-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jz2AdRMz9dMcBGon8ne9uEN+8/8IGlf1yIRGq1A9IBpdg+HoOBZtrjJyYBfurnCz pyHhm/SjqEHJ7Wf3FnKtwg== 0000277948-00-000005.txt : 20000328 0000277948-00-000005.hdr.sgml : 20000328 ACCESSION NUMBER: 0000277948-00-000005 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 20000327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSX CORP CENTRAL INDEX KEY: 0000277948 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 621051971 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-08022 FILM NUMBER: 579957 BUSINESS ADDRESS: STREET 1: ONE JAMES CNTR STREET 2: 901 E CARY ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8047821400 11-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended September 30, 1999 Commission file number 1-8022 CSX CORPORATION CAPITAL BUILDER PLAN CSX CORPORATION A Virginia Corporation IRS Employer Identification Number 62-1051971 One James Center 901 East Cary Street Richmond, Virginia 23219 Telephone (804) 782-1400 1 CSX CORPORATION CAPITAL BUILDER PLAN FINANCIAL STATEMENTS AND SCHEDULES AS OF SEPTEMBER 30, 1999 AND 1998, AND FOR THE YEAR ENDED September 30, 1999 Contents Report of Independent Auditors 3 Statements of Net Assets Available for Benefits 4 Statement of Changes in Net Assets Available for Benefits 5 Notes to Financial Statements 6-13 Supplemental Schedules Line 27a-Schedule of Assets Held for Investment Purposes 15 Line 27d-Schedule of Reportable Transactions 16 Signature 17 Exhibit 23 - Consent of Ernst & Young LLP, Independent Auditors I-1 2 REPORT OF INDEPENDENT AUDITORS The Pension Committee CSX Corporation Capital Builder Plan CSX Corporation Richmond, Virginia We have audited the accompanying statements of net assets available for benefits of the CSX Corporation Capital Builder Plan as of September 30, 1999 and 1998, and the related statement of changes in net assets available for benefits for the year ended September 30, 1999. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at September 30, 1999 and 1998, and the changes in its net assets available for benefits for the year ended September 30, 1999, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of September 30, 1999 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ ERNST & YOUNG LLP Jacksonville, Florida March 21, 2000 3 CSX CORPORATION CAPITAL BUILDER PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (Dollars in Thousands) September 30, 1999 1998 -------------- -------------- ASSETS Investments, at fair value (see Note 3) $319,203 $294,461 Receivables: Employer contributions 54 47 Participant contributions 1,073 653 -------------- -------------- TOTAL ASSETS 320,330 295,161 LIABILITIES Accrued expenses 365 161 -------------- -------------- TOTAL LIABILITIES 365 161 -------------- -------------- NET ASSETS AVAILABLE FOR BENEFITS $319,965 $295,000 ============== ============== See Notes to Financial Statements. 4 CSX CORPORATION CAPITAL BUILDER PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS For the YEAR ENDED SEPTEMBER 30, 1999 (Dollars in Thousands) ADDITIONS Investment income: Dividends and interest $ 7,356 Net appreciation in fair value of investments 18,228 Employer contributions 17,237 Participant contributions 20,833 --------------- 63,654 DEDUCTIONS Transfer of unallocated common stock fund to trust 27,629 fund (see Note 9) Distributions to participants 10,313 Fees and expenses 747 --------------- 38,689 NET INCREASE 24,965 Net Assets Available for Benefits at Beginning of Year 295,000 --------------- Net Assets Available for Benefits at End of Year $319,965 =============== See Notes to Financial Statements. 5 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (Dollars in Thousands) NOTE 1 - DESCRIPTION OF THE PLAN The following description of the CSX Corporation Capital Builder Plan (the Plan) provides only general information. Participants should refer to the Summary Plan Description and the Plan document for a more complete description of the Plan's provisions. General: The Plan is a defined contribution plan covering certain union - ------- employees of CSX Corporation (CSX) and affiliated companies (collectively, the Company or Plan Sponsor). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions: Each year, participants may contribute, in 1% multiples, up to - ------------- 15% of annual compensation, as defined in the Plan. Certain eligible participants may also contribute other compensatory awards to the Plan. Subject to certain limitations, participants may reinvest distributions received from another qualified plan. Participants may revise investment direction daily. The Company contributes a specified number of shares of CSX common stock on an annual basis to certain participant accounts of the eligible groups, as defined in the Plan. These shares may be purchased throughout the year and are classified as "unallocated" shares until credited to the participants' accounts. The CSX Common Stock & ESOP Fund held 96,864 shares valued at $4,105 and 730,302 shares valued at $30,718 representing unallocated shares at September 30, 1999 and 1998, respectively (see Note 9). The Plan also provides for a Company matching contribution to certain eligible participant accounts an amount equal to the lesser of 50% of the participants' contributions or 3% of the participants' annual base compensation. All employer matching contributions are invested in CSX common stock. Participant Accounts: Each participant's account is credited with the - ---------------------- participant's contributions and allocations of (a) the Company's contributions and (b) Plan earnings, and is charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' nonvested accounts are allocated to active participants' accounts. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. 6 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 1999 (Dollars in Thousands) NOTE 1 - DESCRIPTION OF THE PLAN, Continued Vesting: Participants are immediately vested in their contributions plus actual - ------- earnings thereon. Vesting in the Company contribution portion of their accounts plus actual earnings thereon is based on years of continuous service. A participant is 100 percent vested after five years of credited service, or upon death, disability or retirement. Loans: Participants may borrow from their fund account amounts equal to no more - ----- than the lesser of $50,000 in an aggregate amount of all loans from the Plan or 50% of their vested account balance. Loan terms range from one to five years unless the loan is to be used in conjunction with the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at the prime rate in effect at the beginning of the quarter in which the loan originated. Principal and interest are paid ratably through monthly payroll deductions. Payment of Benefits: Upon termination of service, a participant may receive a - ------------------- lump-sum amount equal to the vested value of his or her account, or upon death, disability or retirement, elect to receive monthly installments over a 240 month period. A participant with an account balance of $5,000 or less shall be paid in lump sum. Plan Termination: Although it has not expressed any intent to do so, the Company - ---------------- has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. Administrative Expenses: The administrative expenses of the Plan are paid by the - ----------------------- Company or from Plan funds as the Plan Sponsor directs. The Company paid a portion of the administrative expenses of the Plan in fiscal years 1999 and 1998. 7 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 1999 (Dollars in Thousands) NOTE 2 - Summary of SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The financial statements have been prepared on the - --------------------- accrual method of accounting. Investment Valuation and Income Recognition: The Plan's investments in CSX - ---------------------------------------------- Corporation common stock and mutual funds are stated at fair value. Fair value is based upon the reported sales price on the last business day of the Plan year. Collective trust fund participation units are valued at quoted market prices which represent the net asset values of shares held by the Plan at year-end. The participant loans are valued at their outstanding principal balances, which approximate fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Use of Estimates: The preparation of financial statements in conformity with - ---------------- accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Reclassification: Certain amounts in the 1998 financial statements have been - ---------------- reclassified to conform to the 1999 financial statement presentation. 8 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 1999 (Dollars in Thousands) NOTE 3 - INVESTMENTS The Plan's investments are held by The Northern Trust Company (the Trustee) in a bank administered trust fund. The following investments represent 5% or more of the Plan's net assets.
September 30, 1999 1998 -------------- -------------- Investments, at fair value as determined by quoted market prices: MFO IDS Managed Stable Capital Income Fund $ 21,213 $ 18,095 Vanguard Institutional Index Fund 46,809 33,111 Twentieth Century Select Fund 26,416 18,438 CSX Corporation common stock 210,901* 217,332*
*Includes nonparticipant-directed (see Note 4) During 1999, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $18,228 as follows: Mutual funds $14,543 CSX Corporation common stock 2,560 Collective trust units 1,125 -------------- Total Appreciation $18,228 ============== 9 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 1999 (Dollars in Thousands) Note 4 - Nonparticipant-directed Investments Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:
September 30, 1999 1998 -------------- -------------- Net Assets: CSX Corporation common stock $170,566 $173,259
Year ended September 30, 1999 ----------------------------- Changes in Net Assets: Additions Contributions $ 16,815 Net transfers from participant-directed investments 1,432 Dividends 5,010 Net appreciation in fair value of CSX Corporation common stock 2,048 Deductions Benefits paid to participants (5,494) Fees and Expenses (401) Transfer of unallocated common stock fund (22,103) -------------- Net Decrease in Net Assets ($ 2,693) ==============
Note 5 - Conrail Transaction As a result of labor implementing agreements negotiated as part of the joint acquisition of Conrail Inc. by the Company and Norfolk Southern Corporation, approximately 7,000 additional employees, including current CSX employees and former Conrail employees, became eligible to participate in the Plan on June 1, 1999. 10 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 1999 (Dollars in Thousands) NOTE 6 - RELATED PARTY TRANSACTIONS CSX and its subsidiaries provide the Plan with certain management and accounting services. During fiscal years 1999 and 1998, the Plan reimbursed CSX and its subsidiaries $69 each plan year for these services. The Plan received cash dividends from investments of CSX common stock in amounts of $6,152 and $5,534 during fiscal years 1999 and 1998, respectively. The Trustee routinely invests assets in the Collective Short-Term Investment Fund of The Northern Trust Company. For the year ended September 30, 1999, transactions with this fund included 356 purchases at a total cost of $58,928 and 343 sales with a fair value of $58,398. For the year ended September 30, 1998, transactions with this fund included 145 purchases at a total cost of $31,115 and 157 sales with a fair value of $29,148. NOTE 7 - INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated March 7, 1996, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Sponsor believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. On September 15, 1999, the Plan applied for a new determination letter regarding a restatement of the Plan. The Plan Sponsor believes that the Plan remains qualified and therefore, the related trust is exempt from taxation. 11 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 1999 (Dollars in Thousands) NOTE 8 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following is a reconciliation of net assets available for benefits reported in the financial statements to Form 5500: September 30, 1999 ---------------------- Net assets available for benefits per Financial statements $319,965 Amounts allocated to withdrawing participants (454) ---------------------- Net assets available for benefits per Form 5500 $319,511 ====================== The following is a reconciliation of benefits paid to participants reported in the financial statements to Form 5500: Year Ended September 30, 1999 --------------------- Benefits paid to participants per the financial statements $10,313 Add: Amounts allocated to withdrawing participants at September 30, 1999 454 Less: Amounts allocated to withdrawing participants at September 30, 1998 (136) --------------------- Benefits paid to participants per Form 5500 $10,631 ===================== Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to September 30, but not yet paid as of that date. 12 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 1999 (Dollars in Thousands) NOTE 9 - UNALLOCATED COMMON STOCK During 1998, certain amounts were transferred to the Plan to purchase shares of CSX common stock on the open market in excess of the number of shares needed to discharge the Company's contribution obligations to the Plan for the year ended September 30, 1998. On July 12, 1999, the Company filed for a compliance statement under the Voluntary Compliance Resolution Program with respect to this issue. The Company received a compliance statement dated October 4, 1999 from the Internal Revenue Service (IRS) with respect to these transactions. The IRS determined that the Company's proposed methods of correction and revisions of administrative procedures are appropriate and qualification of the Plan is not affected. The proposed method of correction included transferring the unallocated common stock fund to a trust fund separate from the Plan. Prior to September 30, 1999, amounts from the unallocated stock fund with a fair value of $27,629, consisting of common shares with a fair value of $22,103 and cash of $5,526, had been transferred to this trust fund. The remaining unallocated common stock fund was transferred by December 31, 1999. NOTE 10 - SUBSEQUENT EVENTS Plan Year End: Effective November 1, 1999, the Plan changed its fiscal year end - ------------- from September 30 to December 31. Establishment of Master Trust: Effective November 1, 1999, a Master Trust was - ------------------------------ established for the investment of assets of the Plan and the Tax Savings Thrift Plan for Employees of CSX Corporation and Affiliated Companies, another Company sponsored retirement plan. The assets of the Master Trust are held by The Northern Trust Company. Each participating retirement plan has an undivided interest in the Master Trust. Investment income and expenses will be allocated to each plan based upon its pro-rata share in the net assets of the Master Trust. 13 SUPPLEMENTAL SCHEDULES 14
CSX CORPORATION CAPITAL BUILDER PLAN (Plan Number: 004) (Employer Identification Number: 62-1051971) Line 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES SEPTEMBER 30, 1999 (Dollars in Thousands) (c) (a) Description of Investment Parties- (b) Including Maturity Date, (e) in Identity of Issue, Borrower, Date of Interest, Par, (d) Current - -interest Lessor, or Similar Party Collateral or Maturity Value Cost Value - ----------- ------------------------------- ---------------------------- ------------- ------------ Mutual Funds Twentieth Century Select Fund $ 23,089 $ 26,416 Twentieth Century Vista Fund 1,708 1,850 Fidelity Equity-Income Fund 2,639 2,540 Morgan Stanley Institutional Equity Fund 1,159 1,188 Vanguard Institutional Index Fund 49,529 46,809 ------------- ------------ 78,124 78,803 Common Stock * CSX Corporation Corporate common stock 176,528 210,901 Collective Trust Fund MFO IDS Managed Stable Capital Income Fund 19,458 21,213 Loans to Participants * The Plan Interest rates ranged from 7.75% to 8.50% - 5,579 Cash and Cash Equivalents * The Northern Trust Company Collective Short-Term Investment Fund 2,707 2,707 ------------- ------------ TOTAL $276,817 $319,203 ============= ============
* Parties-in-Interest. 15
CSX CORPORATION CAPITAL BUILDER PLAN (Plan Number: 004) (Employer Identification Number: 62-1051971) Line 27d-SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED SEPTEMBER 30, 1999 (Dollars in Thousands) (h) (b) Current Description of Asset Value of Including Maturity Date (c) (d) Asset on (i) (a) and Interest Rate in Case Purchase Selling (g) Transaction Net Identity of Party Involved of a Loan Price Price Cost of Asset Date Gain/(Loss) - ------------------------------ --------------------------- -------- -------- -------------- ------------ ----------- Category (iii) - series of securities transactions in excess of 5% of plan assets - -------------------------------------------------------------------------------------------------- The Northern Trust Company Collective Short-Term 58,928 - 58,928 58,928 - Investment Fund - 58,398 58,398 58,398 -
There were no category (i), (ii) or (iv) reportable transactions during the year ended September 30, 1999. Columns (e) and (f) have not been presented as this information is not applicable. 16 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the administrative committee members have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. CSX CORPORATION CAPITAL BUILDER PLAN By: /s/ JAMES L. ROSS ----------------- James L. Ross Vice President and Controller CSX Corporation (Plan Sponsor) Date: March 27, 2000 17 EX-23 2 CONSENT OF INDEPENDENT AUDITORS PAGE 1 EXHIBIT 23 Consent of Ernst & Young LLP, Independent Auditors ------------------------------------------ We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-29136) pertaining to the CSX Corporation Capital Builder Plan of our report dated March 21, 2000, with respect to the financial statements and schedules of the CSX Corporation Capital Builder Plan included in this Annual Report (Form 11-K) for the fiscal year ended September 30, 1999. /s/ ERNST & YOUNG LLP Jacksonville, Florida March 21, 2000 I-1 -----END PRIVACY-ENHANCED MESSAGE-----