ended

Jun. 30, 2018

Casualty, Environmental and Other Reserves [Abstract]

Schedule of Casualty, Environmental and Other Reserves

Personal injury and environmental reserves are considered critical accounting estimates due to the need for significant management judgment. Casualty, environmental and other reserves are provided for in the consolidated balance sheets as shown in the table below.

	June 30, 2018						December 31, 2017
(Dollars in millions)	Current		Long-term		Total		Current		Long-term		Total
Casualty:
Personal Injury	$	42	$	105	$	147	$	43	$	125	$	168
Occupational	7		47		54		6		54		60
Total Casualty	49		152		201		49		179		228
Environmental	37		54		91		31		59		90
Other	28		26		54		28		28		56
Total	$	114	$	232	$	346	$	108	$	266	$	374

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Components of Expense/(Income) Related to Net Benefit Expense

	Pension Benefits
(Dollars in millions)	Second Quarters						Six Months
	2018			2017			2018			2017
Service Cost Included in Labor and Fringe	$	7		$	9		$	16		$	20
Interest Cost	23			23			46			46
Expected Return on Plan Assets	(43		)	(43		)	(87		)	(85		)
Amortization of Net Loss	10			10			20			21
Total Income Included in Other Income - Net	(10		)	(10		)	(21		)	(18		)
Net Periodic Benefit Cost	$	(3	)	$	(1	)	$	(5	)	$	2
Restructuring Charges - Non Operating (a)	—			7			—			57
Total (Income) Expense	$	(3	)	$	6		$	(5	)	$	59
	Other Post-retirement Benefits
(Dollars in millions)	Second Quarters						Six Months
	2018			2017			2018			2017
Service Cost Included in Labor and Fringe	$	1		$	1		$	1		$	1
Interest Cost	1			2			3			4
Total Expense Included in Other Income - Net	1			2			3			4
Net Periodic Benefit Cost	$	2		$	3		$	4		$	5
Restructuring Charges - Non Operating  (a)	—			—			—			13
Total Expense	$	2		$	3		$	4		$	18

(a) Charges related to special termination benefits and curtailment costs were the result of the management workforce reductions in first quarter 2017. See Management Workforce Reductions in Note 1. Nature of Operations and Significant Accounting Policies.

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Debt and Credit Agreements (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Activity Related to Long-Term Debt

Total activity related to long-term debt as of the end of second quarter 2018 is shown in the table below. For fair value information related to the Company's long-term debt, see Note 9, Fair Value Measurements.

(Dollars in millions)	Current Portion		Long-term Portion			Total
Long-term debt as of December 31, 2017	$	19	$	11,790		$	11,809
2018 activity:
Long-term debt issued	—		2,000			2,000
Discount, premium and other activity			(21		)	(21		)
Long-term debt as of June 30, 2018	$	19	$	13,769		$	13,788

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Investment Assets

(Dollars in Millions)	June 30, 2018		December 31, 2017
Certificates of Deposit and Commercial Paper	$	75	$	—
Corporate Bonds	57		61
Government Securities	39		34
Total investments at fair value	$	171	$	95

Schedule of Investment Maturities

These investments have the following maturities:

(Dollars in millions)	June 30, 2018		December 31, 2017
Less than 1 year	$	82	$	18
1 - 5 years	16		11
5 - 10 years	27		26
Greater than 10 years	46		40
Total investments at fair value	$	171	$	95

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)	June 30, 2018		December 31, 2017
Long-term Debt (Including Current Maturities):
Fair Value	$	14,069	$	13,220
Carrying Value	13,788		11,809

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Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Changes in AOCI balance by Component

Changes in the AOCI balance by component are shown in the table below. Amounts reclassified in pension and other post-employment benefits to net earnings relate to the amortization of actuarial losses and are included in labor and fringe on the consolidated income statements. See Note 6, Employee Benefit Plans, for further information. Other primarily represents CSX's share of AOCI of equity method investees. Amounts reclassified in other to net earnings are included in equity earnings of affiliates on the consolidated income statements.

	Pension and Other Post-Employment Benefits			Other			Accumulated Other Comprehensive Income (Loss)
(Dollars in millions)
Balance December 31, 2017, Net of Tax	$	(440	)	$	(46	)	$	(486	)
Other Comprehensive Income (Loss)
Loss Before Reclassifications	—			(1		)	(1		)
Amounts Reclassified to Net Earnings	20			(3		)	17
Tax (Expense) Benefit	(5		)	1			(4		)
Reclassification of Stranded Tax Effects	(108		)	1			(107		)
Total Other Comprehensive Loss	(93		)	(2		)	(95		)
Balance June 30, 2018, Net of Tax	$	(533	)	$	(48	)	$	(581	)

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Revenues (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Revenues Disaggregated by Lines of Business

The following table presents the Company’s revenues disaggregated by lines of business as they best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors:

	Second Quarters				Six Months
(Dollars in millions)	2018		2017		2018		2017
Chemicals	$	588	$	552	$	1,145	$	1,118
Automotive	330		307		634		623
Agricultural and Food Products	327		321		634		653
Forest Products	215		194		410		386
Metals and Equipment	198		178		384		368
Minerals	137		128		251		242
Fertilizers	112		118		228		247
Total Merchandise	1,907		1,798		3,686		3,637
Domestic Coal	317		350		590		680
Export Coal	252		180		482		372
Total Coal	569		530		1,072		1,052
Domestic Intermodal	323		308		617		599
International Intermodal	167		140		322		283
Total Intermodal	490		448		939		882
Other	136		157		281		231
Total	$	3,102	$	2,933	$	5,978	$	5,802

Schedule of Accounts Receivable

The Company’s accounts receivable - net consists of freight and non-freight receivables, reduced by an allowance for doubtful accounts.

(Dollars in millions)	June 30, 2018			December 31, 2017
Freight Receivables	$	844		$	810
Freight Allowance for Doubtful Accounts	(17		)	(17		)
Freight Receivables, net	827			793
Non-Freight Receivables	218			186
Non-Freight Allowance for Doubtful Accounts	(9		)	(9		)
Non-Freight Receivables, net	209			177
Total Accounts Receivable, net	$	1,036		$	970

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Summarized Consolidating Financial Data (Tables)

6 Months Ended

Jun. 30, 2018

Condensed Financial Information Disclosure [Abstract]

Consolidating Income Statements

Consolidating Income Statements
(Dollars in millions)
Second Quarter 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	3,083		$	19		$	3,102
Expense	(84		)	1,948			(45		)	1,819
Operating Income	84			1,135			64			1,283
Equity in Earnings of Subsidiaries	942			—			(942		)	—
Interest (Expense) / Benefit	(181		)	(8		)	32			(157		)
Other Income / (Expense) - Net	6			29			(17		)	18
Earnings Before Income Taxes	851			1,156			(863		)	1,144
Income Tax Benefit / (Expense)	26			(274		)	(19		)	(267		)
Net Earnings	$	877		$	882		$	(882	)	$	877
Total Comprehensive Earnings	$	881		$	881		$	(881	)	$	881
Second Quarter 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	2,914		$	19		$	2,933
Expense	6			2,024			(54		)	1,976
Operating Income	(6		)	890			73			957
Equity in Earnings of Subsidiaries	612			—			(612		)	—
Interest (Expense) / Benefit	(143		)	(8		)	14			(137		)
Other Income / (Expense) - Net	2			7			(2		)	7
Earnings Before Income Taxes	465			889			(527		)	827
Income Tax Benefit / (Expense)	45			(332		)	(30		)	(317		)
Net Earnings	$	510		$	557		$	(557	)	$	510
Total Comprehensive Earnings	$	575		$	558		$	(558	)	$	575

Summarized Consolidating Financial Data, continued

Consolidating Income Statements
(Dollars in millions)
Six Months 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	5,940		$	38		$	5,978
Expense	(162		)	3,891			(78		)	3,651
Operating Income	162			2,049			116			2,327
Equity in Earnings of Subsidiaries	1,700			—			(1,700		)	—
Interest (Expense) / Benefit	(345		)	(17		)	56			(306		)
Other Income / (Expense) - Net	10			52			(27		)	35
Earnings Before Income Taxes	1,527			2,084			(1,555		)	2,056
Income Tax (Expense) / Benefit	45			(498		)	(31		)	(484		)
Net Earnings	$	1,572		$	1,586		$	(1,586	)	$	1,572
Total Comprehensive Earnings	$	1,477		$	1,581		$	(1,581	)	$	1,477
Six Months 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Revenue	$	—		$	5,765		$	37		$	5,802
Expense	(42		)	4,194			(76		)	4,076
Operating Income	42			1,571			113			1,726
Equity in Earnings of Subsidiaries	1,034			—			(1,034		)	—
Interest (Expense) / Benefit	(285		)	(18		)	29			(274		)
Other Income / (Expense) - Net	5			(40		)	(8		)	(43		)
Earnings Before Income Taxes	796			1,513			(900		)	1,409
Income Tax (Expense) / Benefit	76			(567		)	(46		)	(537		)
Net Earnings	$	872		$	946		$	(946	)	$	872
Total Comprehensive Earnings	$	943		$	945		$	(945	)	$	943

Consolidating Balance Sheet

Consolidating Balance Sheet
(Dollars in millions)
June 30, 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	1,172		$	143		$	5		$	1,320
Short-term Investments	75			—			8			83
Accounts Receivable - Net	(6		)	271			771			1,036
Receivable from Affiliates	1,005			4,360			(5,365		)	—
Materials and Supplies	—			326			—			326
Other Current Assets	—			98			18			116
Total Current Assets	2,246			5,198			(4,563		)	2,881
Properties	1			41,492			2,813			44,306
Accumulated Depreciation	(1		)	(10,928		)	(1,530		)	(12,459		)
Properties - Net	—			30,564			1,283			31,847
Investments in Conrail	—			—			931			931
Affiliates and Other Companies	(39		)	832			17			810
Investments in Consolidated Subsidiaries	30,585			—			(30,585		)	—
Other Long-term Assets	65			630			(240		)	455
Total Assets	$	32,857		$	37,224		$	(33,157	)	$	36,924
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	93		$	710		$	49		$	852
Labor and Fringe Benefits Payable	38			381			67			486
Payable to Affiliates	5,536			441			(5,977		)	—
Casualty, Environmental and Other Reserves	—			101			13			114
Current Maturities of Long-term Debt	—			18			1			19
Income and Other Taxes Payable	(389		)	480			32			123
Other Current Liabilities	2			126			10			138
Total Current Liabilities	5,280			2,257			(5,805		)	1,732
Casualty, Environmental and Other Reserves	—			190			42			232
Long-term Debt	13,039			730			—			13,769
Deferred Income Taxes - Net	(109		)	6,436			205			6,532
Other Long-term Liabilities	638			305			(307		)	636
Total Liabilities	$	18,848		$	9,918		$	(5,865	)	$	22,901
Shareholders' Equity
Common Stock, $1 Par Value	$	859		$	181		$	(181	)	$	859
Other Capital	127			5,096			(5,096		)	127
Retained Earnings	13,604			22,025			(22,025		)	13,604
Accumulated Other Comprehensive Loss	(581		)	(10		)	10			(581		)
Noncontrolling Interest	—			14			—			14
Total Shareholders' Equity	$	14,009		$	27,306		$	(27,292	)	$	14,023
Total Liabilities and Shareholders' Equity	$	32,857		$	37,224		$	(33,157	)	$	36,924

Consolidating Balance Sheet (Dollars in millions)
December 31, 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
ASSETS
Current Assets
Cash and Cash Equivalents	$	274		$	121		$	6		$	401
Short-term Investments	—			—			18			18
Accounts Receivable - Net	(1		)	301			670			970
Receivable from Affiliates	1,226			3,517			(4,743		)	—
Materials and Supplies	—			372			—			372
Other Current Assets	(1		)	145			10			154
Total Current Assets	1,498			4,456			(4,039		)	1,915
Properties	1			41,479			2,844			44,324
Accumulated Depreciation	(1		)	(11,017		)	(1,542		)	(12,560		)
Properties - Net	—			30,462			1,302			31,764
Investments in Conrail	—			—			907			907
Affiliates and Other Companies	(39		)	800			18			779
Investment in Consolidated Subsidiaries	29,405			—			(29,405		)	—
Other Long-term Assets	39			596			(261		)	374
Total Assets	$	30,903		$	36,314		$	(31,478	)	$	35,739
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable	$	105		$	708		$	34		$	847
Labor and Fringe Benefits Payable	52			494			56			602
Payable to Affiliates	4,792			552			(5,344		)	—
Casualty, Environmental and Other Reserves	—			95			13			108
Current Maturities of Long-term Debt	—			19			—			19
Income and Other Taxes Payable	(326		)	455			28			157
Other Current Liabilities	5			153			3			161
Total Current Liabilities	4,628			2,476			(5,210		)	1,894
Casualty, Environmental and Other Reserves	—			222			44			266
Long-term Debt	11,056			733			1			11,790
Deferred Income Taxes - Net	(130		)	6,342			206			6,418
Other Long-term Liabilities	644			320			(314		)	650
Total Liabilities	$	16,198		$	10,093		$	(5,273	)	$	21,018
Shareholders' Equity
Common Stock, $1 Par Value	$	890		$	181		$	(181	)	$	890
Other Capital	217			5,096			(5,096		)	217
Retained Earnings	14,084			20,933			(20,933		)	14,084
Accumulated Other Comprehensive Loss	(486		)	(5		)	5			(486		)
Noncontrolling Minority Interest	—			16			—			16
Total Shareholders' Equity	$	14,705		$	26,221		$	(26,205	)	$	14,721
Total Liabilities and Shareholders' Equity	$	30,903		$	36,314		$	(31,478	)	$	35,739

Consolidating Cash Flow Statements

Consolidating Cash Flow Statements
(Dollars in millions)
Six Months 2018	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	1,311		$	1,245		$	(547	)	$	2,009
Investing Activities
Property Additions	—			(762		)	(61		)	(823		)
Proceeds from Property Dispositions	—			141			—			141
Purchases of Short-term Investments	(75		)	—			(2		)	(77		)
Proceeds from Sales of Short-term Investments	—			—			12			12
Other Investing Activities	(1		)	(99		)	92			(8		)
Net Cash Provided by (Used in) Investing Activities	(76		)	(720		)	41			(755		)
Financing Activities
Long-term Debt Issued	2,000			—			—			2,000
Long-term Debt Repaid	—			—			—			—
Dividends Paid	(384		)	(500		)	500			(384		)
Shares Repurchased	(1,810		)	—			—			(1,810		)
Accelerated Share Repurchase Pending Final Settlement	(90		)	—			—			(90		)
Other Financing Activities	(53		)	(3		)	5			(51		)
Net Cash Provided by (Used in) Financing Activities	(337		)	(503		)	505			(335		)
Net Increase (Decrease) in Cash and Cash Equivalents	898			22			(1		)	919
Cash and Cash Equivalents at Beginning of Period	274			121			6			401
Cash and Cash Equivalents at End of Period	$	1,172		$	143		$	5		$	1,320

NOTE 12.Summarized Consolidating Financial Data, continued

Consolidating Cash Flow Statements
(Dollars in millions)
Six Months 2017	CSX Corporation			CSX Transportation			Eliminations and Other			Consolidated
Operating Activities
Net Cash Provided by (Used in) Operating Activities	$	814		$	973		$	(221	)	$	1,566
Investing Activities
Property Additions	—			(873		)	(82		)	(955		)
Proceeds from Property Dispositions	—			16			—			16
Purchases of Short-term Investments	(539		)	—			(6		)	(545		)
Proceeds from Sales of Short-term Investments	490			—			2			492
Other Investing Activities	(2		)	35			(8		)	25
Net Cash Used in Investing Activities	(51		)	(822		)	(94		)	(967		)
Financing Activities
Long-term Debt Issued	850			—			—			850
Long-term Debt Repaid	(313		)	—			—			(313		)
Dividends Paid	(350		)	(300		)	300			(350		)
Shares Repurchased	(757		)	—			—			(757		)
Other Financing Activities	(15		)	(4		)	7			(12		)
Net Cash Provided by (Used in) Financing Activities	(585		)	(304		)	307			(582		)
Net Increase (Decrease) in Cash and Cash Equivalents	178			(153		)	(8		)	17
Cash and Cash Equivalents at Beginning of Period	305			281			17			603
Cash and Cash Equivalents at End of Period	$	483		$	128		$	9		$	620

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Nature of Operations and Significant Accounting Policies - Narrative (Details) mi in Thousands, $ in Millions	Jun. 30, 2018 state mi	Mar. 31, 2018 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total number of rail route miles | mi	21
Number of states rail network serves | state	23
Accumulated Other Comprehensive Income (Loss)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification adjustment		$ (107)
Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification adjustment		$ 107

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Nature of Operations and Significant Accounting Policies - Schedule of Retrospective Impact of Adoption (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Labor and Fringe	$ 669	$ 751	$ 1,365	$ 1,546
Restructuring Charge	0	115	0	225
Restructuring Charge - Non-Operating	0	(7)	0	(70)
Other Income - Net	$ 18	14	$ 35	27
As Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Labor and Fringe		743		1,532
Restructuring Charge		122		295
Restructuring Charge - Non-Operating		0		0
Other Income - Net		6		13
Reclass
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Labor and Fringe		8		14
Restructuring Charge		(7)		(70)
Restructuring Charge - Non-Operating		(7)		(70)
Other Income - Net		$ 8		$ 14

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Nature of Operations and Significant Accounting Policies - Restructuring Charges (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Restructuring Cost and Reserve [Line Items]
Restructuring Charge	$ 0	$ 115	$ 0	$ 225
Restructuring Charges Nonoperating	$ 0	7	$ 0	70
Management Streamlining Initiative
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		115		225
Restructuring Charges Nonoperating		7		70
Management Streamlining Initiative | Subtotal Management Workforce Reduction
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		15		107
Restructuring Charges Nonoperating		7		70
Management Streamlining Initiative | Severance and Pension
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		10		91
Restructuring Charges Nonoperating		3		53
Management Streamlining Initiative | Other Post-Retirement Benefits Curtailment
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		0		0
Restructuring Charges Nonoperating		4		17
Management Streamlining Initiative | Employee Equity Awards Proration and Other
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		5		16
Restructuring Charges Nonoperating		0		0
Management Streamlining Initiative | Reimbursement Arrangements
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		84		84
Restructuring Charges Nonoperating		0		0
Management Streamlining Initiative | Executive Equity Awards Proration
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		16		24
Restructuring Charges Nonoperating		0		0
Management Streamlining Initiative | Advisory Fees Related to Shareholder Matters
Restructuring Cost and Reserve [Line Items]
Restructuring Charge				10
Restructuring Charges Nonoperating				0
As Previously Reported
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		122		295
Restructuring Charges Nonoperating		0		0
As Previously Reported | Management Streamlining Initiative
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		122		295
As Previously Reported | Management Streamlining Initiative | Subtotal Management Workforce Reduction
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		22		177
As Previously Reported | Management Streamlining Initiative | Severance and Pension
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		13		144
As Previously Reported | Management Streamlining Initiative | Other Post-Retirement Benefits Curtailment
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		4		17
As Previously Reported | Management Streamlining Initiative | Employee Equity Awards Proration and Other
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		5		16
As Previously Reported | Management Streamlining Initiative | Reimbursement Arrangements
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		84		84
As Previously Reported | Management Streamlining Initiative | Executive Equity Awards Proration
Restructuring Cost and Reserve [Line Items]
Restructuring Charge		$ 16		24
As Previously Reported | Management Streamlining Initiative | Advisory Fees Related to Shareholder Matters
Restructuring Cost and Reserve [Line Items]
Restructuring Charge				$ 10

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Earnings Per Share - Computation of Basic Earnings Per Share, Assuming Dilution (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net Earnings	$ 877	$ 510	$ 1,572	$ 872
Denominator:
Average Common Shares Outstanding (in shares)	864	920	875	923
Other Potentially Dilutive Common Shares (in shares)	4	4	3	3
Average Common Shares Outstanding, Assuming Dilution (in shares)	868	924	878	926
Net Earnings Per Share, Basic (in dollars per share)	$ 1.02	$ 0.55	$ 1.80	$ 0.94
Net Earnings Per Share, Assuming Dilution (in dollars per share)	$ 1.01	$ 0.55	$ 1.79	$ 0.94

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Earnings Per Share - Narrative (Details) - USD ($) shares in Millions	2 Months Ended	3 Months Ended			6 Months Ended
	Feb. 22, 2018	Jul. 17, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Apr. 20, 2018	Feb. 28, 2018	Jan. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Share repurchase program			$ 5,000,000,000		$ 5,000,000,000			$ 1,500,000,000.0
Shares repurchased value			$ 974,000,000	$ 499,000,000	$ 1,810,000,000	$ 757,000,000
Accelerated share repurchase program (payment) receipt amount	$ 30,000,000						$ 450,000,000		$ 150,000,000
Initial share value received							$ 360,000,000		$ 120,000,000
Initial shares received							6
Shares repurchased during the period (in shares)	3		16	9	31	15
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities			1	10
Subsequent Event
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Accelerated share repurchase program (payment) receipt amount		$ 90,000,000
Shares repurchased during the period (in shares)		7

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Share-Based Compensation - Narrative (Details) $ / shares in Units, $ in Millions			1 Months Ended		3 Months Ended		6 Months Ended
	Feb. 06, 2018 shares	Mar. 06, 2017 employee	Feb. 28, 2018 $ / shares shares	Dec. 31, 2017 shares	Jun. 30, 2018 $ / shares	Jun. 30, 2017 USD ($) $ / shares	Jun. 30, 2018 $ / shares shares	Jun. 30, 2017 USD ($) $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted (in shares)			950,000
Fair value of stock options (in dollars per share) | $ / shares			$ 14.55				$ 14.64	$ 12.83
2017 - 2019 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of payout subject to downward adjustment (up to)							25.00%
2017 - 2019 LTIP | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payout range for participants (as a percent)							0.00%
2017 - 2019 LTIP | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Payout range for participants (as a percent)							200.00%
Equity Award Modifications
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employees impacted (employees) | employee		70
Share-based compensation expense revaluation of awards | $						$ 19		$ 31
Performance Units | 2017 - 2019 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)			350,000
Percentage of grants with performance vesting, operating ratio (as a percent)							50.00%
Percentage of grants with performance vesting, return on assets (as a percent)							50.00%
Performance unit equivalent of CSX common stock (in shares)							1
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (in years)	3 years
Restricted Stock Units (RSUs) | 2017 - 2019 LTIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)	85,000
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock options (in dollars per share) | $ / shares					$ 17.62	$ 12.27
Term of stock options (in years)			10 years
Award vesting period (in years)			3 years
Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options forfeited (in shares)				9,000,000

XML

Share-Based Compensation - Share-Based Compensation and Related Income Tax Benefit (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total Share-Based Compensation Expense	$ 12	$ 44	$ 25	$ 82
Income Tax Benefit	9	13	17	29
Performance Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total Share-Based Compensation Expense	8	18	14	39
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total Share-Based Compensation Expense	2	21	6	32
Restricted Stock Units and Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total Share-Based Compensation Expense	2	5	3	9
Stock Awards for Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total Share-Based Compensation Expense	$ 0	$ 0	$ 2	$ 2

XML

Share-Based Compensation - Schedule of Weighted Average Assumptions (Details)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual dividend yield (as a percent)	1.50%	1.50%
Risk-free interest rate (as a percent)	2.60%	2.20%
Annualized volatility (as a percent)	27.00%	27.10%
Expected life (in years)	6 years 6 months	6 years 3 months
Performance Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual dividend yield (as a percent)	1.60%
Risk-free interest rate (as a percent)	2.30%
Annualized volatility (as a percent)	29.20%
Expected life (in years)	2 years 11 months

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Share-Based Compensation - Summary of Fair Value Assumptions for Stock Option Awards (Details) - $ / shares	1 Months Ended	3 Months Ended		6 Months Ended
	Feb. 28, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value (in dollars per share)	$ 14.55			$ 14.64	$ 12.83
Stock options valuation assumptions:
Annual dividend yield (as a percent)				1.50%	1.50%
Risk-free interest rate (as a percent)				2.60%	2.20%
Annualized volatility (as a percent)				27.00%	27.10%
Expected life (in years)				6 years 6 months	6 years 3 months
Other pricing model inputs:
Weighted-average grant-date market price of CSX stock (in dollars per share)				$ 54.14	$ 49.60
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value (in dollars per share)		$ 17.62	$ 12.27
Stock options valuation assumptions:
Annual dividend yield (as a percent)		1.30%	1.50%
Risk-free interest rate (as a percent)		2.80%	2.10%
Annualized volatility (as a percent)		25.80%	27.00%
Expected life (in years)		6 years 6 months	6 years 6 months
Other pricing model inputs:
Weighted-average grant-date market price of CSX stock (in dollars per share)		$ 65.44	$ 47.80

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Casualty, Environmental and Other Reserves - Schedule of Casualty, Environmental and Other Reserves (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Loss Contingencies [Line Items]
Current	$ 114	$ 108
Long-term	232	266
Total	346	374
Total Casualty
Loss Contingencies [Line Items]
Current	49	49
Long-term	152	179
Total	201	228
Personal Injury
Loss Contingencies [Line Items]
Current	42	43
Long-term	105	125
Total	147	168
Occupational
Loss Contingencies [Line Items]
Current	7	6
Long-term	47	54
Total	54	60
Environmental
Loss Contingencies [Line Items]
Current	37	31
Long-term	54	59
Total	91	90
Other
Loss Contingencies [Line Items]
Current	28	28
Long-term	26	28
Total	$ 54	$ 56

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Casualty, Environmental and Other Reserves - Narrative (Details)	1 Months Ended	2 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) claim site	May 31, 2018 USD ($)	Jun. 30, 2018 USD ($) claim site $ / shares	Jun. 30, 2017 USD ($) $ / shares	Jun. 30, 2018 USD ($) claim site $ / shares	Jun. 30, 2017 USD ($) $ / shares	Dec. 31, 2017 USD ($)
All Contingencies Reserves [Line Items]
Total reserves	$ 346,000,000		$ 346,000,000		$ 346,000,000		$ 374,000,000
Net Earnings			$ 877,000,000	$ 510,000,000	$ 1,572,000,000	$ 872,000,000
Net Earnings Per Share, Basic (in dollars per share) | $ / shares			$ 1.02	$ 0.55	$ 1.80	$ 0.94
Casualty
All Contingencies Reserves [Line Items]
Total reserves	201,000,000		$ 201,000,000		$ 201,000,000		228,000,000
Self-insured retention amount, per occurrence	$ 75,000,000	$ 50,000,000
Number of individual claims expected to exceed self insured retention amount | claim	0		0		0
Environmental
All Contingencies Reserves [Line Items]
Total reserves	$ 91,000,000		$ 91,000,000		$ 91,000,000		90,000,000
Environmental impaired sites | site	218		218		218
Other
All Contingencies Reserves [Line Items]
Total reserves	$ 54,000,000		$ 54,000,000		$ 54,000,000		$ 56,000,000

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Commitments and Contingencies (Details)	1 Months Ended			2 Months Ended	6 Months Ended
	Jun. 30, 2018 USD ($)	Mar. 31, 2016 defendant mi	May 31, 2007 entity	May 31, 2018 USD ($)	Jun. 30, 2018 USD ($) claim mi
Loss Contingencies [Line Items]
Casualty and catastrophic property deductible	$ 50,000,000				$ 50,000,000
Casualty and non catastrophic property deductible	25,000,000				$ 25,000,000
Environmental
Loss Contingencies [Line Items]
Number of miles pertaining to Passaic River tidal reach required to be studied by EPA | mi					17
Pending Litigation
Loss Contingencies [Line Items]
Claims with potential material impact (number of claims) | claim					1
Pending Litigation | Fuel Surcharge Antitrust Litigation
Loss Contingencies [Line Items]
Class action lawsuits filed against U.S.-based Class I railroads, excluding CSXT (number of entities) | entity			3
Pending Litigation | Minimum
Loss Contingencies [Line Items]
Possible loss for certain legal proceedings	2,000,000				$ 2,000,000
Pending Litigation | Maximum
Loss Contingencies [Line Items]
Possible loss for certain legal proceedings	117,000,000				$ 117,000,000
Settled Litigation | Environmental
Loss Contingencies [Line Items]
Number of miles subject to remediation | mi		8
Number of parties | defendant		80
Total Casualty
Loss Contingencies [Line Items]
Self-insured retention amount, per occurrence	$ 75,000,000			$ 50,000,000

XML

Employee Benefit Plans - Components of Expense/(Income) Related to Net Benefit Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Pension Benefits
Components of expense/ (income) related to net benefit expense:
Service Cost Included in Labor and Fringe	$ 7	$ 9	$ 16	$ 20
Interest Cost	23	23	46	46
Expected Return on Plan Assets	(43)	(43)	(87)	(85)
Amortization of Net Loss	10	10	20	21
Total Income Included in Other Income - Net	(10)	(10)	(21)	(18)
Net Periodic Benefit Cost	(3)	(1)	(5)	2
Restructuring Charges - Non Operating	0	7	0	57
Total (Income) Expense	(3)	6	(5)	59
Other Post-retirement Benefits
Components of expense/ (income) related to net benefit expense:
Service Cost Included in Labor and Fringe	1	1	1	1
Interest Cost	1	2	3	4
Total Income Included in Other Income - Net	1	2	3	4
Net Periodic Benefit Cost	2	3	4	5
Restructuring Charges - Non Operating	0	0	0	13
Total (Income) Expense	$ 2	$ 3	$ 4	$ 18

XML

Employee Benefit Plans - Narrative (Details)	Jun. 30, 2018 USD ($)
Retirement Benefits [Abstract]
Contributions expected to plan	$ 0

XML

Debt and Credit Agreements - Activity Related to Long-Term Debt (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Movement, Debt Instruments [Roll Forward]
Beginning balance, current portion	$ 19
Beginning balance, long-term portion	11,790
Beginning balance, total	11,809
Long-term debt issued	2,000	$ 850
Discount, premium and other activity	(21)
Ending balance, current portion	19
Ending balance, long-term portion	13,769
Ending balance, total	13,788
Current Portion
Movement, Debt Instruments [Roll Forward]
Beginning balance, current portion	19
Long-term debt issued	0
Discount, premium and other activity
Ending balance, current portion	19
Long-term Portion
Movement, Debt Instruments [Roll Forward]
Beginning balance, long-term portion	11,790
Long-term debt issued	2,000
Discount, premium and other activity	(21)
Ending balance, long-term portion	$ 13,769

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Debt and Credit Agreements - Narrative (Details) - USD ($)		6 Months Ended
	Feb. 20, 2018	Jun. 30, 2018	Jun. 30, 2017
Line of Credit Facility
Long-term debt issued		$ 2,000,000,000	$ 850,000,000
Notes due 2028
Line of Credit Facility
Long-term debt issued	$ 800,000,000
Interest rate (as a percent)	3.80%
Notes due 2048
Line of Credit Facility
Long-term debt issued	$ 850,000,000
Interest rate (as a percent)	4.30%
Notes due 2068
Line of Credit Facility
Long-term debt issued	$ 350,000,000
Interest rate (as a percent)	4.65%
Unsecured Revolving Credit Facility | Credit Facility
Line of Credit Facility
Maximum borrowing capacity		$ 1,000,000,000
Facility expiration date		May 21, 2020
Amount outstanding		$ 0
Receivables Securitization Facility | Line of Credit
Line of Credit Facility
Maximum borrowing capacity		$ 200,000,000
Facility expiration date		Sep. 01, 2019
Facility expiration period		3 years
Outstanding balance		$ 0

XML

Income Taxes (Details) - USD ($) $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	23.50%	38.10%
Unrecognized tax benefits increase			$ 0
Unrecognized tax benefits decrease			$ 0

XML

Fair Value Measurements - Schedule of Fair Value of Investment Assets (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized cost basis	$ 170	$ 95
Fair Value | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments fair value disclosure	171	95
Fair Value | Level 2 | Certificates of Deposit and Commercial Paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments fair value disclosure	75	0
Fair Value | Level 2 | Corporate Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments fair value disclosure	57	61
Fair Value | Level 2 | Government Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments fair value disclosure	$ 39	$ 34

XML

Fair Value Measurements - Schedule of Investment Maturities (Details) - Fair Value - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Less than 1 year	$ 82	$ 18
1 - 5 years	16	11
5 - 10 years	27	26
Greater than 10 years	46	40
Total investments at fair value	$ 171	$ 95

XML

Fair Value Measurements - Schedule of Fair Value and Carrying Value of Long-Term Debt (Details) - Level 2 - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt (Including Current Maturities):	$ 14,069	$ 13,220
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt (Including Current Maturities):	$ 13,788	$ 11,809

XML

Other Comprehensive Income (Loss) - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Equity [Abstract]
Total comprehensive earnings, net of tax	$ 881	$ 575	$ 1,477	$ 943

XML

Other Comprehensive Income (Loss) - Changes in AOCI balance by Component (Details) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Other Comprehensive Income (Loss)
Loss Before Reclassifications	$ (1)
Amounts Reclassified to Net Earnings	17
Tax (Expense) Benefit	(4)
Reclassification of Stranded Tax Effects	(107)
Total Other Comprehensive Loss	(95)
Pension and Other Post-Employment Benefits
Other Comprehensive Income (Loss)
Beginning balance	(440)
Loss Before Reclassifications	0
Amounts Reclassified to Net Earnings	20
Tax (Expense) Benefit	(5)
Reclassification of Stranded Tax Effects	(108)
Total Other Comprehensive Loss	(93)
Ending balance	(533)
Other
Other Comprehensive Income (Loss)
Beginning balance	(46)
Loss Before Reclassifications	(1)
Amounts Reclassified to Net Earnings	(3)
Tax (Expense) Benefit	1
Reclassification of Stranded Tax Effects	1
Total Other Comprehensive Loss	(2)
Ending balance	(48)
Accumulated Other Comprehensive Income (Loss)
Other Comprehensive Income (Loss)
Beginning balance	(486)
Ending balance	$ (581)

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Revenues - Schedule of Revenues Disaggregated by Lines of Business (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation of Revenue [Line Items]
Revenues	$ 3,102	$ 2,933	$ 5,978	$ 5,802
Total Merchandise
Disaggregation of Revenue [Line Items]
Revenues	1,907	1,798	3,686	3,637
Chemicals
Disaggregation of Revenue [Line Items]
Revenues	588	552	1,145	1,118
Automotive
Disaggregation of Revenue [Line Items]
Revenues	330	307	634	623
Agricultural and Food Products
Disaggregation of Revenue [Line Items]
Revenues	327	321	634	653
Forest Products
Disaggregation of Revenue [Line Items]
Revenues	215	194	410	386
Metals and Equipment
Disaggregation of Revenue [Line Items]
Revenues	198	178	384	368
Minerals
Disaggregation of Revenue [Line Items]
Revenues	137	128	251	242
Fertilizers
Disaggregation of Revenue [Line Items]
Revenues	112	118	228	247
Total Coal
Disaggregation of Revenue [Line Items]
Revenues	569	530	1,072	1,052
Domestic Coal
Disaggregation of Revenue [Line Items]
Revenues	317	350	590	680
Export Coal
Disaggregation of Revenue [Line Items]
Revenues	252	180	482	372
Total Intermodal
Disaggregation of Revenue [Line Items]
Revenues	490	448	939	882
Domestic Intermodal
Disaggregation of Revenue [Line Items]
Revenues	323	308	617	599
International Intermodal
Disaggregation of Revenue [Line Items]
Revenues	167	140	322	283
Other
Disaggregation of Revenue [Line Items]
Revenues	$ 136	$ 157	$ 281	$ 231

XML

Revenues - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Contract payment period			15 days
Contract liabilities	$ 0		$ 0
Impairment loss	$ 0	$ 0
Minimum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Transit time			3 days
Maximum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Transit time			8 days
Customer Concentration Risk | Sales Revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue from other services (as a percent)	4.00%		5.00%

XML

Revenues - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Accounts Receivable, net	$ 1,036	$ 970
Freight Receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables gross	844	810
Allowance for Doubtful Accounts	(17)	(17)
Total Accounts Receivable, net	827	793
Non-Freight Receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables gross	218	186
Allowance for Doubtful Accounts	(9)	(9)
Total Accounts Receivable, net	$ 209	$ 177

XML

Summarized Consolidating Financial Data - Consolidating Income Statements (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Consolidated Income Statement
Revenues	$ 3,102	$ 2,933	$ 5,978	$ 5,802
Operating Expenses	1,819	1,976	3,651	4,076
Operating Income	1,283	957	2,327	1,726
Equity in Earnings of Subsidiaries	0	0	0	0
Interest (Expense) / Benefit	(157)	(137)	(306)	(274)
Other Income / (Expense) - Net	18	7	35	(43)
Earnings Before Income Taxes	1,144	827	2,056	1,409
Income Tax Benefit / (Expense)	(267)	(317)	(484)	(537)
Net Earnings	877	510	1,572	872
Total Comprehensive Earnings	881	575	1,477	943
Eliminations and Other
Consolidated Income Statement
Revenues	19	19	38	37
Operating Expenses	(45)	(54)	(78)	(76)
Operating Income	64	73	116	113
Equity in Earnings of Subsidiaries	(942)	(612)	(1,700)	(1,034)
Interest (Expense) / Benefit	32	14	56	29
Other Income / (Expense) - Net	(17)	(2)	(27)	(8)
Earnings Before Income Taxes	(863)	(527)	(1,555)	(900)
Income Tax Benefit / (Expense)	(19)	(30)	(31)	(46)
Net Earnings	(882)	(557)	(1,586)	(946)
Total Comprehensive Earnings	(881)	(558)	(1,581)	(945)
CSX Corporation
Consolidated Income Statement
Revenues	0	0	0	0
Operating Expenses	(84)	6	(162)	(42)
Operating Income	84	(6)	162	42
Equity in Earnings of Subsidiaries	942	612	1,700	1,034
Interest (Expense) / Benefit	(181)	(143)	(345)	(285)
Other Income / (Expense) - Net	6	2	10	5
Earnings Before Income Taxes	851	465	1,527	796
Income Tax Benefit / (Expense)	26	45	45	76
Net Earnings	877	510	1,572	872
Total Comprehensive Earnings	881	575	1,477	943
CSX Transportation
Consolidated Income Statement
Revenues	3,083	2,914	5,940	5,765
Operating Expenses	1,948	2,024	3,891	4,194
Operating Income	1,135	890	2,049	1,571
Equity in Earnings of Subsidiaries	0	0	0	0
Interest (Expense) / Benefit	(8)	(8)	(17)	(18)
Other Income / (Expense) - Net	29	7	52	(40)
Earnings Before Income Taxes	1,156	889	2,084	1,513
Income Tax Benefit / (Expense)	(274)	(332)	(498)	(567)
Net Earnings	882	557	1,586	946
Total Comprehensive Earnings	$ 881	$ 558	$ 1,581	$ 945

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Summarized Consolidating Financial Data - Consolidating Balance Sheet (Details) - USD ($) $ / shares in Units, $ in Millions	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 30, 2016
Current Assets:
Cash and Cash Equivalents	$ 1,320	$ 401	$ 620	$ 603
Short-term Investments	83	18
Accounts Receivable - Net	1,036	970
Receivable from Affiliates	0	0
Materials and Supplies	326	372
Other Current Assets	116	154
Total Current Assets	2,881	1,915
Properties	44,306	44,324
Accumulated Depreciation	(12,459)	(12,560)
Properties - Net	31,847	31,764
Other Long-term Assets	455	374
Total Assets	36,924	35,739
Current Liabilities:
Accounts Payable	852	847
Labor and Fringe Benefits Payable	486	602
Payable to Affiliates	0	0
Casualty, Environmental and Other Reserves	114	108
Current Maturities of Long-term Debt	19	19
Income and Other Taxes Payable	123	157
Other Current Liabilities	138	161
Total Current Liabilities	1,732	1,894
Casualty, Environmental and Other Reserves	232	266
Long-term Debt	13,769	11,790
Deferred Income Taxes - Net	6,532	6,418
Other Long-term Liabilities	636	650
Total Liabilities	22,901	21,018
Shareholders' Equity
Common Stock, $1 Par Value	859	890
Other Capital	127	217
Retained Earnings	13,604	14,084
Accumulated Other Comprehensive Loss	(581)	(486)
Noncontrolling Interest	14	16
Total Shareholders' Equity	14,023	14,721
Total Liabilities and Shareholders' Equity	$ 36,924	$ 35,739
Common stock, par value (in dollars per share)	$ 1	$ 1
Investments in Conrail
Current Assets:
Investment in Affiliates and Other Companies	$ 931	$ 907
Affiliates and Other Companies
Current Assets:
Investment in Affiliates and Other Companies	810	779
Investments in Consolidated Subsidiaries
Current Assets:
Investment in Affiliates and Other Companies	0	0
Eliminations and Other
Current Assets:
Cash and Cash Equivalents	5	6	9	17
Short-term Investments	8	18
Accounts Receivable - Net	771	670
Receivable from Affiliates	(5,365)	(4,743)
Materials and Supplies	0	0
Other Current Assets	18	10
Total Current Assets	(4,563)	(4,039)
Properties	2,813	2,844
Accumulated Depreciation	(1,530)	(1,542)
Properties - Net	1,283	1,302
Other Long-term Assets	(240)	(261)
Total Assets	(33,157)	(31,478)
Current Liabilities:
Accounts Payable	49	34
Labor and Fringe Benefits Payable	67	56
Payable to Affiliates	(5,977)	(5,344)
Casualty, Environmental and Other Reserves	13	13
Current Maturities of Long-term Debt	1	0
Income and Other Taxes Payable	32	28
Other Current Liabilities	10	3
Total Current Liabilities	(5,805)	(5,210)
Casualty, Environmental and Other Reserves	42	44
Long-term Debt	0	1
Deferred Income Taxes - Net	205	206
Other Long-term Liabilities	(307)	(314)
Total Liabilities	(5,865)	(5,273)
Shareholders' Equity
Common Stock, $1 Par Value	(181)	(181)
Other Capital	(5,096)	(5,096)
Retained Earnings	(22,025)	(20,933)
Accumulated Other Comprehensive Loss	10	5
Noncontrolling Interest	0	0
Total Shareholders' Equity	(27,292)	(26,205)
Total Liabilities and Shareholders' Equity	(33,157)	(31,478)
Eliminations and Other | Investments in Conrail
Current Assets:
Investment in Affiliates and Other Companies	931	907
Eliminations and Other | Affiliates and Other Companies
Current Assets:
Investment in Affiliates and Other Companies	17	18
Eliminations and Other | Investments in Consolidated Subsidiaries
Current Assets:
Investment in Affiliates and Other Companies	(30,585)	(29,405)
CSX Corporation
Current Assets:
Cash and Cash Equivalents	1,172	274	483	305
CSX Corporation | Corporate, Non-Segment
Current Assets:
Cash and Cash Equivalents	1,172	274
Short-term Investments	75	0
Accounts Receivable - Net	(6)	(1)
Receivable from Affiliates	1,005	1,226
Materials and Supplies	0	0
Other Current Assets	0	(1)
Total Current Assets	2,246	1,498
Properties	1	1
Accumulated Depreciation	(1)	(1)
Properties - Net	0	0
Other Long-term Assets	65	39
Total Assets	32,857	30,903
Current Liabilities:
Accounts Payable	93	105
Labor and Fringe Benefits Payable	38	52
Payable to Affiliates	5,536	4,792
Casualty, Environmental and Other Reserves	0	0
Current Maturities of Long-term Debt	0	0
Income and Other Taxes Payable	(389)	(326)
Other Current Liabilities	2	5
Total Current Liabilities	5,280	4,628
Casualty, Environmental and Other Reserves	0	0
Long-term Debt	13,039	11,056
Deferred Income Taxes - Net	(109)	(130)
Other Long-term Liabilities	638	644
Total Liabilities	18,848	16,198
Shareholders' Equity
Common Stock, $1 Par Value	859	890
Other Capital	127	217
Retained Earnings	13,604	14,084
Accumulated Other Comprehensive Loss	(581)	(486)
Noncontrolling Interest	0	0
Total Shareholders' Equity	14,009	14,705
Total Liabilities and Shareholders' Equity	32,857	30,903
CSX Corporation | Corporate, Non-Segment | Investments in Conrail
Current Assets:
Investment in Affiliates and Other Companies	0	0
CSX Corporation | Corporate, Non-Segment | Affiliates and Other Companies
Current Assets:
Investment in Affiliates and Other Companies	(39)	(39)
CSX Corporation | Corporate, Non-Segment | Investments in Consolidated Subsidiaries
Current Assets:
Investment in Affiliates and Other Companies	30,585	29,405
CSX Transportation
Current Assets:
Cash and Cash Equivalents	143	121	$ 128	$ 281
Short-term Investments	0	0
Accounts Receivable - Net	271	301
Receivable from Affiliates	4,360	3,517
Materials and Supplies	326	372
Other Current Assets	98	145
Total Current Assets	5,198	4,456
Properties	41,492	41,479
Accumulated Depreciation	(10,928)	(11,017)
Properties - Net	30,564	30,462
Other Long-term Assets	630	596
Total Assets	37,224	36,314
Current Liabilities:
Accounts Payable	710	708
Labor and Fringe Benefits Payable	381	494
Payable to Affiliates	441	552
Casualty, Environmental and Other Reserves	101	95
Current Maturities of Long-term Debt	18	19
Income and Other Taxes Payable	480	455
Other Current Liabilities	126	153
Total Current Liabilities	2,257	2,476
Casualty, Environmental and Other Reserves	190	222
Long-term Debt	730	733
Deferred Income Taxes - Net	6,436	6,342
Other Long-term Liabilities	305	320
Total Liabilities	9,918	10,093
Shareholders' Equity
Common Stock, $1 Par Value	181	181
Other Capital	5,096	5,096
Retained Earnings	22,025	20,933
Accumulated Other Comprehensive Loss	(10)	(5)
Noncontrolling Interest	14	16
Total Shareholders' Equity	27,306	26,221
Total Liabilities and Shareholders' Equity	37,224	36,314
CSX Transportation | Investments in Conrail
Current Assets:
Investment in Affiliates and Other Companies	0	0
CSX Transportation | Affiliates and Other Companies
Current Assets:
Investment in Affiliates and Other Companies	832	800
CSX Transportation | Investments in Consolidated Subsidiaries
Current Assets:
Investment in Affiliates and Other Companies	$ 0	$ 0

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Summarized Consolidating Financial Data - Consolidating Cash Flow Statements (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Operating Activities
Net Cash Provided by (Used in) Operating Activities			$ 2,009	$ 1,566
Investing Activities
Property Additions			(823)	(955)
Proceeds from Property Dispositions			141	16
Purchase of Short-term Investments			(77)	(545)
Proceeds from Sales of Short-term Investments			12	492
Other Investing Activities			(8)	25
Net Cash Used In Investing Activities			(755)	(967)
Financing Activities
Long-term Debt Issued			2,000	850
Long-term Debt Repaid			0	(313)
Dividends Paid			(384)	(350)
Shares Repurchased	$ (974)	$ (499)	(1,810)	(757)
Accelerated Share Repurchase Pending Final Settlement (Note 2)			(90)	0
Other Financing Activities			(51)	(12)
Net Cash Used in Financing Activities			(335)	(582)
Net Increase in Cash and Cash Equivalents			919	17
Cash and Cash Equivalents at Beginning of Period			401	603
Cash and Cash Equivalents at End of Period	1,320	620	1,320	620
Eliminations and Other
Operating Activities
Net Cash Provided by (Used in) Operating Activities			(547)	(221)
Investing Activities
Property Additions			(61)	(82)
Proceeds from Property Dispositions			0	0
Purchase of Short-term Investments			(2)	(6)
Proceeds from Sales of Short-term Investments			12	2
Other Investing Activities			92	(8)
Net Cash Used In Investing Activities			41	(94)
Financing Activities
Long-term Debt Issued			0	0
Long-term Debt Repaid			0	0
Dividends Paid			500	300
Shares Repurchased			0	0
Accelerated Share Repurchase Pending Final Settlement (Note 2)			0
Other Financing Activities			5	7
Net Cash Used in Financing Activities			505	307
Net Increase in Cash and Cash Equivalents			(1)	(8)
Cash and Cash Equivalents at Beginning of Period			6	17
Cash and Cash Equivalents at End of Period	5	9	5	9
CSX Corporation
Operating Activities
Net Cash Provided by (Used in) Operating Activities			1,311	814
Investing Activities
Property Additions			0	0
Proceeds from Property Dispositions			0	0
Purchase of Short-term Investments			(75)	(539)
Proceeds from Sales of Short-term Investments			0	490
Other Investing Activities			(1)	(2)
Net Cash Used In Investing Activities			(76)	(51)
Financing Activities
Long-term Debt Issued			2,000	850
Long-term Debt Repaid			0	(313)
Dividends Paid			(384)	(350)
Shares Repurchased			(1,810)	(757)
Accelerated Share Repurchase Pending Final Settlement (Note 2)			(90)
Other Financing Activities			(53)	(15)
Net Cash Used in Financing Activities			(337)	(585)
Net Increase in Cash and Cash Equivalents			898	178
Cash and Cash Equivalents at Beginning of Period			274	305
Cash and Cash Equivalents at End of Period	1,172	483	1,172	483
CSX Transportation
Operating Activities
Net Cash Provided by (Used in) Operating Activities			1,245	973
Investing Activities
Property Additions			(762)	(873)
Proceeds from Property Dispositions			141	16
Purchase of Short-term Investments			0	0
Proceeds from Sales of Short-term Investments			0	0
Other Investing Activities			(99)	35
Net Cash Used In Investing Activities			(720)	(822)
Financing Activities
Long-term Debt Issued			0	0
Long-term Debt Repaid			0	0
Dividends Paid			(500)	(300)
Shares Repurchased			0	0
Accelerated Share Repurchase Pending Final Settlement (Note 2)			0
Other Financing Activities			(3)	(4)
Net Cash Used in Financing Activities			(503)	(304)
Net Increase in Cash and Cash Equivalents			22	(153)
Cash and Cash Equivalents at Beginning of Period			121	281
Cash and Cash Equivalents at End of Period	$ 143	$ 128	$ 143	$ 128