STRONG CSX RESULTS CONTINUE DESPITE COAL STRIKE, FLOODS
RICHMOND, Va., Oct. 21 /PRNewswire/ -- CSX Corporation (NYSE: CSX) today reported earnings for the third quarter were $63 million, 61 cents per share, which included a non-cash expense of $54 million to account for the retroactive change in the federal corporate income tax rate mandated by the Omnibus Budget Reconciliation Act of 1993. Excluding the effect of the corporate tax rate change for 1993 and prior years, earnings for the third quarter would have been $117 million, $1.13 per share. In the third quarter of 1992, the company reported earnings of $128 million, or $1.25 per share. John W. Snow, chairman and chief executive officer of CSX, said: "I'm extremely pleased with our ability to report such strong earnings despite the significant adversity faced by our rail and barge units. These units continued to suffer from the effects of the coal strike, flooding and weak export coal demand during the quarter, offsetting excellent performances by the company's container-shipping and intermodal units. The success of all our units in controlling costs and reducing expenses is indicative of the core earning power of this company and is suggestive of strong future cash flows." Snow said he expects substantial improvement in earnings once the coal strike is settled, noting that both rail and barge units retained their long-term focus by sustaining their normal repair and maintenance programs despite the downturn in their respective business. He added that the company should generate positive free cash flow in 1993, despite making labor buyout payments of about $200 million. For the quarter, total operating revenue increased to $2.24 billion from $2.21 billion in 1992. Total operating expense edged up slightly to $1.99 billion vs. $1.95 billion in the 1992 quarter. Operating income was $252 million compared with $262 million in 1992. QUARTERLY SEGMENT RESULTS Rail Results Impacted by Coal Strike Operating income at the company's rail unit declined 7.5 percent to $160 million from 1992's operating income of $173 million, as the benefits of strong merchandise revenue and productivity gains were overshadowed by depressed coal shipments. The United Mine Workers strike has halted or curtailed shipments at over 20 percent of the production capacity served by the rail unit, based on 1992's output. During the quarter, the company handled 35.9 million tons of coal vs. 40.6 million tons in the same quarter last year, with much of the 12 percent decline due to the strike. Weak foreign demand as well as a loss of shipments due to the strike resulted in a 37 percent, 2.2 million ton, decrease in export coal volume. Domestic utility traffic declined 13 percent in the quarter, or 3.5 million tons, from the prior year, but shipments to cogeneration and industrial consumers increased 1 million tons, or 14 percent. Strong agricultural products traffic led the 5 percent increase in merchandise revenue, with metals, automotive and minerals traffic also contributing to the better performance. However, the increased merchandise revenue did not offset the coal revenue decline, resulting in a 2 percent decrease in rail operating revenue to $1.06 billion for the 1993 quarter. Rail operating expense in the quarter decreased to $902 million, $9 million below the 1992 figure. The unit continued to reap expense savings from its ongoing cost reduction and productivity improvement programs, offsetting inflationary increases. Container Shipping Operating Income Jumps 29 Percent Operating income at the container-shipping unit surged 29 percent to $71 million vs. $55 million in 1992, further evidence of the unit's commitment to continued productivity improvement and expense-reduction programs. The unit's operating ratio declined to 91.6 percent from 93.2 percent in the prior-year quarter. Operating revenue for the 1993 quarter, driven by volume strength in the Pacific, Asia/Middle East/Europe and the domestic trade lanes, improved $36 million, or 4 percent, to $846 million. However, operating expense increased only $20 million, or 3 percent, over the comparable 1992 quarter, while container volumes handled increased 3 percent. "The excellent progress being made by the Sea-Land team is readily apparent in the third-quarter results, and we anticipate a strong final quarter for 1993 as a result of their ongoing commitment to reduce the cost base and improve the returns of that business," said Snow. Intermodal Continues on Growth Track CSX's intermodal unit reported another solid improvement in earnings with operating income of $16 million, a 33 percent increase over the $12 million recorded in the third quarter of 1992. Operating revenue for the unit grew to $206 million vs. $189 million in the prior-year period, as volume increased 6 percent from strength in both international and domestic traffic. Operating expense increased to $190 million from 1992's quarter of $177 million, due to the higher volume of trailers and containers handled. Barge Unit Profitable Despite Flood Difficulties The company's barge unit earned operating income of $3 million vs. $14 million in the prior-year quarter, largely as a result of Midwest flooding that idled more than half of the unit's barge fleet for much of the quarter and restricted operations for the rest of the quarter. The unit also suffered from depressed export coal shipments and the continuing coal strike. As a result of these adversities, ton miles and revenue declined 31 percent and 26 percent from 1992's third quarter, respectively. Aggressive cost containment efforts allowed the unit to lower expenses to $85 million, 19 percent below the prior-year quarter. NINE MONTHS RESULTS For the first nine months of the year, CSX reported earnings of $208 million, $2 per share, which includes the $54 million, 52 cents per share, retroactive income tax expense and a $61 million, 59 cents per share, restructuring charge recorded by the container-shipping unit in the first quarter of the year. Exclusive of these items, the company would have earned $323 million, $3.11 per share, for the first nine months of 1993. As a result of a productivity charge in the second quarter of 1992, the company reported a net loss of $132 million, $1.28 per share, for the comparable 1992 period. Excluding this charge, the company would have earned $318 million, $3.10 per share.
CSX Corporation, headquartered in Richmond, is an international transportation company offering a variety of rail, container-shipping, intermodal, trucking and barge services.
CSX CORPORATION AND SUBSIDIARIES Consolidated Statement of Earnings (Millions of Dollars, Except Per Share Amounts) Quarter Ended Nine Months Ended Sept. 30, Sept. 30, 1993 1992 1993 1992 Operating Revenue Transportation $2,176 $2,149 $6,505 $6,359 Non-Transportation 62 65 120 130 Total 2,238 2,214 6,625 6,489 Operating Expense Transportation 1,945 1,913 5,844 5,718 Non-Transportation 41 39 95 98 Productivity/Restructuring Charge -- -- 93 699 Total 1,986 1,952 6,032 6,515 Operating Income (Loss) 252 262 593 (26) Other Income 1 1 30 8 Interest Expense 74 71 223 205 Earnings (Loss) before Income Taxes 179 192 400 (223) Income Tax Expense (Benefit) 116 64 192 (91) Net Earnings (Loss) $ 63 $ 128 $ 208 $ (132) Earnings (Loss) Per Share $ 0.61 $ 1.25 $ 2.00 $(1.28) Average Common Shares Outstanding (Thousands) 103,996 102,991 103,856 102,826 Common Shares Outstanding at End of Period (Thousands) 104,047 103,053 104,047 103,053 Cash Dividends Paid Per Common Share $ 0.38 $ 0.38 $ 1.14 $ 1.14 See Accompanying Notes to Consolidated Financial Statements. CSX CORPORATION AND SUBSIDIARIES Consolidated Statement of Cash Flows (Millions of Dollars) Nine Months Ended Sept. 30, 1993 1992 Operating Activities Net Earnings (Loss) $208 $(132) Adjustments to Reconcile Earnings to Cash Provided Depreciation 429 400 Deferred Income Taxes 143 (77) Productivity/Restructuring Charge - Provision 93 699 Productivity/Restructuring Charge - Payments (249) (374) Other Operating Activities 8 36 Changes in Operating Assets and Liabilities Accounts Receivable (72) 81 Materials and Supplies (18) (12) Other Current Assets 7 -- Accounts Payable and Other Current Liabilities (52) (226) Cash Provided by Operating Activities 497 395 Investing Activities Property Additions (486) (654) Purchases of Marketable Securities (111) -- Short-Term Investments - Net 56 81 Proceeds from Property Dispositions 40 33 Other Investing Activities 19 -- Cash Used by Investing Activities (482) (540) Financing Activities Short-Term Debt - Net 295 (152) Long-Term Debt Issued 81 563 Long-Term Debt Repaid (221) (157) Cash Dividends Paid (118) (117) Other Financing Activities (2) 36 Cash Provided by Financing Activities 35 173 Cash, Cash Equivalents and Short-Term Investments Increase in Cash and Cash Equivalents 50 28 Cash and Cash Equivalents at Beginning of Period 374 290 Cash and Cash Equivalents at End of Period 424 318 Short-Term Investments at End of Period 99 83 Cash, Cash Equivalents and Short-Term Investments at End of Period $523 $401 See Accompanying Notes to Consolidated Financial Statements. CSX CORPORATION AND SUBSIDIARIES Consolidated Statement of Financial Position (Millions of Dollars) Sept. 30, Dec. 31, 1993 1992 Assets Current Assets Cash, Cash Equivalents and Short-Term Investments $ 523 $ 530 Accounts Receivable 695 605 Materials and Supplies 207 189 Deferred Tax Assets 86 -- Other Current Assets 90 97 Total Current Assets 1,601 1,421 Properties and Other Assets Properties 15,673 15,702 Less Accumulated Depreciation 5,007 5,066 Properties - Net 10,666 10,636 Affiliates and Other Companies 254 264 Other Assets 806 728 Total Properties and Other Assets 11,726 11,628 Total Assets $13,327 $13,049 Liabilities and Shareholders' Equity Current Liabilities Accounts Payable and Other Current Liabilities $ 1,887 $ 2,066 Current Maturities of Long-Term Debt 150 200 Short-Term Debt 308 14 Total Current Liabilities 2,345 2,280 Long-Term Debt 3,158 3,245 Long-Term Liabilities and Deferred Gains 2,429 2,467 Deferred Tax Liabilities 2,302 2,082 Shareholders' Equity Common Stock 104 103 Other Capital 1,279 1,250 Retained Earnings 1,710 1,622 Total Shareholders' Equity 3,093 2,975 Total Liabilities and Shareholders' Equity $13,327 $13,049 See Accompanying Notes to Consolidated Financial Statements. Notes to Consolidated Financial Statements (1) The company recorded a $93 million pretax charge in the first quarter of 1993 to recognize estimated costs of restructuring certain operations and functions at its container-shipping unit. The restructuring charge reduced net earnings for the first nine months of 1993 by $61 million, 59 cents per share. In the fourth quarter of 1991, the company recorded a charge to provide for the estimated costs of implementing work-force reductions, improvements in productivity and other cost reductions at its major transportation units. The charge amounted to $755 million on a pretax basis and reduced 1991 net earnings by $490 million, $4.88 per share. In the second quarter of 1992, the company recorded a charge principally to recognize the estimated additional costs of buying out certain trip- based compensation elements paid to train crew employees. The additional pretax charge amounted to $699 million and reduced net earnings for the first nine months of 1992 by $450 million, $4.38 per share. (2) Effective Jan. 1, 1993, the company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." SFAS No. 109 superseded SFAS No. 96, "Accounting for Income Taxes," which the company adopted effective Jan. 1, 1987. Net earnings for the third quarter and first nine months of 1993 were not impacted by the adoption of SFAS No. 109. SFAS No. 109 requires that deferred tax assets and liabilities be classified as current or non-current based upon the classification of the related asset or liability for financial reporting. Accordingly, the company has reclassified $86 million of its net deferred income tax liability as a current deferred income tax asset. In the third quarter of 1993, the company revised its estimated annual effective tax rate to reflect the change in the federal statutory rate from 34 to 35 percent. The effect of this change was to increase income tax expense for the third quarter of 1993 by $54 million, 52 cents per share. Of this amount, $50 million, 48 cents per share, related to applying the newly enacted statutory income tax rate to deferred tax balances as of Dec. 31, 1992. (3) Earnings per share are based on the weighted average of 103,995,531 shares outstanding for the third quarter of 1993 and 102,991,328 shares for 1992 and 103,855,794 shares for the first nine months of 1993 and 102,826,294 shares for 1992. Dilution, which could result if all outstanding common stock equivalents were exercised, is not significant. -0- 10/21/93 /CONTACT: Thomas E. Hoppin or Suzanne S. Walston, both of CSX, 804-782-1406/ (CSX)
CO: CSX Corporation ST: Virginia IN: TRN SU: ERN
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