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 quarter ended June 27, 2003
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 1-3359
CSX TRANSPORTATION INC.
(Exact name of registrant as specified in its charter)
| Virginia | 54-6000720 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 500 Water Street, Jacksonville, Florida | 32202 | |
| (Address of principal executive offices) | (Zip Code) |
(904) 359-3100
(Registrant’s 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 ¨
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
CSX TRANSPORTATION INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 27, 2003
INDEX
| Page Number | ||||
| PART I: | FINANCIAL INFORMATION | |||
| Item 1: | Financial Statements | |||
| Consolidated Income Statements (Unaudited)—Quarters and Six Months Ended June 27, 2003 and June 28, 2002 | 3 | |||
| Consolidated Balance Sheets—At June 27, 2003 (Unaudited) and December 27, 2002 | 4 | |||
| Consolidated Cash Flow Statements (Unaudited)—Six Months Ended June 27, 2003 and June 28, 2002 | 5 | |||
| Notes to Consolidated Financial Statements (Unaudited) | 6 | |||
| Item 2: | Management’s Narrative Analysis of the Results of Operations | 15 | ||
| Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 21 | ||
| Item 4: | Disclosure Controls and Procedures | 21 | ||
| PART II: | OTHER INFORMATION | |||
| Item 6: | Exhibits and Reports on Form 8-K | 22 | ||
| Signature | 22 | |||
2
CSX TRANSPORTATION INC. AND SUBSIDIARIES
ITEM 1: FINANCIAL STATEMENTS
Consolidated Income Statements
| (Unaudited) | |||||||||||||
| Quarter Ended |
Six Months Ended | ||||||||||||
| (Dollars in Millions) |
June 27, 2003 |
June 28, 2002 |
June 27, 2003 |
June 28, 2002 | |||||||||
| OPERATING REVENUE |
|||||||||||||
| Merchandise |
$ | 927 | $ | 892 | $ | 1,849 | $ | 1,760 | |||||
| Automotive |
224 | 231 | 432 | 431 | |||||||||
| Coal, Coke & Iron Ore |
416 | 399 | 799 | 796 | |||||||||
| Other |
6 | 16 | 24 | 37 | |||||||||
| Total |
1,573 | 1,538 | 3,104 | 3,024 | |||||||||
| OPERATING EXPENSE |
|||||||||||||
| Labor and Fringe |
617 | 605 | 1,241 | 1,219 | |||||||||
| Materials, Supplies and Other |
281 | 285 | 578 | 571 | |||||||||
| Conrail |
91 | 86 | 178 | 174 | |||||||||
| Related Party Service Fees |
47 | 68 | 93 | 147 | |||||||||
| Equipment Rent |
88 | 103 | 192 | 199 | |||||||||
| Depreciation |
140 | 131 | 278 | 261 | |||||||||
| Fuel |
136 | 112 | 294 | 216 | |||||||||
| Total |
1,400 | 1,390 | 2,854 | 2,787 | |||||||||
| Operating Income |
173 | 148 | 250 | 237 | |||||||||
| Other Income (Expense) |
11 | (17 | ) | 1 | 1 | ||||||||
| Interest Expense |
30 | 28 | 56 | 58 | |||||||||
| Earnings Before Income Taxes and Cumulative Effect of Accounting Change |
154 | 103 | 195 | 180 | |||||||||
| Income Tax Expense |
61 | 39 | 86 | 69 | |||||||||
| Earnings Before Cumulative Effect of Accounting Change—Net of Tax |
93 | 64 | 109 | 111 | |||||||||
| Cumulative Effect of Accounting Change |
— | — | 57 | — | |||||||||
| Net Earnings |
$ | 93 | $ | 64 | $ | 166 | $ | 111 | |||||
See accompanying Notes to Consolidated Financial Statements.
3
CSX TRANSPORTATION INC. AND SUBSIDIARIES
ITEM 1: FINANCIAL STATEMENTS
| (Dollars in Millions) |
(Unaudited) June 27, 2003 |
December 27, 2002 |
||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and Cash Equivalents |
$ | 21 | $ | — | ||||
| Accounts Receivable—Net |
1,040 | 235 | ||||||
| Materials and Supplies |
167 | 171 | ||||||
| Deferred Income Taxes |
113 | 110 | ||||||
| Other Current Assets |
56 | 18 | ||||||
| Total Current Assets |
1,397 | 534 | ||||||
| Properties |
17,664 | 17,354 | ||||||
| Accumulated Depreciation |
(4,812 | ) | (4,730 | ) | ||||
| Properties—Net |
12,852 | 12,624 | ||||||
| Affiliates and Other Companies |
237 | 217 | ||||||
| Other Long-term Assets |
674 | 627 | ||||||
| Total Assets |
$ | 15,160 | $ | 14,002 | ||||
| LIABILITIES |
||||||||
| Current Liabilities: |
||||||||
| Accounts Payable |
$ | 598 | $ | 618 | ||||
| Labor and Fringe Benefits Payable |
320 | 319 | ||||||
| Casualty, Environmental and Other Reserves |
171 | 173 | ||||||
| Current Maturities of Long-term Debt |
113 | 213 | ||||||
| Income and Other Taxes Payable |
97 | 98 | ||||||
| Due to Parent Company |
2,555 | 1,297 | ||||||
| Due to Affiliate |
194 | 200 | ||||||
| Other Current Liabilities |
51 | 132 | ||||||
| Total Current Liabilities |
4,099 | 3,050 | ||||||
| Deferred Income Taxes |
3,547 | 3,424 | ||||||
| Long-term Debt |
784 | 873 | ||||||
| Casualty, Environmental and Other Reserves |
477 | 467 | ||||||
| Other Long-term Liabilities |
592 | 579 | ||||||
| Total Liabilities |
9,499 | 8,393 | ||||||
| SHAREHOLDER’S EQUITY |
||||||||
| Common Stock, $20 Par Value: |
||||||||
| Authorized 10,000,000 Shares; |
||||||||
| Issued and Outstanding 9,061,038 Shares |
181 | 181 | ||||||
| Other Capital |
1,380 | 1,380 | ||||||
| Retained Earnings |
4,100 | 4,048 | ||||||
| Total Shareholder’s Equity |
5,661 | 5,609 | ||||||
| Total Liabilities and Shareholder’s Equity |
$ | 15,160 | $ | 14,002 | ||||
See accompanying Notes to Consolidated Financial Statements.
4
CSX TRANSPORTATION INC. AND SUBSIDIARIES
ITEM 1: FINANCIAL STATEMENTS
Consolidated Cash Flow Statements
| (Unaudited) Six Months Ended |
||||||||
| (Dollars in Millions) |
June 27, 2003 |
June 28, 2002 |
||||||
| OPERATING ACTIVITIES |
||||||||
| Net Earnings |
$ | 166 | $ | 111 | ||||
| Adjustments to Reconcile Net Earnings to Net Cash (Used) Provided: |
||||||||
| Depreciation |
278 | 261 | ||||||
| Deferred Income Taxes |
82 | 68 | ||||||
| Cumulative Effect of Accounting Change—Net of Tax |
(57 | ) | — | |||||
| Other Operating Activities |
(37 | ) | 8 | |||||
| Changes in Operating Assets and Liabilities: |
||||||||
| Accounts and Notes Receivable |
(3 | ) | 46 | |||||
| Sale of Accounts Receivable—Net |
(819 | ) | 19 | |||||
| Other Current Assets |
(35 | ) | (34 | ) | ||||
| Accounts Payable |
(30 | ) | (66 | ) | ||||
| Other Current Liabilities |
(71 | ) | (12 | ) | ||||
| Net Cash (Used) Provided by Operating Activities |
(526 | ) | 401 | |||||
| INVESTING ACTIVITIES |
||||||||
| Property Additions |
(424 | ) | (352 | ) | ||||
| Short-term Investments |
— | 137 | ||||||
| Other Investing Activities |
9 | (2 | ) | |||||
| Net Cash Used by Investing Activities |
(415 | ) | (217 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Advances from CSX |
1,264 | 79 | ||||||
| Long-term Debt Repaid |
(189 | ) | (150 | ) | ||||
| Dividends Paid |
(115 | ) | (100 | ) | ||||
| Other Financing Activities |
2 | 2 | ||||||
| Net Cash Provided (Used) by Financing Activities |
962 | (169 | ) | |||||
| Net Increase in Cash and Cash Equivalents |
21 | 15 | ||||||
| CASH, CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS |
||||||||
| Cash and Cash Equivalents at Beginning of Period |
— | 27 | ||||||
| Cash and Cash Equivalents at End of Period |
21 | 42 | ||||||
| Short-term Investments at End of Period |
— | 83 | ||||||
| Cash, Cash Equivalents and Short-term Investments at End of Period |
$ | 21 | $ | 125 | ||||