Investment in Affiliates and Related-Party Transactions

12 Months Ended

Dec. 31, 2022

Investment in Affiliates and Related-Party Transactions

CSX's investments in affiliates are included on the consolidated balance sheet as investments in affiliates and other companies.


	December		December
(Dollars in Millions)	2022		2021
Equity-method Investments:
Conrail	$	1,124	$	1,083
TTX	914		849
Other (a)	254		167
Total	$	2,292	$	2,099

(a) Other investments as of December 31, 2022, includes an interest in Pan Am Southern, LLC, which is jointly-owned with a subsidiary of Norfolk Southern Corporation, that was acquired as part of the purchase of Pan Am.

Conrail

Through a limited liability company, CSX and Norfolk Southern Corporation (“NS”) jointly own Conrail. CSX has a 42% economic interest and 50% voting interest in the jointly-owned entity, and NS has the remainder of the economic and voting interests. Pursuant to the Investments-Equity Method and Joint Venture Topic in the ASC, CSX applies the equity method of accounting to its investment in Conrail.

Conrail owns rail infrastructure and operates for the joint benefit of CSX and NS. This is known as the shared asset area. Conrail charges fees for right-of-way usage, equipment rentals and transportation, switching and terminal service charges in the shared asset area. These expenses are included in purchased services and other on the consolidated income statements. Future payments due to Conrail under the shared asset area agreements are shown in the table below.


(Dollars in Millions)	Conrail Shared
Years	Asset Agreement
2023	$	31
2024	31
2025	31
2026	31
2027	31
Thereafter	44
Total	$	199

Also, included in equity earnings of affiliates are CSX’s 42% share of Conrail’s income and its amortization of the fair value write-up arising from the acquisition of Conrail and certain other adjustments. The amortization primarily represents the additional after-tax depreciation expense related to the write-up of Conrail’s fixed assets when the original purchase price, from the 1997 acquisition of Conrail, was allocated based on fair value. This write-up of fixed assets resulted in a difference between CSX's investment in Conrail and its share of Conrail's underlying net equity, which is $327 million as of December 2022.

NOTE 15. Investment in Affiliates and Related-Party Transactions, continued

The following table discloses amounts related to Conrail. All amounts in the table below are included in purchased services and other expenses on the Company’s consolidated income statements.


	Years Ended
(Dollars in Millions)	2022		2021		2020

Rents, Fees and Services	$	130	$	128	$	126
Purchase Price Amortization and Other	4		4		4
Equity Earnings of Conrail	(44)		(44)		(49)
Total Conrail Expense	$	90	$	88	$	81

As required by the Related Party Disclosures Topic in the ASC, the Company has disclosed amounts below owed to Conrail, or its subsidiaries, representing liabilities under the operating, equipment and shared area agreements with Conrail. In 2014, the Company executed two promissory notes with a subsidiary of Conrail which were included in long-term debt on the consolidated balance sheets. In December 2020, the Company completed a non-cash conversion of its existing payable balance of approximately $217 million and $224 million, 2.89% notes due 2044 into new notes. The new notes for operation of the shared asset area are $441 million, 1.31% notes due 2050. Interest expense from these promissory notes was $6 million in each 2022, 2021 and 2020.


	December		December
(Dollars in Millions)	2022		2021
Balance Sheet Information:
CSX Accounts Payable to Conrail	$	136	$	100
Promissory Notes Payable to Conrail Subsidiary
1.31% CSX Promissory Note due December 2050	73		73
1.31% CSXT Promissory Note due December 2050	368		368

TTX Company

TTX Company ("TTX") is a privately-held corporation engaged in the business of providing its owner-railroads with standardized fleets of intermodal, automotive and general use railcars at time and mileage rates. CSX owns about 20 percent of TTX's common stock, and the remaining is owned by the other leading North American railroads and their affiliates. Pursuant to the Investments-Equity Method topic in the ASC, CSX applies the equity method of accounting to its investment in TTX. As part of the Pan Am acquisition in June 2022, CSX acquired an immaterial amount of TTX stock, which was subsequently repurchased by TTX in December 2022.

NOTE 15. Investment in Affiliates and Related-Party Transactions, continued

As required by the Related Party Disclosures Topic in the ASC, the following table discloses amounts related to TTX. Car hire rents and equity earnings are included in equipment and other rents expense on the Company’s consolidated income statement.


	Years Ended
(Dollars in Millions)	2022		2021		2020
Income Statement Information:
Car Hire Rents	$	241	$	221	$	219
Equity Earnings of TTX	(51)		(52)		(51)
Total TTX Expense	$	190	$	169	$	168

Also included below is balance sheet information related to CSX's payable to TTX, which represents car rental liabilities.


	December		December
Balance Sheet Information:	2022		2021
CSX Payable to TTX	$	38	$	35