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Business Combinations | 9 Months Ended
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Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Business Combinations Acquisition of Quality Carriers, Inc. On July 1, 2021, the Company completed its acquisition of Quality Carriers, the largest provider of bulk liquid chemicals truck transportation in North America, for $546 million in cash, subject to certain customary purchase price adjustments. Through a network of over 100 company-owned and affiliate terminals and facilities in key locations throughout the United States, Canada and Mexico, Quality Carriers provides transportation services to many of the leading chemical producers and shippers in North America. The results of Quality Carriers' operations and its cash flows were consolidated prospectively. The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805, Business Combinations. The allocation of the purchase price to assets acquired and liabilities assumed is based upon preliminary information and is subject to change as additional information becomes available and as certain tax returns are filed. Any adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The preliminary allocation of total consideration to the fair values of the acquired assets and liabilities of Quality Carriers is summarized in the table below.
(Dollars in millions) | July 1, 2021
Assets Acquired: |
Cash and Cash Equivalents | $ | 3 |
Accounts Receivable, net | 113 |
Properties and Equipment, net | 225 |
Goodwill | 200 |
Intangible Assets | 190 |
Other Assets | 11 |
Total Assets Acquired | $ | 742 |
Liabilities Assumed: |
Accounts Payable and Accrued Liabilities | 48 |
Finance Lease Obligations and Notes Payable | 68 |
Casualty, Environmental and Other Reserves | 60 |
Other Long-term Liabilities | 20 |
Total Liabilities Assumed | 196 |
Fair Value of Assets Acquired, Net of Liabilities Assumed: | $ | 546 |
The goodwill of $200 million was calculated as the excess of the consideration paid over the fair value of net assets assumed as of July 1, 2021 and relates primarily to the ability of CSX to extend the reach of its network and gain access to new products, markets, and regions through a unique and competitive multimodal solution that leverages the reach of truck transportation with the cost advantage of rail-based services. Goodwill recognized in the acquisition is deductible for tax purposes. NOTE 12. Business Combinations, continued Cash paid to acquire the business, net of acquired cash and cash equivalents of $3 million, is included in investing activities on the Company's consolidated statement of cash flows. Properties of $225 million include tractors and trailers, equipment, land, buildings and other assets. Intangible assets of $190 million consist of $160 million of customer relationships and $30 million of trade names that will be amortized over a weighted-average period of 20 years and 15 years, respectively. The Company incurred costs related to this acquisition of approximately $16 million, $12 million of which was incurred during the three months ended September 30, 2021. All acquisition-related costs were expensed as incurred and have been recorded in purchased services and other in the accompanying consolidated income statements. This acquisition is not material with respect to the Company’s financial statements when reviewed under the quantitative and qualitative considerations of Regulation S-X Article 11 and ASC Topic 805. As the acquisition is not material, CSX has not provided pro forma information relating to the pre-acquisition period. Proposed Acquisition of Pan Am Systems, Inc. On November 30, 2020, CSX signed a definitive agreement to acquire Pan Am Systems, Inc. (“Pan Am”) which is the parent company of Pan Am Railways, Inc. who jointly owns Pan Am Southern, LLC with a subsidiary of Norfolk Southern Corporation. Pan Am owns and operates a highly integrated, nearly 1,200-mile rail network and has a joint interest in the more than 600-mile Pan Am Southern system. This acquisition, if approved, will expand CSX’s reach in the Northeastern United States. Assets and facilities to be acquired as part of the proposed transaction include road and track assets, work equipment, land, buildings and other assets. On February 25, 2021, the Company began the process of seeking approval from the Surface Transportation Board ("STB"), with a decision expected by April 1, 2022. This proposed acquisition is not expected to be material with respect to the Company's financial statements when reviewed under the quantitative and qualitative considerations of Regulation S-X Article 11 and ASC Topic 805.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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