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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-8022
------
CSX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 62-1051971
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 East Cary Street, Richmond, VA. 23219-4031
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 782-1400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------------------- -----------------------------
Common Stock, $1 Par Value New York Stock Exchange
9 1/2% Sinking Fund Debentures,
Due 2016 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 ( )
On January 31, 1994, the aggregate market value of the Registrant's voting
stock held by nonaffiliates was $9.3 billion.
On January 31, 1994, there were 104,194,525 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Proxy Statement for the annual meeting of security holders on May 3, 1994,
for Part III (Items 11, 12 and 13) is incorporated by reference.
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CSX CORPORATION
EDGAR Index - Form 10-K Annual Report
Item No. Page & Note Reference
- -------- ---------------------
PART I
1. Business 4-7, 16-35 and Note 17 to
Consolidated Financial
Statements
2. Properties 4, 16-35 and Notes 7
and 10 to Consolidated
Financial Statements
3. Legal Proceedings Note 14 to Consolidated
Financial Statements
4. Not Applicable
PART II
5. Market for the Registrant's
Common Equity and Related
Stockholder Matters 77-82
6. Selected Financial Data 5-7
7. Management's Discussion and 17-36, and Notes 2, 3,
Analysis of Financial Condition 4, 6, 10, 13, 14,
and Results of Operations and 17 to Consolidated
Financial Statements
8. Financial Statements and
Supplementary Data
The response to this item is
submitted in Item 14.
9. Not Applicable
PART III
10. Directors and Executive Officers 72-76
of the Registrant
11. Executive Compensation (a)
12. Security Ownership of Certain (a)
Beneficial Owners and Management
13. Certain Relationships and Related (a)
Transactions
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CSX CORPORATION
EDGAR Index - Form 10-K Report
Item No. Page & Note Reference
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PART IV
14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
a. Consolidated Statement of
Earnings for the Years Ended
December 31, 1993, 1992 and 1991 38
Consolidated Statement of
Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991 39-40
Consolidated Statement of
Financial Position at
December 31, 1993, 1992 and 1991 41
Notes to Consolidated Financial
Statements for the Years Ended
December 31, 1993, 1992 and 1991 42-71
Report of Independent Auditors 37
Index to Exhibits E-1
b. Reports on Form 8-K
None.
(a) Items Number 11, 12 and 13 are incorporated by reference from the
registrant's 1994 Proxy Statement pursuant to instructions G(1) and
G(3) of the General Instructions to Form 10-K.
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THIS IS CSX
CSX Corporation (CSX) is a family of international transportation
companies offering a wide variety of rail, container-shipping, intermodal,
barging, trucking, contract logistics and related services worldwide, through
the business units described below.
Address: 901 E. Cary St., Richmond, VA 23219, (804) 782-1400
CSX Transportation Inc. (CSXT) provides rail transportation and
distribution services over 18,779 route miles and 32,844 track miles in 20
states in the East, Midwest and South; the District of Columbia; and Ontario,
Canada.
Address: 500 Water St., Jacksonville, FL 32202, (904) 359-3100
Sea-Land Service Inc. (Sea-Land) is a leader in container-shipping
transportation and related trade services worldwide. Sea-Land operates a fleet
of 83 container ships and more than 160,000 containers in U.S. and foreign
trade and serves 100 ports in 70 countries and territories.
Address: 150 Allen Rd., Liberty Corner, NJ 07938, (908) 558-6000
CSX Intermodal Inc. (CSXI) provides transcontinental intermodal
transportation services and operates a network of dedicated intermodal
terminals across North America. CSXI also offers truck drayage and chassis
management and leasing services.
Address: 200 International Circle, Hunt Valley, MD 21030, (410) 584-0100
American Commercial Lines Inc. (ACL) is a leader in barge
transportation, operating more than 120 towboats and 3,300 barges in both U.S.
and foreign waterways. Additionally, ACL operates marine construction
facilities, river terminals and communication services.
Address: 1701 E. Market St., Jeffersonville, IN 47130, (812) 288-0100
Customized Transportation Inc. (CTI) is a provider of dedicated
contract logistics services. The company provides an array of premium
distribution, warehousing, processing and assembly, dedicated contract
carriage and just-in-time delivery services.
Address: 10407 Centurion Parkway, North, Suite 400, Jacksonville,
FL 32256-0516, (904) 928-1400
Non-Transportation: Resort holdings include The Greenbrier in White
Sulphur Springs, W.Va., and the Grand Teton Lodge Company in Moran, Wyo. CSX
Real Property Inc. is responsible for sales, leasing and development of CSX-
owned properties no longer needed for operations.
CSX holds a majority interest in Yukon Pacific Corporation, which is
promoting construction of the Trans-Alaska Gas System to transport natural gas
from Alaska's North Slope to Valdez where the gas will be liquefied and
shipped to markets in Japan, Korea and Taiwan.
Address: 1049 W. 5th Ave., Anchorage, AK 99501, (907) 265-3180
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CSX CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Millions of Dollars, Except Per Share Amounts)
1993(b) 1992 1991(c) 1990 1989(d)
------- ------- ------- ------- -------
SUMMARY OF OPERATIONS
Operating Revenue $ 8,940 $ 8,734 $ 8,636 $ 8,205 $ 7,745
------- ------- ------- ------- -------
Operating Expense 7,934 7,769 7,782 7,337 6,876
Productivity/Restructuring
Charge (a) 93 699 755 53 ---
------- ------- ------- ------- -------
Total Operating Expense 8,027 8,468 8,537 7,390 6,876
------- ------- ------- ------- -------
Operating Income $ 913 $ 266 $ 99 $ 815 $ 869
======= ======= ======= ======= =======
Earnings (Loss) From
Continuing Operations $ 359 $ 20 $ (76) $ 365 $ 427
======= ======= ======= ======= =======
PER COMMON SHARE
Earnings (Loss) From
Continuing Operations $ 3.46 $ .19 $ (.75) $ 3.63 $ 4.09
======= ======= ======= ======= =======
Cash Dividends $ 1.58 $ 1.52 $ 1.43 $ 1.40 $ 1.28
======= ======= ======= ======= =======
Market Price - High $ 88.13 $ 73.63 $ 58.00 $ 38.13 $ 38.63
- Low $ 66.38 $ 54.50 $ 29.75 $ 26.00 $ 29.75
======= ======= ======= ======= =======
PERCENTAGE CHANGE FROM
PRIOR YEAR
Operating Revenue 2.4% 1.1% 5.3% 5.9% 2.0%
======= ======= ======= ======= =======
Operating Expense (5.2)% (.8)% 15.5% 7.5% (7.3)%
======= ======= ======= ======= =======
Operating Expense,
excluding Productivity/
Restructuring Charge 2.1% (.2)% 6.1% 6.7% 2.9%
======= ======= ======= ======= =======
Cash Dividends Per Common
Share 3.9% 6.3% 2.1% 9.4% 3.2%
======= ======= ======= ======= =======
SUMMARY OF FINANCIAL POSITION
Cash, Cash Equivalents and
Short-Term Investments $ 499 $ 530 $ 465 $ 609 $ 591
======= ======= ======= ======= =======
Working Capital (Deficit) $ (704) $ (859) $ (942) $ (578) $ (620)
======= ======= ======= ======= =======
Total Assets $13,420 $13,049 $12,798 $12,804 $12,298
======= ======= ======= ======= =======
Long-Term Debt $ 3,133 $ 3,245 $ 2,804 $ 3,025 $ 2,727
======= ======= ======= ======= =======
Shareholders' Equity (e) $ 3,180 $ 2,975 $ 3,182 $ 3,541 $ 3,397
======= ======= ======= ======= =======
Book Value Per Common
Share $ 30.53 $ 28.75 $ 31.08 $ 35.93 $ 33.24
======= ======= ======= ======= =======
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CSX CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS, CONTINUED
1993(b) 1992 1991(c) 1990 1989(d)
------- ------- ------- ------- -------
EMPLOYEE COUNT (f) (Continuing Operations)
Rail 29,216 30,916 33,239 35,672 37,685
Other 17,847 16,681 16,644 15,259 14,897
------- ------- ------- ------- -------
Total 47,063 47,597 49,883 50,931 52,582
======= ======= ======= ======= =======
See Notes 1, 2, and 4 to Consolidated Financial Statements.
(a) In 1993, the company recorded a $93 million pretax charge to
recognize the estimated costs of restructuring certain operations and
functions at its container-shipping unit. The restructuring charge
reduced net earnings by $61 million, 59 cents per share. In 1992,
the company recorded a charge to recognize the estimated costs of
buying out certain trip-based compensation elements paid to train
crews. The pretax charge amounted to $699 million and reduced net
earnings for 1992 by $450 million, $4.38 per share. In 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 pretax
charge amounted to $755 million and reduced 1991 net earnings by $490
million, $4.88 per share. In 1990, the company recorded a $53
million restructuring charge related to its container-shipping unit.
On an after-tax basis, the restructuring charge was $36 million, 37
cents per share.
(b) The company revised its estimated annual effective tax rate in 1993
to reflect the change in the federal statutory income tax rate from
34 to 35 percent. The effect of this change was to increase income
tax expense for 1993 by $56 million, 54 cents per share. Of this
amount, $51 million, 48 cents per share, related to applying the
newly enacted statutory income tax rates to deferred tax balances as
of January 1, 1993.
(c) During 1991, the company consummated the sale of a one-third interest
in Sea-Land Orient Terminals Ltd., the sale of the stock of RF&P
Corporation and other investment transactions. After taxes and
minority interest, the transactions resulted in a net gain of $32
million, 32 cents per share.
(d) During 1989, the company consummated the sales of its partnership
interest in LIGHTNET, and Rockresorts, Inc. and certain related
properties. Those sales resulted in an after-tax gain of $73
million, 73 cents per share.
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CSX CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS, CONTINUED
(e) During 1989, the company purchased 9.9 million shares of its common
stock, which had the effect of reducing shareholders' equity by $324
million. This completed the 60 million share purchase program, which
began in the prior year. The average price of all shares acquired
was $32.03.
(f) Employee count based on annual averages.
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To Our Shareholders:
Any sailor can navigate a calm sea. Just as turbulence helps define a
mariner's skills, adversity tests the competence and agility of a
corporation's management team. Though potentially destructive, adversity has
its benefits. It forces people -- and corporations -- to push themselves
harder, to try new approaches and to challenge the status quo.
Clearly, CSX faced serious difficulties in 1993, a year in which a
series of unforeseeable and unwelcome events sought to impede the company's
efforts to improve the performance of its core transportation businesses. But
it also was a splendid year for the company, because the men and women of CSX
met the myriad challenges that arose. Not only did we remain on course toward
meeting our long-term objectives, we emerged stronger, wiser and better able
to handle whatever problems or opportunities the future may bring.
While CSX's 1993 earnings were below our expectations, the company's
overall operating performance was remarkable, particularly in light of the
unusual circumstances we faced. This ability to produce solid results during
demanding times reflects the fundamental improvements each of our business
units has made in recent years, and it bodes well for CSX's future
performance.
Overcoming Adversity
The difficulties that CSX confronted in 1993 were widespread. A
protracted strike by the United Mine Workers of America (UMWA) and weak
foreign demand for export coal dealt punishing blows to our rail and barge
units. Weak economies abroad hurt U.S. exports and reduced our
container-shipping unit's volumes in key trade lanes. Even Mother Nature added
to our trials, as a severe winter storm in March virtually shut down our
railroad for several days, and catastrophic flooding throughout the spring and
summer in the Midwest caused severe disruptions for our barge unit and, to a
lesser extent, our intermodal unit.
Facing such calamitous external conditions, it would have been easy
to pursue short-term performance goals at the expense of our overriding
long-term objective of improving the strength and fundamental earning power of
the company. Instead, each CSX business unit moved quickly to limit the impact
of adverse conditions on its business while maintaining its focus on
developing stronger, more competitive operations for the long term.
Strong Results
CSX delivered solid financial results in 1993. Total revenue rose
$206 million from 1992's level to $8.94 billion. Excluding a restructuring
charge at our container-shipping unit, operating income exceeded $1 billion
for the first time.
Earnings per share were $4.53, down 4 cents from 1992's level, after
excluding charges from both years and the 1993 impact of applying an increase
in the corporate tax rate. Despite increasing the quarterly dividend by 16
percent and making $293 million in productivity improvement payments that will
enhance future earnings, the company generated $238 million of free cash flow.
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Pro Forma Net Earnings
---------------------------------------------
(Millions of Dollars, Except Per Share Amounts)
1993 1992
----------------- -----------------
Description (All After Tax) Amount Per Share Amount Per Share
--------------------------- ------ --------- ------ ---------
Net Earnings as Reported $359 $3.46 $ 20 $ .19
Statutory Tax Rate Adjustment 51 .48 --- ---
Restructuring/Productivity Charge 61 .59 450 4.38
---- ----- ---- -----
Pro Forma Total, Excluding Charges
and Tax Rate Adjustment $471 $4.53 $470 $4.57
==== ===== ==== =====
CSX closed the year on a positive note by posting record operating
income in the fourth quarter. The strong results were driven by exceptional
performances at each of the company's units, which together offset a 17
percent decline in coal originations by our rail unit during the quarter. UMWA
strikes against selected eastern coal producers ran for 238 days during 1993
and affected nearly 25 percent of the coal traffic handled by our rail unit in
the prior year. With the work stoppages having ended December 15, we expect
domestic coal traffic to return to more normal levels in 1994.
The stock market continued to recognize the progress CSX is making
toward building a better company. For the third consecutive year, the total
return of CSX stock outpaced the S&P 500 Stock Index and other key market
barometers. In 1993 alone, $1.5 billion in additional value was created for
our shareholders, in the form of dividends and share price appreciation.
The favorable performance of CSX stock relative to other
transportation stocks and the overall market reflects Wall Street's
recognition of the progress the company has made in recent years, as well as
expectations for further gains in 1994 and beyond. Our goal is to meet and
exceed those expectations by continuing to master the basics of our business.
We are committed to enhancing shareholder value over the long term by
improving the fundamental earning power of CSX and increasing free cash flow.
We are pleased to report that CSX crossed a critical threshold in
1993 on the path to increased shareholder value: The corporation earned its
cost of capital on a consolidated basis for the first time. Achieving this
long-time goal is a major milestone for CSX, one we intend to build upon in
1994 and beyond.
Creating Value
We strongly endorse the management concept known as "economic value
added," or EVA, which is rapidly gaining favor among leading corporations. In
basic terms, EVA holds that corporations create wealth only when they generate
returns above their cost of capital. EVA provides a formula for measuring an
operation's real profitability -- one that holds managers accountable for
specific financial results.
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Since our major restructuring in 1988, CSX has measured the financial
performance of each of its business enterprises by comparing that unit's
return on invested capital (ROIC) with CSX's cost of capital. ROIC is the
measure CSX uses to determine how effectively we are deploying our investors'
capital in an operating activity -- whether it employs locomotives, freight
cars, vessels, barges, containers, facilities, working capital, or any other
asset. In basic terms, we calculate ROIC by dividing operating profit, after
the payment of cash taxes, by total invested capital. When the ROIC of a CSX
business unit or specific activity exceeds the corporation's overall cost of
capital, EVA is enhanced.
Our focus on generating returns in excess of the cost of capital has
produced impressive results throughout the company. By calculating what
capital costs the company, our management team is better able to evaluate the
performance of specific operations and to determine the financial targets that
must be reached. This discipline forces us to manage assets as efficiently as
possible and deploy capital where it will generate the best returns. Over
time, the additional value created within CSX will be reflected in the
financial markets, thus creating wealth for our shareholders.
Managing More Effectively
This focus on EVA has spread throughout CSX. It is EVA that has
spearheaded many of our successful efforts to improve the long-term
profitability of the company -- by cutting costs, utilizing assets more
productively, conserving capital and growing our business prudently.
Possibly the clearest example of how EVA has worked for CSX is the
dramatic turnaround in the profitability of our intermodal business, which
combines rail and truck operations. Six years ago when we closely evaluated
this business, we discovered it was losing nearly $50 million a year -- thus
eroding shareholder value.
To remedy the situation, CSX formed a strategic business unit -- CSX
Intermodal Inc. (CSXI) -- to manage our intermodal operations. In its first
year, CSXI retrenched to its core business by closing 14 terminals, releasing
more than 75 locomotives for other rail service and shedding nearly $100
million in revenue from money-losing operations.
Over the next five years, CSXI grew rapidly by concentrating on its
profitable niches, deploying its assets more productively and developing new
business opportunities. In 1993, CSXI earned operating income of $53 million
and produced a return on its capital investment well above CSX's cost of
capital.
Attacking Unnecessary Costs
The same management strategies that transformed our inefficient
intermodal business into a flourishing enterprise are producing positive
results throughout CSX. The most impressive results so far have come from our
aggressive campaign to reduce the cost base of our businesses by driving out
unnecessary expenses.
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Our rail unit, CSX Transportation Inc. (CSXT), has led the assault on
costs through its Performance Improvement Team (PIT) initiative begun in 1992.
Benchmarking the railroad's performance against that of its peers' best
practices, CSXT identified performance gaps and established action teams to
close them. The PIT process has produced permanent cost savings of $263
million since 1992, and CSXT has targeted well over $100 million in savings
for 1994.
Last year, the PIT process spread to Sea-Land Service Inc.
(Sea-Land), our container-shipping unit. Sea-Land expects its performance
teams to help the company capture cost reductions and productivity savings in
excess of $100 million this year. That will be on top of the $262 million in
savings Sea-Land has achieved during the past two years.
Our barge unit, American Commercial Lines Inc. (ACL), also has teams
hard at work refining the company's work processes and operational
efficiencies following recent acquisitions. Last year, ACL initiated a major
effort to re-engineer work processes to maintain its position as the carrier
of choice on the U.S. inland waterway system. ACL has achieved productivity
improvements of $28 million since 1992, including greater asset utilization
and significant reductions in general and administrative costs.
Reducing costs, however, is just one component of CSX's campaign to
enhance the fundamental value of the company. Each of our business units is
committed to working smarter in every way -- both individually and in close
cooperation with other CSX units -- to improve safety, productivity,
competitiveness and profitability. That commitment has become ingrained in the
culture of CSX.
Growth Opportunities
While we expect additional cost reductions to have the greatest
impact on the company's operating income over the next few years, we also see
significant growth opportunities ahead. In fact, each of our transportation
companies currently expects to produce higher revenue during 1994.
The railroad's merchandise traffic should remain relatively strong,
and coal carloadings are expected to return to more normal levels this year.
CSXI should achieve record revenue and operating income. Sea-Land will expand
its market share in major trade lanes, in strategic commodity groups and among
key multinational customers. Customized Transportation Inc. (CTI) -- a leading
provider of dedicated contract logistics services and the newest member of the
CSX family of transportation companies -- will continue to grow rapidly by
expanding its service to the U.S. automotive industry and branching out into
new markets. And ACL will continue to augment its main revenue sources -- coal
and grain -- by increasing its handling of higher-margin commodities, such as
liquids and chemicals.
We are excited about the numerous opportunities we see flowing from
the expansion of international trade. Sea-Land, because of its strength as a
full-service provider of global transportation services, is especially
well-positioned to pursue attractive returns and strong growth in developing
markets -- particularly China, Southeast Asia, South America and Eastern
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Europe. CSXT, which serves more ocean ports than any other U.S. railroad, will
benefit from increased trade between America and the rest of the world, as
will our intermodal company. And ACL is testing foreign waters with a new
barging venture in Venezuela.
Global Transportation
When we compare CSX with other freight transportation systems, we
take great pride in the breadth of our expertise and in the fact that we
already have a strong international base. These attributes give us a unique
opportunity to take advantage of the growing globalization of trade and
transportation services.
All of our units -- but particularly Sea-Land and ACL -- should
benefit from the recent conclusion of negotiations under the General Agreement
on Tariffs and Trade, which is expected to increase trade between the United
States and Europe in both merchandise and agricultural products. Likewise, our
units should benefit from implementation of the North American Free Trade Act.
We are especially optimistic about plans to gain direct access to the
burgeoning Mexican market with a rail-marine link between the U.S. Gulf Coast
and some of Mexico's largest markets. Under this scenario, CSXT rail cars
would be rolled aboard custom-designed vessels for delivery to the Mexican
Gulf Coast, where the cars would be transferred to the Mexican national
railroad. Several CSX units have joined forces to produce an action plan that
we expect to begin implementing late this year.
Investing in the Future
CSXT will make a major investment in the reliability and efficiency
of its locomotive fleet beginning this year. Over the next four years, CSXT
will purchase 300 highly efficient locomotives, including 250
alternating-current (AC) locomotives, 53 of which will be powered by
6,000-horsepower engines. Each of the new locomotives is expected to replace
approximately two older models, resulting in lower maintenance costs,
increased fuel efficiency and greater service reliability.
Crew-reduction and work-rule agreements implemented over the past few
years also will contribute to the enhanced efficiency of our railroad in the
years ahead. As a result of agreements negotiated in 1993 and similar ones
implemented over the past several years, CSXT now can operate through-freight
trains with only a conductor and engineer on virtually its entire system.
Efforts to implement these agreements in local and yard service are well under
way. These new crew-consist agreements, together with more flexible work rules
and other productivity improvements, are strengthening the competitiveness of
our railroad -- and the rail industry as a whole.
Our ocean-shipping unit is moving to improve its competitiveness by
investing $250 million over the next three years to enhance its fleet.
Sea-Land will acquire four high-performance, fuel-efficient container ships.
When delivered in the second half of 1995 and early 1996, the new vessels will
replace higher-cost capacity in the competitive trans-Pacific trade. The
company also will modify three existing Atlantic Class vessels to increase
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their service speed, allowing the ships to be deployed in any of several key
trade lanes. This program will enable Sea-Land to replace higher-cost assets,
improve efficiency and enhance customer service.
Another way CSX is preparing for the future is by investing in the
people who serve this company. The CSX Way, the framework for shaping our
corporate culture that we unveiled in 1991, recognizes that the ultimate
success of the company will be determined by its employees. With that in mind,
we began a concerted effort last year to foster and develop the
professionalism of our work force. These employee training and development
programs promote the highest standards of professionalism and ethical conduct,
both at senior levels of management and throughout the organization.
Public policy issues
As always, CSX's fortunes will be affected by external factors in
1994, not the least of which will be issues of public policy and regulation.
Increasing rail passenger service offers significant opportunities
for our nation. However, renewed interest in the use of our railroad's
existing rights of way by commuter and high-speed intercity passenger services
raises serious issues. First, our railroad must be fairly compensated for the
use of its tracks. Liability protection also must be provided. And, finally,
there is the issue of passenger or commuter service limiting our ability to
adequately serve freight customers.
We must not sacrifice the quality of our freight system. We are
actively negotiating with local commuter authorities on the number of trains
allowed to use our rights of way and the adequate level of compensation, and
we hope for a fair outcome for all parties. The reality is that our tracks
have limited capacity. The preferred solution will be to build new tracks for
passengers within existing rail rights of way.
Like most U.S. companies, we are closely studying the Clinton
Administration's health-care proposals. CSX provides generous benefits to its
employees worldwide and last year spent more than $300 million on health care.
With more than 40,000 employees in the United States alone, CSX clearly has a
large stake in the outcome of this debate.
We also are alert to possible efforts to increase the tax burden on
corporations. The retroactive increase in the statutory corporate tax rate
from 34 to 35 percent last year hurt the competitiveness of American
businesses and reduced CSX earnings significantly. We believe that requiring
corporations to pay higher income taxes is a mistake. In reality, it is
shareholders, customers and employees who bear the brunt of higher corporate
taxes. Moreover, corporate taxes drain funds that would otherwise be available
for investment in productive assets.
While we were disappointed to see higher corporate taxes enacted last
year, we were relieved to see the demise of various proposals to assess severe
taxes on energy consumption. Taxing the carbon or BTU content of energy would
have placed an unreasonable burden on coal, a key commodity of our rail and
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PAGE 14
barge units and an important source of energy for many CSX customers. We will
continue to oppose government policies that favor certain fuel sources to the
disadvantage of others.
Another proposed tax that was firmly rejected by Congress was the
unwise proposal to place a $1-per-gallon user fee on fuel used by barge
operators on the inland waterways. This would have been a more than fivefold
increase in the already substantial fuel taxes paid by the barge industry.
Maritime Reform Progress
One positive development on the political front was the progress made
toward enactment of maritime policy reform, which culminated in the House of
Representatives overwhelmingly approving the Maritime Security and
Competitiveness Act. This is a major step toward revitalizing the U.S.
Merchant Marine. We are encouraged that the Clinton Administration supports
maritime reform and has earmarked funding for it in its fiscal 1995 budget
proposal.
We are diligently working with other carriers and our unions to
ensure that maritime policy reform becomes a reality in 1994. However, one way
or another, we intend to overcome the competitive disadvantages of being a
U.S.-flag operator. If significant reform is not enacted in 1994, we expect
the U.S. government to approve our request to transfer a number of container
ships to foreign registry, thus enabling Sea-Land to compete on more equal
terms with heavily subsidized, foreign-flag competitors.
We can't accurately predict the outcome of public policy issues or
the impact economic and political developments may have on our business. But
we will continue to move swiftly to limit the adverse consequences of
unwelcome events beyond our control and to seize opportunities as they arise.
Building on Our Strengths
In 1994, CSX will build on its strengths, while continuing to
identify and correct weaknesses. Our business units will benchmark specific
operations and functions against the best of their peers, both within and
outside the transportation industry. As we identify and develop best business
practices, we will spread them throughout our organization.
Already, CSX is reaping the rewards of increased cooperation among
its business units. Our companies are working closely together, sharing
intelligence and economies of scale, and cooperating across a wide spectrum of
activities -- including purchasing, safety, quality, technology, marketing and
operations. By leveraging the strengths of our vast network of transportation
companies, we are creating value for our shareholders.
Improving the performance of our individual units continues to be our
foremost objective. Beyond that, however, we intend to demonstrate that the
true value of CSX is greater than the sum of its parts.
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PAGE 15
Long-term Outlook
Our units, having made enormous strides in recent years improving
virtually every aspect of their performance, are now poised to use these
achievements as a springboard to further progress. We believe CSX has an
opportunity to create an organization that stands among the best, not only
within the transportation industry, but among all corporations worldwide. We
are excited about the future and eager to demonstrate the improving earning
power of CSX.
No matter what 1994 brings -- and it would be hard to imagine
circumstances as adverse as those we faced in 1993 -- we intend to deliver
solid results. We have high aspirations and are setting new standards for
performance excellence. And in so doing, we are laying the foundation for a
bright future for our employees, customers and shareholders.
Sincerely,
/s/ JOHN W. SNOW
- ----------------
John W. Snow
Chairman and Chief Executive Officer
- 15 -
PAGE 16
CSX CORPORATION AND SUBSIDIARIES
FINANCIAL SECTION
A Message to Shareholders on CSX's Financial Principles
The management of CSX Corporation is dedicated to reporting the
company's financial condition and results of operations in an accurate, timely
and conservative manner in order to give shareholders all the information they
need to make decisions about investment in the company. CSX management also
strives to present to shareholders a clear picture of the company's financial
objectives and the principles that guide its employees in achieving those
goals.
In this section, financial information is presented to assist you in
understanding the sources of earnings and financial resources of the company
and the contributions of the major business units. In addition, certain
information needed to meet the Securities and Exchange Commission's Form 10-K
requirements has been included in the Notes to Consolidated Financial
Statements.
The key objective of CSX is to increase shareholder value by
improving the return on capital invested in its businesses and maximizing free
cash flow. The company defines "free cash flow" as the amount of cash
available for debt service and other purposes generated by operating
activities after deducting capital expenditures, present value of new leases
and cash dividends.
To achieve these goals, managers utilize the following guidelines in
conducting the financial activities of the company:
Capital expenditures -- CSX business units are expected to earn returns on
capital expenditures in excess of the CSX cost of capital, unless such
expenditures are necessary to meet safety, environmental or other regulatory
requirements. Business units that do not earn above the CSX cost of capital
and do not generate an adequate level of free cash flow over an appropriate
period of time will be evaluated for sale or other disposition.
Taxes -- CSX will pursue all available opportunities to pay the lowest
possible federal, state and foreign taxes, consistent with applicable laws and
regulations and the company's obligation to carry a fair share of the cost of
government. CSX also works through the legislative process to keep effective
tax rates as low as possible.
Debt ratings -- The company will strive to maintain its investment grade debt
ratings, which allow cost-effective access to major financial markets
worldwide. The company will manage its financial condition in a manner
consistent with meeting this objective, including its debt levels and the
amount of fixed charges it incurs.
Dividends -- Every quarter, the cash dividend will be reviewed in light of the
current rate of inflation and competitive dividend yields. The dividend may be
increased periodically if cash flow projections show the higher payout level
could be adequately maintained.
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PAGE 17
Management's Responsibility for Financial Reporting
The consolidated financial statements of CSX Corporation have been
prepared by management, which is responsible for their content and accuracy.
The statements present the results of operations, cash flows and financial
position of the company in conformity with generally accepted accounting
principles and, accordingly, include amounts based on management's judgments
and estimates.
CSX and its subsidiaries have established and maintain an internal
control structure designed to provide reasonable assurance that assets are
safeguarded and that transactions are properly authorized by management and
recorded in conformance with generally accepted accounting principles. This
structure includes accounting controls, written policies and procedures and a
code of corporate conduct that stresses the highest ethical standards and is
routinely communicated to all employees. This structure also includes an
internal audit staff to monitor the compliance with and effectiveness of
established policies and procedures.
The Audit Committee of the board of directors, which is composed
solely of outside directors, meets periodically with management, internal
auditors and the independent auditors to review audit findings, adherence to
corporate policies and other financial matters.
The firm of Ernst & Young, Independent Auditors, has been engaged to
audit and report on the company's consolidated financial statements. Its audit
was conducted in accordance with generally accepted auditing standards and
included a review of internal accounting controls to the extent deemed
necessary for the purpose of its report, which appears on page 37.
ANALYSIS OF OPERATIONS
CSX is a worldwide freight transportation company with autonomous
units providing rail, intermodal, ocean container-shipping, barging and
trucking services. In addition, these units offer a range of related services,
including warehousing, distribution, logistics management and inland marine
construction and repair.
Each unit of CSX is charged with earning a return on invested capital
greater than the corporate cost of capital and generating free cash flow and
operating income that meet annual targets set in conjunction with corporate
goals. Consistent with these unit objectives, CSX has as its foremost goal the
creation of shareholder value.
While each CSX unit faced challenges during 1993 and will meet new
hurdles in 1994 and beyond, the company is committed to achieving the goals
set forth above. During 1993, CSX made significant progress in reducing
costs, increasing productivity and improving customer service -- progress that
translated into increased market value for CSX shareholders.
CSX Transportation Inc. (CSXT), the rail unit, serves all major
industrial and consumer markets east of the Mississippi River, with the
exception of New England, and more ocean ports than any other U.S. railroad.
CSXT accounted for 49% of CSX's 1993 total operating revenue and 74% of total
- 17 -
PAGE 18
operating income. These percentages and those of the other units exclude the
effect of a restructuring charge recorded at the container-shipping unit.
Sea-Land Service Inc. (Sea-Land), is the largest U.S.-flag
container-shipping company and the only U.S. carrier serving all major ocean
trade lanes. Sea-Land contributed 36% of overall operating revenue and 19% of
operating income.
CSX Intermodal Inc. (CSXI), the nation's only full-service,
coast-to-coast intermodal transportation company, offers a wide variety of
services to domestic and international shippers through its North American
network of dedicated terminals. In 1993, CSXI provided 9% of total operating
revenue and 5% of total operating income.
American Commercial Lines Inc. (ACL), provides barge and other marine
services, primarily along the U.S. inland waterway system. It generated 5% of
CSX's operating revenue and 4% of overall operating income.
Customized Transportation Inc. (CTI), CSX's newest business unit,
supplies contract logistics services, including just-in-time deliveries. CTI
provided 2% of total operating revenue and 1% of operating income. The
financial results of CTI are included in other transportation operations and
interunit eliminations. (See Table 1.)
The consolidated statements of earnings, cash flows and financial
position presented on pages 38-41 reflect the combined performance of the
company's business units.
Discussion of Earnings
Consolidated operating revenue for 1993 was $8.9 billion, 2% higher
than in 1992 and 4% above 1991's level. The higher 1993 revenue resulted from
greater volumes handled by the container-shipping and intermodal units. These
gains, attributable to expanded service and improved market share, were
sufficient to overcome lower revenue at other units. Rail revenue suffered
from a decline in the export coal market, as well as from the effects of a
238-day strike against selected eastern coal operators. These events depressed
shipments of the largest commodity moved by CSXT. Barging revenue also
declined significantly on a year-to-year basis as disastrous flooding along
the upper Mississippi River and its tributaries halted most barge traffic
along the inland waterway system for 89 days during the summer. ACL also felt
the impact of weakened coal exports and the coal strike.
Compared with 1991, all units generated higher revenue in 1993,
primarily due to volume gains. Driving the increases were an improved level of
economic activity, expanded service and market share gains. In addition, the
barge unit's revenue benefited from the 1992 acquisition of the Valley Line
Companies' barges.
Consolidated operating expense was $8 billion in 1993, including
Sea-Land's $93 million pretax restructuring charge. Operating expense was $8.5
billion for both 1992 and 1991. The decrease in 1993's operating expense was
due to a lower charge and also reflected significant cost improvement
strategies employed at all units. Operating expense in 1992 included a $699
million pretax productivity charge, and 1991's operating expense included a
- 18 -
PAGE 19
pretax productivity charge of $755 million. Both of these charges related
primarily to train-crew reductions at the rail unit.
Excluding the restructuring and productivity charges from all three
years, 1993 operating expense would have been $7.9 billion, up slightly from
$7.8 billion in 1992 and 1991.
Consolidated operating income for 1993 was $913 million. This
represents a significant increase over both 1992 and 1991 levels, due to the
large productivity charges recorded in these years. Excluding the productivity
and restructuring charges from all years, operating income increased 4% from
1992 and 18% from 1991.
Other income totaled $18 million, compared with $3 million in 1992
and $94 million in 1991. Other income for 1993 included an increase in the
gain recognized on the installment sale of track in South Florida. Other
income for 1991 included one-time gains on the sales of RF&P Corporation stock
and an interest in Sea-Land Orient Terminals Ltd.
Interest expense increased $22 million from 1992's level, but
decreased $8 million compared with 1991. The increase from 1992 is due largely
to higher levels of short-term commercial paper issued by the company to
provide cash reserves in the event of a disruptive and prolonged coal strike.
This higher level of interest expense was partially offset by earnings on the
company's cash reserves.
Net earnings totaled $359 million, $3.46 per share, compared with $20
million, 19 cents per share in 1992, and a loss of $76 million, 75 cents per
share in 1991, before a change in accounting.
Net earnings for 1993 included the effect of the $93 million pretax
restructuring charge posted in the first quarter to recognize the expense
associated with reorganizing and downsizing the European and North American
operations of Sea-Land. After taxes, this charge was $61 million, 59 cents per
share. Additionally, CSX recognized $51 million, 48 cents per share of income
tax expense related to applying the newly enacted statutory income tax rate to
deferred tax balances as of January 1, 1993.
Earnings for 1991 included a charge to provide for the estimated
costs of implementing work-force reductions, improvements in productivity and
other cost reductions at the 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. Earnings for 1992 included a charge principally to
recognize the estimated additional costs of buying out certain trip-based
compensation elements paid to train crews. The additional pretax charge
amounted to $699 million and reduced net earnings for 1992 by $450 million,
$4.38 per share.
Excluding the Sea-Land restructuring charge and the effect of the
corporate tax rate change, earnings for 1993 would have been $471 million,
$4.53 per share. These adjusted results were 4 cents per share lower than
1992's level of $470 million, $4.57 per share, and 72 cents per share above
1991's $382 million, $3.81 per share, on a like basis.
- 19 -
PAGE 20
Discussion of Cash Flows
For 1993, cash provided by operating activities, together with
proceeds from disposition of properties, was adequate to fund property
additions and cash dividends.
Cash provided by operating activities totaled $962 million in 1993,
compared with $939 million in 1992 and $866 million in 1991. This amount
continued to be negatively impacted by payments related to the 1992 and 1991
productivity charges to implement two-member crew agreements on CSXT's rail
system.
During 1993, CSXT successfully concluded agreements providing for
two-member train crews on through-freight assignments across virtually its
entire rail system. These agreements, like those previously negotiated,
provided for the buyout of excess positions, productivity funds and short-crew
allowances.
To date, the company has paid $640 million related to its 1992 and
1991 productivity charges, largely due to the implementation of these
agreements. CSX estimates cumulative savings of approximately $60 million to
$70 million in 1992 and 1993 as a result of its reduced crew sizes. Payments
also were made in conjunction with implementation of Sea-Land's European and
North American restructuring activities as well as other CSXT severance
programs.
With completion of two-member crew negotiations and payments made to
date, CSX anticipates a significant decrease in future cash payments made from
productivity and restructuring reserves. These payments are expected to be
between $100 million and $125 million in 1994 and under $100 million annually
after 1994.
Property additions totaled $768 million for the year. This compares
with additions of $1 billion in 1992, which included $137 million for
acquisition of the assets of the Valley Line companies, and $864 million in
1991. This reduced level of capital spending reflects CSX's success in
rationing capital and utilizing assets wisely.
Additional capital was committed in the form of new and renewed
operating leases. The present value of future payments on these equipment and
facility leases totaled $108 million in 1993, for total new capital investment
of $876 million in 1993. This compares with totals of $1 billion and $881
million in 1992 and 1991, respectively.
CSX's cash dividends per common share rose 4% from 1992's level and
10% above 1991's level, to $l.58, compared with $1.52 and $1.43 for 1992 and
1991, respectively. This resulted from the 16% increase in the quarterly
dividend beginning with the fourth quarter of 1993. The number of CSX shares
outstanding rose slightly, to 104 million, as a result of stock issued under
the provisions of incentive and benefit plans and the dividend reinvestment
plan available to shareholders.
CSX anticipates achieving cash flows from operations sufficient to
meet future operating and capital needs, cash dividends and anticipated labor
buyout and restructuring payments.
- 20 -
PAGE 21
The company also expects that it will continue its successful record
of extracting significant cash value from disposition or lease of rights of
way, real estate and non-core asset holdings. CSX expects to have access to
financial markets, as necessary, to fund operating, working capital and other
requirements.
Discussion of Financial Position
Cash, cash equivalents and short-term investments totaled $499
million at December 31, 1993, compared with $530 million at year-end 1992, and
$465 million at year-end 1991.
CSX adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," effective
January 1, 1994. Investments in short-term and long-term debt securities held
as of that date have been classified as "held to maturity."
The working capital deficit decreased by $155 million during 1993,
largely due to reclassification of current deferred income taxes. CSX had
year-end working capital deficits of $704 million in 1993, $859 million in
1992, and $942 million in 1991. A working capital deficit is not unusual for
CSX and does not indicate a lack of liquidity. CSX maintains adequate
resources to satisfy current liabilities when they are due and has sufficient
financial capacity to manage its day-to-day cash requirements.
Under Statement of Financial Accounting Standards No. 109, CSX
reclassified $108 million of its long-term deferred income tax balances to a
current account during 1993 to match the life of this deferred benefit with
the underlying components that gave rise to the deferred income taxes.
Environmental concerns have drawn considerable attention. CSX, like
many American companies today, faces the challenge of dealing with this issue
and is addressing its environmental responsibilities and managing the related
expenditures. Environmental management is an important part of CSX's strategic
planning, which includes promotion of policies and procedures that emphasize
environmental awareness throughout the company.
CSX has established formal environmental departments at each
operating unit to monitor operations. As a result, there is an active focus on
finding the most efficient, cost-effective solutions for dealing responsibly
with waste materials generated from past and present business operations.
These solutions range from simple recycling and cleanup efforts to high-tech
remediation initiatives.
CSX has systematically examined the products it uses in daily
processes and has avoided the use of toxic chemicals or substituted more
benign products to the greatest extent possible. The company also has
large-scale office waste recycling programs in place at each of its units.
Total expenditures associated with protecting the environment and
remedial environmental cleanup efforts amounted to $42 million in 1993. This
compares with $27 million in 1992 and $30 million in 1991.
Future levels of environmental costs and capital spending are
difficult to estimate since they depend upon a number of variables.
- 21 -
PAGE 22
These include evolving legal requirements, technologies, insurance coverage,
responsibility and credit worthiness of other parties and assessment of the
remediation required at sites.
CSX continues to assess its responsibility at environmentally
sensitive locations. The company periodically reviews its environmental
reserves as new developments arise and determines whether adjustments are
needed. Based upon information currently available, the company believes that
such reserves are adequate to meet remedial actions to comply with present
laws and regulations. However, there can be no assurance that, as new facts
become available or as new environmentally sensitive locations are identified,
additional liabilities and related settlements would not be significant to
future consolidated results of operations and cash flows.
CSX's debt-to-total-capital ratio was 49.2% at year-end 1993,
compared with 51.7% for 1992 and 46.5% for 1991. The company anticipates using
excess cash to reduce debt over the next few years.
Consistent with this objective, long-term debt decreased to $3.1
billion in 1993 from $3.2 billion in 1992. This level compares with $2.8
billion in 1991. The company issued additional debt in 1992 to finance
productivity payments and property acquisitions.
RESOURCES AVAILABLE DECEMBER 31, 1993
-------------------------------------
(Millions of Dollars)
-------------------
Cash, Cash Equivalents and Short-Term Investments $ 499
Total Credit Lines Available 880
Outstanding Borrowings:
Bank Lines ---
Commercial Paper (464)
-----
Total Liquidity $ 915
=====
Working Capital (Deficit) $(704)
=====
- 22 -
PAGE 23
Rail Assets
(Owned and leased as of December 31, 1993)
Freight Cars
Boxcars 15,012
Open-top hoppers 35,928
Covered hoppers 18,808
Gondolas 20,604
Other cars 14,784
-------
Total 105,136
-------
Locomotives 2,810
Track
Route miles 18,779
Track miles 32,844
Rail Results
CSXT met the challenges of a prolonged U.S. coal strike and sharp
decline in its export coal markets in 1993 by continuing to lower the cost of
its operations while increasing its focus on merchandise markets. This dual
emphasis allowed the unit to earn operating income of $746 million, $6 million
above 1992's comparable $740 million, despite a significant decline in coal
volumes. Operating income rose 21% compared with 1991 earnings of $617 million
on a like basis. These comparisons exclude net productivity charges of $619
million and $647 million in 1992 and 1991, respectively, associated with labor
reductions. Including these charges, the rail unit recorded operating income
of $121 million in 1992 and an operating loss of $30 million in 1991.
Operating revenue was $4.38 billion, a 1% decline from $4.43 billion
a year earlier, but a slight increase from 1991's revenue of $4.37 billion.
The decrease in 1993 was caused by a 13% decline in coal revenue, the largest
source of CSXT revenue. Coal revenue also was 13% lower than 1991's level.
Total coal originated by CSXT was 144.1 million tons in 1993, 11% and 13%
below levels originated in 1992 and 1991, respectively.
Weakened demand for U.S. coal from the European Community nations and
Japan, due to lower levels of economic growth, continued government subsidies
and intensified foreign competition, caused CSXT's export coal shipments to
decline significantly from the prior two years. In addition, both domestic and
export shipments were negatively affected by selective coal strikes against
eastern coal operators, which diminished shipments during nine months of 1993.
While CSXT anticipates only a slight recovery in the export coal market, the
company does expect notably higher carloadings of coal to utilities since the
strikes ended in December 1993.
Rail merchandise volume and revenue jumped 4% and 5% from 1992's
levels and 6% and 9% from 1991's results, respectively, to 2.6 million
carloads and $2.9 billion in revenue. The gains reflected expansion in the
domestic economy and improved conditions in key industries served by CSXT.
- 23 -
PAGE 24
With U.S. auto producers enjoying large gains in market share and
increased demand from consumers, CSXT's automotive traffic led the growth in
merchandise carloadings and revenue. CSXT also recorded large gains in metals,
due to surging scrap demand from U.S. mini-mill steel producers. Minerals
traffic advanced due to renewed activity in construction and highway projects.
CSXT's agriculture volumes and revenues moved well beyond prior-year levels,
benefiting from export of 1992's bumper grain crop through late summer and
continued expansion in the southeastern poultry and feed grain businesses
throughout the year. The strengthening economy and higher level of auto
production contributed to a sizeable increase in chemical traffic.
With foreign demand for U.S.-mined phosphates remaining depressed,
phosphate and fertilizer carloadings declined further. The forest products
market also was off slightly from 1992 and 1991 levels as a result of excess
paper production during 1992.
CSXT anticipates modest improvement in merchandise traffic volume and
revenue for 1994, reflecting continued expansion of the U.S. economy. Also,
while no marked improvement is forecast in export phosphate demand, increased
shipments of fertilizer products to the U.S. Midwest are expected as farmers
replenish fields following last year's flooding.
Rail operating expense was $3.6 billion, a decline of 2% from
comparable 1992 expense and 3% from 1991 expense, excluding the previously
mentioned productivity charges. Commitment to expense reduction and
productivity improvement, coupled with volume declines, led to the lower
expense level in 1993.
Labor expense continued to decline, to $1.8 billion, from a level of
$1.81 billion and $1.86 billion in 1992 and 1991, respectively, despite the
negative impact of a greater number of crew starts associated with moving a
larger proportion of merchandise traffic. The 1993 expense includes a 3% wage
increase awarded to most contract employees mid-year and also reflected a
decrease in employment levels due to implementation of two-member crews and
continued personnel reductions. A 4% wage increase is scheduled for mid-1994.
CSXT expects to continue to decrease the size of its work force over the next
few years.
CSXT estimated the average size of its train crews for through, local
and yard trains to be 2.7 members at year-end. The unit plans to lower its
average crew size for all trains to 2.3 over the next few years through
implementation of smaller yard and local crews as contemplated by the 1992 and
1991 productivity charges.
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PAGE 25
CSX CORPORATION AND SUBSIDIARIES
--------------------------------
(All Tables in Millions of Dollars)
Table 1. TRANSPORTATION OPERATING RESULTS
1993
----
Container Elim/
Total Rail Shipping Intermodal Barge Other
------ ------ --------- ---------- ------ -----
Operating Revenue $8,767 $4,380 $3,246 $ 793 $ 417 $ (69)
------ ------ ------ ----- ----- -----
Operating Expense
Labor and Fringe Benefits 2,922 1,797 822 81 107 115
Materials, Supplies and
Other (a) 2,144 891 814 108 175 156
Building and Equipment
Rents 1,048 369 573 64 19 23
Inland Transportation 721 --- 608 475 --- (362)
Depreciation 558 352 127 11 29 39
Fuel 413 225 109 1 42 36
Productivity/
Restructuring Charge 93 --- 93 --- --- ---
------ ------ ------ ----- ----- -----
Total 7,899 3,634 3,146 740 372 7
------ ------ ------ ----- ----- -----
Operating Income (Loss) $ 868 $ 746 $ 100 $ 53 $ 45 $ (76)
====== ====== ====== ===== ===== =====
Operating Income (Loss)(b) $ 961 $ 746 $ 193 $ 53 $ 45 $ (76)
====== ====== ====== ===== ===== =====
Operating Ratio(b) 83.0% 94.1% 93.3% 89.2%
====== ====== ===== =====
Average Employment 29,216 9,440 1,510 2,747
====== ====== ===== =====
Property Additions and
Present Value of New
Operating Leases $ 818 $ 576 $ 172 $ 50 $ 13 7
====== ====== ====== ===== ===== =====
- 25-
PAGE 26
1992
----
Container Elim/
Total Rail Shipping Intermodal Barge Other
------ ------ --------- ---------- ------ -----
Operating Revenue $8,550 $4,434 $3,148 $ 739 $ 443 $(214)
------ ------ ------ ----- ----- -----
Operating Expense
Labor and Fringe Benefits 2,853 1,814 795 70 114 60
Materials, Supplies and
Other (a) 2,147 939 789 110 174 135
Building and Equipment
Rents 1,029 374 576 54 25 ---
Inland Transportation 678 --- 605 454 --- (381)
Depreciation 513 332 117 11 23 30
Fuel 424 235 115 1 47 26
Productivity/
Restructuring Charge 681 619 17 45 --- ---
------ ------ ------ ----- ----- -----
Total 8,325 4,313 3,014 745 383 (130)
------ ------ ------ ----- ----- -----
Operating Income (Loss) $ 225 $ 121 $ 134 $ (6) $ 60 $ (84)
====== ====== ====== ===== ===== =====
Operating Income (Loss)(b) $ 906 $ 740 $ 151 $ 39 $ 60 $ (84)
====== ====== ====== ===== ===== =====
Operating Ratio(b) 83.3% 95.2% 94.7% 86.5%
====== ====== ===== =====
Average Employment 30,916 9,495 1,382 2,905
====== ====== ===== =====
Property Additions and
Present Value of New
Operating Leases $ 986 $ 570 $ 236 $ 28 $ 152
====== ====== ====== ===== =====
- 26-
PAGE 27
1991
----
Container Elim/
Total Rail Shipping Intermodal Barge Other
------ ------ --------- ---------- ------ -----
Operating Revenue $8,419 $4,373 $3,238 $ 686 $ 352 $(230)
------ ------ ------ ----- ----- -----
Operating Expense
Labor and Fringe Benefits 2,860 1,857 788 59 101 55
Materials, Supplies and
Other (a) 2,132 952 832 98 131 119
Building and Equipment
Rents 1,028 377 578 48 25 ---
Inland Transportation 697 --- 642 448 --- (393)
Depreciation 482 323 105 8 16 30
Fuel 444 247 127 1 44 25
Productivity/
Restructuring Charge 714 647 67 --- --- ---
------ ------ ------ ----- ----- -----
Total 8,357 4,403 3,139 662 317 (164)
------ ------ ------ ----- ----- -----
Operating Income (Loss) $ 62 $ (30) $ 99 $ 24 $ 35 $ (66)
====== ====== ====== ===== ===== =====
Operating Income (Loss)(b) $ 776 $ 617 $ 166 $ 24 $ 35 $ (66)
====== ====== ====== ===== ===== =====
Operating Ratio(b) 85.9% 94.9% 96.5% 90.1%
====== ====== ===== =====
Average Employment 33,239 9,284 1,192 2,694
====== ====== ===== =====
Property Additions and
Present Value of New
Operating Leases $ 829 $ 634 $ 141 $ 22 $ 32
====== ====== ====== ===== =====
(a) A portion of intercompany interest income received from the CSX
parent company has been classified as a reduction of materials,
supplies and other, by the container shipping unit. These amounts
were $64 million in 1993 and 1992 and $65 million in 1991,
respectively, and the corresponding charge is included in
eliminations and other.
(b) Excludes productivity/restructuring charges.
Materials, supplies and other expense, which includes the cost of
maintenance, information services and personal injury, decreased significantly
from 1992 and 1991 levels. The results of CSXT's intensive Performance
Improvement Team (PIT) program and the company's ongoing commitment to safety
continue to be seen in this cost category.
CSXT's PIT process has been responsible for marked reductions in the
expense base of rail operations over the past two years and is expected to
contribute additional savings in 1994 and 1995.
- 27 -
PAGE 28
While shrinking expenses, this program also has led to significant
improvements in reliability, performance and efficiency. Major strides have
been made in locomotive and freight car maintenance and repair, information
technology, contract labor scheduling, and purchasing among other areas of
rail activity. Specifically, through PIT initiatives, CSXT reduced expenses by
$147 million and $116 million in 1993 and 1992, respectively. Further savings
of over $100 million each year are targeted for 1994 and 1995.
Fuel expense fell to $225 million from $235 million and $247 million
in 1992 and 1991, respectively. Fuel consumption decreased from levels in
earlier years, reflecting the level of operation and increased fuel
efficiency. In 1993, CSXT locomotives consumed 1.33 gallons of diesel fuel per
thousand gross ton miles, compared with 1.37 gallons in the prior year and 1.4
gallons in 1991. CSXT diesel fuel averaged 64 cents per gallon versus 65 cents
in 1992 and 68 cents in 1991, net of the CSX hedging program.
Building and equipment rent expense declined slightly from earlier
years, reflecting lower traffic levels. Depreciation expense increased
slightly from earlier years as new equipment was purchased and deployed in the
business.
With continued effort throughout CSXT to lower its expense base, the
company anticipates only a slight increase in total operating expense for
1994, assuming modest improvements in traffic levels and no unusual operating
conditions.
Capital additions for 1993 totaled $579 million, which included $10
million in present value of new operating leases, compared with $561 million
and $649 million for the years 1992 and 1991, respectively. Included in the
1993 total was $323 million for roadway improvements, including 400 miles of
rail that were installed or replaced. With $101 million used to acquire 75 new
locomotives, CSXT's fleet totaled 2,810 units at year-end, compared with 2,965
and 3,123 for year-end 1992 and 1991.
CSXT's car fleet benefited from $73 million in new capital.
Additional capital was spent on terminals, technology and other equipment.
For 1994, CSXT projects an increase of approximately 10% in its
capital additions program. As in past years, the largest share of the total
will be directed to track and roadway improvements.
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PAGE 29
Table 2. RAIL COMMODITIES BY CARLOADS AND REVENUE
Market
Share (a) Carloads Revenue
(Percent) (Thousands) (Millions of Dollars)
--------- -------------------- ----------------------
1993 1993 1992 1991 1993 1992 1991
---- ----- ----- ----- ----- ------ ------
Automotive 27 326 288 265 $ 461 $ 413 $ 367
Chemicals 40 371 356 347 652 619 587
Minerals 36 374 345 327 332 310 290
Food and Consumer 34 166 161 164 196 196 201
Agricultural Products 30 284 264 262 327 297 295
Metals 22 258 225 199 243 219 200
Forest Products 30 435 441 439 442 448 425
Phosphates and Fertilizer 70 423 457 475 256 268 269
Coal 40 1,566 1,760 1,816 1,363 1,565 1,573
----- ----- ----- ----- ------ ------
Total 4,203 4,297 4,294 4,272 4,335 4,207
===== ===== =====
Other Revenue 108 99 166
------ ------ ------
Total Operating Revenue $4,380 $4,434 $4,373
====== ====== ======
(a) Market share is defined as CSX carloads versus carloads handled by
all major Eastern railroads.
CSXT has embarked on a four-year program to acquire 300 locomotives,
with 80 of these to be delivered in 1994. Included will be 50 Dash-9-44CW
direct current (DC) powered and 250 alternating current (AC) locomotives, 197
of these at 4,400 horsepower and 53 at 6,000 horsepower. The first of the AC
units will be delivered in mid-1994. This new technological breakthrough for
the railroad industry will allow CSXT to replace an average of two units in
its existing fleet with each new unit.
Remaining capital in the 1994 budget has been earmarked for car
acquisitions, technology and a rail-barge venture to transfer freight between
CSXT's rail territory in the southeastern United States and ports along
Mexico's eastern coast.
Container-Shipping Results
Sea-Land achieved solid operating results in 1993, driven by expense
reductions throughout its business activities, efficiencies resulting from
restructuring its Atlantic operations, and modest improvement in most traffic
lanes. Excluding the $93 million pretax charge associated with this
restructuring, Sea-Land would have earned record operating income of $193
million in 1993. This compares with $151 million in 1992, excluding a $17
million productivity charge; and $166 million in 1991, excluding a $67 million
charge. Including the charges, reported operating income was $100 million,
$134 million and $99 million for the years 1993, 1992 and 1991, respectively.
- 29 -
PAGE 30
Through ongoing management commitment and re-engineering of a number
of operations, Sea-Land removed $124 million from its expense base and has
targeted further significant reductions for 1994. This emphasis on the
efficiency of its ocean and related inland transportation services enabled
Sea-Land to deliver improved service levels to customers as well. Major
improvements were recorded in vessel on-time port arrivals, which rose to 88%
from the prior year's 86%.
Sea-Land's results stand out in a year when Japanese and major
European economies recorded little or no growth, adversely affecting demand
for transportation services. On a comparable basis, Sea-Land's 28% increase in
operating income was earned on a marginal 3% rise in container loads versus
the prior year and a similar 3% growth in revenue. Operating revenue totaled
$3.25 billion in 1993, compared with $3.15 billion in 1992 and $3.24 billion
in 1991.
Sea-Land experienced solid growth in both eastbound and westbound
Pacific lanes. Eastbound gains resulted from new, major account customers and
improving U.S. consumer markets. While Sea-Land successfully increased its
volume of westbound container shipments, rates deteriorated from earlier
levels due to the lagging Japanese economy. Fast-paced growth in southeast
Asia, particularly China, added volume to the intra-Asian trade lane. Overall,
Pacific rates remained flat in 1993. Continued U.S. consumer confidence,
coupled with rapid expansion of Chinese trade, leads the company to expect
improvement in these trade lanes during 1994. Sea-Land does not anticipate
significant improvement in the Japanese economy within the next year.
Container volumes in Sea-Land's Atlantic services declined primarily
as a result of the company's restructuring. The core of the business was
strengthened as functions were streamlined, agencies were closed and service
to certain outlying, non-profitable ports was curtailed. These measures, along
with conference rate agreements reached during the year, caused a 2% increase
in the average rate for Atlantic cargoes, but revenue for this business
segment declined due to the lower volumes.
Modest improvement is forecast for the economies of Germany and the
United Kingdom -- the major economies of Europe. Accordingly, Sea-Land
anticipates only modest growth in Atlantic volume in the near future. However,
as Europe recovers and as trade expands under the General Agreement on Tariffs
and Trade, the unit expects increased demand and revenue from these routes.
Strong growth in shipments between Asia and Europe and to the Middle
East and Indian Subcontinent led to a 19% increase in Asia/Middle East/Europe
(AME) traffic. These lanes experienced intense rate competition for
incremental volume, causing average rates to fall 8% from the prior year.
However, carrier efforts to stabilize rates took hold late in 1993 and are
expected to lead to an improved rate structure in 1994. With expectations of
7% market growth, Sea-Land anticipates that its AME traffic will continue to
increase this year.
Sea-Land recorded solid volume and revenue gains in its domestic
routes, namely Hawaii, Alaska and Puerto Rico. Market share gains were
achieved and further benefit was derived from rising economic demand.
Continued revenue increases are forecast despite possible expansion by the
- 30 -
PAGE 31
leading Alaskan competitor and the pending sale of the state-run Puerto Rican
shipping company.
Service expansion to the Caribbean and Latin American markets spurred
growth in the Americas trade lanes. Refrigerated cargo movements continue to
make a major contribution to profit improvement. Total Americas revenue
climbed 9% from 1992 and 20% from 1991 levels.
Sea-Land's 1993 operating expense rose $56 million from 1992's level
and decreased $19 million from 1991's expense, excluding productivity and
restructuring charges from all years. These results reflect Sea-Land's efforts
to use expense reductions and productivity improvements to offset global
inflation and the cost of carrying higher volumes. Including restructuring and
productivity charges, 1993's total operating expense was $3.15 billion,
compared with $3.01 billion in 1992 and $3.14 billion in 1991.
Container-Shipping Assets
(Owned and leased as of December 31, 1993)
Containers
40- and 20-foot dry vans 131,354
45-foot dry vans 8,833
Refrigeration vans 15,989
Other specialized equipment 5,252
-------
Total 161,428
=======
Container ships 83
Terminals
Exclusive-use 8
Preferred berthing rights 15
Labor and fringe benefits expense rose slightly despite a reduction
in Sea-Land's worldwide labor force. This increase reflected higher average
wages, stronger business activity and inflation. Sea-Land anticipates no
increase in the overall size of its work force in 1994, but a modest increase
in the average wage.
Materials, supplies and other expense rose 3% from the prior year but
decreased 2% from 1991's level as a result of efforts to improve terminal
productivity and contain vessel and equipment maintenance costs.
Rent expense remained flat over the three-year period from 1991-93 as
Sea-Land undertook efforts to replace short-term leased containers with owned
assets and carefully controlled vessel-charter and facility-lease expense.
Inland transportation expense remained at 1992's level but was 5%
lower than in 1991, a year influenced by military operations in the Middle
East. The unit has achieved significant gains in reducing this major expense
category through centralization of vendor selection and other controls.
Reflecting new capital additions, depreciation expense rose over the
three-year period 1991-93.
- 31 -
PAGE 32
Fuel expense, net of CSX's hedging program, declined from prior years
due to declining prices for bunker fuel, the lower-grade fuel used to power
container ships. Sea-Land paid an average of 32 cents, 34 cents and 37 cents
per gallon of fuel in 1993, 1992 and 1991, respectively. Annual fuel
consumption remained steady over the three-year period at approximately 340
million gallons.
Sea-Land's management is committed to obtaining more than $100
million in additional expense reductions during 1994 while improving the
quality of customer service. By the late 1990's, the company hopes to reach a
90% ratio of operating expense to operating revenue through cost-control and
productivity-improvement efforts. This objective requires the unit to
continually offset inflation through expense reductions.
Additional reductions in operating expense could be realized through
Congressional reform of U.S. maritime policy. CSX is optimistic that
legislation authorizing subsidies and/or foreign registry of vessels currently
under U.S.-flag registration will be approved by Congress and funded by the
Administration during 1994. Sea-Land does not foresee any material cost
associated with implementing changes currently proposed in U.S. maritime
policy or reflagging.
Sea-Land's capital additions totaled $172 million for 1993, including
$125 million in expenditures and $47 million in present value of new long-term
operating lease commitments. The total compares with $236 million in the prior
year and $141 million for 1991.
Early last year, Sea-Land launched an upgraded express service
between Southeast Asia and the U.S. Westcoast at an investment of $53 million.
This total included new vessel charters and containers.
In addition, Sea-Land spent $40 million to purchase or refurbish
containers. Over the past two years, Sea-Land spent significant capital to
expand its fleet of owned containers. This represents replacement of leased
containers, rather than enlargement of the container fleet.
The unit also invested $20 million in its vessel fleet during 1993
with the remaining portion of its capital dedicated to terminal facilities,
technology and other areas.
Sea-Land's level of 1994 maintenance capital is expected to remain at
or below 1993's level. Capital will be focused on upgrading and increasing the
number of refrigerated containers and continuing to reduce short-term
equipment leases through acquisition. Additional capital will be required to
maintain vessels and to upgrade and expand terminal capacity.
During the first quarter of 1994, Sea-Land will enter into contracts
covering the construction of four high-performance, fuel-efficient container
vessels and the modification of three Atlantic Class Vessels (ACVs) in its
current fleet, at a total expenditure of approximately $250 million over a
three-year period. The four new vessels will replace higher-cost capacity in
the very competitive trans-Pacific trade. The three ACVs will have their speed
increased from roughly 19 knots to 21 knots, while their effective capacity
will remain unchanged. This combined program will enable Sea-Land to replace
higher-cost assets, improve efficiency and enhance service to its customers.
- 32 -
PAGE 33
Intermodal Results
CSXI grew operating income 36% in 1993, to a level of $53 million,
excluding a 1992 productivity charge. Prior-year results for this unit would
have been $39 million in 1992, exclusive of the $45 million productivity
charge, and $24 million in 1991. Beginning in 1993, separate results were
publicly reported for CSXI. Previously, earnings were reported with those of
the rail unit.
Operating revenue was $793 million, 7% higher than the prior year and
16% greater than 1991's level. Rail containers and trailers handled by CSXI
totaled 1.14 million in 1993, with significant increases over prior years in
shipments from domestic customers, international steamship lines other than
Sea-Land, and truckline partners. CSXI anticipates continued volume growth in
1994 in these same categories of traffic. The unit has undertaken a program to
enhance the size and prominence of its national sales force during 1993 and
1994 and expects greater rates of revenue growth as it continues to win
customers with its superior product and service.
Intermodal Assets
(Owned and leased as of December 31, 1993)
Equipment
Domestic Containers 2,520
Rail Trailers 8,672
Facilities
CSX Intermodal Terminals 33
Motor Carrier Operations Terminals 24
CSX Services Facilities 17
Operating expense was $740 million in 1993. This compares with $745
million in the prior year and $662 million in 1991. The unit's 1992 expense
included a $45 million transfer of the productivity charge recorded by CSXT
related to locomotive-crew buyouts. Excluding the charge, 1993 expense
increased 6% and 12% from 1992 and 1991, respectively, as result of the higher
volumes handled by the unit.
Capital additions for the year of $50 million were focused on
terminal improvements and equipment acquisition. This total compares with $28
million in 1992 and $22 million in 1991. CSXI plans to further expand its
domestic trailer and container fleet in 1994 as well as to complete a number
of expansion and upgrade projects at major facilities across the United
States, including Chicago, Atlanta and Little Ferry, N.J. Reflecting its
growth plans, CSXI's capital program is expected to total approximately $60
million in 1994.
Barge Results
ACL suffered a one-year setback in operating income due to extensive
flooding along the Mississippi River system. Operating income declined from
1992's $60 million to $45 million as ACL faced closings and restrictions on
the waterway system during the second and third quarters of 1993. Operating
- 33 -
PAGE 34
income was higher than the $35 million reported in 1991, as ACL increased its
fleet size by one-third through acquisitions of barge assets during late 1991
and 1992.
Total operating revenue was $417 million, compared with 1992's
revenue of $443 million and $352 million in 1991. Barge ton miles totaled 45
billion for 1993, a decrease of 3 billion ton miles from the prior year, but 5
billion ton miles above 1991's levels. Mirroring this lower volume, revenue
from barging activity declined 5% from the prior year, but was 12% higher than
in 1991 due to the recent acquisitions. Midwest flooding, depressed export
coal shipments and lower grain movements caused the year-over-year decline.
The barge unit, however, did record sizeable gains in the movement of
non-bulk commodities and bulk products other than coal and grain. Non-bulk
commodities, such as scrap metal, pig iron and aluminum slabs, surged with
demand from industrial consumers. Tonnages of salt and fertilizer grew,
reflecting increased demand and the need of Midwest farmers to replenish
fields following last summer's floods.
Soft demand for export coal is expected through 1994 while weak grain
exports are anticipated through the second quarter of 1994. These two factors
will limit both the growth in barge movements and rate improvement, though
continued strength in the non-bulk sector is expected. The company
anticipates a return to typical business levels with a normal grain harvest in
the fall of 1994.
ACL's other marine revenue, which includes revenue from terminal
operations and Jeffboat, the unit's marine construction company, declined from
the prior year due to the Midwest floods but increased from 1991's level as a
result of the acquisitions. Jeffboat currently has a backlog of new orders
through mid-summer 1994 and anticipates successfully entering the market to
build vessels for the expanding riverboat gaming industry.
Barge operating expense was $372 million, a 3% decrease from 1992's
$383 million, resulting from re-engineering of many operations and business
practices and the lower level of barging activity. Expenses were 17% greater
than 1991's $317 million, due to the unit's larger barge fleet.
Labor and fringe benefits expense declined from the prior years as a
result of downsizing the administrative functions and layoffs of boat
personnel during the summer floods.
As a result of the ongoing high level of activity at Jeffboat,
materials, supplies and other expense was flat compared with 1992's level.
This expense increased 34% from 1991's level, due primarily to the fleet
expansion.
The lower level of barging activity caused fuel consumption to
decline 7% and expense to fall 11% from the prior year. Compared with 1991,
consumption rose 8% while expense declined 5%, with the larger barge fleet
accounting for the increase in fuel consumption, offset by lower oil prices.
ACL consumed 70 million gallons of fuel during 1993 at an average price of 58
cents per gallon.
- 34 -
PAGE 35
ACL trimmed its level of capital additions to $13 million in 1993.
This compares with $152 million a year earlier, which included $137 million
for the assets of the Valley Line companies, and $32 million in 1991. The
majority of 1993 capital was used to upgrade and expand the chemical barge
fleet. ACL anticipates that 1994's level of capital expenditures will be
similar to last year's level.
Barging Assets
(Owned and leased as of December 31, 1993)
Towboats 123
Barges
Covered/open-top hoppers 3,117
Tankers 236
Marine Services
River terminals 11
Fleeting operations 15
Shipyards 2
- 35 -
PAGE 36
Consolidated Outlook
With growing strength in the domestic economy, especially in the
industrial base served by CSXT, and limited recovery of the major economies of
Europe and Japan, CSX expects to improve earnings in 1994. As always, this
outlook is subject to external factors similar to those that affected the
company's performance during 1993 -- severe weather conditions, work stoppages
at major customers and stalled growth in foreign economies.
The management and employees of CSX remain committed to improving the
efficiency and productivity of their businesses while reducing the cost of
supplying customers with continually improving levels of transportation
services. CSX is also dedicated to recognizing growth opportunities in the
markets it serves and pursuing new markets that offer adequate returns on
investment. These efforts should be reflected in improved operating
performance and operating ratios at each of the CSX transportation units.
- 36 -
PAGE 37
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of CSX Corporation
We have audited the accompanying consolidated statement of financial
position of CSX Corporation and subsidiaries as of December 31, 1993, 1992 and
1991, and the related consolidated statements of earnings and cash flows for
the years then ended. Our audits also included the financial statement
schedule listed in the index at Item 14(a). These financial statements and
schedule are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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 consolidated financial statements referred to
above (appearing on Pages 38-71) present fairly, in all material respects, the
consolidated financial position of CSX Corporation and subsidiaries at
December 31, 1993, 1992 and 1991, and the consolidated results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
As discussed in Notes 1 and 13 to the consolidated financial
statements, the company changed its method of accounting for post-retirement
benefits other than pensions in 1991.
/s/ ERNST & YOUNG
-----------------
Ernst & Young
Richmond, Virginia
January 28, 1994
- 37 -
PAGE 38
CSX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(Millions of Dollars, Except Per Share Amounts)
Years Ended December 31,
1993 1992 1991
------ ------ ------
OPERATING REVENUE
Transportation $8,767 $8,550 $8,419
Non-Transportation 173 184 217
------ ------ ------
Total 8,940 8,734 8,636
------ ------ ------
OPERATING EXPENSE
Transportation 7,806 7,644 7,643
Non-Transportation 128 125 139
Productivity/Restructuring Charge 93 699 755
------ ------ ------
Total 8,027 8,468 8,537
------ ------ ------
OPERATING INCOME 913 266 99
Other Income 18 3 94
Interest Expense 298 276 306
------ ------ ------
EARNINGS (LOSS) BEFORE INCOME TAXES 633 (7) (113)
Income Tax Expense (Benefit) 274 (27) (37)
------ ------ ------
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING 359 20 (76)
Cumulative Effect on Years Prior to 1991
of Change in Accounting for Post-
retirement Benefits Other than Pensions --- --- (196)
------ ------ ------
NET EARNINGS (LOSS) $ 359 $ 20 $ (272)
====== ====== ======
EARNINGS (LOSS) PER SHARE BEFORE
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING $ 3.46 $ .19 $ (.75)
Cumulative Effect on Years Prior to 1991
of Change in Accounting for Post-
retirement Benefits Other than Pensions --- --- (1.95)
------- ------- -------
EARNINGS (LOSS) PER SHARE $ 3.46 $ .19 $ (2.70)
======= ======= =======
AVERAGE COMMON SHARES
OUTSTANDING (THOUSANDS) 103,915 102,907 100,489
======= ======= =======
COMMON SHARES OUTSTANDING
AT END OF YEAR (THOUSANDS) 104,143 103,476 102,362
======= ======= =======
CASH DIVIDENDS PAID PER COMMON SHARE $ 1.58 $ 1.52 $ 1.43
======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
- 38 -
PAGE 39
CSX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of Dollars)
Years Ended December 31,
1993 1992 1991
------- ------- -------
OPERATING ACTIVITIES
Earnings (Loss) Before Cumulative Effect of
Change in Accounting $ 359 $ 20 $ (76)
Adjustments to Reconcile Earnings to
Cash Provided
Depreciation 572 527 501
Deferred Income Taxes 181 (72) (165)
Productivity/Restructuring Charge - Provision 93 699 755
- Payments (293) (445) (93)
Net Gains from Investment Transactions --- --- (75)
Other Operating Activities 35 67 (39)
Changes in Operating Assets and
Liabilities
Accounts Receivable (15) 145 (3)
Materials and Supplies (10) 18 49
Other Current Assets 3 35 (13)
Accounts Payable and Other Current
Liabilities 37 (55) 25
----- ----- ------
Cash Provided by Operating Activities 962 939 866
----- ----- ------
INVESTING ACTIVITIES
Property Additions (768) (1,041) (864)
Purchase of Long-Term Marketable Securities (115) --- ---
Proceeds from Property Dispositions 59 65 78
Proceeds from Sales of Affiliates --- 7 203
Other Investing Activities (46) (16) (6)
----- ----- ------
Cash Used by Investing Activities (870) (985) (589)
----- ----- ------
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PAGE 40
CSX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
(Millions of Dollars)
Years Ended December 31,
1993 1992 1991
------- ------- -------
FINANCING ACTIVITIES
Short-Term Debt-Net 150 (154) (128)
Long-Term Debt Issued 81 664 379
Long-Term Debt Repaid (249) (260) (431)
Cash Dividends Paid (164) (157) (144)
Other Financing Activities 14 37 41
----- ----- -------
Cash (Used) Provided by Financing Activities (168) 130 (283)
----- ----- -------
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
(Decrease) Increase in Cash and Cash Equivalents (76) 84 (6)
Cash and Cash Equivalents at Beginning of Year 374 290 296
----- ----- -------
Cash and Cash Equivalents at End of Year 298 374 290
Short-Term Investments 201 156 175
----- ----- -------
Cash, Cash Equivalents and Short-Term
Investments at End of Year $ 499 $ 530 $ 465
===== ===== =======
See accompanying Notes to Consolidated Financial Statements.
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PAGE 41
CSX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Millions of Dollars)
December 31,
1993 1992 1991
------- ------- -------
ASSETS
Current Assets
Cash, Cash Equivalents and
Short-Term Investments $ 499 $ 530 $ 465
Accounts Receivable 668 605 728
Materials and Supplies 199 189 206
Deferred Income Taxes 108 --- ---
Other Current Assets 97 97 136
------- ------- -------
Total Current Assets 1,571 1,421 1,535
------- ------- -------
Properties and Other Assets
Properties-Net 10,788 10,636 10,177
Affiliates and Other Companies 268 264 238
Other Assets 793 728 848
------- ------- -------
Total Properties and Other Assets 11,849 11,628 11,263
------- ------- -------
Total Assets $13,420 $13,049 $12,798
======= ======= =======
LIABILITIES
Current Liabilities
Accounts Payable and Other Current
Liabilities $ 1,965 $ 2,066 $ 2,079
Current Maturities of Long-Term Debt 146 200 230
Short-Term Debt 164 14 168
------- ------- -------
Total Current Liabilities 2,275 2,280 2,477
------- ------- -------
Long-Term Debt 3,133 3,245 2,804
------- ------- -------
Long-Term Liabilities and Deferred Gains 2,491 2,467 2,114
------- ------- -------
Deferred Income Taxes 2,341 2,082 2,221
------- ------- -------
SHAREHOLDERS' EQUITY
Common Stock, $1 Par Value 104 103 102
Other Capital 1,307 1,250 1,217
Retained Earnings 1,927 1,729 1,866
Minimum Pension Liability Adjustment (158) (107) (3)
------- ------- -------
Total Shareholders' Equity 3,180 2,975 3,182
------- ------- -------
Total Liabilities and
Shareholders' Equity $13,420 $13,049 $12,798
======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
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PAGE 42
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES.
Principles of Consolidation
The Consolidated Financial Statements reflect the results of
operations, cash flows and financial position of CSX and its majority-owned
subsidiaries as a single entity. All significant intercompany accounts and
transactions have been eliminated.
Investments in companies that are not majority-owned are carried at
either cost or equity, depending on the extent of control.
Cash, Cash Equivalents and Short-Term Investments
Cash in excess of current operating requirements is invested in
various short-term instruments carried at cost that approximates market value.
Those short-term investments having a maturity of three months or less at the
date of acquisition are classified as cash equivalents. Cash and cash
equivalents are net of outstanding checks that are funded daily as presented
for payment from cash receipts and maturing short-term investments.
Accounts Receivable
In October 1993, a special purpose subsidiary of the company filed a
registration statement with the Securities and Exchange Commission covering
$250 million of Trade Receivable Participation Certificates ("Certificates")
evidencing undivided interests in a trade accounts receivable master trust.
The master trust assets include an ownership interest in a revolving portfolio
of rail freight accounts receivable.
Subsequently, the company issued $200 million of Certificates, at
5.05%, due September 1998. The Certificates are collateralized by $234
million of accounts receivable held in the master trust. The proceeds from
the issuance of the Certificates were used to reduce the amount of accounts
receivable sold under a previous agreement.
In addition, the company has a five-year revolving agreement with a
financial institution to sell with recourse on a monthly basis, an undivided
percentage ownership interest in designated pools of accounts receivable up to
a maximum of $200 million. CSX has retained the collection responsibility
with respect to accounts receivable held in trust or sold. Previous revolving
agreements allowed for the sale of up to $500 million of accounts receivable.
At December 31, 1993, 1992 and 1991, accounts receivable have been reduced by
$380 million, $400 million and $425 million, respectively, representing
Certificates and receivables sold.
The company maintains an allowance for doubtful accounts based upon
the expected collectibility of accounts receivable, including receivables
collateralizing Certificates and receivables sold. Allowances for doubtful
accounts of $87 million, $96 million and $89 million have been applied as a
reduction of accounts receivable at December 31, 1993, 1992 and 1991,
respectively.
- 42 -
PAGE 43
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES, Continued
Materials and Supplies
Materials and supplies are carried at average cost.
Properties
Properties are carried principally at cost. Provisions for
depreciation of rail property and equipment are based on estimated useful
service lives of seven to 42 years, computed primarily on the straight-line
composite method. Under this method, ordinary gains and losses on dispositions
are recorded to accumulated depreciation. Provisions for depreciation of
non-rail property and equipment are based on estimated useful service lives of
three to 45 years, computed on the straight-line unit basis method, and gains
and losses on dispositions are recorded in earnings as incurred.
Post-Retirement Benefits Other Than Pensions
The company has adopted SFAS No. 106, "Employers' Accounting for
Post-retirement Benefits Other than Pensions." Under the accrual method
specified by SFAS No. 106, the total future cost of providing other
post-retirement employment benefits is estimated and recognized as expense
over the employees' requisite service period.
Fair Values of Financial Instruments
The following methods and assumptions were used by the company in
estimating fair values for financial instruments as required by SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments," which the company
adopted effective January 1, 1992:
Current Assets and Current Liabilities
The carrying amounts reported in the statement of financial position
for current assets and current liabilities qualifying as financial instruments
approximate their fair values.
Long-Term and Short-Term Debt
The carrying amounts of the company's borrowings under its short-term
debt arrangements approximate their fair values. The fair values of the
company's long-term debt have been based upon market quotations for similar
debt instruments or estimated using discounted cash flow analyses based upon
the company's current incremental borrowing rates for similar types of
borrowing arrangements.
The company's remaining financial instruments at December 31, 1993
and 1992 are not significant.
- 43 -
PAGE 44
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES, Continued
Environmental Costs
Environmental costs that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to remediating an
existing condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities are recorded
when CSX's responsibility for environmental remedial efforts is deemed
probable, and the costs can be reasonably estimated. Generally, the timing of
these accruals coincides with the completion of a feasibility study or the
company's commitment to a formal plan of action. The recorded liabilities for
estimated future environmental costs at December 31, 1993, 1992 and 1991, were
$131 million, $77 million and $81 million, respectively.
Earnings Per Share
Earnings per share are based on the weighted average of common shares
outstanding. Dilution, which could result if all outstanding common stock
equivalents were exercised, is not significant.
Prior-Year Data
Certain prior-year data have been reclassified to conform to the 1993
presentation.
NOTE 2. PRODUCTIVITY AND RESTRUCTURING CHARGES.
1993 Restructuring Charge
The company recorded a $93 million pretax charge in the first quarter
of 1993 to recognize the estimated costs of restructuring certain operations
and functions at its container-shipping unit. The restructuring charge
reduced net earnings for 1993 by $61 million, 59 cents per share. As of
December 31, 1993, payments totaling $34 million have been recorded as a
reduction of the liability for the restructuring charge.
1992/1991 Productivity Charges
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 crews. The additional pretax charge amounted to $699
million and reduced net earnings for 1992 by $450 million, $4.38 per share. Of
the combined charges, $1.3 billion was provided for employee
- 44 -
PAGE 45
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 2. PRODUCTIVITY AND RESTRUCTURING CHARGES, Continued
separations and associated liabilities and $151 million related to various
costs and claims expected to result from consolidation of terminal operations,
litigation and other negotiated settlements.
The $1.3 billion portion of the combined charges attributable to CSX
Transportation Inc. (CSXT), the company's rail unit, includes $1.2 billion for
reductions from three to two person train crews and for buying out
productivity funds and short-crew allowances. CSXT has reached labor
agreements across virtually all of its rail system allowing it to operate
trains with two-member crews. The estimated cost based on the ratified labor
agreements with the United Transportation Union members is approximately 93%
of the amount initially provided.
As of December 31, 1993, payments totaling $640 million have been
recorded as a reduction of the aggregate liabilities for the productivity
charges. The remaining liability consists of $607 million for employee
separations and associated costs and $187 million for claims, litigation and
other negotiated settlements.
The $84 million combined 1992 and 1991 pre-tax productivity charges
at the container-shipping unit included a provision of $40 million for the
planned separation of employees, and $44 million for the consolidation and
realignment of various divisions and terminal operations, a change in revenue
and expense recognition methodology and other negotiated settlements.
NOTE 3. OPERATING EXPENSE.
1993 1992 1991
------- ------- -------
Labor and Fringe Benefits $ 3,055 $ 2,986 $ 3,001
Materials, Supplies and Other 1,963 1,974 1,968
Building and Equipment Rent 1,101 1,080 1,079
Inland Transportation 721 678 697
Depreciation 572 527 502
Fuel 413 424 444
Taxes Other Than Income and Payroll Taxes 109 100 91
Productivity/Restructuring Charge 93 699 755
------- ------- -------
Total $ 8,027 $ 8,468 $ 8,537
======= ======= =======
Maintenance and Repair Expense
Included in Above Items $ 1,188 $ 1,205 $ 1,224
======= ======= =======
Selling, General and Administrative Expense
Included in Above Items $ 1,202 $ 1,134 $ 1,148
======= ======= =======
- 45 -
PAGE 46
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 4. OTHER INCOME.
1993 1992 1991
---- ---- ----
Interest Income $ 52 $ 43 $ 72
Net Gain on Investment Transactions (a) --- --- 49
Gain on Sale of RF&P Corporation Stock (b) --- --- 31
Installment Gain on South Florida Track Sale 20 7 7
Discount on Sale of Accounts Receivable (15) (17) (32)
Minority Interest in Earnings
of Subsidiaries (14) (15) (25)
Equity Earnings of Other Affiliates (7) 2 6
Miscellaneous (18) (17) (14)
----- ----- -----
Total $ 18 $ 3 $ 94
===== ===== =====
(a) In 1991, the company consummated the sale of one-third of its
interest in Sea-Land Orient Terminals Ltd., to Ready City Ltd. (a
Hong Kong-based consortium). The sale proceeds amounted to $97
million and resulted in a pretax gain of $65 million, $35 million
after tax, or 35 cents per share. The company also recorded a pretax
charge of $16 million, $11 million after tax, or 11 cents per share,
related to the establishment of valuation reserves for several
investments in "non-core business" affiliates.
(b) In a series of transactions consummated in 1991, the company
exchanged its 6.8 million shares of RF&P Corporation (RF&P) stock for
the rail assets of RF&P and $106 million in cash. These transactions
resulted in a pretax gain of $31 million, before associated minority
interest expense of $5 million, $8 million after tax, or 8 cents per
share.
NOTE 5. INCOME TAXES.
Effective January 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 January 1, 1987. SFAS No. 109 requires that
deferred income tax assets and liabilities be classified as current or non-
current based upon the classification of the related asset or liability for
financial reporting. Net earnings for 1993 were not impacted by the adoption
of SFAS No. 109. As permitted under the new rules, prior-year financial
statements have not been restated.
- 46 -
PAGE 47
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 5. INCOME TAXES, Continued
Earnings from domestic and foreign operations and related income tax
expense are as follows:
1993 1992 1991
----- ----- -----
Earnings (Loss) Before Income
Taxes:
- Domestic $ 570 $ (67) $(239)
- Foreign 63 60 126
----- ----- -----
Total $ 633 $ (7) $(113)
===== ===== =====
Income Tax Expense (Benefit):
Current - Federal $ 71 $ 27 $ 102
- Foreign 18 15 11
- State 4 3 15
----- ----- -----
Total Current 93 45 128
----- ----- -----
Deferred - Federal 160 (72) (142)
- Foreign 1 2 2
- State 20 (2) (25)
----- ----- -----
Total Deferred 181 (72) (165)
----- ----- -----
Total Expense (Benefit) $ 274 $ (27) $ (37)
===== ===== =====
Income tax expense reconciled to the tax computed at statutory rates
is as follows:
1993 1992 1991
---- ---- ---- ---- ---- ----
Tax at Statutory Rates $222 35% $ (2) (34)% $(38) (34)%
State Income Taxes 16 2 1 (a) (7) (6)
Minority Interest --- --- --- --- 6 5
Increase in Statutory Rate(b) 51 8 --- --- --- ---
Prior Years' Income Taxes (15) (2) (14) (a) (1) (1)
Other Items --- --- (12) (a) 3 3
---- ---- ---- ---- ---- ----
Total Expense (Benefit) $274 43% $(27) (a)% $(37) (33)%
==== ==== ==== ==== ==== ====
(a) Percentage is not meaningful.
(b) The company revised its annual effective tax rate in 1993 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 by $51 million related
to applying the newly enacted statutory income tax rate to deferred tax
balances as of January 1, 1993.
- 47 -
PAGE 48
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 5. INCOME TAXES, Continued
The significant components of deferred tax assets and liabilities
after considering the adoption of SFAS No. 109 include:
December 31, January 1,
1993 1993
------ ------
Deferred Tax Assets
Productivity/Restructuring Charge $ 299 $ 375
Employee Benefit Plans 351 282
Deferred Gains and Related Rents 162 159
Other 312 283
------ ------
Total 1,124 1,099
------ ------
Deferred Tax Liabilities
Accelerated Depreciation 2,979 2,799
Other 378 382
------ ------
Total 3,357 3,181
------ ------
Net Deferred Tax Liabilities $2,233 $2,082
====== ======
At December 31, 1991, the net deferred income tax liability was $2.2
billion. The significant components were a net liability for accelerated
depreciation of $2.7 billion, and net benefits for productivity/restructuring
charges of $318 million, employee benefit plans of $176 million and deferred
gains and related rents of $103 million.
In addition to the annual provision for deferred income tax expense,
the change in the year-end net deferred income tax liability balances included
the income tax benefit for the minimum pension liability adjustments in 1993
and 1992 and, in 1991, the income tax benefit related to the cumulative effect
of the change in accounting and the effect of the RF&P transactions.
The company has not recorded domestic deferred or additional foreign
income taxes applicable to undistributed earnings of foreign subsidiaries that
are reinvested. Such earnings amounted to $213 million, $188 million and $169
million at December 31, 1993, 1992 and 1991, respectively. These amounts
could become taxable upon their remittance as dividends or upon the sale or
liquidation of these foreign subsidiaries. It is not practical to determine
the amount of net additional income tax that would be payable if such earnings
were repatriated.
Income tax payments during 1993, 1992 and 1991 totaled $92 million,
$71 million and $57 million, respectively.
The company files a consolidated federal income tax return, which
includes its principal domestic subsidiaries. Examinations of the federal
- 48 -
PAGE 49
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 5. INCOME TAXES, Continued
income tax returns of CSX have been completed through 1987. Returns for 1988-
1990 are currently under examination. Management believes adequate provision
has been made for any adjustments that might be assessed.
NOTE 6. CHANGES IN SHAREHOLDERS' EQUITY.
Common Shares Minimum
Outstanding Common Other Retained Pension
(Thousands) Stock Capital Earnings Liability
------------- ------ ------- -------- ---------
Balance December 31, 1990 98,540 $ 99 $1,160 $2,282 $ ---
Net Loss --- --- --- (272) ---
Dividends - Common --- --- --- (144) ---
Common Stock -
Stock Purchase
and Loan Plan
Stock Issued - Net 2,007 2 96 --- ---
Purchase Loans - Net --- --- (93) --- ---
Other Stock Issued - Net 1,815 1 54 --- ---
Minimum Pension Liability --- --- --- --- (3)
------- ---- ------ ------ -----
Balance December 31, 1991 102,362 102 1,217 1,866 (3)
Net Earnings --- --- --- 20 ---
Dividends - Common --- --- --- (157) ---
Common Stock -
Stock Purchase
and Loan Plan
Stock Issued - Net 103 --- 8 --- ---
Purchase Loans - Net --- --- (3) --- ---
Other Stock Issued - Net 1,011 1 28 --- ---
Minimum Pension Liability --- --- --- --- (104)
------- ---- ------ ------ -----
Balance December 31, 1992 103,476 103 1,250 1,729 (107)
Net Earnings --- --- --- 359 ---
Dividends - Common --- --- --- (164) ---
Common Stock -
Stock Purchase
and Loan Plan
Stock Canceled (82) --- (4) --- ---
Purchase Loans - Net --- --- 19 --- ---
Other Stock Issued - Net 749 1 42 --- ---
Minimum Pension Liability --- --- --- --- (51)
Other --- --- --- 3 ---
------- ---- ------ ------ -----
Balance December 31, 1993 104,143 $104 $1,307 $1,927 $(158)
======= ==== ====== ====== =====
- 49 -
PAGE 50
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 7. PROPERTIES.
Balance Balance
at Beginning Retirements Other at End
of Year Additions and Sales Changes of Year
------------ --------- ----------- ------- -------
1993
Property:
Transportation $15,312 $ 747 $(622) $ 13 $15,450
Non-Transportation 390 21 (8) -- 403
------- ------ ----- ----- -------
Total $15,702 $ 768 $(630) $ 13 $15,853
======= ====== ===== ===== =======
Accumulated Depreciation:
Transportation $ 4,973 $ 560 $(564) $ (8) $ 4,961
Non-Transportation 93 12 (2) 1 104
------- ------ ----- ----- -------
Total $ 5,066 $ 572 $(566) $ (7) $ 5,065
======= ====== ===== ===== =======
Properties - December 31, 1993 $10,788
=======
Balance Balance
at Beginning Retirements Other at End
of Year Additions and Sales Changes of Year
------------ --------- ----------- ------- -------
1992
Property:
Transportation $14,783 $1,016 $(504) $ 17 $15,312
Non-Transportation 393 25 (25) (3) 390
------- ------ ----- ----- -------
Total $15,176 $1,041 $(529) $ 14 $15,702
======= ====== ===== ===== =======
Accumulated Depreciation:
Transportation $ 4,916 $ 513 $(447) $ (9) $ 4,973
Non-Transportation 83 14 (6) 2 93
------- ------ ----- ----- -------
Total $ 4,999 $ 527 $(453) $ (7) $ 5,066
======= ====== ===== ===== =======
Properties - December 31, 1992 $10,636
=======
- 50 -
PAGE 51
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 7. PROPERTIES, Continued
Balance Balance
at Beginning Retirements Other at End
of Year Additions and Sales Changes of Year
------------ --------- ----------- ------- -------
1991
Property:
Transportation $14,490 $ 832 $(416) $(123) $14,783
Non-Transportation 437 32 (33) (43) 393
------- ------ ----- ----- -------
Total $14,927 $ 864 $(449) $(166) $15,176
======= ====== ===== ===== =======
Accumulated Depreciation:
Transportation $ 4,866 $ 481 $(353) $ (78) $ 4,916
Non-Transportation 70 20 (5) (2) 83
------- ------ ----- ----- -------
Total $ 4,936 $ 501 $(358) $ (80) $ 4,999
======= ====== ===== ===== =======
Properties - December 31, 1991 $10,177
=======
NOTE 8. ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES.
December 31,
1993 1992 1991
------ ------ ------
Trade Accounts Payable $ 917 $ 901 $ 926
Labor and Fringe Benefits(a) 523 727 668
Income Taxes and Other 332 278 329
Casualty Reserves 193 160 156
------ ------ ------
Total $1,965 $2,066 $2,079
====== ====== ======
(a) Labor and Fringe Benefits includes separation liabilities of $46
million for 1993, $238 million for 1992 and $170 million for 1991.
- 51 -
PAGE 52
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 9. CASUALTY AND OTHER RESERVES, SEPARATION LIABILITIES AND DEFERRED
GAINS.
Long-term liabilities and deferred gains totaled $2.49 billion, $2.47
billion and $2.1 billion in 1993, 1992 and 1991, respectively, and included
casualty reserves; deferred gains; pension and other post-retirement
obligations; productivity/restructuring charge liabilities; and other
liabilities.
Activity related to casualty and other reserves, separation
liabilities and deferred gains is as follows:
Deferred Gains (c)
---------------------------
Casualty
and Other Separation Sale-Leaseback Installment
Reserves(a) Liabilities(a) Transactions Sale
----------- -------------- --------------- -----------
Balance 12/31/90 $ 430 $ 154 $ 370 $ 136
Charged to Expense
and Other Additions 309 634 --- ---
Payments and Other
Reductions (250) (87) (23) (7)
----- ------ ----- -----
Balance 12/31/91 489 701 347 129
Charged to Expense
and Other Additions 355 653 --- ---
Payments and Other
Reductions (336) (423)(b) (23) (7)
----- ------ ----- -----
Balance 12/31/92 508 931 324 122
Charged to Expense
and Other Additions 331 32 --- ---
Payments and Other
Reductions (275) (321)(b) (24) (20)
----- ------ ----- -----
Balance 12/31/93 $ 564 $ 642 $ 300 $ 102
===== ====== ===== =====
(a) Balances include current portion of casualty and other reserves and
separation liabilities, respectively, of $186 million and $170
million at December 31, 1991; $190 million and $238 million at
December 31, 1992; and $223 million and $46 million at December 31,
1993.
(b) Includes reallocation of $95 million in 1993 and $62 million in 1992
to litigation claims and other negotiated settlements.
(c) Deferred gains on sale-leaseback transactions and the installment
sale are being amortized over periods ranging from 2 to 22 years.
- 52 -
PAGE 53
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 10. DEBT AND CREDIT AGREEMENTS.
Type Average
(Maturity Dates) Interest Rates 1993 1992 1991
- ---------------- -------------- ------ ------ ------
Notes Payable
(1994-2021) 9% $1,162 $1,242 $1,179
Debentures
(1999-2022) 9% 945 945 600
Equipment Obligations
(1994-2016) 9% 644 672 578
Commercial Paper 3% 300 300 300
Mortgage Bonds
(1995-2003) 3% 84 137 200
Other Obligations
(1994-2011) 8% 144 149 177
------ ------ ------
Total 8% 3,279 3,445 3,034
Less Debt Due
Within One Year 146 200 230
------ ------ ------
Total Long-Term Debt $3,133 $3,245 $2,804
====== ====== ======
The estimated fair value of long-term debt at December 31, 1993 and
1992, is as follows:
Fair Value of Total Debt
1993 1992
-------------------------
Notes Payable $1,284 $1,254
Debentures 1,063 1,003
Equipment Obligations 711 721
Commercial Paper 300 300
Mortgage Bonds 69 160
Other Obligations 158 149
------ ------
Total $3,585 $3,587
====== ======
In March 1993, the company issued $74 million of Series A Equipment
Trust Certificates. The certificates will mature in 15 annual installments
from 1994 through 2008.
In May 1992, CSX issued $200 million of 8 5/8% debentures due 2022
under a June 1991 shelf registration to provide for the issuance of up to $250
million of debt securities. In September 1992, the company filed a shelf
registration with the Securities and Exchange Commission to provide for the
issuance, from time to time, of up to $450 million of senior debt securities,
warrants to purchase debt securities or currency warrants. As of December 31,
1993, CSX had issued $250 million of debt under this registration, including
$100 million, 7% notes due 2002 and $150 million, 8.10% debentures due 2022.
- 53 -
PAGE 54
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 10. DEBT AND CREDIT AGREEMENTS, Continued
The proceeds from the issuance of long-term debt securities in 1992 were
primarily used for the purchase of the assets of the Valley Line companies,
costs for implementation of work force reductions and costs related to
productivity improvements.
During 1991, CSX issued the remaining $188 million of debt under a
$750 million shelf registration filed in July 1990. The initial debt issuance
of $562 million under this registration took place in 1990. The entire $188
million issued during 1991 was in the form of Medium-Term notes with
maturities from 1992 to 2021. Proceeds from these debt issues were utilized
for the repayment of commercial paper and general corporate purposes.
The company maintains revolving credit agreements with domestic and
foreign banks (aggregating $880 million) under which there were no borrowings
as of December 31, 1993. Substantially all of these agreements have underlying
debt maturities greater than 12 months. These agreements support $464 million
of privately placed commercial paper outstanding at December 31, 1993, of
which $300 million has been classified as long-term debt based upon the
company's ability and intention to maintain this debt outstanding for at least
one year.
Excluding long-term commercial paper, the company has long-term debt
maturities during the next five years aggregating $146 million in 1994, $316
million in 1995, $521 million in 1996, $114 million in 1997 and $152 million
in 1998. Substantially all of the company's rail unit properties are pledged
as security for various rail-related, long-term debt issues.
Commercial paper classified as short-term debt was $164 million at
December 31, 1993, $4 million at December 31, 1992, and $158 million at
December 31, 1991. The average interest rate for the short-term commercial
paper outstanding at year-end was 3% for 1993, 4% for 1992 and 5% for 1991.
The average amount of short-term commercial paper outstanding (average monthly
interest rate) during 1993, 1992 and 1991 was $172 million (3%), $60 million
(4%), and $114 million (6%), respectively. The maximum amount of short-term
commercial paper outstanding was $391 million for 1993, $201 million for 1992
and $383 million for 1991.
Interest payments, net of amounts capitalized, totaled $304 million,
$279 million and $305 million, respectively, for 1993, 1992 and 1991.
- 54 -
PAGE 55
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 11. PREFERRED STOCK.
The company has total authorized preferred stock of 25 million
shares, of which 250,000 shares of Series A have been reserved for issuance,
and 3 million shares of Series B have been reserved for issuance under the
Shareholder Rights Plan. No shares have been issued as of December 31, 1993.
All preferred shares rank senior to common shares both as to
dividends and liquidation preference.
NOTE 12. COMMON STOCK.
The company has a single class of common stock, $1 par value, of
which 300 million shares are authorized. Each share is entitled to one vote in
all matters requiring a vote. The most recent quarterly dividend, paid in
December 1993, was 44 cents per share. For the years ended December 31, 1993,
1992 and 1991, respectively, dividends were paid at the rate of $1.58, $1.52
and $1.43 per share.
Stock Purchase and Loan Plan
The 1991 Stock Purchase and Loan Plan provided for the issuance of
grants to 165 eligible officers and key employees at December 31, 1993. The
plan allowed for the purchase of common stock and related rights and also
entitled those employees to obtain loans with respect to those shares of
common stock. In July 1991, 2,200,000 shares of common stock and related
rights were reserved for issuance under this Plan. Shares were granted in 1991
and 1992 at market price on date of grant. The shares were purchased with a 5%
down payment in the form of cash or recourse loans. The remaining 95% of the
purchase price was in the form of non-recourse loans secured by the shares
issued. The loans bear interest at rates set on the award date and are due on
July 31, 1996. The Plan is intended to further the long-term stability and
financial success of the company by providing a method for eligible employees
to significantly increase their ownership of common stock.
- 55 -
PAGE 56
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 12. COMMON STOCK, Continued
Stock Purchase and Loan Plan, Continued
Transactions involving the 1991 Stock Purchase and Loan Plan are
summarized as follows:
Shares Average
(000's) Price
------- -------
Outstanding at 1/1/91 --- $ ---
Granted 2,023 $48.33
Canceled (16) $48.33
----- ------
Outstanding at 12/31/91 2,007 $48.33
Granted 213 $64.33
Canceled (110) $48.33
----- ------
Outstanding at 12/31/92 2,110 $49.76
Granted --- $ ---
Canceled (82) $48.72
----- ------
Outstanding at 12/31/93 2,028 $40.43
===== ======
1993 1992 1991
---- ---- ----
5% Down Payment Loans Outstanding $ 5 $ 5 $ 5
95% Purchase Loans Outstanding $ 77 $100 $ 92
Average Interest Rate 7.72% 7.72% 7.87%
Compensation Expense for the Year $ 48 $ 22 $ 4
Stock Purchase and Dividend Reinvestment Plans
The 1991 Employees Stock Purchase and Dividend Reinvestment Plan
provides a method and incentive for eligible employees to purchase shares of
common stock at market value by payroll deductions. Officers and key employees
who qualify for the 1991 Stock Purchase and Loan Plan are not eligible to
participate in this Plan. To encourage ownership of the company's stock,
employees receive a 17.65% matching payment on their contributions in the form
of additional stock purchased by the company. Each matching payment of stock
is subject to a two-year holding period. Sale of stock prior to the completion
of the holding period will result in forfeiture of the matching stock purchase
and dividends thereon. At December 31, 1993, 439,483 shares of common stock
were reserved for issuance under this Plan.
Under the terms of the company's Dividend Reinvestment and Stock
Purchase Plans adopted in 1981, all employees and shareholders may purchase
CSX common stock at the average of daily high and low sale prices for the five
trading days ending on the day of purchase. To encourage ownership of the
company's stock, employees receive a 5% discount on all purchases under this
program. At December 31, 1993, there were 3,077,810 shares reserved for
issuance under these plans.
- 56 -
PAGE 57
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 12. COMMON STOCK, Continued
Shareholder Rights Plan
In June 1988, the board of directors of the company adopted a
Shareholder Rights Plan and declared a dividend of one preferred share
purchase right ("right") for each outstanding share of CSX common stock held
as of June 8, 1988. The Shareholder Rights Plan was amended in 1990. Each
right entitles shareholders of record to purchase from the company, until the
earlier of June 8, 1998, or the redemption of the rights, one one-hundredth of
a share of Series B preferred stock at an exercise price of $100, subject to
certain adjustments or, under certain circumstances, to obtain additional
shares of common stock of the company in exchange for the rights. The rights
will not be exercisable or transferable apart from the CSX common stock until
the earlier of (1) 10 days following the public announcement that a person or
affiliated group has acquired or obtained the right to acquire 20% or more of
CSX's common stock, or (2) 10 days following the commencement or announcement
of an intention to make a tender offer or exchange offer, the consummation of
which would result in the ownership by a person or group of 20% or more of the
company's outstanding common stock. The board of directors may redeem the
rights at a price of one cent per right at any time prior to the acquisition
by a person of 20% or more of the outstanding CSX common stock.
Long-Term Performance Stock Plan
The CSX Corporation Long-Term Performance Stock Plan, which
superseded the 1980 and 1981 stock option plans, provides for awards to a
group of 337 officers and employees. The awards are based on increases in the
current market value of CSX common stock over the market value at date of
grant or the financial performance of CSX, or both.
At December 31, 1993, a total of 6,303,981 shares were reserved for
issuance, of which 1,200,578 were available for new grants (2,495,289 at
December 31, 1992). The remaining shares are assigned to outstanding stock
options, Stock Appreciation Rights (SARs) and Performance Share Awards (PSAs).
Transactions involving stock options and SARs are summarized as follows:
Options SARs
-------------------- -------------------
Shares Average Units Average
(000s) Price (000s) Price
------ ------- ----- -------
Outstanding at 1/1/93 3,385 $44.22 340 $31.52
Granted 1,117 $73.38 --- $ ---
Canceled or Expired (136) $49.70 (2) $29.96
Exercised (671) $40.05 (54) $31.22
----- ------ ----- ------
Outstanding at 12/31/93 3,695 $53.59 284 $31.58
===== ====== ===== ======
Exercisable at 12/31/93 2,612 $45.38 284 $31.58
===== ====== ===== ======
Exercised in 1992 1,002 $33.18 77 $31.13
===== ====== ===== ======
Exercised in 1991 1,754 $32.27 745 $33.04
===== ====== ===== ======
- 57 -
PAGE 58
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 12. COMMON STOCK, Continued
Long-Term Performance Stock Plan, Continued
The value of PSAs is contingent on achievement of performance goals
and completion of certain continuing employment requirements over a three-year
period. Each PSA earned will equal the fair market value of one share of CSX
common stock on the date of payment. At December 31, 1993, 1,125,015 shares
were reserved for outstanding PSAs.
Stock Award Plan
In 1990, the company implemented a Stock Award Plan whereby all
officers and employees of the company are eligible to receive shares of CSX
common stock as an incentive award. All awards of common stock shall be issued
based on terms and conditions approved by the Compensation and Pension
Committee of the company's board of directors. At December 31, 1993, 1,000,000
shares have been reserved for issuance and no common stock awards have been
granted under the provisions of this Plan.
Directors' Stock Plan
In 1992, the board of directors of the company adopted a stock plan
for directors which changes the manner in which fees and retainers are paid. A
minimum of 40% of the retainer fees must be paid in common stock of the
company. In addition to the basic level of payment in stock, each director may
elect to receive the remaining 60% of his or her retainer and fees in the form
of common stock of the company. The Plan permits each director to elect to
transfer stock into a trust that will hold the shares until the participant's
death, disability, retirement as a director, or other cessation of services as
a director, or change in control of the company. In May 1992, 500,000 shares
of common stock were reserved for issuance under this plan and at December 31,
1993, 494,196 shares of common stock remained reserved.
- 58 -
PAGE 59
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 13. EMPLOYEE BENEFIT PLANS.
Pension Plans
CSX and its subsidiaries have defined benefit pension plans,
principally for salaried personnel. The plans provide for eligible employees
to receive benefits based principally on years of service with the company and
compensation rates near retirement. Contributions to the plans are made on the
basis of not less than the minimum funding standards set forth in the Employee
Retirement Income Security Act of 1974, as amended. Plan assets consist
primarily of common stocks, corporate bonds and cash and cash equivalents.
Pension costs for these plans include the following components:
1993 1992 1991
----- ----- -----
Service Cost $ 28 $ 24 $ 18
Interest Cost on Projected Benefit Obligation 88 86 87
Actual Return on Plan Assets (95) (24) (122)
Net Amortization and Deferral 26 (70) 46
Foreign Pension Plans 4 4 4
----- ----- -----
Net Pension Expense $ 51 $ 20 $ 33
===== ===== =====
The funded status of the plans and the amounts reflected in the
accompanying statement of financial position at year-end are as follows:
1993
-------------------
Assets Benefits
Exceed Exceed
Benefits Assets
Assets and Obligations - -------- --------
Vested Benefits $ 20 $1,048
Non-Vested Benefits 1 44
------ ------
Accumulated Benefit Obligation 21 1,092
Effect of Anticipated Future
Salary Increases 1 166
------ ------
Projected Benefit Obligation 22 1,258
Fair Value of Plan Assets 33 862
------ ------
Funded Status 11 (396)
Unrecognized Initial Net Obligation (Asset) (4) 28
Unrecognized Prior Service Cost 1 10
Unrecognized Net Loss 6 398
Recognition of Minimum Liability --- (287)
------ ------
Net Pension Asset (Obligation) $ 14 $ (247)
====== ======
- 59 -
PAGE 60
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 13. EMPLOYEE BENEFIT PLANS, Continued
Pension Plans, Continued
1992
-------------------
Assets Benefits
Exceed Exceed
Benefits Assets
Assets and Obligations - -------- --------
Vested Benefits $ 17 $ 911
Non-Vested Benefits 1 37
------ ------
Accumulated Benefit Obligation 18 948
Effect of Anticipated Future
Salary Increases 1 124
------ ------
Projected Benefit Obligation 19 1,072
Fair Value of Plan Assets 30 793
------ ------
Funded Status 11 (279)
Unrecognized Initial Net Obligation (Asset) (4) 32
Unrecognized Prior Service Cost 1 11
Unrecognized Net Loss 5 287
Recognition of Minimum Liability --- (229)
------ ------
Net Pension Asset (Obligation) $ 13 $ (178)
====== ======
1991
-------------------
Assets Benefits
Exceed Exceed
Benefits Assets
Assets and Obligations - -------- --------
Vested Benefits $ 769 $ 73
Non-Vested Benefits 23 2
------ ------
Accumulated Benefit Obligation 792 75
Effect of Anticipated Future
Salary Increases 94 7
------ ------
Projected Benefit Obligation 886 82
Fair Value of Plan Assets 826 19
------ ------
Funded Status (60) (63)
Unrecognized Initial Net Obligation (Asset) 22 11
Unrecognized Prior Service Cost 7 5
Unrecognized Net Loss 101 19
Recognition of Minimum Liability --- (28)
------ ------
Net Pension Asset (Obligation) $ 70 $ (56)
====== ======
- 60 -
PAGE 61
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 13. EMPLOYEE BENEFIT PLANS, Continued
Pension Plans, Continued
The projected benefit obligations were determined using assumed
discount rates of 7.25% for 1993, 8.25% for 1992 and 9% for 1991; and an
estimated long-term salary increase rate of 5% for 1993 and 1992 and 5.5% for
1991. Net pension cost was determined using expected long-term rates of return
on assets of 9.75% for 1993, 10.5% for 1992 and 11.5% for 1991. The effect of
lowering the assumed discount rate for 1993 and 1992 changed the relative
funded status of a major plan and resulted in the recognition of an aggregate
additional minimum pension liability totaling $287 million at the end of 1993.
Savings Plans
The company has established savings plans for virtually all full-time
salaried employees and certain employees covered by collective bargaining
agreements of CSX and subsidiary companies. CSX matches 50% of each salaried
employee's contribution, which is limited to 6% of the employee's earnings.
CSX contributes fixed amounts for each participating employee covered by a
collective bargaining agreement. Expense for these plans for 1993, 1992 and
1991 was $32 million, $29 million and $28 million, respectively.
Other Post-Retirement Benefit Plans
In addition to the company's defined benefit pension plans, CSX has
three defined benefit post-retirement plans covering most full-time salaried
employees. Two plans provide medical benefits and another plan provides life
insurance benefits. The post-retirement health care plans are contributory,
with retiree contributions adjusted annually, and contain other cost-sharing
features such as deductibles and coinsurance. The accounting for the health
care plans anticipate future cost-sharing changes to the written plans that
are consistent with the company's expressed intent to increase the retiree
contribution rate annually for the expected medical inflation rate for that
year. The life insurance plan is non-contributory.
Effective January 1, 1991, the company adopted SFAS No. 106,
"Employers' Accounting for Post-Retirement Benefits Other Than Pensions." Net
earnings for 1991 were decreased by $196 million (net of related income tax
benefit of $116 million), $1.95 per share, by the cumulative effect of the
change in accounting for post-retirement benefits related to years prior to
1991, which were not restated.
- 61 -
PAGE 62
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 13. EMPLOYEE BENEFIT PLANS, Continued
Other Post-retirement Benefit Plans, Continued
The company's current policy is to fund the cost of the
post-retirement health care and life insurance benefits on a pay-as-you-go
basis, as in prior years. The amounts recognized for the combined plans in the
company's statement of financial position at December 31, 1993, 1992 and 1991
are as follows:
1993
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Accumulated Post-Retirement
Benefit Obligation:
Retirees $181 $73
Fully Eligible Active Participants 27 3
Other Active Participants 42 3
---- ---
Accumulated Post-Retirement
Benefit Obligation 250 79
Unrecognized Prior Service Cost 29 7
Unrecognized Net Loss (50) (14)
---- ---
Net Post-Retirement
Benefit Obligation $229 $72
==== ===
1992
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Accumulated Post-Retirement
Benefit Obligation:
Retirees $149 $65
Fully Eligible Active Participants 24 3
Other Active Participants 32 2
---- ---
Accumulated Post-Retirement
Benefit Obligation 205 70
Unrecognized Prior Service Cost 36 7
Unrecognized Net Loss (13) (4)
---- ---
Net Post-Retirement
Benefit Obligation $228 $73
==== ===
- 62 -
PAGE 63
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 13. EMPLOYEE BENEFIT PLANS, Continued
Other Post-retirement Benefit Plans, Continued
1991
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Accumulated Post-Retirement
Benefit Obligation:
Retirees $169 $63
Fully Eligible Active Participants 33 5
Other Active Participants 42 6
---- ---
Accumulated Post-Retirement
Benefit Obligation 244 74
Unrecognized Prior Service Cost --- --
Unrecognized Net Loss --- --
---- ---
Net Post-Retirement Benefit Obligation $244 $74
==== ===
Net periodic post-retirement benefit expense for 1993, 1992 and
1991 is as follows:
1993
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Service Cost $ 7 $ 1
Interest Cost 16 6
Amortization of Prior Service Cost (6) (1)
---- ----
Net Periodic Post-Retirement
Benefit Expense $17 $ 6
==== ====
1992
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Service Cost $ 8 $ 1
Interest Cost 18 6
Amortization of Prior Service Cost (4) --
---- ----
Net Periodic Post-Retirement
Benefit Expense $22 $ 7
==== ====
- 63 -
PAGE 64
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 13. EMPLOYEE BENEFIT PLANS, Continued
Other Post-retirement Benefit Plans, Continued
1991
--------------------
Life
Medical Insurance
Plans Plan
---- ----
Service Cost $ 9 $ 2
Interest Cost 20 6
Amortization of Prior Service Cost -- --
---- ----
Net Periodic Post-retirement Benefit Expense $29 $ 8
==== ====
The weighted-average annual assumed rate of increase in the per
capita cost of covered benefits (i.e., health care cost trend rate) for the
medical plans is 11.5% for 1993-1994 and is assumed to decrease gradually to
5.5% by 2005 and remain at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amounts reported. For example,
increasing the assumed health care cost trend rates by one percentage point in
each year would increase the accumulated post-retirement benefit obligation
for the medical plans as of December 31, 1993, by 9%, and the aggregate of the
service and interest cost components of net periodic post-retirement benefit
expense for 1993 by $3 million.
The weighted-average discount rate used in determining the
accumulated post-retirement benefit obligation was 7.25%, 8.25% and 9% at
December 31, 1993, 1992 and 1991, respectively. The effect of lowering the
assumed discount rate for 1993 increased significantly the accumulated post-
retirement benefit obligation.
Post-employment Benefits
Effective January 1, 1994, the company will adopt SFAS No. 112
"Employers' Accounting for Post-employment Benefits." This statement requires
that certain benefits provided to former or inactive employees, after
employment but before retirement, such as workers' compensation and disability
benefits, be accrued if attributable to employees' service already rendered.
The financial impact of adopting SFAS No. 112 is not expected to be
significant.
Other Plans
Under collective bargaining agreements, the company participates in a
number of union-sponsored, multi-employer benefit plans. Payments to these
plans are made as part of aggregate assessments generally based on number of
employees covered, hours worked, tonnage moved or a combination thereof. The
administrators of the multi-employer plans generally allocate funds received
from participating companies to various health and welfare benefit plans and
pension plans. Current information regarding such allocations has not been
provided by the administrators. Total contributions of $211 million, $194
million and $220 million, respectively, were made to these plans in 1993, 1992
and 1991.
- 64 -
PAGE 65
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 14. SUMMARY OF COMMITMENTS AND CONTINGENCIES
Lease Commitments
CSX leases equipment under agreements with terms up to 22 years.
Non-cancelable, long-term leases generally include options to purchase at fair
value and to extend the terms. At December 31, 1993, minimum building and
equipment rentals under non-cancelable operating leases totaled approximately
$454 million for 1994, $379 million for 1995, $328 million for 1996, $326
million for 1997, $306 million for 1998 and $2.8 billion thereafter.
Rent expense on operating leases, including net daily rental charges
on railroad operating equipment of $247 million, $205 million and $183 million
in 1993, 1992 and 1991, respectively, amounted to $1.1 billion in 1993, 1992
and 1991. Deferred gains arising from sale-leaseback transactions are being
amortized from 2 to 22 years and have reduced rent expense by $24 million in
1993, 1992 and 1991, respectively.
Futures and Options Contracts
The company purchases futures and options contracts to hedge against
fluctuations in fuel oil prices and interest rates. Gains and losses on
contracts to hedge fuel oil commitments and interest rates are deferred and
amortized as a part of the commitment transaction.
The counterparties to certain futures and options contracts consist
of a large number of major financial institutions. The company continually
monitors its positions and the credit ratings of its counterparties and limits
the amount of agreements or contracts it enters into with any one party. While
the company may be exposed to credit losses in the event of non-performance by
counterparties, it does not currently anticipate such losses.
Purchase Commitment
CSX Transportation Inc. ("CSXT") entered into an agreement to
purchase 300 locomotives from GE Transportation Systems, a unit of General
Electric Co. This large single order will cover CSXT's normal locomotive
replacement needs over the next four years. This purchase agreement will
introduce alternating current traction technology to CSXT's locomotive fleet.
CSXT will take delivery of 50 direct current and 30 alternating current
locomotives in 1994, and the remaining 220 alternating current units will be
delivered during 1995-1997.
Contingent Liabilities
The company and its subsidiaries are contingently liable individually
and jointly with others as guarantors of long-term debt and obligations
principally relating to leased equipment, joint ventures and joint facilities.
These contingent obligations amounted to approximately $85 million at December
31, 1993.
Although the company obtains substantial amounts of commercial
insurance for potential losses for third-party liability and property damage,
reasonable levels of risk are retained on a self-insurance basis. A portion
of the insurance coverage, up to $250 million from rail operations and up to
$175 million from certain other operations, is provided by insurance companies
- 65 -
PAGE 66 CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 14. SUMMARY OF COMMITMENTS AND CONTINGENCIES, Continued
owned or partially owned by CSX.
CSXT is a party to various proceedings brought both by private
parties and regulatory agencies related to environmental issues. CSXT has
been identified as a potentially responsible party in a number of governmental
investigations and actions relating to environmentally impaired sites that are
or may be subject to remedial action under the Federal Superfund Statute
("Superfund") or corresponding state statutes. The majority of these
proceedings are based on allegations that CSXT, or its railroad predecessors,
sent hazardous substances to the facilities in question for disposal. Such
proceedings arising under Superfund typically involve numerous other waste
generators and disposal companies and seek to allocate or recover costs
associated with site investigation and cleanup, which could be substantial.
The assessment of the required response and remedial costs associated
with these sites is extremely complex. Among the variables that management
must assess are imprecise and changing remedial cost estimates and continually
evolving governmental standards.
CSXT frequently reviews its role, if any, with respect to each such
location, giving consideration to the nature of CSXT's alleged connection to
the location (e.g., generator, owner or operator), the extent of CSXT's
alleged connection (e.g., volume of waste sent to the location and other
relevant factors), the accuracy and strength of evidence connecting CSXT to
the location, and the number, connection and financial position of other named
and unnamed potentially responsible parties at the location. Further, CSXT
periodically reviews its exposure in all non-Superfund environmental
proceedings with which it is involved.
Based upon such reviews and updates of the sites with which it is
involved, CSXT has recorded, and periodically reviews for adequacy, reserves
to cover estimated contingent future environmental costs with respect to such
sites. Liabilities are recorded for environmental matters in accordance with
the company's accounting policy described in Note 1. The company does not
currently possess sufficient information to reasonably estimate the amounts of
additional liabilities, if any, on some sites until completion of future
environmental studies. Such additional liabilities could be significant to
future consolidated results of operations and cash flows. Based upon
information currently available, however, the company believes that its
environmental reserves are adequate to accomplish remedial actions to comply
with present laws and regulations.
Legal Proceedings
A number of legal actions, other than environmental, are pending
against CSX and certain subsidiaries in which claims are made in substantial
amounts. While the ultimate results of environmental investigations, lawsuits
and claims involving the company cannot be predicted with certainty,
management does not currently expect that these matters will have a material
adverse effect on the consolidated financial position, results of operations
and cash flows of the company.
- 66 -
PAGE 67
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 14. SUMMARY OF COMMITMENTS AND CONTINGENCIES, Continued
Contingent Liabilities, Continued
In December 1993, a Consent Decree was entered in the U. S. District
Court in Jacksonville, Florida to settle claims of Federal Clean Water Act
violations alleged against CSXT. The Consent Decree resolves a civil
enforcement action initiated in June, 1992, by the U.S. Environmental
Protection Agency with respect to alleged violations by CSXT of permit
discharge limitations at five rail yard waste water treatment facilities in
Florida and North Carolina. The settlement called for a civil penalty of $3
million, which has been paid by CSXT, as well as the establishment of an
escrow account in the amount of $4 million to fund certain environmentally
beneficial projects.
NOTE 15. QUARTERLY DATA (Unaudited).
1993
1st(a) 2nd 3rd(b) 4th
------ ------ ------ ------
Operating Revenue $2,123 $2,264 $2,238 $2,315
====== ====== ====== ======
Operating Income $ 63 $ 278 $ 252 $ 320
====== ====== ====== ======
Net Earnings (Loss) $ (9) $ 154 $ 63 $ 151
====== ====== ====== ======
Earnings (Loss) Per Share $ (.09) $ 1.48 $ .61 $ 1.46
====== ====== ====== ======
1992
1st 2nd(c) 3rd 4th(d)
------ ------ ------ ------
Operating Revenue $2,086 $2,189 $2,214 $2,245
====== ====== ====== ======
Operating Income (Loss) $ 157 $ (445) $ 262 $ 292
====== ====== ====== ======
Net Earnings (Loss) $ 62 $ (322) $ 128 $ 152
====== ====== ====== ======
Earnings (Loss) Per Share $ .60 $(3.13) $ 1.25 $ 1.47
====== ====== ====== ======
1991(e)
1st(f) 2nd(g) 3rd 4th(h)
------ ------ ------ ------
Operating Revenue $2,030 $2,125 $2,205 $2,276
====== ====== ====== ======
Operating Income (Loss) $ 145 $ 206 $ 241 $ (493)
====== ====== ====== ======
Earnings (Loss) before Cumulative
Effect of Change in Accounting $ 57 $ 115 $ 108 $ (356)
====== ====== ====== ======
Earnings (Loss) Per Share before
Cumulative Effect of Change
in Accounting $ .58 $ 1.15 $ 1.07 $(3.47)
====== ====== ====== ======
- 67 -
PAGE 68
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 15. QUARTERLY DATA (Unaudited), Continued
(a) The company recorded a $93 million pretax charge in the first quarter
of 1993 to recognize the estimated costs of restructuring certain
operations and functions at its container-shipping unit. The
restructuring charge reduced net earnings by $61 million, 59 cents
per share.
(b) The company revised its estimated annual effective tax rate in the
third quarter of 1993 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, $51 million, 48 cents
per share, related to applying the newly enacted statutory income tax
rate to deferred tax balances as of January 1, 1993.
(c) Includes impact of $699 million additional pretax productivity
charge, $450 million after tax, $4.38 per share, to reflect the
estimated additional costs of implementing work force reductions.
(d) In the fourth quarter of 1992, the company adjusted its estimate of
the annual effective tax rate, which increased fourth-quarter
earnings by $5 million, 5 cents per share.
(e) The sum of 1991 quarterly earnings per share amounts do not equal
annual earnings per share as reported in the Consolidated Statement
of Earnings due to the quarterly per-share effects of certain
significant transactions and the issuance of common stock.
(f) The first-quarter 1991 results exclude the cumulative effect of the
accounting change that decreased net earnings $196 million, $1.95 per
share. The effect of adopting SFAS No. 106 on 1991 operating income
was not significant and was included in the results of the fourth
quarter. The first-, second- and third-quarter 1991 results were not
restated.
(g) Includes $35 million, 35 cents per share, after-tax gain on sale of
Sea-Land Orient Terminals Ltd. and $11 million, 11 cents per share,
after-tax loss on the establishment of investment reserves.
(h) Includes impact of $755 million pretax productivity charge, $490
million after-tax, $4.80 per share. The productivity charge
recognized the estimated costs of implementing work force reductions
and productivity improvements.
- 68 -
PAGE 69
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 16. SUMMARIZED FINANCIAL DATA - SEA-LAND SERVICE INC.
During 1987, Sea-Land Service Inc. (Sea-Land) entered into agreements
to sell and lease back by charter three new U.S. built, U.S. flag, D-7 class
container ships. CSX has guaranteed the obligations of Sea-Land pursuant to
the related charters which, along with the container ships, will serve as
collateral for debt securities registered with the Securities and Exchange
Commission (SEC). In accordance with SEC disclosure requirements, summarized
financial information for Sea-Land and its consolidated subsidiaries is as
follows:
Summary of Operations: 1993 1992 1991
--------------------- -------- -------- -------
Operating Revenue $3,246 $3,148 $3,238
Operating Expense - Public 2,879 2,826 2,882
- Affiliated (a) 202 188 210
Productivity/Restructuring Charge (b) 93 17 67
------ ------ ------
Operating Income $ 72 $ 117 $ 79
====== ====== ======
Earnings before Cumulative
Effect of Change in Accounting $ 12 $ 17 $ 50
Cumulative Effect of Change in
Accounting (c) --- --- (23)
------ ------ ------
Net Earnings $ 12 $ 17 $ 27
====== ====== ======
Summary of Financial Position: 1993 1992 1991
------------------------------ ------ ------ ------
Current Assets - Public $ 515 $ 429 $ 574
- Affiliated (a) $ 24 $ 24 $ 107
Other Assets - Public $1,497 $1,492 $1,402
- Affiliated (a) $ 115 $ 123 $ 5
Current Liabilities - Public $ 574 $ 477 $ 475
- Affiliated (a) $ 149 $ 78 $ 85
Other Liabilities - Public $ 673 $ 722 $ 721
- Affiliated (a) $ 113 $ 141 $ 141
Equity $ 642 $ 650 $ 666
(a) Amounts represent activity with CSX affiliated companies.
- 69 -
PAGE 70
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 16. SUMMARIZED FINANCIAL DATA - SEA-LAND SERVICE INC., Continued
(b) In 1993, a $93 million pretax charge was recorded to recognize the
estimated costs of restructuring certain operations and functions.
In 1992, a pretax charge of $17 million was recorded to recognize a
change in revenue and expense recognition methodology. In 1991, a
pretax charge of $67 million was recorded relating to productivity
improvements.
(c) Amount represents cumulative effect on years prior to 1991 of change
in accounting for post-retirement benefits other than pensions, net
of income tax benefit of $12 million.
SL Alaska Trade Company (SLATCO) is a special purpose, unconsolidated
subsidiary of Sea-Land with assets of $116 million in a trust account securing
$106 million of debt maturing on October 1, 2015. The assets of SLATCO are
not available to creditors of Sea-Land or its subsidiaries, nor are the SLATCO
notes guaranteed by Sea-Land or any of its subsidiaries.
NOTE 17. BUSINESS SEGMENTS.
Operating Revenue Operating Income
Years Ended ------------------------- ------------------------
December 31, 1993 1992 1991 1993 1992 1991
------ ------ ------ ------ ------ ------
Transportation $8,767 $8,550 $8,419 $ 868 $ 225 $ 62
Non-Transportation 173 184 217 45 41 37
------ ------ ------ ------ ------ ------
Total $8,940 $8,734 $8,636 913 266 99
====== ====== ====== ------ ------ ------
Other Income 18 3 94
Interest Expense 298 276 306
------ ------ ------
Earnings (Loss) before Income Taxes $ 633 $ (7) $ (113)
====== ====== ======
Identifiable Assets
---------------------------
At December 31, 1993 1992 1991
------- ------- -------
Transportation $12,511 $12,138 $11,862
Non-Transportation 909 911 936
------- ------- -------
Total $13,420 $13,049 $12,798
======= ======= =======
- 70 -
PAGE 71
CSX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(All Tables in Millions of Dollars, Except Per Share Amounts)
NOTE 17. BUSINESS SEGMENTS, Continued
The principal components of the business segments are:
Transportation -
Rail, international container-shipping, intermodal and barge
operations. The container-shipping operation reported revenue of $3.2 billion
for 1993, $3.1 billion for 1992 and $3.2 billion for 1991. Approximate
revenue allocation by port of origin for 1993, 1992 and 1991 was: North
America - 41%; Asia - 33%; Europe - 17%; and Other - 9%.
Non-Transportation -
Real estate sales and rentals, resort management and operations,
integrated computer services and eliminations of intersegment sales and
corporate-related items.
- 71 -
PAGE 72
BOARD OF DIRECTORS
- ------------------
Edward L. Addison (1,4)
President and CEO
The Southern Company, Atlanta, Ga.
Elizabeth E. Bailey (2)
John C. Hower Professor of Public Policy and Management
The Wharton School
University of Pennsylvania, Philadelphia, Pa.
Robert L. Burrus, Jr. (4)
Partner and Chairman
McGuire, Woods, Battle & Boothe
Richmond, Va.
Bruce C. Gottwald (4)
President, CEO and COO
Ethyl Corporation, Richmond, Va.
Clifford M. Kirtland, Jr. (1,2)
Retired Chairman of the Board
Cox Communications Inc., Atlanta, Ga.
Robert D. Kunisch (3)
Chairman, President and CEO
PHH Corporation, Hunt Valley, Md.
Hugh L. McColl, Jr. (2)
Chairman, President and CEO
NationsBank Corp., Charlotte, N.C.
James W. McGlothlin (4)
Chairman and CEO
The United Company, Bristol, Va.
Southwood J. Morcott (3)
Chairman, President and CEO
Dana Corporation, Toledo, Oh.
Charles E. Rice (2)
Chairman and CEO
Barnett Banks Inc., Jacksonville, Fla.
William C. Richardson (3)
President
The Johns Hopkins University
Baltimore, Md.
Frank S. Royal, M.D.
Physician
Richmond, Va.
- 72 -
PAGE 73
BOARD OF DIRECTORS, CONTINUED
- -----------------------------
John W. Snow (1)
Chairman, President and CEO
CSX Corporation, Richmond, Va.
William B. Sturgill (1,3)
President
East Kentucky Investment Company,
Lexington, Ky.
Sir Denis Thatcher, Bt MBE TD
Counsellor to the Board
KEY TO COMMITTEES OF THE BOARD
- ------------------------------
1 - Executive
2 - Audit
3 - Compensation & Pension
4 - Organization & Corporate Responsibility
- 73 -
PAGE 74
CSX CORPORATION OFFICERS
- ------------------------
John W. Snow, 54 *
Chairman, President CEO
elected February 1991
Mark G. Aron, 51 *
Senior Vice President-Law and Public Affairs
elected January 1986
James Ermer, 51 *
Senior Vice President-Finance
elected April 1985
Andrew B. Fogarty, 48 *
Vice President-Executive Department
elected February 1990
Daniel S. Green, 47
Vice President-State Relations
since December 1988
Thomas E. Hoppin, 52
Vice President-Corporate Communications
since July 1986
Richard H. Klem, 49 *
Vice President-Corporate Strategy
elected May 1992
James P. Peter, 42
Vice President-Taxes
since June 1993
Woodruff M. Price, 58
Corporate Vice President-Federal Affairs
since May 1988
Alan A. Rudnick, 46
Vice President-General Counsel and Corporate Secretary
since June 1991
James A. Searle Jr., 47
Vice President-Special Projects
since August 1989
Peter J. Shudtz, 45
General Counsel
since September 1991
William H. Sparrow, 50 *
Vice President and Treasurer
elected October 1985
- 74 -
PAGE 75
CSX CORPORATION OFFICERS, CONTINUED
- -----------------------------------
Richard H. Steiner, 57
Vice President
since February 1992
Gregory R. Weber, 48 *
Vice President and Controller
elected April 1989
Charles J. O. Wodehouse Jr., 46
Vice President-Audit and Advisory Services
since January 1988
* Executive officers of the corporation
CSX SUBSIDIARY OFFICERS
- -----------------------
CSX Transportation Inc.
Alvin R. (Pete) Carpenter, 52 *
President and CEO
since January 1992
Donald D. Davis, 54 *
Senior Vice President-Employee Relations
since April 1992
Jerry R. Davis, 55 *
Executive Vice President and COO
since January 1992
Paul R. Goodwin, 51 *
Senior Vice President-Finance
since April 1992
Sea-Land Service Inc.
John P. Clancey, 49 *
President and CEO
since August 1991
Robert J. Grassi, 47 *
Senior Vice President-Finance and Planning
since October 1991
Wilford W. Middleton Jr., 55 *
Executive Vice President
since January 1990
- 75 -
PAGE 76
CSX SUBSIDIARY OFFICERS, CONTINUED
- ----------------------------------
Charles C. Raymond, 50 *
Senior Vice President-Operations
since September 1988
CSX Intermodal Inc.
M. McNeil Porter, 60 *
President and CEO
since September 1987
American Commercial Lines Inc.
Michael C. Hagan, 47 *
President and CEO
since May 1992
Customized Transportation Inc.
William C. Bender, 63
President
since October 1983
The Greenbrier
Ted J. Kleisner, 49
President and Managing Director
since January 1989
Yukon Pacific Corporation
William V. McHugh, 50
President and CEO
since January 1989
All of the executive officers listed on pages 74 through 76 have held
executive positions with CSX or its subsidiaries or predecessors since before
1989 except for: Mr. Fogarty, who was the Governor of Virginia's Chief of
Staff from 1986 to the time he joined CSX in October 1989; Mr. Weber, who was
a senior officer of LIGHTNET from March 1986 until April 1989; and Mr. J.
Davis, who was Executive Vice President of Union Pacific Railroad from 1986 to
the time he joined CSX in March 1990.
- 76 -
PAGE 77
CORPORATE INFORMATION
Headquarters
One James Center
901 East Cary Street
Richmond, VA 23219-4031
(804) 782-1400
Market Information
CSX's common stock is listed on the New York, London and Swiss stock
exchanges and trades with unlisted privileges on the Midwest, Boston,
Cincinnati, Pacific and Philadelphia stock exchanges. The official trading
symbol is "CSX."
Description of Common and Preferred Stock
A total of 300 million shares of common stock is authorized, of which
104,143,450 shares were outstanding as of Dec. 31, 1993. Each share is
entitled to one vote in all matters requiring a vote of shareholders. There
are no pre-emptive rights.
A total of 25 million shares of preferred stock is authorized.
Series A consists of 250,000 shares of $7.00 Cumulative Convertible Preferred
Stock. All outstanding shares of Series A Preferred Stock were redeemed as of
July 31, 1992.
Series B consists of 3 million shares of Junior Participating
Preferred Stock, none of which has been issued. These shares will become
issuable only and when the rights distributed to holders of common stock under
the Preferred Share Rights Plan adopted by CSX on June 8, 1988, become
exercisable.
Common Stock Shares Outstanding, Number of Registered Shareholders
1993 1992 1991 1990 1989
------ ------ ------ ------ ------
Number of Shareholders: 59,714 62,820 66,032 66,658 70,318
====== ====== ====== ====== ======
Shares Outstanding as of Jan. 31, 1994: 104,194,525
Common Stock Shareholders as of Jan. 31, 1994: 59,522
- 77 -
PAGE 78
Common Stock Price Range and Dividends Per Share
Year 1993
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $79.75 $78.13 $80.25 $88.13
Low $67.13 $66.38 $67.88 $74.88
Dividends Per Share $.38 $.38 $.38 $.44
Year 1992
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $62.00 $67.50 $67.75 $73.63
Low $54.88 $55.50 $56.63 $54.50
Dividends Per Share $.38 $.38 $.38 $.38
Year 1991
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $39.00 $47.88 $52.63 $58.00
Low $29.75 $36.50 $44.25 $47.75
Dividends Per Share $.35 $.35 $.35 $.38
Year 1990
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $38.13 $36.00 $36.88 $31.88
Low $31.25 $31.38 $26.00 $26.13
Dividends Per Share $.35 $.35 $.35 $.35
Year 1989
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $33.63 $35.13 $38.63 $37.50
Low $29.88 $29.75 $32.00 $31.00
Dividends Per Share $.31 $.31 $.31 $.35
- 78 -
PAGE 79
Preferred Stock Price Range and Dividends Per Share
Year 1992**
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High * $380.25 ** **
Low * $380.25 ** **
Dividends Per Share $1.75 $1.75 ** **
Year 1991
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $173.00 * * *
Low $173.00 * * *
Dividends Per Share $1.75 $1.75 $1.75 $1.75
Year 1990
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High * * $174.00 $173.00
Low * * $174.00 $173.00
Dividends Per Share $1.75 $1.75 $1.75 $1.75
Year 1989
----
Quarter 1st 2nd 3rd 4th
--- --- --- ---
Market Price
High $196.50 * $218.00 $222.00
Low $196.00 * $208.00 $222.00
Dividends Per Share $1.75 $1.75 $1.75 $1.75
* No shares traded during the quarter.
** Series A Preferred Stock was redeemed as of July 31, 1992.
- 79 -
PAGE 80
SHAREHOLDER INFORMATION
Shareholder Services
Shareholders with questions about their accounts should write to the
transfer agent at the address below or call (800) 521-5571. Illinois residents
should call (312) 461-6827.
General questions about CSX or information contained in company
publications should be directed to corporate communications at the address or
telephone number shown below.
Security analysts, portfolio managers or other investment community
representatives should contact investor relations at the address or telephone
number shown below.
Transfer Agent, Registrar and Dividend Disbursing Agent
Harris Trust Company
P.O. Box A3309
Chicago, IL 60690
(800) 521-5571
(312) 461-5545, in Illinois
Shareholder Relations
Anne B. Taylor
Administrator-Shareholder Services
CSX Corporation
P.O. Box 85629
Richmond, VA 23285-5629
(804) 782-1465
Corporate Communications
Suzanne S. Walston
Manager-Corporate Communications
CSX Corporation
P.O. Box 85629
Richmond, VA 23285-5629
(804) 782-1406
Investor Relations
Renee D. Weaver
Director-Financial Planning
CSX Corporation
P.O. Box 85629
Richmond, VA 23285-5629
(804) 782-1553
- 80 -
PAGE 81
SHAREHOLDER INFORMATION, Continued
Stock Held in Brokerage Accounts
When a broker holds your stock, it is usually registered in the
broker's name, or "street name." We do not know the identity of individual
shareholders who hold stock in this manner. We know only that a broker holds a
certain number of shares that may be for any number of customers. If your
stock is in a street-name account, you are not eligible to participate in the
company's Dividend Reinvestment Plan. Also, you will receive your dividend
payments, annual reports and proxy materials through your broker. You should
notify your broker, not Harris Trust, if you wish to eliminate unwanted,
duplicate mailings and improve the timeliness on the delivery of these
materials and your dividend payments.
Lost or Stolen Stock Certificates
If your stock certificates are lost, stolen or in some way destroyed,
you should notify Harris Trust in writing immediately.
Multiple Dividend Checks and Duplicate Mailings
Some shareholders hold their stock on CSX records in similar but
different names (e.g., John A. Smith and J.A. Smith). When this occurs, we are
required to create separate accounts for each name. Although the mailing
addresses are the same, we are required to mail separate dividend checks to
each account. Duplicate mailings of annual reports can be eliminated if you
send the labels or copies of the labels from a CSX mailing to Harris Trust.
You should mark the labels to indicate names to be kept on the mailing list
and names to be deleted. However, this action will affect mailings of
financial materials only. Dividend checks and proxy materials will continue to
be sent to each account.
Consolidating Accounts
If you want to consolidate separate accounts into one account, you
should contact Harris Trust for the necessary forms and instructions. When
accounts are consolidated, it may be necessary to reissue the stock
certificates.
Dividends
CSX pays quarterly dividends on its common stock on or about the 15th
of March, June, September and December, when declared by the board of
directors, to shareholders of record approximately three weeks earlier.
Replacing Dividend Checks
If you do not receive your dividend check within 10 business days
after the payment date or if your check is lost or destroyed, you should
notify Harris Trust so payment on the check can be stopped and a replacement
issued.
- 81 -
PAGE 82
SHAREHOLDER INFORMATION, Continued
Dividend Reinvestment
CSX provides dividend reinvestment and stock purchase plans for
shareholders of record and employees as a convenient method of acquiring
additional CSX shares by reinvestment of dividends or by optional cash
payments, or both.
The Shareholders Dividend Reinvestment Plan permits automatic
reinvestment of common stock dividends without payment of any brokerage
commission or service charge. In fact, under the plan, you may elect to
continue receiving dividend payments while making cash payments of up to
$1,500 per month for investment in additional CSX shares without any fee.
For a prospectus or other information on the plan, write or call the
Harris Trust Dividend Reinvestment Department at the address or telephone
number shown on page 80.
Proxy and Financial Supplement to the Annual Report
Proxy materials are forwarded to shareholders in mid-March, and
shareholders are urged to vote, sign and return their Proxy promptly.
Copies of the Financial Supplement to the Annual Report will be
available to shareholders at the annual meeting, or may be reserved by
contacting Renee D. Weaver at the address shown on page 80.
- 82 -
PAGE 83
CSX CORPORATION FORM 10-K
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 4th day of
March 1994.
CSX CORPORATION
By: /s/ GREGORY R. WEBER
-----------------------------
Gregory R. Weber
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures Title
---------- -----
John W. Snow Chairman of the Board, President,
Chief Executive Officer and Director
(Principal Executive Officer)(a)
James Ermer Senior Vice President-Finance
(Principal Financial Officer)(a)
Edward L. Addison Director(a)
Elizabeth E. Bailey Director(a)
Robert L. Burrus Jr. Director(a)
Bruce C. Gottwald Director(a)
Clifford M. Kirtland Jr. Director(a)
Robert D. Kunisch Director(a)
Hugh L. McColl Jr. Director
James W. McGlothlin Director(a)
Southwood J. Morcott Director(a)
Charles E. Rice Director(a)
William C. Richardson Director(a)
Frank S. Royal Director(a)
William B. Sturgill Director(a)
(a) /s/ PETER J. SHUDTZ
---------------------------------
Peter J. Shudtz, Attorney-in-Fact
March 4, 1994
- 83 -
PAGE 84
CSX CORPORATION
Statement of Differences
1. The pages in the electronic filing do not correspond to the pages in
the printed document because there is more material on each page of
the printed document. There are, therefore, fewer printed pages.
The printed Annual Report and Form 10-K also contains numerous
charts, graphs and pictures not incorporated into the electronic Form
10-K.
2. Page references in the electronic Form 10-K refer to pages in the
electronic filing, while page references in the printed document
refer to pages in that document. The information on page 29 of the
printed document, i.e. the 10-K cover sheet and index, has been
repositioned on pages 1 and 2 of the electronic document with the
page references changed as discussed above.
- 84 -
PAGE 1 CSX CORPORATION
INDEX TO EXHIBITS
Description Value
- ----------- -----
Articles of Incorporation, incorporated by reference
(filed with Commission as an Exhibit under Form SE dated
February 20, 1991) EX-3.1
Bylaws EX-3.2
CSX Stock Plan for Directors, incorporated by reference
(filed with Commission as an Exhibit under Form SE dated
March 3, 1993) EX-10.1
Special Retirement Plan for CSX Directors, incorporated by
reference
(filed with Commission as an Exhibit under Form SE dated
February 23, 1989) EX-10.2
Corporate Director Deferred Compensation Plan, incorporated
by reference
(filed with Commission as an Exhibit under Form SE dated
March 1, 1990) EX-10.3
CSX Directors' Charitable Gift Plan EX-10.4
CSX Directors' Matching Gift Program EX-10.5
Form of Agreement with J.W. Snow, A.R. Carpenter,
J.R. Davis, and J.P. Clancey and J. Ermer, incorporated
by reference
(filed with Commission as an Exhibit under Form SE dated
March 1, 1990) EX-10.6
June 1989 Letter Agreement with J.R. Davis EX-10.7
Form of Retention Agreement with A.R. Carpenter, J.R. Davis
and J.P. Clancey, incorporated by reference
(filed with Commission as an Exhibit under Form SE dated
February 26, 1992) EX-10.8
Agreement with J.W. Snow EX-10.9
1991 Stock Purchase and Loan Plan, incorporated by reference
(filed with Commission on Form S-8 dated July 2, 1991) EX-10.10
1987 Long-Term Performance Stock Plan EX-10.11
1985 Deferred Compensation Program for Executives
of CSX Corporation and Affiliated Companies EX-10.12
Supplementary Savings Plan and Incentive Award
Deferral Plan for Eligible Executives of CSX
Corporation and Affiliated Companies EX-10.13
- E-1 -
PAGE 2 CSX CORPORATION
INDEX TO EXHIBITS
Description Value
- ----------- -----
Special Retirement Plan of CSX Corporation
and Affiliated Companies EX-10.14
Supplemental Retirement Plan of CSX Corporation
and Affiliated Companies EX-10.15
Subsidiaries of the Registrant EX-21
Consent of Independent Auditors EX-23
Financial Data Schedule - Schedule II (a) EX-27
(a) No other schedules are required to be filed.
- E-2 -
PAGE 1
Exhibit 3.2
BY-LAWS
OF
CSX CORPORATION
(Amended as of January 1, 1994)
____________________
ARTICLE I.
Stockholders' Meetings.
SECTION 1. Annual Meeting. The annual meeting of the stockholders
of the Corporation shall be held on such date in March, April, May or June as
the Board of Directors may designate, either within or without the State of
Virginia.
SECTION 2. Special Meetings. Special meetings of the stockholders
may be called from time to time by the Board of Directors or the Chief
Executive Officer of the Corporation. Special meetings shall be held solely
for the purposes specified in the notice of meeting.
SECTION 3. Time and Place. The time and place of each meeting of
the stockholders shall be stated in the notice of the meeting.
SECTION 4. Quorum. The holders of a majority of the outstanding
shares of Capital Stock entitled to vote shall constitute a quorum at any
meeting of the stockholders. Less than a quorum may adjourn the meeting to a
fixed time and place, no further notice of any adjourned meeting being
required. Each stockholder shall be entitled to one vote in person or by
proxy for each share entitled to vote then outstanding and registered in his
name on the books of the Corporation.
SECTION 5. Record Date. The Board of Directors may fix in advance a
date to determine shareholders entitled to notice or to vote at any meeting of
shareholders, to receive any dividend, or for any purpose, such date to be not
more than 70 days before the meeting or action requiring a determination of
shareholders.
SECTION 6. Conduct of Meeting. The Chairman of the Board shall
preside over all meetings of the stockholders and prescribe rules of procedure
thereof. If he is not present, or if there is none in office, the President
shall preside. If the Chairman of the Board and the President are not
present, a Vice President shall preside, or, if none be present, a Chairman
shall be elected by the meeting. The Secretary of the Corporation shall act
as Secretary of the meeting, if he is present. If he is not present, the
Chairman shall appoint a Secretary of the meeting. The Chairman of the
meeting shall appoint one or more inspectors of election who shall determine
the qualification of voters, the validity of proxies, and the results of
ballots.
- 1 -
PAGE 2
SECTION 7. Notice of Stockholder Business. At an annual meeting of
the stockholders, only such business shall be conducted as shall have been
brought before the meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who complies with the
notice procedures set forth in this Section 7. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation, not less than
30 days nor more than 60 days prior to the meeting; provided, however, that in
the event that less than 40 days' notice or prior public disclosure of the
date of the meeting is given or made to the stockholders, notice by the
stockholder to be timely must be received not later than the close of business
on the 10th day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the By-laws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 7. The Chairman of
an annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section 7, and if he should so
determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
ARTICLE II.
SECTION 1. Number, term and election. The Board of Directors shall
be elected at the annual meeting of the stockholders or at any special meeting
held in lieu thereof. The number of Directors shall be fourteen. This number
may be increased or decreased at any time by amendment of these By-laws, but
shall always be a number of not less than four. No person shall be eligible
for election as a Director, nor shall any Director be eligible for reelection,
if he shall have attained the age of 70 years at the time of such election,
except that the Board, in its sole discretion, may waive such ineligibility
for a period not to exceed one year. Inside Directors, including Chief
Executive Officers, shall retire from the Board immediately upon leaving
active service, or age 65, whichever is first. Further, only CSX senior
corporate officers shall be eligible for election as Director. Outside
Directors shall hold office until removed or until the next annual meeting of
the stockholders is held and their successors are elected.
- 2 -
PAGE 3
SECTION 2. Notice of Stockholder Nominees. Only persons who are
nominated in accordance with the procedures set forth in the By-laws shall be
eligible for election as Directors. Nominations of persons for election to
the Board of Directors of the Corporation may be made at a meeting of
stockholders (a) by or at the direction of the Board of Directors or (b) by
any stockholder of the Corporation entitled to vote for the election of
Directors at the meeting who complies with the notice procedures set forth in
this Section 2. Nominations by stockholders shall be made pursuant to timely
notice in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 30 days nor more
than 60 days prior to the meeting; provided, however, that in the event that
less than 40 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th
day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. Such stockholder's notice shall
set forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a Director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a Director if elected); and (b) as to the stockholder giving the
notice (i) the name and address, as they appear on the Corporation's books, of
such stockholder and (ii) the class and number of shares of the Corporation
which are beneficially owned by such stockholder. At the request of the Board
of Directors any person nominated by the Board of Directors for election as a
Director shall furnish to the Secretary of the Corporation that information
required to be set forth in the stockholder's notice of nomination which
pertains to the nominee. No person shall be eligible for election as Director
of the Corporation unless nominated in accordance with the procedures set
forth in the By-laws. The Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made
in accordance with the procedures prescribed by the By-laws, and if he should
so determine, he shall so declare to the meeting and the defective nomination
shall be disregarded.
SECTION 3. Quorum. A majority of the Directors shall constitute a
quorum. Less than a quorum may adjourn the meeting to a fixed time and place,
no further notice of any adjourned meeting being required.
SECTION 4. Removal and vacancies. The stockholders at any meeting,
by a vote of the holders of a majority of all the shares of Capital Stock at
the time outstanding and having voting power, may remove any Director and fill
any vacancy. Vacancies arising among the Directors, including a vacancy
resulting from an increase by the Board of Directors in the number of
directors, so long as the increase so created is not more than two, may be
filled by the remaining Directors, though less than a quorum of the Board,
unless sooner filled by the stockholders. Vacancies filled by the Directors
may be subject to such rules, regulations, and criteria as the Board may from
time to time prescribe.
- 3 -
PAGE 4
SECTION 5. Meetings and notices. Regular meetings of the Board of
Directors shall be held each month, unless cancelled by the Board of
Directors, at such place and at such time as the Board of Directors may from
time to time designate. Special meetings of the Board of Directors may be
held at any place and at any time upon the call of the Chairman of the Board
or of any three members of the Board of Directors. Notice of any meetings
shall be given by mailing or delivering such notice to each Director at his
residence or business address or by telephoning or telegraphing it to him at
least twenty-four hours before the meeting. Any such notice shall state the
time and place of the meeting. Meetings may be held without notice if all of
the Directors are present or those not present waive notice before or after
the meeting.
Any action required to be taken at a meeting of the Board may be
taken without a meeting if a consent in writing setting forth the action so to
be taken, shall be signed by all the Directors and filed with the Secretary.
Such consent shall have the same force and effect as a unanimous vote.
Any action required to be taken at a meeting of the Board may be
taken by means of a conference telephone or similar communications equipment
whereby all persons participating in the meeting can hear each other, and
participation by such means shall constitute presence in person at such
meeting. When such meeting is conducted, a written record shall be made of
the action taken at such meeting.
ARTICLE III.
Executive Committee.
SECTION 1. Number and Chairman. The Board of Directors shall by
vote of a majority of the whole number herein fixed designate an Executive
Committee, consisting of the Chairman of the Board, the President of the
Corporation and the Chairman of each of the Committees of the Board. The
Chairman of the Board of Directors shall be the Chairman of the Committee.
SECTION 2. Authority and quorum. The Committee, when the Board of
Directors is not in session, shall have and may exercise all the authority of
the Board of Directors, except as may be prohibited by Section 13.1-40 of the
Code of Virginia, as it may from time to time be amended. A majority of the
Committee shall constitute a quorum for the transaction of business, and the
affirmative vote of the majority of those present shall be necessary for any
action by the Committee. The Committee shall cause to be kept a full and
accurate record of its proceedings at each meeting and report the same at the
next meeting of the Board. In the absence of the Chairman of the Committee, a
temporary chairman shall be designated by the Committee to preside at such
meeting.
SECTION 3. Meetings and notices. Meetings of the Committee may be
called at any time by the Chairman of the Board or any three members of the
Committee and shall be held at such time and place as shall be stated in the
notice of the meeting. Notice of any meeting of the Committee shall be given
by delivering or mailing such notice to each member of his residence or
- 4 -
PAGE 5
business address or by telephoning or telegraphing it to him not less than
twenty-four hours before the meeting. Any such notice shall state the time
and place of the meeting. Meetings may be held without notice if all of the
members of the Committee are present or those not present waive notice before
or after the meeting.
Action may be taken by the Executive Committee without a meeting
in the manner provided by Section 4 of Article II.
SECTION 4. Removal. Members of the Committee may be removed as
members thereof and replaced by the affirmative vote of a majority of the
Directors in office at any regular or special meeting of the Board of
Directors.
ARTICLE IV.
Committees of the Board.
(other than the Executive Committee)
The Board of Directors shall by vote of a majority of the whole
number herein fixed establish an Audit Committee, a Compensation and Pension
Committee, and an Organization and Corporate Responsibility Committee, each
committee consisting of at least two directors whose designation and terms of
office shall be by resolution of the Board. The Board may also create from
time to time such additional committees as it may deem appropriate. The
committees shall meet and perform such duties and functions as the Board may
prescribe.
ARTICLE V.
Officers.
At the first meeting of the Board of Directors held after the
annual meeting of the stockholders, the Board of Directors shall elect
officers of the Corporation as follows:
A Chairman of the Board, who shall be the
Chief Executive Officer,
A President, who shall be the Chief Operating Officer,
A Vice Chairman,
One or more Vice Presidents, any of whom may be
designated as an Executive Vice President, a
Senior Vice President or a Vice President with
a functional title,
A General Counsel,
A Secretary, and
A Treasurer
- 5 -
PAGE 6
All officers elected by the Board of Directors shall, unless
removed by the Board of Directors as hereinafter set forth, hold office until
the first meeting of the Board of Directors after the next annual meeting of
the stockholders and until their successors are elected. Any two or more
offices may be held by the same person, except the offices of President and
Secretary.
The Chairman of the Board may appoint such additional subordinate
officers as he may deem necessary for the efficient conduct of the affairs of
the Corporation.
The powers, duties, and responsibilities of officers and employees
of the Corporation not prescribed in these By-laws shall be established from
time to time by the Board of Directors or by the Chairman of the Board.
Any officer shall be subject to removal at any time if elected by
the Board of Directors, by the affirmative vote of a majority of all of the
members of the Board of Directors, or, if appointed by the Chairman of the
Board, by the Chairman of the Board.
ARTICLE VI.
Chairman of the Board.
The Chairman of the Board of Directors shall be elected from
among the Directors. He shall preside at all meetings of the Board of
Directors. Subject to the direction of the Board of Directors, he shall have
general charge, control, and supervision of all the business and operations of
the Corporation.
The Board of Directors may elect a Vice Chairman of the Board from
among the members thereof. He shall have such powers, duties and
responsibilities as may be assigned to him by the Board of Directors or the
Chairman of the Board.
ARTICLE VII.
President.
The President shall be elected from among the Directors. He shall
have such powers, duties, and responsibilities as may be assigned to him by
the Board of Directors or the Chairman of the Board.
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PAGE 7
ARTICLE VIII.
Vice Presidents.
The powers, duties, and responsibilities of the Vice Presidents
shall be fixed by the Chairman of the Board with the approval of the Board of
Directors. From time to time, the Board of Directors may assign to a Vice
President the duty of acting for the President in case of his absence or
inability to act.
ARTICLE IX.
General Counsel.
The General Counsel shall have general charge of the legal affairs
of the Corporation, and shall cause to be kept adequate records of all suits
or actions of every nature to which the Corporation may be a party or in which
it has an interest, with sufficient data to show the nature of the case and
proceedings therein. He shall prepare or cause to be prepared legal opinions
on any subject necessary for the affairs of the Corporation, and shall perform
such other duties as the Board of Directors, the Chairman of the Board, or the
Senior Vice President-Corporate Services may designate.
ARTICLE X.
Secretary.
SECTION 1. The Secretary shall attend all meetings of the
stockholders, the Board of Directors, and the Executive Committee and record
their proceedings, unless a temporary secretary be appointed. He shall give
due notice as required of all meetings of the stockholders, Directors, and
Executive Committee. He shall keep or cause to be kept at a place or places
required by law a record of the stockholders of the Corporation, giving the
names and addresses of all stockholders and the number, class, and series of
the shares held by each. He shall be custodian of the seal of the
Corporation, and of all records, contracts, leases, and other papers and
documents of the Corporation, unless otherwise directed by the Board of
Directors, and shall perform such other duties as may be assigned to him by
the Board of Directors, the Chairman of the Board, or the Senior Vice
President-Corporate Services.
SECTION 2. In case of the Secretary's absence or incapacity, the
Chairman of the Board shall designate an appropriate officer to perform the
duties of the Secretary.
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PAGE 8
ARTICLE XI.
Treasurer.
SECTION 1. The Treasurer shall receive, keep and disburse all
moneys belonging or coming to the Corporation, shall keep regular, true and
full accounts of all receipts and disbursements and make detailed reports
thereof. He shall also perform such other duties in connection with the
administration of the financial affairs of the Corporation as the Senior Vice
President-Finance shall assign to him.
SECTION 2. In case of the Treasurer's absence or incapacity, the
Senior Vice President-Finance shall designate an appropriate officer to
perform the duties of the Treasurer.
ARTICLE XII.
Compensation.
The compensation of the officers elected by the Board of Directors
shall be fixed by the Board of Directors. The compensation of all other
officers shall be fixed by the Chairman of the Board or the President or heads
of departments subject to the control of the Chairman of the Board.
No salary of more than a maximum level, fixed from time to time by
the Board of Directors, shall be established except with approval of the Board
of Directors.
ARTICLE XIII.
Depositaries.
The money and negotiable instruments of the Corporation shall be
kept in such bank or banks as the Senior Vice President-Finance or the Vice
President and Treasurer shall from time to time direct or approve. All checks
and other instruments for the disbursement of funds shall be executed manually
or by facsimile by such officers or agents of the Corporation as may be
authorized by the Board of Directors.
ARTICLE XIV.
Seal.
The seal of the Corporation, of which there may be any number of
counterparts, shall be circular in form and shall have inscribed thereon the
name of the Corporation, the year of its organization and the words,
"Corporate Seal Virginia." The Board may also authorize to be used, as the
seal of the Corporation, any facsimile thereof.
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PAGE 9
ARTICLE XV.
Fiscal Year.
The fiscal year of the Corporation shall begin on the first day
of January and end on the 31st day of December of each year.
ARTICLE XVI.
Amendments to By-laws.
These By-laws may be amended or repealed at any regular or special
meeting of the Board of Directors by the vote of a majority of the Directors
present. They may also be repealed or changed, and new By-laws made, by the
stockholders, provided notice of the proposal to take such action shall have
been given in the notice of the meeting. The stockholders may prescribe that
any By-law made by them shall not be altered, amended or repealed by the Board
of Directors.
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PAGE 1
Exhibit 10.4
CSX CORPORATION
DIRECTORS CHARITABLE GIFT PROGRAM
as amended as of December 9, 1992
PLAN OVERVIEW
The Directors Charitable Gift Program provides an opportunity for CSX
Corporation and the Directors to jointly participate in a program of
charitable giving. Under the plan, with certain limitations, each Director
has the ability to designate large contributions to various charities of his
or her choice.
The plan is designed such that there is no current tax cost to the
Directors and no long-term cost to CSX Corporation. In addition, the plan
generates a positive public relations image for the Company and public
recognition to the Directors for their personal achievement through their own
philanthropy.
HOW THE PLAN WORKS
The Directors Charitable Gift Program works as follows:
- Upon the death of a Director who is a participant in the plan, CSX
makes tax-deductible charitable contributions totaling $1,000,000
on the Director's behalf to the charity or charities selected by
the Director.
- $100,000 will be paid upon the Director's retirement. The balance
of $900,000 will be paid in annual increments of $100,000
commencing on the Director's death.
- The charitable donations will be funded by corporate-owned life
insurance on the Director's life. CSX is the owner and
beneficiary of the policy.
- CSX pays the premiums. At the death of the Director, CSX receives
tax-free benefits.
ADMINISTRATION OF THE PLAN
The plan shall be administered by the Organization and Corporate
Responsibility Committee of the Board (the "Committee") in consultation with
the Chairman of the Board and the Chief Executive Officer.
The Committee shall have full power and authority to adopt, alter and
repeal any administrative rules, regulations and practices governing the
operation of the plan as it shall deem advisable and to interpret the terms
and provisions of the plan. All decisions, interpretations or resolutions of
the Committee shall be conclusive and binding on all interested parties.
ELIGIBILITY
Participation in the plan is discretionary and determined by the
Committee. No Director shall be a participant in the plan until he or she has
completed five years of service as a Director.
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PAGE 2
BENEFITS
Upon the death of a Director currently serving on the CSX Board or
retired from the Board who is a plan participant, CSX will make contributions
to the designated charity or charities totaling $1,000,000.
DESIGNATION OF CHARITABLE ORGANIZATION
- Each Director may designate up to five charities as donees of the
$1,000,000 contribution to be made by CSX for filing with the
Corporate Secretary of CSX a written designation in a form
approved by the Committee. The Director's designation shall be
confirmed in writing by the Corporate Secretary after approval by
the Committee.
- In addition to the designation, the Director shall make a
determination as to the amount awarded to each charity. The
minimum single award amount is $100,000.
- $100,000 will be paid upon the Director's retirement. The balance
of $900,000 will be paid in annual increments of $100,000
commencing on the Director's death.
- Each such charity designated as a donee must be a tax-exempt
organization qualified as such under Section 501(c)(3) of the
Internal Revenue Code, as amended consistent with CSX Corporation
guidelines for charitable gifts.
- CSX shall send each designated charity a written notification of
such designation on a form approved by the Committee unless
directed otherwise by the donor Director.
- Prior to death, the designation of a charity or an award amount
may be revoked or changed by the Director at any time by filing a
new written designation form with the Corporate Secretary, who
will confirm the new designation in writing after approval by the
Committee.
AMENDMENT AND DISCONTINUANCE
CSX may at any time amend, suspend or discontinue the plan.
CHANGE IN CONTROL
In the event of a Change in Control as defined herein, donations to
charities or other non-profit organizations contemplated hereby may be made as
the Committee may determine as of the date of such Change In Control and then
paid on such basis and in such form as the Committee may prescribe.
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PAGE 3
"Change of Control" shall mean any of the following:
(i) The acquisition, other than from CSX Corporation, by any
individual, entity or group (within the meaning of Section 13 (d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either the then outstanding shares
of common stock of CSX or the combined voting power of the then outstanding
voting securities of CSX entitled to vote generally in the election of
directors, but excluding for this purpose, any such acquisition by CSX or any
of its subsidiaries, or any employee benefit plan (or related trust) of CSX or
its subsidiaries, or any corporation with respect to which, following such
acquisition, more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned, directly or
indirectly, by the individuals and entities who were the beneficial owners,
respectively, of the common stock and voting securities of CSX immediately
prior to such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the then outstanding
shares of common stock of CSX or the combined voting power of the then
outstanding voting securities of CSX entitled to vote generally in the
election of directors, as the case may be; or
(ii) Individuals who, as of the date hereof, constitute the Board (as
of the date hereof the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election or nomination for
election by CSX Corporation's shareholders was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of CSX (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act); or
(iii) Approval by the stockholders of CSX of a reorganization, merger
or consolidation, in each case, with respect to which the individuals and
entities who were the respective beneficial owners of the common stock and
voting securities of CSX immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or a complete liquidation or
dissolution of CSX or of its sale or other disposition of all or substantially
all of the assets of CSX.
EFFECTIVE DATE
The effective date of the plan, as amended, is December 9, 1992.
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PAGE 1
Exhibit 10.5
CSX CORPORATION
DIRECTORS' MATCHING GIFT PROGRAM
DIRECTORS' MATCHING GIFT PROGRAM
CSX Corporation's Matching Gift Program is part of the Company's
commitment to higher education. An educated population benefits the Company
and the communities in which it does business. The Employee Matching Gift
Program provides an opportunity for employees to determine directly the
recipients of some of the Company's charitable donations.
Directors and retired Directors of the company are entitled to
participate in the Matching Gift Program under the "Directors' Matching Gift
Program." Gifts by Directors or retired Directors may be made jointly with a
spouse. The participant need not be an alumnus of the eligible educational
institution receiving the gift.
ELIGIBLE INSTITUTIONS
Colleges, including junior colleges, technical schools or other
educational institutions above the high school level, universities, graduate
and professional schools, or a state association of independent colleges and
universities or other national association, foundation or fund which collects
an distributes donations to independent colleges and universities, which is:
1. Located within the United States or one of its territories:
2. Public or private;
3. Non-profit, non-proprietary;
4. Accredited or approved by a recognized national or regional
accrediting association; and
5. Recognized by the Internal Revenue Service as an organization to
which contributions are tax deductible.
CONTRIBUTIONS/CONDITIONS
- - Individual contributions, with a minimum of $25 and a maximum of
$5,000 per institution, per calendar year, will be matched, with a
maximum annual Company match of $25,000 per Director. The matching
rate is one to one.
- - Contributions must be a personal gift from the Director's own funds,
paid in cash or securities, and not a pledged gift.
- - Funds will not be matched for extra-curricular programs or any other
non-educational purposes such as sports, alumni capital improvement
projects, dues, subscriptions, insurance premiums, or other such non-
direct payments.
PROGRAM ADMINISTRATION
The program is administered by the Corporate Secretary of CSX
Corporation, and may be suspended, revoked, terminated or amended by the
Company at any time.
Questions as to interpretation, application, administration or other
aspects of the program shall be decided by the Corporate Secretary.
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PAGE 2
The Corporate Secretary reserves the right to determine eligibility
of an institution to receive matching funds under this program.
INSTRUCTIONS
- - Part A of the Application in this folder should be completed by the
Director and the entire folder should accompany the Director's gift
to an eligible institution.
- - The qualifying institution, upon receipt of the gift and this folder,
should complete Part B of the Application and return the entire
folder to the Contributions Coordinator at the address below.
- - Upon request, the beneficiary institution will provide evidence of
its tax exempt status under Section 501(c)(3) of the Internal Revenue
Code.
- - All applications for matching gifts received during any calendar year
will be paid when administratively convenient but not less than semi-
annually.
- - Additional forms may be secured from the Contributions Coordinator.
Requests for information and all correspondence relating to the
Directors' Matching Gift Program should be addressed to:
Contributions Coordinator
CSX Corporation
P. O. Box 85629
Richmond, VA 23285-5629
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PAGE 3
Part A-Director's Section
(To be completed by Director, who is to send this entire pamphlet, together
with gift, to educational institution)
Date.............
Enclosed is my personal donation of $.........
to........................................
Name of Educational Institution
I hereby authorize the institution named above to report this gift to the
Contributions Coordinator of CSX Corporation, for the purpose of qualifying
for a contribution in accordance with the provisions of the Company's Matching
Gift Program.
.................................................................
Director's Name (print in full)
.................................................................
Director's Address
.................................................................
City State Zip
.................................................................
Director's Signature
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PAGE 4
Part B-Beneficiary's Section
(To be completed by an appropriate financial officer of the educational
institution, and returned to Matching Gifts Administrator; P.O. Box 85629,
Richmond, VA 23285-5629
I hereby certify that a donation of $..... was received
on......................., 19.., from...........................in favor of
this institution; Name of Donor
And I further certify that this institution meets all the requirements for
eligibility as set forth in CSX Corporation's Matching Gift Program.
Contributions to the beneficiary institution shown are tax deductible by CSX
Corporation pursuant to Section 501(c)(3) of the Internal Revenue Code, and
that the beneficiary institution will provide evidence of this status upon
request.
.................................. ..........................
Name of Educational Institution Signature
.................................. ...........................
Address of Educational Institution Name (print or type in full)
.................................. ............................
Title
.................................. ............................
Date
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PAGE 1
Exhibit 10.7
June 21, 1989
Mr. Jerry R. Davis
6501 Stonesthrough Drive
Omaha, Nebraska 68152
Dear Jerry:
This letter will confirm the details of your employment as chief
operating officer of CSX Rail Transport. We are very excited about your
joining CSXT and are confident that you will make a very significant
contribution to CSXT.
Salary and Annual Incentive
Your initial salary will be $300,000 per annum with a guaranteed
bonus during 1989 and 1990 of $200,000. CSX's annual incentives are paid in
February following completion of the year. You will be in CSX salary grade 31
with an annual incentive opportunity of 69%.
Long Term Incentives
As the chief operating officer of CSX Rail Transport, annually you
will receive a contingent grant of 5,005 performance shares and 13,125 non-
qualified stock options in tandem with 6,910 stock appreciation rights (20,235
total) exercisable over ten years.
Performance shares (unrestricted shares of CSX Common stock) are paid
at the completion of three year cycles. The number of shares paid is
determined by the extent to which CSXT achieves its financial and strategic
goals. This plan was introduced in 1987 and has had two interim payouts of
90% and 80% of maximum awards. Assuming you joined CSXT this July, you would
be eligible for pro-rata awards for cycles beginning in 1987 (1/6), 1988 (1/2)
and 1989 (5/6). The schedule below depicts the hypothetical value of this
plan based upon payouts of 85% and annual growth in CSX stock of 7% per annum
(five year average).
Payment Date # Shares Value
- ------------ -------- -------
February 1990 708 (1/6) $25,665
1991 2,125 (1/2) 82,408
1992 3,541 (5/6) 146,951
1993 4,250 188,700
1994 4,250 201,909
1995 4,250 216,043
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PAGE 2
Mr. Jerry R. Davis
June 21, 1989
Page 2
As you know, it is difficult to value stock option and SAR grants.
CSX grants are made annually and vest 100% one year later and may be exercised
as late as 10 years after the grant date. Assuming CSX stock appreciated 7%
per year and you exercised all options/SAR's five years after the grant, you
would have the following gain:
Grant Exercise
Year Grant Size Year Gain
----- ---------- -------- --------
1990 20,235 1995 $295,229
1991 20,235 1996 315,895
1992 20,235 1997 338,007
1993 20,235 1998 361,668
1994 20,235 1999 386,984
1995 20,235 2000 414,074
As a special incentive to improve CSXT's results and thereby improve
CSX's stock price, upon employment you will receive a special performance
stock option grant of 50,000 shares. This grant will expire in November 1993
and can be exercised in increments of 25% (12,500 shares) when CSX stock
reaches $40 and $45 and the final 50% (25,000 shares) when CSX stock reaches
$50 per share. CSX's stock price at close of business today was $33 7/8.
Retirement
You will participate in both the CSX Pension Plan and Special
Retirement Plan. The latter plan provides an additional year of credited
service ("2 for 1") for each year of actual service with a maximum of 44 years
of service. For example, if you worked five years at CSX, you would receive
ten years of credited service in the calculation of your pension. In
addition, upon completing ten years at CSX, we would include all of your UP
service in the CSX pension calculation, less the amount of your UP pension.
Your maximum creditable service can not exceed 44 years (versus 40 years in
the UP Pension Plan).
The table below depicts your annual pension under both the CSX and UP
plans assuming retirement at age 61 with average final compensation of
$500,000 and total UP and CSX railroad service of 41.8 years. The CSX pension
is greater because of the "2 for 1" crediting and a substantially lower
reduction factor for retirement before age 65.
CSX UP
Annual Pension Annual Pension
Avg. Comp. Age 61 Age 61
- ---------- -------------- ---------------
$500,000 $313,860 $247,904
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PAGE 3
Mr. Jerry R. Davis
June 21, 1989
Page 3
Deferred Compensation
CSX offers its executives several plans to defer receipt of salary
and bonus income until retirement. Deferrals are not taxed until receipt and
build up tax-free in various investment funds of your choice. As an
inducement for you to join CSXT, we will permit you to defer $200,000 of bonus
into a plan (otherwise closed to new members) that credits 16% per annum. The
attached schedule indicates that a $200,000 deferral in February 1990 would
generate additional annual income of $153,276 at age 62 payable for 15 years.
Life Insurance
Until age 55, CSX will provide you with term life coverage of
$1,500,000 (three times salary and bonus). At age 55 this coverage is reduced
to 2 times salary and bonus. There is a further reduction at ages 60, 65 and
70. You may also purchase optional term life coverage up to $900,000 (three
times salary).
Perquisites
You will be entitled to the following additional benefits:
- tax preparation service by Ernst & Whinney
- city club and country club memberships
- monthly car allowance of $575
- 50% discount while vacationing at The Greenbrier
- annual physical exam at Greenbrier Clinic
We trust this information is helpful to you in understanding the
terms of your employment. We have based our projections on what we believe to
be reasonable assumptions and current plan provisions.
If I can be of any assistance to you in understanding this letter,
please call me at (804) 782-1535 (O) or (804) 379-3022 (H).
Sincerely,
/s/ DONALD D. DAVIS
-------------------
Donald D. Davis
Senior Vice Present-
Human Resources
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PAGE 1
Exhibit 10.9
AGREEMENT
THIS AGREEMENT is made this 9th day of February, 1994 by and between
CSX Corporation, a Virginia corporation ("CSX"), and John W. Snow (the
"Executive").
Recitals
WHEREAS, the Executive has served as Chairman of the Board, President
and Chief Executive Officer of CSX since February 1991;
WHEREAS, during the time the Executive has served as Chairman of the
Board, President and Chief Executive Officer of CSX, there has been a
substantial improvement in the financial performance of CSX and a substantial
increase in the per share price of Common Stock of CSX;
WHEREAS, the Compensation and Pension Committee (the "Committee") of
the Board of Directors (the "Board") of CSX have determined that it is
important for the continued success of CSX that its chief executive officer
maintain a substantial stock ownership interest so that he will have a more
direct and proprietary interest in the future success and financial
performance of CSX;
WHEREAS, the Committee and the Board have determined that it is
important for the continued improvement of the financial performance of CSX
and its effect on the per share price of Common Stock of CSX that the
Executive's employment by CSX be continued;
WHEREAS, the Committee and the Board have determined that it is in
the best interests of CSX and its stockholders to provide an incentive to the
Executive to continue his employment with CSX, both for the reasons set forth
hereinabove and so as to afford CSX the opportunity to continue to identify
and develop potential candidates to succeed the Executive as the chief
executive officer of the Company;
WHEREAS, CSX has adopted the 1987 Long-Term Performance Stock Plan,
as amended from time to time (the "Plan"), a copy of which is attached hereto
as Appendix A and made a part hereof, to enable officers and key employees of
CSX and its subsidiaries who are responsible for contributing to the financial
success and growth of CSX to acquire or increase their stock ownership in CSX,
thus providing them with a more direct and proprietary interest in CSX;
WHEREAS, the Committee has approved a grant, effective as of the date
of this Agreement, to the Executive of options to purchase shares of Common
Stock of CSX upon the terms and conditions set forth hereinbelow;
WHEREAS, the Committee and the Board have approved the terms and
conditions of this Agreement for the purposes set forth hereinabove.
NOW, THEREFORE, in consideration of the above premises, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
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PAGE 2
1. Grant of Options. As of the date of this Agreement, CSX hereby
grants, and the Executive hereby accepts, 500,000 Non-Qualified Stock Options
(as that term is defined in the Plan), each to purchase one (1) share of the
Common Stock of CSX at $89.875 per share under the terms and conditions set
forth in the Plan (the "Options"), with the Options to be exercisable as
follows:
(a) Provided that the Executive has been continuously employed
by CSX for the period from the date of this Agreement until the third
anniversary of the date of this Agreement, 100,000 Options will become
exercisable in full at the later to occur of (i) the third anniversary of the
date of this Agreement or (ii) that day which is the first business day after
the occurrence of ten (10) consecutive business days on which the Fair Market
Value of the Common Stock of CSX for each such day was equal to or greater
than $100.00 per share. Notwithstanding the foregoing, in the event of the
Separation From Employment of the Executive on account of his death or
Disability prior to the third anniversary of this Agreement, the Executive (or
his Fiduciary) shall be entitled to exercise the Options granted pursuant to
this subsection (a) as to that number of shares of Common Stock determined by
multiplying 100,000 by a fraction, the numerator of which shall be the number
of Completed Months after the date of this Agreement and prior to the date of
such death or Disability and the denominator of which shall be 36. The
Executive (or his Fiduciary) may only exercise such Options described in the
previous sentence if one (1) year has elapsed from the date of grant and
condition (ii) has been satisfied. The remainder of the Options granted
pursuant to this subsection (a) shall become null and void and of no further
force or effect.
(b) Provided that the Executive has been continuously employed
by CSX for the period from the date of this Agreement until the fourth
anniversary of the date of this Agreement, an additional 150,000 Options shall
become exercisable in full at the later to occur of (i) the fourth anniversary
of the date of this Agreement or (ii) that day which is the first business day
after the occurrence of ten (10) consecutive business days on which the Fair
Market Value of the Common Stock of CSX for each such day was equal to or
greater than $110.00 per share. Notwithstanding the foregoing, in the event
of the Separation From Employment of the Executive on account of his death or
Disability prior to the fourth anniversary of this Agreement, the Executive
(or his Fiduciary) shall be entitled to exercise the Options granted pursuant
to this subsection (b) as to that number of shares of Common Stock determined
by multiplying 150,000 by a fraction, the numerator of which shall be the
number of Completed Months after the date of this Agreement and prior to the
date of such death or Disability and the denominator of which shall be 48.
The Executive (or his Fiduciary) may only exercise such Options described in
the previous sentence if one (1) year has elapsed from the date of grant and
condition (ii) has been satisfied. The remainder of the Options granted
pursuant to this subsection (b) shall become null and void and of no further
force or effect.
(c) Provided that the Executive has been continuously employed
by CSX for the period from the date of this Agreement until the fifth
anniversary of the date of this Agreement, an additional 250,000 Options shall
become exercisable in full at the later to occur of (i) the fifth anniversary
of the date of this Agreement or (ii) that day which is the first business day
- 2 -
PAGE 3
after the occurrence of ten (10) consecutive business days on which the Fair
Market Value of the Common Stock of CSX for each such day was equal to or
greater than $120.00 per share. Notwithstanding the foregoing, in the event
of the Separation From Employment of the Executive on account of his death or
Disability prior to the fifth anniversary of this Agreement, the Executive (or
his Fiduciary) shall be entitled to exercise the Options granted pursuant to
this subsection (c) as to that number of shares of Common Stock determined by
multiplying 250,000 by a fraction, the numerator of which shall be the number
of Completed Months after the date of this Agreement and prior to the date of
such death or Disability and the denominator of which shall be 60. The
Executive (or his Fiduciary) may only exercise such Options described in the
previous sentence if one (1) year has elapsed from the date of grant and
condition (ii) has been satisfied. The remainder of the Options granted
pursuant to this subsection (c) shall become null and void and of no further
force or effect.
Notwithstanding the foregoing, the Options shall not be exercisable
after February 8, 2004. Options may be exercised simultaneously or at
different times.
2. Exercise of Options. Notice of an exercise of Options shall be
given by the Executive in writing to the Corporate Secretary of CSX stating
the number of shares with respect to which the Options are exercised. As
provided in the Plan, the full purchase price of the shares being purchased
through exercise of Options shall be tendered at the time of and shall
accompany such notice.
Further, as provided in the Plan, income and payroll withholding
taxes for federal, state or local jurisdictions must be paid to CSX at the
time payment is made for shares purchased through exercise of Options.
Notwithstanding any other provision of this Agreement, as permitted by law,
the Executive may tender shares of CSX Common Stock as payment for options
exercised and may cause withholding tax obligations to be satisfied using CSX
Common Stock realized as a result of the option exercise, or, at the Company's
discretion, by an adjustment equal in value to the amount of such obligations,
in the number of shares transferred to the Executive.
3. Section 16 Compliance. If the Executive has been notified by CSX
that he is an "officer," within the meaning of Regulation 16a-1(f) of the
Securities and Exchange Commission (17 C.F.R. 240.16a-1(f)) (hereinafter
called "Statutory Insider"), the Executive shall comply with all laws and
regulations applicable to such Statutory Insiders. If the Executive is not a
Statutory Insider, then the Executive will be deemed to be a "Contractual
Insider" and, as a Contractual Insider, the Executive shall comply with and be
bound by all requirements of regulations promulgated by the Securities and
Exchange Commission pursuant to Section 16 of the Securities Exchange Act of
1934, as amended, except insofar as such regulations require the filing of
reports or forms with the Securities and Exchange Commission. CSX may, for
good reason shown and in its sole discretion, excuse any failure of a
Contractual Insider to comply with the aforesaid rules of the Securities and
Exchange Commission, and no penalty or forfeiture shall be assessed against
the Executive upon such excuse from performance. Further, the Executive,
whether a Statutory Insider or Contractual Insider, shall provide such
information as CSX may request regarding securities which are issued by CSX
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PAGE 4
and which the Executive owns (whether directly or beneficially, and regardless
of whether held by the Executive in the Executive's name, in a brokerage
account, in an individual retirement account, or in a program in which the
Executive participates that has been established for employees of CSX or its
affiliates or otherwise), or which the Executive has sold or otherwise
transferred.
4. Limitations on Sales. In consideration of the grant of the
Options set forth hereinabove, the Executive agrees to the following
restrictions on his ability to sell or otherwise dispose of any shares of
Common Stock of CSX acquired upon exercise of any of the Options (the "Option
Shares"):
(a) During the Executive's employment with CSX and during the
one (1) year period following the Executive's Separation From Employment with
CSX for any reason other than Disability, the Executive shall not sell or
otherwise dispose of any of the Option Shares.
(b) During the one (1) year period following the first
anniversary of the Executive's Separation From Employment with CSX for any
reason other than Disability, the Executive shall not sell or otherwise
dispose of in excess of one-third of the aggregate number of Option Shares.
(c) During the two (2) year period following the first
anniversary of the Executive's Separation From Employment with CSX for any
reason other than Disability, the Executive shall not sell or otherwise
dispose of in excess of two-thirds of the Option Shares.
The foregoing restrictions shall immediately terminate and be of no
further force or effect in the event of the Executive's death, his Separation
From Employment due to Disability or due to a Change in Control as described
in the Plan.
5. Provisions of the Plan and the Agreement. The Options are
accepted subject to all of the terms and provisions of the Plan, as amended
from time to time, and of this Agreement, except that no amendment to the Plan
may, without the written consent of the Executive, terminate the Options or
materially and adversely affect his rights under the Options or this
Agreement. Capitalized terms, not otherwise defined in this Agreement, which
are used in this Agreement and which are defined in the Plan shall have the
meanings ascribed to them in the Plan. The Executive represents that he has
read and is familiar with the terms and provisions of the Plan. All
interpretations and decisions by the Committee referred to in the
Administration Section of the Plan on any questions under the Plan or this
Agreement shall be binding, conclusive and final.
6. Definitions. The following terms shall have the following
meanings when utilized in this Agreement:
(a) "Completed Month": The term Completed Month shall mean a
period beginning on the monthly anniversary date of this Agreement and ending
on the day before the next monthly anniversary.
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PAGE 5
(b) "Disability": The term Disability shall mean long-term
disability as determined under CSX's Salary Continuance and Long-Term
Disability Plan.
(c) "Fiduciary": The term Fiduciary shall mean any guardian,
committee, trustee, executor, administrator or conservator legally appointed
to handle the affairs of the Executive or his estate.
(d) "Retirement": The term Retirement shall mean termination of
employment with immediate commencement of retirement benefits under CSX's
pension plan.
(e) "Separation From Employment": The term Separation From
Employment shall mean an employee's separation from employment with CSX as a
result of Retirement, death, Disability, or termination of employment
(voluntary or involuntary).
7. Entire Agreement; Modifications; Waiver. This Agreement and the
Plan constitute the entire agreement between the parties concerning the terms
and conditions of the Options. Neither this Agreement nor any provision
hereof may be changed, modified, amended, discharged, terminated or waived
orally or by any course of dealing or purported course of dealing, except by
an agreement in writing signed by the Executive and CSX. The waiver of or the
failure to enforce any breach of this Agreement shall not be deemed to be a
waiver of any other breach hereof.
8. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed under seal as of the day and year first above written.
WITNESS: CSX CORPORATION
By: /s/ ALAN A. RUDNICK (SEAL)
- -------------------------------- -------------------------------
Name: Alan A. Rudnick
Title: Vice President-General
Counsel and Corporate Secretary
/s/ JOHN W. SNOW
- -------------------------------- -------------------------------
John W. Snow
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PAGE 1
Exhibit 10.11
Appendix A
CSX CORPORATION
1987 Long-Term Performance Stock Plan as Amended
and Restated May 3, 1994
1. Purpose
The purpose of the CSX Corporation Long-Term Performance Stock Plan
is to attract and retain outstanding individuals as officers and key employees
of CSX Corporation and its subsidiaries, to furnish motivation for the
achievement of long-term performance objectives by providing such persons
opportunities to acquire ownership of common shares of the Company, monetary
payments based on the value of such shares or the financial performance of the
Company, or both, on terms as herein provided. It is intended that the
Incentives provided under this Plan will be treated as qualified performance-
based compensation within the meaning of section 162(m) of the Code.
2. Definitions
Whenever the following words are capitalized and used in the Plan,
they shall have the respective meanings set forth below, unless a different
meaning is expressly provided. Unless the context clearly indicates to the
contrary, in reading this document the singular shall include the plural and
the masculine shall include the feminine.
a. Beneficiary: The term Beneficiary shall mean the person designated
by the Participant, on a form provided by the Company, to exercise the
Participant's rights in accordance with section 14 of the Plan in the event of
his death.
b. Board of Directors: The term Board of Directors or Board means the
Board of Directors of CSX Corporation.
c. Cause: The term Cause means (i) an act or acts of personal
dishonesty of a Participant intended to result in substantial personal
enrichment of the Participant at the expense of the Company or any of its
subsidiaries, (ii) violation of the management responsibilities by the
Participant which is demonstrably willful and deliberate on the Participant's
part and which is not remedied in a reasonable period of time after receipt of
written notice from the Company or a subsidiary, or (iii) the conviction of
the Participant of a felony involving moral turpitude.
d. Change in Control: The term Change in Control is defined in
section 19.
e. Code: The term Code means the Internal Revenue Code of 1986, as
amended.
f. Committee: The term Committee means a committee appointed from
time to time by the Board of Directors to administer the Plan.
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PAGE 2
g. Company: The term Company means CSX Corporation and/or its
subsidiary companies.
h. Completed Month: The term Completed Month shall mean a period
beginning on the monthly anniversary date of a grant of an Incentive and
ending on the day before the next monthly anniversary.
i. Covered Employee: The term Covered Employee shall mean the chief
executive officer of the Company or any other individual who is among the four
(4) highest compensated officers or who is otherwise a covered employee within
the meaning of section 162(m) of the Code, as determined by the Committee.
j. Disability: The term Disability means long-term disability as
determined under the Company's Salary Continuance and Long-Term Disability
Plan.
k. Exchange Act: The term Exchange Act means the Securities Exchange
Act of 1934, as amended.
l. Exercisability Requirements: The term Exercisability Requirements
used with respect to any grant of options means such restrictions or
conditions on the exercise of such options that the Committee may, in its
discretion, add to the one-year holding requirement contained in Sections 7
and 8.
m. Fair Market Value: The term Fair Market Value shall be deemed to
be the mean between the highest and lowest quoted selling prices of the stock
per share as reported under New York Stock Exchange-Composite Transactions on
the day of reference to any event to which the term is pertinent, or, if there
is no sale that day, on the last previous day on which any such sale occurred.
n. Incentive: The term Incentive means any incentive under the Plan
described in section 6.
o. Objective Standard: The term Objective Standard means a formula or
standard by which a third party, having knowledge of the relevant performance
results, could calculate the amount to be paid to a Participant. Such formula
or standard shall specify the individual employees or class of employees to
which it applies, and shall preclude discretion to increase the amount payable
that would otherwise be due upon attainment of the objective.
p. Participant: The term Participant means an individual designated
by the Committee as a Participant pursuant to section 5.
q. Performance Objective: The term Performance Objective shall mean a
performance objective established in writing by the Committee prior to the
commencement of the Performance Period to which the performance objective
relates and at a time when the outcome of such objective is substantially
uncertain. Each Performance Objective shall be established in such a way that
a third party having knowledge of the relevant facts could determine whether
the objective is met. A Performance Objective may be based on one or more
business criteria that apply to the individual Participant, a business unit or
the Company as a whole, and shall state, in terms of an Objective Standard,
the method of computing the amount payable to the Participant if the
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PAGE 3
Performance Objective is attained. With respect to Incentives granted to
Covered Employees, the material terms of the Performance Objective shall be
disclosed to, and must be subsequently approved by, a vote of the shareholders
of the Company, consistent with the requirements of section 162(m) of the Code
and the regulations thereunder. The Performance Objectives are disclosed in
Addendum I.
r. Performance Period: The term Performance Period means a fixed
period of time, established by the Committee, during which a Participant
performs service for the Company and during which Performance Objectives may
be achieved.
s. Plan: The term Plan means this CSX Corporation 1987 Long-Term
Performance Stock Plan as amended or restated from time to time.
t. Retirement: The term Retirement means termination of employment
with immediate commencement of retirement benefits under the Company's defined
benefit pension plan.
u. Separation From Employment: The term Separation From Employment
means an employee's separation from employment with the Company as a result of
Retirement, death, Disability, or termination of employment (voluntarily or
involuntarily). A Participant in receipt of periodic severance payments shall
be considered separated from employment on the day preceding the day such
severance payments commenced.
3. Number of Shares
Subject to the provisions of section 16 of this Plan, the maximum
number of shares which may be issued pursuant to the Incentives shall be
16,000,000 shares of the Company's common stock, par value $1.00 per share.
Such shares shall be authorized and unissued shares of the Company's common
stock. Subject to the provisions of section 16, if any Incentive granted under
the Plan shall terminate or expire for any reason without having been
exercised in full, the unissued shares subject thereto shall again be
available for the purposes of the Plan. Similarly, shares which have been
issued, but which the Company retains or which the Participant tenders to the
Company in satisfaction of income and payroll tax withholding obligations or
in satisfaction of the exercise price of any option shall remain authorized
and shall again be available for the purposes of the Plan, provided, however,
that any such previously issued shares shall not be the subject of any grant
under the Plan to any officer of the Company who, at the time of such grant,
is subject to the short-swing trading provisions of section 16 of the Exchange
Act.
4. Administration
The Plan shall be administered by the Committee. The Committee shall
consist of three or more members of the Board of Directors. No member of the
Committee shall be eligible to receive any Incentives under the Plan while a
member of the Committee. A majority of the Committee shall constitute a
quorum. The Committee shall recommend to the Board individuals to receive
Incentives, including the type and amount thereof, unless the Board shall have
delegated to the Committee the authority and power to select persons to whom
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PAGE 4
Incentives may be granted, to establish the type and amount thereof, and to
make such grants.
Subject to the express provisions of the Plan, the Committee shall
have authority to construe any agreements entered into with any person in
respect of any Incentive or Incentives, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the terms and provisions of
any such agreements and to make all other determinations necessary or
advisable for administering the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
agreement under the Plan in the manner and to the extent it shall deem
expedient to carry it into effect, and it shall be the sole and final judge of
such expedience. Any determination of the Committee under the Plan may be made
without notice of meeting of the Committee by a writing signed by a majority
of the Committee members. The determinations of the Committee on the matters
referred to in this section 4 shall be conclusive.
5. Eligibility and Participation
Incentives may be granted only to officers and key employees of the
Company and of its subsidiaries at the time of such grant as the Committee in
its sole discretion may designate from time to time to receive an Incentive or
Incentives. An officer or key employee who is so designated shall become a
Participant. A director of the Company or of a subsidiary who is not also an
officer or employee of the Company or of such subsidiary will not be eligible
to receive an Incentive.
The Committee's designation of an individual to receive an Incentive
at any time shall not require the Committee to designate such person to
receive an Incentive at any other time. The Committee shall consider such
factors as it deems pertinent in selecting Participants and in determining the
type and amount of their respective Incentives, including without limitation
(a) the financial condition of the Company, (b) anticipated financial results
for the current or future years, including return on invested capital, (c) the
contribution by the Participant to the profitability and development of the
Company through achievement of established strategic objectives, and (d) other
compensation provided to Participants.
6. Incentives
Incentives may be granted in any one or a combination of (a)
Incentive Stock Options; (b) Non-Qualified Stock Options; (c) Stock
Appreciation Rights; (d) Performance Shares; (e) Performance Units; and (f)
Restricted Stock, all as described below and pursuant to the terms set forth
in sections 7-11 hereof. With respect to Items (a)-(c), the maximum number of
shares of common stock of the Company with respect to which these Incentives
may be granted any Plan Year to any Participant will be 750,000. With respect
to Items (d)-(f), the maximum number of shares of common stock of the Company
with respect to which these Incentives may be granted during any Plan Year to
any Participant will be 150,000.
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PAGE 5
7. Incentive Stock Options
Incentive Stock Options (ISOs) will consist of options to purchase
shares of the Company's common stock at purchase prices not less than 100
percent of the Fair Market Value of such common stock on the date of grant.
ISOs will be exercisable upon the date or dates specified in an option
agreement entered into with a Participant but not earlier than one year after
the date of grant of the options and not later than 10 years after the date of
grant of the options; provided, however, that whether or not the one-year
holding requirement is satisfied, any Exercisability Requirements must be
satisfied. For options granted after December 31, 1986, the aggregate Fair
Market Value, determined at the date of grant, of shares for which ISOs are
exercisable for the first time by a Participant during any calendar year shall
not exceed $100,000.
Notwithstanding the provisions of section 5 of this Plan, no
individual will be eligible for or granted an ISO if that individual owns
stock of the Company possessing more than 10 percent of the total combined
voting power of all classes of the stock of the Company or its subsidiaries.
Any Participant who is an option holder may exercise his option to
purchase stock in whole or in part upon the date or dates specified in the
option agreement offered to him. In no case may an option be exercised for a
fraction of a share. Except as set forth in this section 7 and in sections 12
through 15, no option holder may exercise an option unless at the time of
exercise he has been in the continuous employ of the Company or one of its
subsidiaries since the grant of such option. An option holder under this Plan
shall have no rights as a shareholder with respect to any shares subject to
such option until such shares have been issued.
For purposes of this section 7, written notice of exercise must be
received by the Corporate Secretary of the Company not less than one year nor
more than 10 years after the option is granted. Such notice must state the
number of shares being exercised and must be accompanied by payment of the
full purchase price of such shares. Payment for the shares for which an option
is exercised may be made by (1) a personal check or money order payable to CSX
Corporation; (2) a tender by the employee (in accordance with procedures
established by the Company) of shares of the Company's common stock having a
Fair Market Value on the date of tender equaling the purchase price of the
shares for which the option is being exercised; or (3) any combination of (1)
and (2).
8. Non-Qualified Stock Options
Non-Qualified Stock Options (NQSOs) will consist of options to
purchase shares of the Company's common stock at purchase prices not less than
100 percent of the Fair Market Value of such common stock on the date of
grant. NQSOs will be exercisable upon the date or dates specified in an
option agreement entered into with a Participant but not earlier than one year
after the date of grant of the options and not later than 10 years after the
date of grant of the options; provided, however, that whether or not the one-
year holding requirement is satisfied, any Exercisability Requirements must be
satisfied.
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PAGE 6
Any Participant may exercise an option to purchase stock upon the
date or dates specified in the option agreement offered to him. In no case may
an option be exercised for a fraction of a share. Except as set forth in this
section 8 and in sections 12 through 15, no option holder may exercise an
option unless at the time of exercise he has been in the continuous employ of
the Company or one of its subsidiaries since the grant of his option. An
option holder under this Plan shall have no rights as a shareholder with
respect to any shares subject to such option until such shares have been
issued.
For purposes of this section 8, written notice of exercise must be
received by the Corporate Secretary of the Company, not less than one year nor
more than 10 years after the option is granted. Such notice must state the
number of shares being exercised and must be accompanied by payment of the
full purchase price of such shares. Payment for the shares for which an option
is exercised may be made by (1) a personal check or money order payable to CSX
Corporation; (2) a tender by the employee (in accordance with procedures
established by the Company) of shares of the Company's common stock having a
Fair Market Value on the date of tender equaling the purchase price of the
shares for which the option is being exercised; (3) the delivery of a properly
executed exercise notice, together with irrevocable instructions to a broker
to promptly deliver to the Company either sale proceeds of shares sold to pay
the purchase price or the amount loaned by the broker to pay the purchase
price; or (4) any combination of (1), (2) and (3).
9. Stock Appreciation Rights
Any option granted under the Plan may include a stock appreciation
right (SAR) by which the participant may surrender to the Company all or a
portion of the option to the extent exercisable at the time of surrender and
receive in exchange a payment equal to the excess of the Fair Market Value of
the shares covered by the option portion surrendered over the aggregate option
price of such shares. Such payment shall be made in shares of Company common
stock, in cash, or partly in shares and partly in cash, as the Committee in
its sole discretion shall determine, but in no event shall the number of
shares of common stock delivered upon a surrender exceed the number the option
holder could then purchase upon exercise of the option. Such rights may be
granted by the Committee concurrently with the option or thereafter by
amendment upon such terms and conditions as the Committee may determine.
The Committee may also grant, in addition to, or in lieu of options
to purchase stock, SARs which will entitle the Participant to receive a
payment upon surrender of that right, or portion of that right in accordance
with the provisions of the Plan equaling the difference between the Fair
Market Value of a stated number of shares of Company common stock on the date
of the grant and the Fair Market Value of a comparable number of shares of
Company common stock on the day of surrender, adjusted for stock dividends
declared between the time of the grant of the SAR and its surrender. The
Committee shall have the right to limit the amount of appreciation with
respect to any or all of the SARs granted. Payment made upon the exercise of
the SARs may be in cash or shares of Company common stock, or partly in shares
and partly in cash, as the Committee in its sole discretion shall determine.
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PAGE 7
For purposes of this section 9, written notice must be received by
the Corporate Secretary of the Company between the beginning of the second
year and the end of the tenth year after the SAR is granted. Such notice must
state the number of SARs being surrendered and the method of settlement
desired within the guidelines established from time to time by the Committee.
The SAR holder will receive settlement based on the Fair Market Value on the
day the written request is received by the Corporate Secretary of the Company.
In certain situations as determined by the Committee, for purposes of
this section 9, written notice must be received by the Corporate Secretary of
the Company between the third and twelfth business days after the public
release of the Company's Quarterly Earnings Report, or between such other,
different period as may hereinafter be established by the Securities and
Exchange Commission. For such settlements, a Participant subject to a
restricted exercise period shall receive settlement based on the highest Fair
Market Value during the period described in the foregoing sentence.
The Committee may not grant an SAR or other rights under this section
9 in connection with an incentive stock option if such grant would cause the
option or the Plan not to qualify under section 422A of the Code or if it is
prohibited by such section or Treasury regulations issued thereunder. Any
grant of an SAR or other rights which would disqualify either the option as an
ISO or the Plan, or which is prohibited by section 422A of the Code or
Treasury regulations issued thereunder, is and will be considered as void and
vesting no rights in the grantee. It is a condition for eligibility for the
benefits of the option and of the Plan that the Participant agree that in the
event an SAR or other right granted should be determined to be void as
provided by the foregoing, the Participant has no right or cause of action
against the Company.
10. Performance Unit Awards and Performance Share Awards.
The Committee may grant Performance Unit Awards (PUAs) and
Performance Share Awards (PSAs) under which payment shall be made in shares of
the Company's common stock, in cash, or partly in shares and partly in cash,
as the Committee in its sole discretion shall determine. The Committee shall
establish in writing and communicate to Participants at the time of grant of
each PUA or PSA, Performance Objectives to be achieved during the Performance
Period. Awards of PUAs and PSAs may be determined by the average level of
attainment of Performance Objectives over multiple Performance periods.
Prior to the payment of PUAs and PSAs, the Committee shall determine
the extent to which Performance Objectives have been attained during the
Performance Period or Performance Periods in order to determine the level of
payment to be made, if any, and shall record such results in the minutes of
the meeting of the Committee. In no instance will payment be made if the
Performance Objectives are not attained.
Payment, if any, shall be made in a lump sum or in installments, in
cash or shares of Company common stock, as determined by the Committee,
commencing as promptly as feasible following the end of the Performance
Period, except that (a) payments to be made in cash may be deferred subject to
such terms and conditions as may be prescribed by the Committee, and (b)
payments to be made in Company common stock may be deferred pursuant to an
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PAGE 8
election filed on forms prescribed and provided by and filed with the
Committee. A Participant may elect annually to defer to a date certain, or the
occurrence of an event, as provided in the form, the receipt of all or any
part of shares of Company common stock he may subsequently become entitled to
receive. On forms provided by and filed with the Committee, the Participant
shall also specify whether, when the deferral period expires or the
restrictions specified below lapse, payment will be in a lump sum or
installments over a period not exceeding twenty years. The Committee shall
prescribe the time periods during which the election must be filed in order to
be effective. Elections to defer are irrevocable. Changes to the date of
payment, the period over which payments are to be made and the method of
payment are subject to substantial penalties. Shares of Company common stock
with respect to which a Participant has made an effective election shall be
transferred to a trust and shall remain subject to the claims of the Company's
creditors and restricted and may not be sold, hypothecated or transferred
(including, without limitation, transfer by gift or donation), except that
such shares shall be distributed to Participants and such restrictions shall
lapse upon:
a. the death of the Participant;
b. the Disability of the Participant
c. the Participant's termination of employment with the Company or a
subsidiary of the Company, subject to the Participant's deferral election; or
d. a Change in Control.
11. Restricted Stock
A Restricted Stock Award (RSA) shall entitle the Participant,
subject to his continued employment during the restriction period determined
by the Committee and his complete satisfaction of any other conditions,
restrictions and limitations imposed in accordance with the Plan, to the
unconditional ownership of the shares of the Company's common stock covered by
the grant without payment therefor.
The Committee may grant RSAs at any time or from time to time to a
Participant selected by the Committee in its sole discretion. The Committee
shall establish at the time of grant of each RSA a Performance Period and
Performance Objectives to be achieved during the Performance Period.
At the time of grant, the Performance Period and Performance
Objectives shall be set forth either in agreements or in guidelines
communicated to the Participant in such form consistent with this Plan as the
Committee shall approve from time to time.
Following the conclusion of each Performance Period and prior to
payment, the Committee shall determine the extent to which Performance
Objectives have been attained or a degree of achievement between maximum and
minimum Performance Objectives during the Performance Period in order to
determine the level of payment to be made, if any, and shall record such
results in the minutes of the meeting of the Committee. In no instance will
payment be made if the Performance Objectives are not attained.
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PAGE 9
At the time that an RSA is granted, the Committee shall establish in
the written agreement a restriction period applicable to all shares covered by
such grant. Subject to the provisions of the next following paragraph, the
Participant shall have all of the rights of a stockholder of record with
respect to the shares covered by the grant to receive dividends or other
distributions in respect of such shares (provided, however, that any shares of
stock of the Company distributed with respect to such shares shall be subject
to all of the restrictions applicable to such shares) and to vote such shares
on all matters submitted to the stockholders of the Company, but such shares
shall not be sold, exchanged, pledged, hypothecated or otherwise disposed of
at any time prior to the expiration of the restriction period, including by
operation of law, and any purported disposition, including by operation of
law, shall result in automatic forfeiture of any such shares.
Except as hereinafter provided, if, during the restriction period
applicable to such grant, a Separation From Employment of a Participant occurs
for any reason other than death, Disability or Retirement, all shares covered
by such grant shall be forfeited to the Company automatically. If the
Participant's Separation From Employment is because of Retirement or death, or
in the event of Disability, the Participant or his successor in interest shall
be entitled to unconditional ownership of a fraction of the total number of
shares covered by such grant of which the numerator is the number of whole
calendar months in the period commencing with the first whole calendar month
following the date of grant and ending with the whole calendar month including
the date of death, Disability or Retirement, and of which the denominator is
the number of whole calendar months in the applicable restriction period. Any
fractional shares shall be disregarded.
The Committee may, at the time of granting any RSA, impose such other
conditions, restrictions or limitations upon the rights of the Participants
during the restriction period or upon the Participant's right to acquire
unconditional ownership of shares as the Committee may, in its discretion,
determine and set forth in the written agreement.
At the time of grant of an RSA, the Company shall cause to be issued
and registered in the name of the Participant a stock certificate representing
the full number of shares covered thereby, which certificate shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such grant, and the grantee shall execute and deliver to the
Company a stock power endorsed in blank covering such shares. Such stock
certificate and stock power shall be held by the Company or its designee until
the expiration of the restriction period, at which time the same shall be
delivered to the Participant or his designee if all of the conditions and
restrictions of the grant have been satisfied, or until the forfeiture of such
shares, at which time the same shall be cancelled and the shares shall be
returned to the status of unissued shares.
12. Separation From Employment
If the Participant's Separation From Employment is because of
Disability or death, the right of the Participant or his successor in interest
to exercise an ISO, NQSO or SAR shall terminate not later than five years
after the date of such Disability or death, but in no event later than 10
years from the date of grant; provided, however, that if such Participant is
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PAGE 10
eligible to retire with the ability to immediately begin receiving retirement
benefits under the Company's pension plan, his or his successor in interest's
right to exercise any ISOs, NQSOs or SARs shall be determined as if his
Separation From Employment was because of Retirement.
If the Participant's Separation From Employment is because of his
Retirement, the right of the Participant or his successor in interest to
exercise an ISO, NQSO or SAR shall terminate not later than 10 years from the
date of grant.
Unless the Committee deems it necessary in individual cases (except
with respect to Covered Employees) to extend a Participant's exercise period,
if a Participant's Separation From Employment is for any reason other than
Retirement, Disability or death, the right of the Participant to exercise an
ISO, NQSO or SAR shall terminate not later than one year from the date of
Separation From Employment, but in no event later than 10 years after the date
of grant.
At the time of his Separation From Employment for any reason other
than Cause, a Participant shall vest in a portion of any Incentives granted
under sections 7 (ISOs), 8 (NQSOs) or 9 (SARs) that he has held for less than
one year from the date of the grant. The portion of such Incentives in which
the Participants shall vest shall be determined by multiplying all shares
subject to such incentives by a fraction, the numerator of which shall be the
number of Completed Months of employment following the date of grant and the
denominator of which shall be twelve.
A Participant who vests in any Incentives under the preceding
paragraph may not exercise such Incentives prior to the satisfaction of the
one-year holding requirement and the Exercisability Requirements pertaining to
such Incentives. Any Incentives vested under the preceding paragraph must be
exercised within one year from the date of the Participant's Separation From
Employment.
As to PUAs or PSAs, in the event of a Participant's Separation From
Employment by Retirement, Disability or death prior to the end of the
applicable Performance Period, payment, if any, to the extent earned under the
applicable Performance Objectives and awarded by the Committee, shall be
payable at the end of the Performance Period in proportion to the active
service of the Participant during the Performance Period, as determined by the
Committee. If the Separation From Employment is for any other reason, the
Participant's participation in Section 10 of the Plan shall immediately
terminate, his agreement shall become void and the PUA or PSA shall be
cancelled.
13. Incentives Non-assignable and Non-transferable
Any Incentive granted under this Plan shall be non-assignable and
non-transferable other than as provided in section 14 and shall be exercisable
(including any action of surrender and exercise of rights under section 9)
during the Participant's lifetime only by the Participant who is the holder of
the Incentive or his guardian or legal representative.
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PAGE 11
14. Death of Option Holder
In the event of the death of a Participant who is an Incentive holder
under the Plan while employed by the Company or one of its subsidiaries or
prior to exercise of all rights under an Incentive, the Incentive theretofore
granted may be exercised (including any action of surrender and exercise of
rights under section 9) by the Participant's Beneficiary or, if no Beneficiary
is designated, by the executor or executrix of the Participant's estate or by
the person or persons to whom rights under the Incentive shall pass by will or
the laws of descent and distribution in accordance with the provisions of the
Plan and of the option and to the same extent as though the Participant were
then living.
15. No Right to Continued Employment
Notwithstanding any other provisions of this Plan to the contrary, it
is a condition for eligibility for any benefit or right under this Plan that
each individual agrees that his or her designation as a Participant and any
grant made under the Plan may be rescinded and determined to be void and
forfeited entirely in the absolute and sole discretion of the Committee in the
event that such individual is discharged for Cause.
Incentives granted under the Plan shall not be affected by any change
of employment so long as the Incentive holder has not suffered a Separation
From Employment. A leave of absence granted by the Company or one of its
subsidiaries shall not constitute Separation From Employment unless so
determined by the Committee. Nothing in the Plan or in any Incentive granted
pursuant to the Plan shall confer on any individual any right to continue in
the employ of the Company or one of its subsidiaries or interfere in any way
with the right of the Company or such subsidiary to terminate employment at
any time.
16. Adjustment of Shares
In the event of any change (through recapitalization, merger,
consolidation, stock dividend, split-up, combination or exchanges of shares or
otherwise) in the character or amount of the Company's common stock prior to
exercise of any Incentive granted under this Plan, the Incentives, to the
extent not exercised, shall entitle the Participant who is the holder to such
number and kind of securities as he would have been entitled to had he
actually owned the stock subject to the Incentives at the time of the
occurrence of such change. If any such event should occur, prior to exercise
of an Incentive granted hereunder, which shall increase or decrease the amount
of common stock outstanding and which the Committee, in its sole discretion,
shall determine equitably requires an adjustment in the number of shares which
the Incentive holder should be permitted to acquire, such adjustment as the
Committee shall determine may be made, and when so made shall be effective and
binding for all purposes of the Plan.
Incentives may also be granted having terms and provisions which vary
from those specified in the Plan provided that any Incentives granted pursuant
to this paragraph are granted in substitution for, or in connection with the
assumption of, then existing Incentives granted by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant to or
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PAGE 12
by reason of a transaction involving a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
which the Company or a subsidiary corporation is a party.
17. Loans to Option Holders
The Committee may adopt programs and procedures pursuant to which the
Company may lend money to any Participant who is an Incentive holder for the
purpose of assisting the Participant to acquire or carry shares of common
stock issued upon the exercise of Incentives granted under the Plan.
18. Termination and Amendment of Plan
Unless the Plan shall have been previously terminated as hereinafter
provided, the Plan shall terminate on May 2, 1999, and no Incentives under it
shall be granted thereafter. The Board of Directors, without further approval
of the Company's shareholders, may at any time prior to that date terminate
the Plan, and thereafter no further Incentives may be granted under the Plan.
However, Incentives previously granted thereunder may continue to be exercised
in accordance with the terms thereof.
The Board of Directors, without further approval of the shareholders,
may amend the Plan from time to time in such respects as the Board may deem
advisable; provided, however, that no amendment shall become effective without
prior approval of the shareholders which would: (i) increase (except in
accordance with section 16) the maximum number of shares for which Incentives
may be granted under the Plan; (ii) reduce (except in accordance with section
16) the Incentive price below the Fair Market Value of the Company's common
stock on the date of grant of the Incentive; (iii) extend the term of the Plan
beyond May 2, 1999; (iv) change the standards of eligibility prescribed by
section 5; or (v) increase the maximum awards identified in Sections 7, 8, 9,
10 and 11.
No termination or amendment of the Plan may, without the consent of a
Participant who is a holder of an Incentive then existing, terminate his or
her Incentive or materially and adversely affect his or her rights under the
Incentive.
19. Change in Control
a. Notwithstanding any provision of this Plan to the contrary, upon
the occurrence of a Change in Control as set forth in subsection b., below:
(i) all stock options then outstanding under this Plan shall become fully
exercisable as of the date of the Change in Control, whether or not then
otherwise exercisable; (ii) all SARs which have been outstanding for at least
six months shall become fully exercisable as of the date of the Change in
Control, whether or not then otherwise exercisable: (iii) all terms and
conditions of RSAs then outstanding shall be deemed satisfied as of the date
of the Change in Control; and (iv) all PUAs and PSAs then outstanding shall
be deemed to have been fully earned and to be immediately payable in cash as
of the date of the Change in Control.
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PAGE 13
b. A Change in Control shall be deemed to have occurred on the
earliest of the following dates: (i) the acquisition, other than from the
Company, by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or
more of either the then outstanding shares of common stock of the Company or
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by the Company or any of its
subsidiaries, or any employee benefit plan (or related trust) of the Company
or its subsidiaries, or any corporation with respect to which, following such
acquisition, more than 50 percent of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by the individuals and entities who were the beneficial owners,
respectively, of the common stock and voting securities of the Company
immediately prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the then
outstanding shares of common stock of the Company or the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors, as the case may be; or
(ii) Individuals who, as of this date hereof, constitute the
Board (as of the date hereof the Incumbent Board) cease for any reason to
constitute at least a majority of the Board, provided that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
the individuals and entities who were the respective beneficial owners of the
common stock and voting securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or consolidation, or a
complete liquidation or dissolution of the Company or of the sale or other
disposition of all or substantially all of the assets of the Company.
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PAGE 14
20. Compliance with Regulatory Authorities
Any shares purchased or distributed pursuant to any Incentives
granted under this Plan must be held for investment and not with a view to the
distribution or resale thereof. Each person who shall exercise an Incentive
granted under this Plan may be required to give satisfactory assurances to
such effect to the Company as a condition to the issuance to him or to her of
shares pursuant to such exercise; provided, however, that the Company may
waive such condition if it shall determine that such resale or distribution
may be otherwise lawfully made without registration under the Securities Act
of 1933, or if satisfactory arrangements for such registration are made. Each
Incentive granted under this Plan is further subject to the condition that if
at any time the Board shall in its sole discretion determine that the listing,
registration or qualification of the shares covered by such Incentive upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of or in connection with the granting of such Incentives or the
purchase or transfer of shares thereunder, the delivery of any or all shares
of stock pursuant to exercise of the Incentive may be withheld unless and
until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board.
21. Withholding Tax
Whenever the Company proposes or is required to issue or transfer
shares of common stock under the Plan, a Participant shall remit to the
Company an amount sufficient to satisfy any federal, state or local income and
payroll tax withholding liability prior to the delivery of any certificate or
certificates for such shares. Alternatively, in the sole discretion of the
Company, to the extent permitted by applicable laws including regulations
promulgated under the Exchange Act, such federal, state or local income and
payroll tax withholding liability may be satisfied prior to the delivery of
any certificate or certificates for the shares by an adjustment, equal in
value to such liability, in the number of shares to be transferred to the
Participant. Whenever under the Plan payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any federal, state or
local income and payroll tax withholding liability.
22. Non-Uniform Determinations
Determinations by the Committee under the Plan, including, without
limitation, determinations of the persons to receive Incentives and the form,
amount and timing of such Incentives, and the terms and provisions of such
Incentives and the agreements evidencing the same need not be uniform, and may
be made by the Committee selectively among persons who receive, or are
eligible to receive, Incentives under the Plan, whether or not such persons
are similarly situated.
Without amending the Plan, Incentives may be granted to eligible
employees who are foreign nationals or who are employed outside the United
States or both, on such terms and conditions different from those specified in
the Plan as may, in the judgment of the Committee, be necessary or desirable
to further the purposes of the Plan. Such different terms and conditions may
be reflected in Addenda to the Plan.
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PAGE 15
Addendum I
The Performance Objectives for any Performance Period shall be based
on one or more of the following measures, as determined by the Committee in
writing prior to the beginning of the Performance Period:
1. The achievement by the Company or business unit of specific levels of
Return on Invested Capital ("ROIC"). ROIC for the Company or business unit
means its results of operations divided by its capital.
2. The generation by the Company or business unit of free cash flow.
3. The creation by the Company or business unit of specific levels of
Economic Value Added ("EVA"). EVA for the Company or business unit means its
ROIC less its cost of capital multiplied by its capital.
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PAGE 1
Exhibit 10.12
DEFERRED COMPENSATION PROGRAM
FOR EXECUTIVES OF CSX CORPORATION
AND AFFILIATED COMPANIES
1. Purpose
The purpose of this Program is to provide eligible executives with an
opportunity to supplement their retirement income.
2. Definitions
2.1 "Affiliated Company" shall mean the Corporation and any
company or corporation directly or indirectly controlled by
the Corporation which the Committee designates for
participation in this Program in accordance with Section
13.2.
2.2 "Award" shall mean, for any year, the amount awarded to an
employee of an Affiliated Company for that year and, in the
absence of a Deferral Agreement with respect to such amount,
payable to him in the succeeding year under the MICP,
including any special incentive award.
2.3 "Board" shall mean the Board of Directors of the
Corporation.
2.4 "Committee" shall mean the committee appointed pursuant to
Section 13.1 to administer the Program.
2.5 "Corporation" shall mean CSX Corporation, a Virginia
corporation, and any successor thereto by merger, purchase,
or otherwise.
2.6 "Deferral Agreement" shall mean a completed agreement,
including any attachments and appendices thereto, in the
form determined by the Committee, between an Eligible
Executive and the Affiliated Company of which he is an
employee, under which the Eligible Executive agrees to defer
all or a portion of his Award in accordance with the
provisions of Section 3.
2.7 "Deferral Date" shall mean, with respect to any Deferral
Agreement entered into by an Eligible Executive, the first
day of the month in which the Award subject to the Deferral
Agreement would be payable to the Eligible Executive in the
absence of such Deferral Agreement.
2.8 "Eligible Executive" shall mean, for any year, an employee
of an Affiliated Company who is in MICP grades 1 through 6
as of (a) December 30th of such year, or (b) for calendar
years beginning on or after January 1, 1986, the date in
such year he retired from the Affiliated Companies or
terminated on account of disability, as determined by the
Committee, provided, however, that the Committee, in its
sole discretion, may designate any other employee of an
Affiliated Company as an Eligible Executive for such year.
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PAGE 2
2.9 "Equivalent" shall mean of equal present or accumulated
value based on the interest rates set forth in the
applicable Deferral Agreements. In determining Equivalent
values, only the value of benefits for which the eligibility
requirements have been met shall be included.
2.10 "MICP" shall mean the Affiliated Companies' Management
Incentive Compensation Plans, as from time to time in
effect.
2.11 "Normal Retirement Date" for a Participant shall mean the
later of:
(a) the last day of the month in which his 62nd birthday
occurs or
(b) the earlier of (i) the last day of the month preceding
the 2nd anniversary of the Participant's earliest
Deferral Date or (ii) the last day of the month in
which his 65th birthday occurs.
2.12 "Participant" shall mean an Eligible Executive who elects to
defer a portion of his Award i accordance with the
provisions of Section 3.
2.13 "Program" shall mean this Deferred Compensation Program for
Executives of CSX Corporation and Affiliated Companies.
2.14 "Service" shall mean an employee's months of continuous
employment with the Affiliated Companies. In the event the
employee has a break in his continuous employment, his
period of employment prior to the break shall be credited to
the employee in accordance with the rules governing breaks
in service under the CSX Corporation Pension Plan.
3. Deferral of Awards
3.1 At any time prior to the close of business on December 30 in
any calendar year an Eligible Executive may elect to defer
all or a portion of his Award, if any, for that year. Such
election shall be made by filing a Deferral Agreement with
the Committee on or before the close of business no December
30 of the calendar year for which the Award is made. In the
event that December 30 does not fall on a weekday, such
filing must be made by the close of business on the last
prior business day.
3.2 Subject to the provisions of Sections 3.3 and 3.4:
(a) an Eligible Executive in 1985 may elect to defer up to 100%
of his 1985 Award; and
(b) an Eligible Executive in 1986 may elect to defer up to 100%
of his 1986 Award but not more than the sum of any special
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PAGE 3
incentive award he may receive and the excess of (i) 50% of
the sum of the Awards he could have received for 1985 and
1986 [excluding any special incentive award(s)] if his
individual performance and the performance of his employer
had resulted in the maximum Awards possible under the MICP
(Level IV A), over (ii) the amount, if any, of the 1985
Award (excluding any special incentive award) the Eligible
Executive deferred under a Deferral Agreement. For purpose
of clause (ii), no portion of any special incentive award
shall be considered as having been deferred unless the
Eligible Executive had deferred the maximum amount permitted
without such special incentive award.
3.3 The minimum amount which an Eligible Executive may defer in
any year shall be the lesser of $5,000 or the maximum amount
determined under Section 3.2. If an Eligible Executive
elects to defer less than this amount, his election shall
not be effective.
3.4 In its sole discretion, the Committee may, at any time,
impose additional limits on the maximum amount which an
Eligible Executive may elect to defer under this Program in
any year or may impose additional requirements on the
Eligible Executive's right to defer the maximum amount under
this Program in any year.
3.5 An Eligible Executive's election to defer all or a portion
of his Award shall be effective on the last day such
deferral may be elected, under Section 3.1, for the year for
which the Award is made. An Eligible Executive may revoke
or change his election to defer all or a portion of his
Award at any time prior to the date the election becomes
effective. Any such revocation or change shall be made in a
form and manner determined by the Committee.
4. Normal Retirement Benefit
A Participant who retires from employment with the Affiliated
Companies on his Normal Retirement Date shall receive a benefit
Equivalent to the sum of the amounts set forth in the Participant's
Deferral Agreement(s) plus accrued interest. The benefit shall be
paid in 180 equal monthly installments commencing on the first day of
the month next following the Participant's retirement date, but in no
event prior to the first day of the month next following the
Participant's last Deferral Date, unless the Participant elects to
receive his benefit in accordance with Section 9 of this Program.
5. Delayed Retirement Benefit
A Participant who retires or otherwise terminates his employment with
the Affiliated Companies after his Normal Retirement Date shall
receive a benefit equal to the benefit he would have received under
Section 4 had his benefit commenced on his Normal Retirement Date,
increased by 5/6 of 1% for each complete calendar month between his
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PAGE 4
Normal Retirement Date and the date his benefit commences. The
benefit shall be paid in 180 equal monthly installments commencing on
the first day of the month next following the Participant's
termination of employment, but in no event prior to the first day of
the month next following the Participant's last Deferral Date, unless
the Participant elects to receive his benefit in accordance with
Section 9 of this Program.
6. Early Retirement Benefit
A Participant who has attained age 55, has completed 120 months of
Service and terminates his employment with the Affiliated Companies
prior to his Normal Retirement Date shall receive a benefit
commencing on the first day of the month following his Normal
Retirement Date but in no event prior to the first day of the month
following the Participant's last Deferral Date. The Participant's
benefit shall be equal to the benefit the Participant would have
received under Section 4 had he terminated his employment on his
Normal Retirement date. However, the Participant may elect a lump
sum under Section 9 or may elect, in a time and manner determined by
the Committee, to have payment of his benefit commence no the first
day of any month preceding his Normal Retirement Date, and following
the latest of (i) his termination of employment, (ii) 24 months after
his earliest Deferral Date and (iii) the first of the month following
his last Deferral Date, in which event the amount of his benefit
shall be reduced by 5/6 of 1% for each complete calendar month
between the date his benefit commences and the first day of the month
next following his Normal Retirement Date. However, in no event
shall the monthly benefit be less than an amount Equivalent to the
Participant's deferrals with accrued interest. Benefits under this
Section 6 shall be paid in 180 equal monthly installments, unless the
Participant elects to receive his benefit in accordance with Section
9 of this Program.
7. Separation Benefit
7.1 A Participant who terminates his employment with the
Affiliated Companies prior to being eligible for a benefit
under Sections 4 or 6, but after having completed 120 months
of Service, shall receive a monthly benefit commencing on
the first day of the month next following his Normal
Retirement Date. The benefit shall be equal to the monthly
benefit the Participant would have received under Section 4
had he terminated employment on his Normal Retirement Date.
However, the Participant may elect a lump sum pursuant to
Section 9, or may elect, in a time and manner determined by
the Committee, to have monthly benefits commence no the
first day of any month, prior to his Normal Retirement Date,
and following the latest of (i) his termination of
employment with the Affiliated Companies, (ii) his 55th
birthday or (iii) the last day of the month prior to the 2nd
anniversary of his earliest Deferral Date, in which event
the amount of his benefit shall be reduced by 5/6 of 1% for
each complete calendar month between the date his benefit
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PAGE 5
commences and the first day of the month next following his
Normal Retirement Date. However, in no event shall the
monthly benefit be less than an amount Equivalent to the
Participant's deferred amounts with accrued interest.
Monthly benefits under this Section 7.1 shall be paid in 180
equal monthly installments.
7.2 A Participant who terminates his employment with the
Affiliated Companies, other than on account of death, and is
not eligible for a benefit under Section 7.1 shall receive a
single sum payment equal to the sum of the amounts the
Participant deferred under his Deferral Agreements plus
accrued interest. However, if the Participant terminates
his employment with the Affiliated Companies on account of a
disability within the meaning of Section 8.1, he shall
receive a benefit under this Section 7.2 only if the
Participant elects, in a time and manner determined by the
Committee, to receive such benefit and to cease accruing
Service under Section 8.1. The single sum payment shall be
made on the first day of the month next following the
Participant's termination of employment, or as soon as
practicable thereafter. The Participant shall not receive
any other benefits under this Program.
8. Disability
8.1 A Participant who, in the sole judgment of the Committee,
becomes totally and permanently disabled prior to his
termination of employment with the Affiliated Companies, and
does not make an election under Section 7.2 to receive a
benefit under such Section, shall continue to accrue Service
during his period of disability as if he remained an active
employee. Such a Participant shall be eligible to receive a
benefit under Sections 4, 6 or 7.1 when he meets the age and
Service requirements for such a benefit.
8.2 The Committee may, in its sole discretion, require a
Participant to submit to a medical examination by a
physician approved by the Committee, or present other
evidence satisfactory to the Committee, to establish the
existence or continuance of his disability. The Committee
may require such medical examination or other evidence not
more than once per year. A Participant who refuses to
submit to any required medical examination or to present any
other required evidence under this Section 8.2 shall not be
disabled for purposes of this Program and shall only be
eligible to receive the benefit he would have received under
the Program had he terminated his employment with the
Affiliated Companies immediately prior to the date of such
request.
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PAGE 6
9. Single Sum Payments
A Participant who is eligible to receive a benefit under Sections 4,
5, 6, 7.1 or 8.1 of the program but whose benefits hereunder have not
yet commenced may elect, in a time and manner determined by the
Committee, to receive his benefit in the form of a single sum. The
single sum shall be in the amount of the Participant's deferred
amounts plus accrued interest, provided that, in the case of a
Participant then eligible for immediate commencement of monthly
benefits, such single sum shall not be less than an amount Equivalent
to the value of such monthly benefits. Such single sum shall be paid
on the first day of the fourth month following the later of (i) the
Participant's termination of employment with the Affiliated
Companies, or (ii) the date such election is received by the
Committee. Notwithstanding any other provision hereof, such amount
shall be determined as of a date three months prior to the date of
payment and shall not accrue interest beyond such earlier date.
10. Hardship Withdrawals
10.1 While employed by the Affiliated Companies, a Participant
may, in the event of a severe financial hardship, request a
withdrawal of an amount which does not exceed the single sum
amount determined in Section 9. The request shall be made
in a time and manner determined by the Committee, and shall
not be for a greater amount than the amount required to meet
the financial hardship, and shall be subject to approval by
the Committee.
10.2 For purposes of this Section 10, financial hardship shall
include:
(a) Education of a dependent child where the Participant
can show that without the withdrawal under this
Section 10 the education would be unavailable to the
child;
(b) Illness of the Participant or his dependents,
resulting in severe financial hardship to the
Participant;
(c) the loss of the Participant's home or its contents, to
the extent not reimbursable by insurance or otherwise,
if such loss results in a severe financial hardship to
the Participant; and
(d) any other extraordinary circumstances of the
Participant approved by the Committee if such
circumstances would result in a present or impending
critical financial need which the Participant is
unable to satisfy with funds reasonably available from
other sources.
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PAGE 7
10.3 If a Participant makes a withdrawal under this Section 10,
any other benefit which he may be entitled to under this
Program on his termination of employment shall be
appropriately adjusted to take into account the amount the
Participant received under this Section 10.
11. Death Benefits
11.1 Except as provided in Section 11.10(b), if a Participant
dies while employed by an Affiliated Company, his
beneficiary shall be eligible to receive a single sum
benefit equal to the greatest of:
(a) three times the sum of the amount(s) the Participant
deferred under his Deferral Agreement(s);
(b) the amounts the Participant deferred under his
Deferral Agreement(s) plus accrued interest; or
(c) an amount Equivalent to the monthly benefit the
Participant could have received under the Program, if
any, had he terminated his employment with the
Affiliated Companies on the day immediately preceding
his death and elected to begin receiving the benefit
on the first day of the following month.
The benefit is payable on the first day of the month next
following date of the Participant's death, and shall be in
lieu of all other benefits payable under this Program, other
than any benefit payable under Section 11.6.
11.2 If a Participant who has terminated his employment with the
Affiliated Companies after becoming eligible for a benefit
under Sections 4, 5 or 6, dies prior to the commencement of
any benefit under this Program, his beneficiary shall
receive a benefit under Section 11.1.
11.3 If a Participant who is totally and permanently disabled
under Section 8.1 dies prior to receiving a benefit under
this Program, his beneficiary shall receive a benefit under
Section 11.1.
11.4 If a Participant who is eligible for a benefit under Section
7.1 dies prior to receiving a benefit, his beneficiary will
receive a benefit based on the greater of the amounts
determined under Sections 11.1(b) and 11.1(c).
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PAGE 8
11.5 If a Participant dies after commencing to receive a benefit,
other than a benefit under Section 7.2, but prior to
receiving all remaining benefits due, the remaining benefits
shall be paid to the Participant's beneficiary or contingent
beneficiary, whichever is applicable.
11.6 In addition to any other benefit payable under this Section
11, in the case of a Participant (i) who dies while employed
by an Affiliated Company after becoming eligible for
benefits under Sections 4, 5, or 6 hereof, or (ii) who
terminates employment terminates while eligible for a
benefit under Section 4, 5, or 6 of the Program and then
dies, his beneficiary shall be eligible to receive a benefit
of $10,000, payable in a single sum. This benefit shall be
payable as soon as practicable following the presentation to
the Committee, and the Committee's examination and approval
of, any information or material, including proof of death of
the Participant, the Committee may request. Notwithstanding
anything to the contrary, a benefit shall not be payable on
account of the death of a Participant who received a single
sum benefit under Sections 12 or 14 of the Program.
11.7 A Participant may, in a time and manner determined by the
Committee, designate a beneficiary and one or more
contingent beneficiaries (which may include the
Participant's estate) to receive any benefits which may be
payable under this Section 11. If the Participant fails to
designate a beneficiary or contingent beneficiary, or if the
beneficiary and the contingent beneficiaries fail to survive
the Participant, such benefits shall be paid to the
Participant's estate. The Participant may also designate a
remainder beneficiary to receive any benefits which may be
payable under Section 11.9.
11.8 A Participant may revoke or change any designation made
under Section 11.7 in a time and manner determined by the
Committee.
11.9 If, pursuant to Section 11.7, payments commence to a
beneficiary or contingent beneficiary and if such
beneficiary or contingent beneficiary dies prior to
receiving all payments due under this Plan, any remaining
payments shall be made to the Participant's remainder
beneficiary. If, at the date of such death, there is no
surviving remainder beneficiary, the remaining benefits
hereunder shall be paid to the estate of the beneficiary or
contingent beneficiary previously in receipt of benefits
hereunder.
11.10 (a) If any benefits are payable under this Section 11 to
an individual other than the Participant's spouse,
child under age 21 (or child under age 25 who is a
full-time student at an accredited institute of higher
education), the benefit shall be paid in the form of a
single sum.
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PAGE 9
(b) If benefits become payable to the Participant's
spouse, his child under age 21 (or his child under age
25 who is a full-time student at an accredited
institute of higher education) such benefits (other
than benefits under Section 11.6) shall be payable in
180 monthly installments Equivalent to the single sum
amount determined under Sections 11.1 through 11.5
hereof, as applicable. Monthly benefits shall
commence on the first day of the month following the
Participant's death. The Participant may elect, in a
time and manner determined by the Committee to have
any amounts which may be payable under the Program
paid in accordance with Section 11.10(a).
(c) Notwithstanding anything to the contrary in this
Program, if a Participant's child under age 21 (or
child under age 25 who is a full-time student at an
accredited institute of higher education) is receiving
a benefit under this Program in the form of
installment payments, upon his attaining age 21 (or
age 25 or ceasing to be a full-time student at an
accredited institute of higher education) he shall
receive a single sum Equivalent to his remaining
installments in lieu of receiving such remaining
installments.
12. Special Distribution Rules
Notwithstanding anything to the contrary in this Program, if a
Participant becomes the owner, director or employee of a competitor
of the Affiliated Companies, or if his employment is terminated by an
Affiliated Company on account of actions by the Participant which are
detrimental to the interests of an Affiliated Company, the Committee
may, in its sole discretion, pay the Participant a single sum payment
equal to the sum of the amounts the Participant deferred under his
Deferral Agreements plus accrued interest, reduced by an amount
Equivalent to any payments the Participant may already have received
under this Program. However, if the Participant is receiving a
benefit under the Program, or could be receiving an immediate benefit
under the Program, the single sum shall not be less than an amount
Equivalent to the remaining monthly benefit the Participant is, or
could be, receiving. The single sum payment shall be made as soon as
practicable following the Participant's becoming an owner, director
or employee of a competitor or his termination of employment, as the
case may be, and shall be in lieu of all other benefits which may be
payable to the Participant under this Program.
13. Administration
13.1 This Program shall be administered by the Compensation and
Pension Committee of the Board. The Committee shall
interpret the Program, establish regulations to further the
purposes of the Program and take any other action necessary
to the proper operation of the Program.
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PAGE 10
13.2 The Board, in its sole discretion and upon such terms as it
may prescribe, may permit any company or corporation
directly or indirectly controlled by the Corporation to
participate in the Program for such periods as the Committee
may determine.
13.3 The Committee shall provide adequate notice in writing to
any Participant, beneficiary, contingent beneficiary or
remainder beneficiary whose claim for benefits under this
Program has been denied, setting forth the specific reasons
for such denial. A reasonable opportunity shall be afforded
to any such Participant, beneficiary, contingent beneficiary
or remainder beneficiary for a full and fair review by the
Committee of its decision denying the claim. The
Committee's decision on any such review shall be final and
binding on the Participant, beneficiary, contingent
beneficiary, remainder beneficiary and all other interested
persons.
13.4 All acts and decisions of the Committee shall be final and
binding upon all Participants and employees of the
Affiliated Companies.
14. Termination and Amendment of the Program
14.1 The Board may, in its sole discretion, terminate this
Program and the related Deferral Agreement(s) at any time.
In the event the Program and related Deferral Agreement(s)
are terminated, Participants shall receive a single sum
payment equal to the sum of the amounts they deferred under
their Deferral Agreements plus accrued interest, reduced by
an amount Equivalent to any payments the Participant may
already have received under this Program. However, if the
Participant is receiving a benefit under the Program, or
could be receiving an immediate benefit under the Program,
the single sum shall not be less than an amount Equivalent
to the monthly benefit the Participant is, or could be,
receiving. The single sum payment shall be made as soon as
practicable following the date the Program is terminated and
shall be in lieu of any other benefit which may be payable
to the Participant under this Program.
14.2 The Board, in its sole discretion, may amend this Program
and the related Deferral Agreements in any way on 30 days
prior notice to the Participants. If any amendment to this
Program or to the Deferral Agreements shall adversely affect
the rights of a Participant, the Participant must consent in
writing to such amendment prior to its effective date. If
the Participant does not consent to the amendment, the
Program shall be deemed to be terminated with respect to the
Participant and he shall receive a single sum payment in
accordance with Section 14.1.
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PAGE 11
14.3 Notwithstanding anything to the contrary in this Section 14,
the Board must act to terminate or amend the Program or the
Deferral Agreements in a uniform and nondiscriminatory
manner.
15. Miscellaneous
15.1 The existence of this Program or of a Deferral Agreement
does not constitute a contract for continued employment
between an Eligible Executive or a Participant and an
Affiliated company. The Affiliated Companies reserve the
right to modify an Eligible Executive's or Participant's
compensation and to terminate an Eligible Executive or a
Participant for any reason and at any time, notwithstanding
the existence of this Program or of a Deferral Agreement.
The Affiliated Companies reserve the right not to grant
Awards to Eligible Executives and Participants for any
reason.
15.2 The right to receive any benefit under this Program may not
be transferred, assigned or subject to garnishment,
attachment or other legal or equitable process without the
prior written consent of the Affiliated Companies.
15.3 Nothing contained in this Program or in a Deferral Agreement
shall require the Affiliated Companies to segregate any
monies from their general funds, or to create any trusts, or
to make any special deposits for any amounts to be paid to
any Participant, beneficiary, contingent beneficiary or
remainder beneficiary. Neither the Participant, his
beneficiary, contingent beneficiaries, remainder
beneficiary, heirs or personal representatives shall have
any right, title or interest in or to any funds of the
Affiliated Companies on account of this Program or on
account of having completed a Deferral Agreement.
15.4 All payments under this Program shall be net of an amount
sufficient to satisfy any federal, state or local
withholding tax requirements.
15.5 Prior to paying any benefit under this Program, the
Committee may require the Participant, beneficiary,
contingent beneficiary or remainder beneficiary to provide
such information or material as the Committee, in its sole
discretion, shall deem necessary for it to make any
determination it may be required to make under this Program.
The Committee may withhold payment of any benefit under this
Program until it receives all such information and material
and is reasonably satisfied of its correctness and
genuineness.
15.6 The masculine pronoun shall mean the feminine pronoun and
the singular shall include the plural wherever appropriate.
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PAGE 12
15.7 The terms of this Program and any Deferral Agreement shall
be governed by the laws of the Commonwealth of Virginia.
15.8 The invalidity or unenforceability of any provision of this
Program or of a Deferral Agreement shall in no way affect
the validity or enforceability of any other provision.
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PAGE 13
DEFERRAL AGREEMENT
UNDER THE
DEFERRED COMPENSATION PROGRAM
FOR EXECUTIVES OF CSX CORPORATION
AND AFFILIATED COMPANIES
AGREEMENT effective this 30th day of December, 1985, by and between__________
__________________________________ , a ______________________________________
corporation (the "Company"), participating in the Deferred Compensation
Program for executives of CSX Corporation and Affiliated Companies (the
"Program") and ________________________________, an employee of the Company
residing at_______________________________________________________________(the
"Employee").
WHEREAS, the Employee is employed by the Company in an executive capacity and
has discharged his duties in a capable and efficient manner; and
WHEREAS, the Employee is an Eligible Executive under the Program, has received
and read a copy of the Program, understands the terms and conditions of the
Program and desires to participate in the Program;
NOW, THEREFORE, the Company and the Employee agree as follows:
1. The Employee hereby elects to defer either [complete either A or B
and cross out the one which does not apply]:
A. _____% of his 1985 Award; provided, however, that such amount may
not be less than the amount provided in Section 3.3 of the
Program.
B. $_____ of his 1985 Award, but not less than the amount provided in
Section 3.3 of the Program.
2. Except as otherwise provided under the terms of the Program,
including but not limited to Sections 11, 12 and 14 of the Program,
the total benefit payable by the Company to or no behalf of the
Employee under Section 4 of the Program if he terminates his
employment with the Affiliated Companies on his Normal Retirement
Date shall be $_________ for each $1,000 of the Award deferred,
payable in 180 equal monthly installments of $__________ each.
3. Subject to Section 14 of the Program, the interest rate used to
determine "Equivalent' under Section 2.9 of the Program shall be 16%,
compounded annually. The interest rate used to determine accrued
interest for purposes of Sections 4, 6, 7.2, 9, 11.1(b), 12 and 14 of
the Program shall be 16%, compounded annually, except that for
Participants whose benefits commence after their Normal Retirement
Date pursuant to Sections 4 or 5 of the Program, the interest rate
shall be 10% simple interest per annum (i) for the Participant's
period of employment after his Normal Retirement Date, and (ii) for
any other period of delayed benefit commencement after the
Participant's Normal Retirement Date and preceding the first of the
month following his last Deferral Date. Interest shall accrue from
February 1, 1986 until the date the last payment is made hereunder.
- 13 -
PAGE 14
4. The terms and conditions of the Program are incorporated in this
Deferral Agreement by reference and are binding on the Company and
the Employee in all cases. Defined terms in this Deferral Agreement
shall have the same meaning as the same defined terms in the Program.
5. Subject to the provisions of Section 14 of the Program, the Board may
amend or terminate the Program or this Deferral Agreement at any time
and for any reason.
6. The Employee's Social Security number is ____________________ and his
date of birth is _________________________.
IN WITNESS WHEREOF, the Company and the Employee have signed this Deferral
Agreement on the date first above written.
__________________________________________________
By
__________________________________________________
Title
__________________________________________________
Employee
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PAGE 15
DEFERRED COMPENSATION PROGRAM FOR EXECUTIVE OF
CSX CORPORATION AND AFFILIATED COMPANIES
DESIGNATION OF BENEFICIARY
Under Section 11.7 of the Deferred Compensation Program for Executives of CSX
Corporation and Affiliated Companies (the "Program") I may designate a
beneficiary and contingent beneficiaries to receive any benefits which may be
payable on my behalf under Section 11 of the Program. I understand that if no
beneficiary is named or if the beneficiary and contingent beneficiaries
predecease me, my estate will be deemed to be my beneficiary. I further
understand that I may designate a remainder beneficiary to receive any
benefits which may be payable under Section 11 of the Program in the event of
the subsequent death of my beneficiary or contingent beneficiary after
benefits have commenced to such beneficiary or contingent beneficiary. I
understand that if no remainder beneficiary survives such beneficiary or
contingent beneficiary any remaining benefits will be payable to the estate of
the beneficiary or contingent beneficiary who was previously receiving
benefits hereunder. This designation shall supersede all prior designations
made by me under the Program, if any.
Beneficiary(ies):
Name(s) Address
____________________________
___________________________________________
____________________________
___________________________________________
Contingent Beneficiary(ies)
Name(s) Address
____________________________
___________________________________________
____________________________
___________________________________________
Remainder Beneficiaries
Name(s) Address
____________________________
___________________________________________
____________________________
___________________________________________
If my beneficiary, contingent beneficiary or remainder beneficiary is my
spouse, my child under the age of 21 or my child under the age of 25 who is a
full-time student at an accredited institute of higher education, I want ( )
do not want ( ) any benefit to which they may be entitled under this Program
paid in a single sum.
____________________________________________________________________
Date Participant's Signature
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PAGE 16
AMENDMENT TO DEFERRED COMPENSATION PROGRAM
FOR CSX CORPORATION
AND AFFILIATED COMPANIES
1. Separation Benefit
RESOLVED, that the first sentence of Section 7.1 is amended,
effective January 1, 1992, to read as follows:
"7.1 A Participant who terminates his employment with the
Affiliated Companies prior to being eligible for a benefit
under Sections 4 or 6, but after having completed 120 months
of Service, shall receive a monthly benefit commencing on
the first day of the month next following his Normal
Retirement Date; provided, however, that effective January
1, 1992, a Participant shall not be eligible for a benefit
under this Section 7.1 if the Participant terminates
employment without the consent of the Affiliated Companies."
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PAGE 17
AMENDMENT NO. 1
TO THE
DEFERRED COMPENSATION PROGRAM
FOR EXECUTIVES OF CSX CORPORATION
AND AFFILIATED COMPANIES
WHEREAS, the Board of Directors of CSX Corporation may amend the Deferred
Compensation Program for Executives of CSX Corporation and Affiliated
Companies (the "Program") at any time pursuant to Section 14.2 of the Program;
NOW, THEREFORE, the Board of Directors hereby amends the Program, effective as
of January 1, 1987, as follows:
1. Section 2.8 of the Program is hereby amended by deleting the words
"MICP grades 1 through 6" and substituting therefor the words "salary
grades 22 through 40".
2. Section 3.2 of the Program is hereby amended in its entirety to read
as follows:
"3.2 Subject to the provisions of Sections 3.3 and 3.4:
(a) an Eligible Executive in 1985 may elect to defer up to
100% of his 1985 Award; and
(b) An Eligible Executive in 1986 may elect to defer up to
100% of his 1986 Award."
3. Section 9 of the Program is hereby amended in its entirety to read as
follows:
"9. Single Sum Payments
A Participant who is eligible to receive a benefit under Sections
4, 5, 6, 7.1 or 8.1 of the Program but whose benefits hereunder
have not yet commenced may, with the consent of the Committee,
elect, in a time and manner determined by the Committee, to
receive his benefit in the form of a single sum. The single sum
shall be in the amount of the Participant's deferred amounts plus
accrued interest, provided that, in the case of a Participant then
eligible for immediate commencement of monthly benefits, such
single sum shall not be less than an amount Equivalent to the
value of such monthly benefits. Such single sum shall be paid on
the first day of the fourth month following the later of (i) the
Participant's termination of employment with the Affiliated
Companies, or (ii) the date such election is received by the
Committee. Notwithstanding any other provision hereof, such
amount shall be determined as of a date three months prior to the
date of payment and shall not accrue interest beyond such earlier
date."
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PAGE 18
AMENDMENT NO. 3
TO THE
DEFERRED COMPENSATION PROGRAM
FOR EXECUTIVES OF CSX CORPORATION
AND AFFILIATED COMPANIES
WHEREAS, the Board of Directors of CSX Corporation may amend the Deferred
Compensation Program for Executives of CSX Corporation and Affiliated
companies (the "Program") at any time pursuant to Section 14.2 of the Program:
NOW, THEREFORE, the Board of Directors hereby amends the Program, effective as
of June 30, 1992, as follows:
Section 12 of the Program is hereby amended in its entirety to read
as follows:
"12. Special Distribution Rules
Notwithstanding anything to the contrary in this Program, if
(a) a Participant becomes the owner, director or employee of
a competitor of the Affiliated Companies, (b) his employment
is terminated by an Affiliated Company on account of actions
by the Participant which are detrimental to the interests of
an Affiliated Company, or (c) he engages in conduct
subsequent to the termination of his employment with the
Affiliated Companies which the Committee determines to be
detrimental to the interests of an Affiliated Company, then
the Committee may, in its sole discretion, pay a Participant
a single sum payment equal to the sum of the amounts the
Participant deferred under his Deferral Agreements plus
accrued interest, reduced by an amount Equivalent to any
payments the Participant may already have received under
this Program. However, if the Participant is receiving a
benefit under the Program or could be receiving an immediate
benefit under the Program, the single sum shall not be less
than an amount Equivalent to the remaining monthly benefit
the Participant is, or could be, receiving. The single sum
payment shall be made as soon as practicable following the
Participant's becoming an owner, director or employee of a
competitor, his termination of employment or the Committee's
determination of detrimental conduct, as the case may be,
and shall be in lieu of all other benefits which may be
payable to the Participant under this Program.
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PAGE 19
COLI REFERENCE MANUAL NOVEMBER 1990
CSX CORPORATION
CORPORATE DIRECTOR DEFERRED COMPENSATION PLAN
EFFECTIVE NOVEMBER 1, 1980
As Amended September 11, 1985
1. Purpose
The purpose of this Plan is to permit members of the Board of
Directors of CSX Corporation to elect deferred receipt of director's fees.
This Plan is intended to constitute a deferred compensation plan for corporate
director's fees in accordance with Revenue Ruling 71-419, Cumulative Bulletin
1971-2, page 220.
2. Definitions
The following words or terms used herein shall have the following
meanings:
(a) "Plant" -- Corporate Director Deferred Compensation Plan
(b) "CSX" -- CSX Corporation.
(c) "Board" -- Board of Directors of CSX.
(d) "Member" -- any person duly elected to the Board.
(e) "Participant" -- any Member who elects to participate in the
Plan.
(f) "Secretary" -- the Corporate Secretary of CSX.
(g) "Director's Fees" -- any compensation, whether for Board
meetings for Committee meetings or otherwise, earned by a
Member for services rendered as a Member during a particular
calendar year in which he has elected to be a Participant.
(h) In any instance in which the male gender is used herein, it
shall also include persons of the female gender in
appropriate circumstances.
3. Merger Provisions
Any person who was a Participant under the Chessie System, Inc.
Corporate Director Deferred Compensation Plan or who was a director and had
made an election under the Seaboard Coast Line Industries, Inc. Nonfunded
Deferred Compensation Plan for Directors shall automatically become a
- 19 -
PAGE 20
Participant under this Plan effective upon the merger of Chessie System, Inc.
and Seaboard Coast Line Industries, Inc. into the Corporation, provided that
such a person shall be a Member as defined in this Plan.
Director's Fees deferred previously under the terms of the aforesaid
director deferred compensation plans of Chessie System, Inc. and Seaboard
Coast Line Industries, Inc. shall remain subject to the terms and conditions
respectively provided therein, and the terms of this Plan shall only govern as
to Director's Fees earned on and after the date of merger into the
Corporation.
4. Participation
A Member may become a Participant for any calendar year by filing a
written Election to Participate in the Plan with the Secretary not later than
December 31 immediately prior to the year in which Director's Fees are to be
earned.
An Election to Participate may be made with respect to all or any
part of Director's Fees to be earned for any year or years to which such
Election to Participate may elate.
An Election to Participate, once filed, shall apply to Director's
Fees earned in subsequent years in which a Participant shall serve as a
Member, unless amended or revoked by written request to the Secretary.
Any person who becomes a Member and who was not a Member on the
preceding December 31 may file an Election to Participate before his term as a
Member begins.
5. Deferral of Director's Fees
CSX shall, during any year in which a Participant has an Election to
Participate on file with the Secretary, withhold and defer payment of all or
any specified part of Participant's Director's Fees in accordance with his
Election to Participate. Prior to the beginning of any year a Participant can
elect to have all or any portion of the amounts withheld, including all
earnings thereon, or to be withheld, credited to an interest-accruing account
("Interest Account") and/or to an enhanced interest-accruing account
("Enhanced Interest Account"), and/or to a CSX phantom stock account ("Stock
Account"). Such deferral election can be made or changed before the beginning
of any year.
Interest shall accrue on the Interest Account from the date the
deferred Director's Fee would otherwise have been paid to the Participant
until it is actually paid, such interest to be credited to the Participant's
account and compounded quarterly at the end of each calendar quarter. The
rate of interest will be reviewed periodically.
Interest shall accrue on the Enhanced Interest Account from the first
day of the month following the deferral and shall compound thereafter at an
annual rate of 16% until all amounts are finally paid to the Participant.
- 20 -
PAGE 21
Credits t the Stock Account shall be in full and fractional units
based on the closing price for CSX common stock as reported on the New York
stock Exchange - Composite Listing ("NYSE") on the date the fees would
otherwise have been paid to the Participant. Dividends shall be credited in
full and fractional units to the account based on the number of units in the
account on the record date and calculated based on the closing price for CSX
common stock on the dividend payment date.
A Participant, while a Member, may elect prior to the beginning of
any year to transfer all or any portion of amounts deferred, including all
earnings thereon, to an Enhanced Interest account, and Interest Account and/or
a Stock Account, provided, however, that no transfer may be made out of an
Enhanced Interest account.
6. Distribution of Deferred Director's Fees
Amounts deferred under the Plan and credited to an Interest Account
or Stock Account shall be distributed to a Participant from the account(s)
maintained in respect of his account in a lump sum at the beginning of the
year following the year in which a Participant ceases to be a Member, unless
he shall elect installments as provided below. Amounts deferred and credited
to an Enhanced Interest Account shall be distributed over an installment
period elected by the Participant.
The value of a Participant's Interest Account shall be the sum of
amounts deferred and all interest accrued thereon. The value of an Enhanced
Interest Account shall be the sum of amounts deferred and all interest accrued
thereon. The value of a Stock Account shall be the value of the units in a
Participant's account based on the closing price for CSX common stock as
reported on the NYSE no the last business day of the year in which a
Participant ceases to be a Member, unless he shall elect annual or quarterly
installments as provided below. The value of a Stock Account will fluctuate
in value in line with the fluctuation in the price of CSX common stock. There
can be no assurance on the market value of the phantom units either at the
time of acquisition or at any time during the distribution period, nor can
there be any assurance as to the continuation of dividends.
Distribution of Deferred amounts shall begin with either the first
day of the calendar year immediately following the year in which a
Participant shall cease to be a Member for any reason other than death, or the
first day of the calendar year immediately following the year in which a
Participant shall cease to be a Member and shall have attained aged 65, as the
Member may elect.
If installment payments are elected for Interest or Stock Accounts,
payments shall be made, as the Participant may elect, for either (a) five
years, (b) ten years, or (c) any other designated period which shall be not
less than the period he was a Participant nor exceed ten years. For Enhanced
Interest Accounts, the Participant may elect to receive payments over (a) five
years, (b) ten years, or (c) fifteen years.
For Interest Accounts and Stock Accounts, installments shall be on an
annual or quarterly basis as the member may elect. The amount of each
installment shall be determined by multiplying the value of the Participant's
- 21 -
PAGE 22
account at the end of the calendar quarter immediately preceding the
installment date by a fraction, the numerator of which shall be one (1) and
the denominator of which shall be the number of installment payments over
which payment of such amount is to be made, less the number of installment
payments theretofore made.
For Enhanced Interest Accounts, payments shall be in level
installments on a monthly basis over the number of years (five, ten, or
fifteen) as elected by the Member.
The elections provided in this Section 6 shall be made in writing in
a Participant's Election to Participate and shall be subject to all other
provisions of the Plan relating thereto and to the deferral of receipt of
Director's Fees.
In the event a Participant shall die while he is a Member, the amount
appearing as the credit balance of his account, or the value of the units in
his Stock Account, shall be paid in either a lump sum or installments
(consistent with the election made by the Participant as described in this
Section 6) to his Designated Beneficiary. Each Participant may file with the
Secretary a Designation of Beneficiary for this purpose.
In the event a Participant shall die after he ceases to be a Member
and before he has received complete distribution from his account, any credit
balance of his account, including interest, or the value of the units in his
Stock Account, shall be paid to his Designated Beneficiary consistent with the
election made by the Participant as described in this Section 6.
In the event a Participant shall not file a Designation of
Beneficiary, or his Designated Beneficiary is not living at the Participant's
death, the balance credited to his account, including interest, shall be paid
in full to his estate not later than the tenth day of the calendar year
following his date of death.
7. Death Benefit
For Participants electing to have deferred Director's Fees credited
to an Enhanced Interest Account who die while a Member, a death benefit equal
to the greater of three times the amount o Director's Fees deferred or the
amount of Director's Fees deferred plus accumulated interest will be paid to
the Member's Designated Beneficiary. For Participants in an Enhanced Interest
Account who die after ceasing to be a Member, a lump sum death benefit of
$10,000 will be paid to the Designated Beneficiary. This death benefit shall
apply only to Director's Fees deferred after December 31, 1985 and which have
been credited to an Enhanced Interest Account. This death benefit shall not
apply to any amounts credited to an Enhanced Interest account by reason of
transfer from an Interest Account and/or a Stock Account.
In the event a Participant shall not file a Designation of
Beneficiary, or the Designated Beneficiary is not living at the Participant's
death, the death benefit shall be paid to the Participant's estate.
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PAGE 23
8. Amendment or Termination of Election to Participate
A Participant may amend or terminate his Election to Participate by
written request to the Secretary, which shall become effective for the
calendar year following the year in which his request is made; provided,
however, that no amendment shall be made to contravene the deferral of
Director's fees previously made under the provisions of this Plan.
In the event a Participant amends or terminates his Election to
Participate and remains a Member, he shall not be entitled to receive any
distribution from his account until he ceases to be a Member, and
distributions shall be made only as provided in Section 6 of this Plan.
9. Obligation of CSX
This Plan shall be unfunded and credits to the memorandum account(s)
of each Participant shall not be set apart for him nor otherwise made
available so that he may draw upon it at any time, except as provided in this
Plan. Neither any Participant nor his Designated Beneficiary shall have any
right, title, or interest in such credits or any claim against them. Payments
may only be made at such times and in the manner expressly provided in this
Plan. CSX's contractual obligation is to make the payments when due. No
notes or security for the payment of any Participant's account shall be issued
by CSX.
10. Claims Against Participant's Account
No credits to the account of any Participant under this Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, and any attempt to do so shall be void. Nor
shall any credit be subject to attachment or legal process for debts or other
obligations. Nothing contained in this Plan shall give any Participant any
interest, lien, or claim against any specific asset of CSX. no Participant or
his Designated Beneficiary shall have any rights other than as a general
creditor of CSX.
11. Competition by Participant
In the event a Participant ceases to be a Member and becomes a
proprietor, officer, partner, employee, director, or otherwise becomes
affiliated with any business that is in competition with the Corporation, the
entire balance credited to his account, including interest, or the value of
the credits in his Stock Account, may, if directed by the Board i its sole
discretion, be paid immediately to him in a lump sum.
12. Payment of Credit Balance to Participant's Account
Notwithstanding anything herein to he contrary, the Board may, in its
sole discretion, direct payment in a lump sum, of any or all of the credit
balance appearing at the time in the account of a Participant, and/or of the
value of the units in his Stock Account.
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PAGE 24
13. Amendment or Termination
This Plan may be altered, amended, suspended, or terminated at any
time by the Board; provided, however, that no alteration, amendment,
suspension, or termination shall be made to this Plan which would result in
the distribution of amounts credited to the Accounts of all Participants in
any manner other than is provided in this Plan without the consent of all
Participants.
- 24 -
PAGE 25
CSX CORPORATION
CORPORATE DIRECTOR DEFERRED COMPENSATION PLAN
ELECTION TO PARTICIPATE
I. In accordance with Section 4 of CSX's Corporate Director Deferred
Compensation Plan, as amended September 11, 1985, (the "Plan"), I
hereby elect:
A. To participate in the Plan beginning January 1, 1986 for so long
as I continue to be a Director or until this election is amended
or revoked by written request to the Secretary of the Corporation,
and
B. To have the Corporation withhold and defer the payment of my
Director's Fees as follows (please complete one):
____ All Director's fees, including annual retainer and Board and
Committee meeting fees.
____ Only the annual retainers, including any retainers paid for
committee chairmanships.
____ Retainers and fees as follows:
________________________________________________
II. The amounts to be deferred, including interest or dividends accrued
thereon, should be credited as follows:
Enhanced Interest Account Interest Account Phantom Stock Account
____% ____% ______%
III. Director's Fees already deferred and credited to any account,
including all interest or dividends accrued thereon, should be
credited at the close of business on December 31, 1985, along with
all future interest or dividends accrued thereon, as follows:
From my present Interest Account- From my present Phantom Stock Account-
____ No change. ____ No change.
___% to an Enhanced Interest ___% to an Enhanced Interest Account.
Account
___% to a CSX Phantom Stock ___% to a CSX Phantom Stock Account.
Account
IV. It is understood that I may change my election prior to the beginning
of any calendar year, so long as I continue to be a Member, except
that no transfers may be made out of an Enhanced Interest Account.
______________________________ ______________________________________
Date Signature
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PAGE 26
CSX CORPORATION
CORPORATE DIRECTOR DEFERRED COMPENSATION PLAN
DISTRIBUTION OF DEFERRED DIRECTOR'S FEES
I. For Enhanced Interest Accounts:
Monthly payments on a level installment basis should begin in
January of the calendar year following the year in which I cease
to be a Director and continue for a period of:
five years________,
ten years_________, or
fifteen years__________. (Select one)
II. For Interest Accounts and Phantom Stock Accounts:
Payment should begin in January of the calendar year following the
year in which I cease to be a Director and be:
______ in a lump sum
______ in installment payments over
five years _______, or
ten years ________.
If installment payments are elected, such
payments should be made
annually _______, or
quarterly _______.
___________________ ________________________________
Date Signature
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PAGE 27
CSX CORPORATION
CORPORATE DIRECTOR DEFERRED COMPENSATION PLAN
DESIGNATION OF BENEFICIARY
Under Section 6 of the Plan, I may file with the Corporate Secretary
f Designation of Beneficiary. Further, the Designation may be changed by me
in writing at any time. I understand that if no Beneficiary is named or if
such Beneficiary pre-deceases me, all payments will be made to my estate.
This Designation shall apply to all balances credited to my account and to any
death benefit that may be payable under Section 7 of the Plan.
Primary Beneficiary(ies):
Name(s) Address
__________________________________ ___________________________________
__________________________________ ____________________________________
__________________________________ ____________________________________
___________________________ ___________________________________
Date Signature
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PAGE 28
COLI REFERENCE MANUAL MARCH 1992
AMENDMENT TO CORPORATE DIRECTOR DEFERRED COMPENSATION PLAN
1. Lump Sum Payment on Account of Financial Hardship
RESOLVED, that Section 13 is amended, effective December 1, 1990,
by adding the following sentence at the end thereof:
"Any such lump sum distribution must be approved without regard to
the vote of the participant whose account is under consideration.
Such distributions shall only be permitted in cases of financial
emergency or severe hardship beyond the control of the participant
or beneficiary. Such distributions are limited to the amount
necessary to satisfy the financial emergency."
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PAGE 1
Exhibit 10.13
SUPPLEMENTARY SAVINGS AND INCENTIVE AWARD DEFERRAL PLAN
FOR ELIGIBLE EXECUTIVES OF
CSX CORPORATION AND AFFILIATED COMPANIES
As Amended and Restated
January 1, 1993
TABLE OF CONTENTS
Page
ARTICLE 1.DEFINITIONS......................................... 1
1.1 Account.......................................... 1
1.2 Affiliated Company............................... 1
1.3 Award............................................ 1
1.4 Award Deferral Agreement......................... 1
1.5 Board of Directors............................... 1
1.6 Change of Control................................ 1
1.7 Code............................................. 3
1.8 Committee........................................ 3
1.9 Compensation..................................... 3
1.10 Corporation...................................... 3
1.11 Deferral Agreement............................... 4
1.12 Effective Date................................... 4
1.13 Eligible Executive............................... 4
1.14 Matching Credits................................. 5
1.15 Member........................................... 5
1.16 MICP............................................. 5
1.17 Participating Company............................ 5
1.18 Plan............................................. 5
1.19 Salary Deferrals................................. 5
1.20 Salary Deferral Agreement........................ 5
1.21 Salary Deferral Package.......................... 5
1.22 Tax Savings Thrift Plan.......................... 6
1.23 Valuation Date................................... 6
ARTICLE 2. MEMBERSHIP......................................... 7
2.1 In General....................................... 7
2.2 Modification of Initial Deferral Agreement....... 7
2.3 Termination of Membership; Re-employment......... 8
2.4 Change in Status................................. 9
ARTICLE 3. AWARD DEFERRAL PROGRAM............................. 10
3.1 Filing Requirements.............................. 10
3.2 Amount of Deferral............................... 11
3.3 Crediting to Account............................. 11
ARTICLE 4. SALARY DEFERRAL PROGRAM............................ 13
4.1 Filing Requirements.............................. 13
4.2 Salary Deferral Agreement........................ 13
4.3 Amount of Salary Deferrals....................... 14
4.4 Changing Salary Deferrals........................ 15
4.5 Certain Additional Credits....................... 16
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PAGE 2
ARTICLE 5. MAINTENANCE OF ACCOUNTS............................ 17
5.1 Adjustment of Account............................ 17
5.2 Investment Performance Elections................. 18
5.3 Changing Investment Elections.................... 19
5.4 Vesting of Account............................... 19
5.5 Individual Accounts.............................. 19
ARTICLE 6. PAYMENT OF BENEFITS................................ 20
6.1 Commencement of Payment.......................... 20
6.2 Method of Payment................................ 21
6.3 Applicability.................................... 23
6.4 Hardship......................................... 23
6.5 Designation of Beneficiary....................... 24
6.6 Special Distribution Rules....................... 24
6.7 Status of Account Pending Distribution........... 25
6.8 Installments and Withdrawals Pro-Rata............ 25
6.9 Acceleration of Payments......................... 25
ARTICLE 7. AMENDMENT OR TERMINATION........................... 27
7.1 Right to Terminate............................... 27
7.2 Right to Amend................................... 27
7.3 Uniform Action................................... 27
ARTICLE 8. GENERAL PROVISIONS................................. 28
8.1 No Funding....................................... 28
8.2 No Contract of Employment........................ 28
8.3 Withholding Taxes................................ 28
8.4 Nonalienation.................................... 28
8.5 Administration................................... 29
8.6 Construction..................................... 30
ARTICLE 9. POST-SECONDARY EDUCATION SUB-ACCOUNTS.............. 31
9.1 Post-Secondary Education Sub-Accounts............ 31
9.2 Distribution of Post-Secondary Education
Sub-Accounts..................................... 32
9.3 Construction..................................... 34
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PAGE 3
INTRODUCTION
This Supplemental Savings and Incentive Award Deferral Plan for
Eligible Executives of CSX Corporation and Affiliated Companies (the "Plan")
is effective October 1, 1987. This plan is generally intended to provide
certain executives eligible to participate in the Tax Savings Thrift Plan for
Employees of CSX Corporation and Affiliated Companies (the "Savings Plan")
with an opportunity to defer a portion of their salary, and/or award(s) under
the Management Incentive Compensation Plan until their retirement or other
termination of employment and to restore employer matching contributions lost
under the Plan because of the application of Sections 401(a)(17),401(k),401(m)
and 415 of the Internal Revenue Code. Commencing with respect to MICP awards
paid and salary earned after 1990, eligible executives may, if they so elect,
designate all or a portion of such deferrals to be used for payment of post-
secondary education expenses for one or more members of their families. The
Plan is unfunded and is maintained by CSX Corporation and Affiliated Companies
primarily for the purpose of providing deferred compensation for a select
group of management who are highly-compensated employees. The Plan reads as
hereinafter set forth.
ARTICLE 1. DEFINITIONS
1.1 Account shall mean the book-keeping account maintained for each
Member to record his Salary Deferrals, Matching Credits and the amount of
Awards he has elected to defer, as adjusted pursuant to Article 5. The
Account shall consist of the sub-accounts, if any, established pursuant to
Article 9 (hereinafter referred to as the "Post Secondary Education Sub-
account") and all amounts not in those accounts shall be allocated to a sub-
account hereinafter referred to as the "Retirement Sub-account". The
Committee may establish such other sub-accounts within a Member's Account as
it deems necessary to implement the provisions of the Plan.
1.2 Affiliated Company shall mean the Corporation and any company or
corporation directly or indirectly controlled by the Corporation.
1.3 Award shall mean, for any year, the amount awarded to an
employee of an Affiliated Company for that year (including any special
incentive award) and, in the absence of an Award Deferral Agreement with
respect to such amount, payable to him in the succeeding year under the MICP.
1.4 Award Deferral Agreement shall mean a Deferral Agreement filed
in accordance with the award deferral program as described in Article 3.
1.5 Board of Directors or "Board" shall mean the Board of Directors
of the Corporation.
1.6 Change of Control shall mean any of the following:
(a) The acquisition, other than from the Corporation, by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either the then outstanding
- 3 -
PAGE 4
shares of common stock of the Corporation or the combined
voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election
of directors, but excluding for this purpose, any such
acquisition by the Corporation or any of its subsidiaries,
or any employee benefit plan (or related trust) of the
Corporation or its subsidiaries, or any corporation with
respect to which, following such acquisition, more than 50%
of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by the
individuals and entities who were the beneficial owners,
respectively, of the common stock and voting securities of
the Corporation immediately prior to such acquisition in
substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then
outstanding shares of common stock of the Corporation or the
combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in
the election of directors, as the case may be; or
(b) Individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent
to the date hereof whose election or nomination for election
by the Corporation's shareholders was approved by a vote of
at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of
the Directors of the Corporation (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(c) Approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with
respect to which the individuals and entities who were the
respective beneficial owners of the common stock and voting
securities of the Corporation immediately prior to such
reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation beneficially
own, directly or indirectly, more than 50% or, respectively,
the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Corporation or of its sale
or other disposition of all or substantially all of the
assets of the Corporation.
- 4 -
PAGE 5
1.7 Code shall mean the Internal Revenue Code of 1986, as amended
from time to time.
1.8 Committee shall mean the committee appointed pursuant to Section
to 8.5 administer the Plan.
1.9 Compensation shall mean the "Base Compensation" of an Eligible
Executive as defined in the Tax Savings Thrift Plan, determined prior to (a)
any Salary Deferrals under Article 4, and (b) any limit on compensation
imposed by Section 401(a)(17) of the Code.
1.10 Corporation shall mean CSX Corporation, a Virginia corporation,
and any successor thereto by merger, purchase or otherwise.
1.11 Deferral Agreement shall mean either an Award Deferral Agreement
or a Salary Deferral Agreement, or both if the context so requires. A
Deferral Agreement shall be a completed agreement between an Eligible
Executive and a Participating Company of which he is an employee under which
the Eligible Executive agrees to defer an Award or make Salary Deferrals under
the Plan, as the case may be. The Deferral Agreement shall be on a form
prescribed by the Committee and shall include any amendments, attachments or
appendices.
1.12 Effective Date shall mean October 1, 1987 or with respect to the
Eligible Executives of a company which adopts the Plan, the date such company
becomes a Participating Company.
1.13 Eligible Executive shall mean an employee of a Participating
Company, provided that:
(a) for purposes of the award deferral program in Article 3,
such employee (i) is employed by a Participating Company in
the salary grades of 21 through 40 inclusive, as of December
30 of the calendar year in question or (ii) retired from the
Participating Companies or terminated employment with the
Participating Companies on account of disability, as
determined by the Committee, and was in salary grades 21
through 40 inclusive at the time of such retirement or
termination or
(b) for purposes of the salary deferral program described in
Article 4, such employee is eligible for membership in the
Tax Savings Thrift Plan and is employed in salary grades 21
through 40 inclusive.
The Committee may, in its sole discretion, designate any
other employee of an Affiliated Company an Eligible
Executive.
1.14 Matching Credits shall mean amounts credited to the Account of a
Member pursuant to Section 4.5.
1.15 Member shall mean, except as otherwise provided in Article 2,
each Eligible Executive who has executed an initial Deferral Agreement as
described in Section 2.1.
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PAGE 6
1.16 MICP shall mean the Participating Companies' Management
Incentive Compensation Program.
1.17 Participating Company shall mean the Corporation any company or
corporation directly or indirectly controlled by the Corporation, which the
Board designates for participation in the Plan in accordance with Section
8.5(b).
1.18 Plan shall mean this Supplementary Savings and Incentive Award
Deferral Plan for Eligible Executives of CSX Corporation and Affiliated
Companies, as amended from time to time.
1.19 Salary Deferrals shall mean the amounts credited to a Member's
Account under Section 4.3.
1.20 Salary Deferral Agreement shall mean a Deferral Agreement filed
in accordance with the salary deferral program described in Article 4.
1.21 Salary Deferral Package shall mean a percentage of an Eligible
Executive's Base Compensation elected in a Salary Deferral Agreement, pursuant
to Section 4.1 hereof, and shall be an integral percentage not in excess of
thirty (30) percent.
1.22 Tax Savings Thrift Plan shall mean the Tax Savings Thrift Plan
for Employees of CSX Corporation and Affiliated Companies, as amended from
time to time.
1.23 Valuation Date shall mean the last business day of each calendar
month following the Effective Date.
ARTICLE 2. MEMBERSHIP
2.1 In General:
(a) An Eligible Executive shall become a Member as of the date
he files his initial Deferral Agreement with the Committee.
However, such Deferral Agreement shall be effective for
purposes or deferring an Award or making Salary Deferrals
only as provided in Articles 3 and 4.
(b) A Member's Initial Deferral Agreement shall be in writing
and properly completed upon a form approved by the
Committee, which shall be the sole judge of the proper
completion thereof. Except as provided in Section 4.1(d),
such Agreement shall provide for the deferral of an Award or
for Salary Deferrals, shall specify the date of distribution
and form of payment, and may include such other provisions
as the Committee deems appropriate. An initial Deferral
Agreement shall not be revoked or modified except pursuant
to the establishment of a Post-Secondary Education Sub-
account as provided in Article 9 or as otherwise provided in
this Article 2.
- 6 -
PAGE 7
(c) As a condition for membership, the Committee may require
such other information as it deems appropriate.
2.2 Modification of Initial Deferral Agreement
(a) A Member may elect to change, modify or revoke his initial
Deferral Agreement as follows:
(i) A Member may change the amount or Award he elects to defer
on his initial Award Deferral Agreement prior to the
Agreement's effective date as provided in Article 3.
(ii) A Member may changed the rate of his Salary Deferrals, or
suspend his Salary Deferrals on account of severe financial
hardship, as provided in Article 4.
(iii)A Member may change the event entitling him to distribution
which he designated on his initial Deferral Agreement,
subject to the five percent (5%) penalty described in
Section 6.1(b).
(iv) A Member may change the form of payment which he designated
on his initial Deferral Agreement, subject to the five
percent (5%) penalty described in Section 6.2(b).
Notwithstanding any provision in this Section 2.2(a) to the
contrary, the establishment of a Post-Secondary Education
Sub-account with respect to future Salary Deferrals and
Awards as provided in Article 9 shall not be deemed a change
for the purposes of this Section 2.2(a).
(b) A Member who files an Award Deferral Agreement specifying
the amount of Award he is deferring for a calendar year
shall not, in this respect, be deemed to have changed or
revoked his initial Deferral Agreement.
2.3 Termination of Membership; Re-employment
(a) Membership shall cease, subject to Section 2.4, upon a
Member's termination of employment; provided that if a
former Eligible Executive is receiving severance payments
under a Participating Company's severance pay program or is
eligible to defer an Award under Article 3, he shall not be
deemed to have terminated employment until the later time of
the date the severance payments cease or the date the Award
would have been paid. Membership shall be continued during
a leave of absence approved by the Participating Companies.
(b) Upon re-employment as an Eligible Executive, a former member
may become a Member again as follows:
(i) in the case of a former Member who prior to re-employment
received the balance in his Account, by executing a Deferral
Agreement under Section 2.1 as though for all purposes of
- 7 -
PAGE 8
the Plan the Affiliated Companies had never employed the
former Member;
(ii) in the case of a former Member who prior to re-employment
did not received the balance in his Account, by executing a
Deferral Agreement under Section 2.1; provided his previous
elections of the event entitling him to distribution, form
or payment and beneficiary shall remain in effect.
2.4 Change in Status
a. In the event that a Member ceases to be an Eligible Executive with
respect to Salary Deferrals but continues to be employed by an
Affiliated Company his Salary Deferrals and Matching Credits shall
thereupon be suspended until such time as he shall once again
become an Eligible Executive. All other provisions os his Salary
Deferral Agreement shall remain in force and he shall continue to
be a Member of the Plan.
b. In the event that a Member ceases to be an Eligible Executive with
respect to the deferral of Awards hereunder but continues to be
employed by an Affiliated Company, he shall continue to be a
Member of the Plan but shall not be eligible to defer any portion
of future awards until such time as he shall once again become an
Eligible Executive.
ARTICLE 3. AWARD DEFERRAL PROGRAM
3.1 Filing Requirements:
(a) At such time as the Committee may prescribe prior to the
close of business on December 30 in any calendar year an
Eligible Executive may elect to defer all or a portion of
his Award, if any, for that year. Such election shall be
made by filing an Award Deferral Agreement with the
Committee on or before the close of business on December 30
of the calendar year for which the Award is made. In the
event that December 30 does not fall on a weekday, such
filing must be made by the close of business on the last
prior business day.
(b) Notwithstanding paragraph 3.1(a) above, an individual who
becomes an Eligible Executive after the calendar year for
which an Award is made, but prior to the first day of the
month in which such Award is determined including required
action by the Board, may elect to defer all or a portion of
that Award in accordance with this paragraph 3.1(b). Such
election shall be made by filing an Award Deferral Agreement
during the 30 day or shorter period beginning on the date
the individual becomes an Eligible Executive and ending no
later than the last day of the month preceding the month in
which the Award is determined.
- 8 -
PAGE 9
(c) An Eligible Executive's election to defer all or a portion
of his Award shall be effective on the last day that such
deferral may be elected under paragraph 3.1(a) or 3.1(b) and
shall be effective only for the Award in question. An
Eligible Executive may revoke or change his election to
defer all or a portion of his Award at any time prior to the
date the election becomes effective. Any such revocation or
change shall be made in a form and manner determined by the
Committee.
(d) An Eligible Executive shall not be entitled to defer an
Award on or after attaining the age, if any, which he has
designated under Section 6.1(b) or 6.1(c) for the purpose of
commencing distribution of his Account (or, if applicable,
his Retirement Sub-account). In the event a Member
establishes a Post-Secondary Education Sub-account pursuant
to Article 9, he shall not be entitled to defer all or any
portion of an award into such a Sub-account after attaining
the age which he has designated for the purpose of
commencing distribution from the Sub-account.
(e) An Eligible Executive shall not be entitled to defer an
Award if his is eligible to defer his award under another
nonqualified program of deferred compensation maintained by
an Affiliated Company.
3.2 Amount of Deferral:
(a) In its sole discretion, the Committee may establish such
maximum limit on the amount of Award an Eligible Executive
may defer for a calendar year as the Committee deems
appropriate. Such maximum limit shall appear on the
Eligible Executive's Deferral Agreement for the year.
(b) The minimum amount which an Eligible Executive may defer in
any year shall be the lesser of $5,000 or the maximum amount
determined under paragraph 3.2(a) above. If an Eligible
Executive elects to defer less than this amount, his
election shall not be effective.
3.3 Crediting to Account:
(a) The amount of Award which an Eligible Executive has elected
to defer for a calendar year shall be credited to his
Account as of the Valuation Date consistent with or next
following the date the Award would have been paid to the
Eligible Executive.
(b) An additional credit shall be made to the Account as of the
Valuation Date described in paragraph 3.3(a) above,
determined as if the amount of Award deferred had earned the
same rate of return as the CSX Cash Pool Earnings Rate from
the date the Award would have been paid until the Valuation
Date is it credited to the Eligible Executive's Account. In
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PAGE 10
lieu of the CSX Corporation Cash Pool Earnings Rate, the
Committee may designate, from time to time, such other
indices of investment performance or investment funds as the
measure of investment performance under this paragraph
3.3(b).
ARTICLE 4. SALARY DEFERRAL PROGRAM
4.1 Filing Requirements:
(a) An individual who is an Eligible Executive immediately prior
to the Effective Date may file a Salary Deferral Agreement
with the Committee, within such period prior to the
Effective Date an in such manner as the Committee may
prescribe.
(b) An individual who becomes an Eligible Executive on or after
the Effective Date may file a Salary Deferral Agreement with
the Committee during the calendar month he becomes an
Eligible Executive, in such manner as the Committee may
prescribe.
(c) An Eligible Executive who fails to file a Salary Deferral
Agreement with the Committee as provided in paragraphs
4.1(a) and 4.1(b) above may file a Salary Deferral Agreement
in any subsequent month of December.
(d) An Eligible Executive who has not otherwise filed a Deferral
Agreement shall file a Salary Deferral Agreement under
paragraph 4.1(a) or 4.1(b) above, whichever applies, in
order to receive the Matching Credits described in Section
4.5, provided that such agreement need not provide for
Salary Deferrals.
4.2 Salary Deferral Agreement: An Eligible Executive's Salary
Deferral Agreement shall authorize a reduction in his base pay with respect to
his Salary Deferrals under the Plan. The Agreement shall be effective for
payroll periods beginning on or after the later of (a) the Effective Date or
(b) the first day of the month following the date the Salary Deferral
Agreement is filed with the Committee in accordance with Section 4.1.
Paychecks applicable to said payroll periods shall be reduced accordingly.
4.3 Amount of Salary Deferrals
(a) On each Valuation Date following the effective date of an
Eligible Executive's Salary Deferral Agreement, his Account
(or, if applicable, his Sub-accounts) shall be credited with
an amount of Salary Deferral, if any, for the monthly
payroll period ending thereon, as he elects in his Salary
Deferral Agreement. Such Salary Deferral for any month
shall be determined as the sum of his Basic Salary Deferral
- 10 -
PAGE 11
for such month determined under subparagraph (i) and his
Additional Salary Deferral for such month, determined under
subparagraph (ii) as follows:
(i) An Eligible Executive's Basic Salary Deferral shall be
determined by multiply his monthly Compensation by
the excess of his Salary Deferral Percentage over the
percentage determined in subparagraph (ii) below
(ii) An Eligible Executive's Additional Salary Deferral
shall be determined by multiplying his monthly
Compensation by a percentage determined a (a) the
excess of his Salary Deferral Percentage over 15%,
divided by (B) .85.
provided, however, that no Basic Salary Deferral shall
be made under this Plan for any month unless the
Eligible Executive is prevented from making elective
deferrals under the Tax Savings Thrift Plan for such
month as a result of Section 402(g) of the Code, and
provided further that, for the month in which such
Basic Salary Deferral is first made, it shall be
limited to the excess of the amount otherwise
determined for such month under subparagraph 4.3(a)(i)
above over the Eligible Executive's elective deferrals
under the Tax Savings Thrift Plan for such month. If
applicable, additional Deferrals shall be made for
each month of the year to which the Salary Deferral
Agreement applies, without regard to whether the
Eligible Executive makes elective deferrals under the
Tax Savings Thrift Plan and without regard to any
Basic Deferrals under this Plan.
(b) An Eligible Executive shall not be entitled to make Salary
Deferrals on or after attaining the age, if any, which he
has designated under Section 6.1(b) or 6.1(c) for the
purpose of commencing distribution of his Account (or, if
applicable, his Retirement Sub-account). In the event a
Member establishes a Post-Secondary Education Sub-account
pursuant to Article 9, he shall not be entitled to make
Salary Deferrals into such Sub-account after attaining the
age which he has designated for the purpose of commencing
distribution from that Sub-account.
4.4 Changing Salary Deferrals:
(a) An Eligible Executive's election on his Salary Deferral
Agreement of the rate at which he authorizes Salary
Deferrals under the Plan shall remain in effect in
subsequent calendar years unless he filed with the Committee
an amendment to his Salary Deferral Agreement modifying or
revoking such election. The amendment shall be filed in
the month of December and shall be effective for payroll
periods beginning on or after the following January 1.
(b) Notwithstanding paragraph 4.4(a) above, an Eligible
Executive may, in the event of severe financial hardship,
- 11 -
PAGE 12
request a suspension of his Salary Deferrals under the Plan.
The request shall be made in a time and manner determined by
the Committee, and shall be effective as of such date as the
Committee prescribes. The Committee shall apply standards,
to the extent applicable, identical to those described in
Section 6.3 in making its determination. The Eligible
Executive may apply to the Committee to resume his Salary
Deferrals with respect to payroll periods beginning on or
after the January 1 following the date of suspension, in a
time and manner determined by the Committee; provided, that
the Committee shall approve such resumption only if the
Committee determines that the Eligible Executive is no
longer incurring such hardship.
4.5 Certain Additional Credits: On each Valuation Date, there shall
be credited Matching Credits to the Account (or if applicable, Retirement Sub-
account of an Eligible Executive determined as follows:
(a) For months prior to the inception of Basic Salary Deferrals
hereunder, the greater of (i) or (ii)
(b) For months during which Basic Salary Deferrals are
effective, the greater of (i) or (iii), minus (iv), where
'(i)' is the employer matching contributions the Eligible
Executive would have received under the Tax Savings
Thrift Plan if the provisions of Sections 401(k)(3),
401(m)(9) and 415 of the Code had not applied to the
Tax Savings Thrift Plan; and
'(ii)' is an amount determined as 3% of the Eligible
Executive's additional Salary Deferrals; and
'(iii)' is the employer matching contributions the Eligible
Executive would have received under the Tax Savings
Thrift Plan if his deferrals under this Plan had been
contributed to the Tax Savings Thrift Plan (in
addition to those amounts actually contributed to that
Plan), based on "Compensation" as defined in this Plan
and as if the provisions of Sections 401(a)(17),
401(k)(3), 401(m)(9) and 415 of the Code had not
applied to the Tax Savings Thrift Plan; and
'(iv)' is the employer matching contributions made on his
behalf for the applicable period to the Tax Savings
Thrift Plan; and
No Matching Credits shall be credited to a Member's Post-Secondary Education
Sub-account.
ARTICLE 5. MAINTENANCE OF ACCOUNTS
5.1 Adjustment of Account:
(a) As of each Validation Date each Account (and, if applicable,
each Sub-account) shall be credited or debited with the
amount of earnings or losses which such Account (or, if
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PAGE 13
applicable, each Sub-account) would have been credited or
debited, assuming it had been invested in one or more
investment funds, or earned the rate of return of one or
more indices of investment performance, designated by the
Committee and, if applicable, elected by the Member or
former Member, for purposes of measuring the investment
performance of his Account (or, if applicable, each Sub-
account).
(b) The Committee shall designate at least one investment fund
or index of investment performance and may designate other
investment funds or investment indices to be used to measure
the investment performance of Accounts. The designation of
any such investment funds or indices shall not required the
Affiliated Companies to invest or earmark their general
assets in any specific manner. The Committee may change the
designation of investment funds or indices from time to
time, in its sole discretion, and any such change shall not
be deemed to be an amendment affecting Member's or former
Member's rights under Section 7.2.
(c) For purposes of paragraph 5.1(a), the portion of a Member's
Retirement Sub-account attributable to Matching Credits
shall be credited or debited with earnings or losses based
upon the performance of "Fund E" (CSX Stock Fund) under the
Tax Savings Thrift Plan.
5.2 Investment Performance Elections
(a) In the event the Committee designates more than one
investment fund or index of investment performance under
Section 5.1, each Member and, if applicable, former Member,
shall file an initial investment election with the Committee
with respect to the investment of his Salary Deferrals
within such time period and on such form as the Committee
may prescribe. The election shall designate the investment
fund or funds or index or indices of investment performance
which shall be used to measure the investment performance of
the Member's Salary Deferrals. The election shall be
effective as of the beginning of the payroll period next
following the date the election is fled. The election shall
be in increments of 10%.
(b) In the event the Committee designates more than one
investment fund or index under Section 5.1, each Member
shall file an initial investment election each calendar year
in which he defers an Award with respect to the amount
deferred. The election shall be made within such time
period and on such form as the Committee prescribes and
shall be in increments of 10% of the amount deferred. The
election shall be effective on the Valuation Date on which
the amount determined is credited to the Member's Account.
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PAGE 14
(c) A Member may not elect separate investment funds or indices
of investment performance with respect to each Sub-account.
5.3 Changing Investment Elections:
(a) A Member may change his election in Section 5.2(a) with
respect to his future Salary Deferrals, no more than four
times in any calendar year, by filing an appropriate written
notice with the Committee The notice shall be effective as
of the beginning of the first payroll period following the
date the notice is filed with the Committee.
(b) A Member or, if applicable, former Member may change his
election of the investment fund or funds or index or indices
of investment performance used to measure the future
investment performance of his existing Account balance, by
filing an appropriate written notice with the Committee.
Any change in the investment fund or funds or index or
indices of investment performance shall apply pro-rata to
all Sub-accounts. The election shall be effective as of the
last business day of the calendar quarter following the
month in which the notice is filed. No election under this
paragraph 5.3(b) shall apply to the portion of a Member's
Account attributable to Matching Credits.
5.4 Vesting of Account: Each Member shall be fully vested in his
Account.
5.5 Individual Accounts: The Committee shall maintain, or cause to
be maintained, records showing the individual balances of each Account and, if
applicable, each Sub-account. At least once a year, each Member and, if
applicable, former Member shall be furnished with a statement setting forth
the value of his Account and, if applicable, his Sub-accounts.
ARTICLE 6. PAYMENT OF BENEFITS
6.1 Commencement of Payment:
(a) The distribution of the Member's or former Member's Account
shall commence, pursuant to Section 6.2, on or after the
occurrence of (i), (ii), (iii) or (iv) below, as designated
by the Member on his initial Deferral Agreement executed
following his employment by the Participating Companies:
(i) the Member's termination of employment with the Affiliated
Companies;
(ii) attainment of a designated age not earlier than age 59-1/2
nor later than age 70-1/2,
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PAGE 15
(iii)the earlier of (i) or (ii) above, or
(iv) the later of (i) or (ii) above.
In the event a Member elects either (ii) or (iii) above, he may not
elect an age less than three (3) years subsequent to his current age.
A Member or former Member shall not change his designation of the
event which entitles him to distribution of this Account, except as
provided in paragraph 6.1(b) below.
(b) A Member or former Member may change his designation of the
event which entitles him to distribution of his Account
under paragraph 6.1(a) above, no more than once in any
calendar year, by filing with the Committee an amendment to
his initial Deferral Agreement on or before December 30 (or
the last preceding business day if December 30 is not a
weekday). The change shall be limited to those events
entitling a Member to distribution that are described in
paragraph 6.1(a) above, shall be subject to approval of the
Committee and shall be effective as of the last Valuation
Date of the calendar year in which the change is filed. An
election under this paragraph 6.1(b) shall result in the
forfeiture of five percent (5%) of the Member's or former
Member's Account, unless the provisions of Section 6.1(d)
apply, determined as of the Valuation Date upon which the
election is effective. A forfeiture under this Section
6.1(b) shall be in addition to a forfeiture incurred by the
Member, if any, under Section 6.2(b).
(c) Notwithstanding anything in this Section 6.1 or Article 9 to
the contrary, a Member's Account shall be distributed upon
his death.
(d) A Member may not change the designation of the event which
entitles him to distribution of one or more Post-Secondary
Education Sub-accounts, except that a Member may transfer
the entire amount in any Post-Secondary Education Sub-
account to one or more other Post-Secondary Education Sub-
accounts and his Retirement Sub-account, or any combination
thereof, subject to forfeiture of five percent (5%) of the
Sub-account so transferred, as provided in Article 9.
6.2 Method of Payment:
(a) A Member's or former Member's Account (or, if applicable,
Retirement Sub-account) shall be distributed to him, or in
the event of his death to his Beneficiary, in a cash single
sum payment s soon as administratively practicable following
the January 1 coincident with or next following the date the
Member incurs the distributable event elected under Section
6.1 or his date of death, as the case may be. Matching
Credits earned in respect to periods following the date of
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PAGE 16
such distributable event shall be paid directly to the
Member in cash as soon as practical. Notwithstanding the
foregoing, a Member or former Member may elect to receive
distribution of his Account in installments over a period
not to exceed fifteen (15) years. Installments shall be
determined s of each June 30 and December 31 and shall be
paid as soon as administratively practicable thereafter.
Installments shall commence as of the June 30 or December 31
coincident with or next following the date the Member incurs
the distributable event elected under Section 6.1, or as
soon as administratively practicable thereafter. The amount
of each installment shall equal the balance in the Account
as of the Valuation Date of determination, divided by the
number of remaining installments (including the installment
being determined). The election shall be made on his
initial Deferral Agreement and shall be irrevocable except
as provided in paragraph 6.2(b) below. If a Member or
former Member dies before payment of the entire balance of
his Account, the remaining balance shall be paid in a single
sum to his Beneficiary as soon as administratively
practicable following the January 1 coincident with or next
following his date of death.
(b) Notwithstanding paragraph 6.2(a) above, a Member or former
Member may change the form in which his Account is
distributed, no more than once in any calendar year, by
filing with the Committee an amendment to his initial
Deferral Agreement on or before December 30 (or the last
preceding business day if December 30 is not a weekday).
The change shall be limited to those forms of distribution
described in paragraph 6.2(a) above, shall be subject to
approval of the Committee and shall be effective as of the
last Valuation Date of the calendar year in which it is
filed. An election under this paragraph 6.2(b) shall result
in the forfeiture of five percent (5%) of the Member's or
former Member's Account, unless the provisions of Section
6.2(c) apply, determined as of the Valuation Date upon which
the election is effective. A forfeiture under this Section
6.2(b) shall be in addition to a forfeiture incurred by the
Member, if any, under Section 6.1(b).
(c) In the event the Member's Account consists of a Retirement
Sub-account and ne or more Post-Secondary Education Sub-
accounts, the provisions of this Section 6.2 shall apply
exclusively to the Member's Retirement Sub-account. A
Member may not change the form in which his Post-Secondary
Education Sub-accounts are distributed, except that a Member
may transfer the entire amount in any Post-Secondary
Education Sub-account to one or more other Post-Secondary
Education Sub-accounts and his Retirement Sub-account, or
any combination thereof, subject to forfeiture of five
percent (5%) of the Sub-account so transferred, as provided
in Article 9.
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PAGE 17
6.3 Applicability: In the event the Member's Account consists of a
Retirement sub-account and one or more Post-Secondary Education Sub-accounts,
the provisions of Sections 6.1(a) and 6.1(b) and 6.2 shall apply exclusively
to the Member's Retirement Sub-account.
6.4 Hardship
(a) While employed by the Participating Companies, a Member or
former Member may, in the event of a severe financial
hardship, request a withdrawal from his Account. The
request shall be made in a time and manner determined by the
Committee, shall not be for a greater amount than the amount
required to meet the financial hardship, and shall be
subject to approval by the Committee.
(b) For purposes of this Section 6.3 financial hardship shall
include:
(i) education of a dependent child where the Member or former
Member shows that without the withdrawal under this Section
the education would be unavailable to the child;
(i) illness of the Member or former or his dependents, resulting
in severe financial hardship to the member or former Member
(iii)the loss of the Member's or former Member's home or its
contents, to the extent not reimbursable by insurance or
otherwise, if such loss results in a severe financial
hardship to the Member or former Member;
(iv) any other extraordinary circumstances of the Member or
former Member approved by the Committee if such
circumstances would result in a present or impending
critical financial need which the Member or former Member is
unable to satisfy with funds reasonably available from other
sources.
6.5 Designation of Beneficiary: A Member or former Member may, in a
time and manner determined by the Committee, designate a beneficiary and one
or more contingent beneficiaries (which may include the Member's or former
Member's estate) to receive any benefits which may be payable under this Plan
upon his death. If the Member or former Member fails to designate a
beneficiary or contingent beneficiary, or if the beneficiary and the
contingent beneficiaries fail to survive the Member or former Member, such
benefits shall be paid to the Member's or former Member's estate. A Member or
former Member may revoke or change any designation made under this Section 6.4
in a time and manner determined by the Committee.
6.6 Special Distribution Rules: Notwithstanding anything to the
contrary in this Plan, if (a) a Member or former Member becomes the owner,
director or employee of a competitor of the Affiliated Companies, (b) his
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PAGE 18
employment is terminated by an Affiliated Company on account of actions by the
Member which are detrimental to the interests of the Affiliated Company, or
(c) he engages in conduct subsequent to the termination of his employment with
the Affiliated Companies which the Committee determines to be detrimental to
the interests of an Affiliated Company, then the Committee may, in its sole
discretion, pay the Member or former Member a single sum payment equal to the
balance in his Account. The single sum payment shall be made as soon as
practicable following the date the Member or former Member becomes an owner,
director or employee of a competitor, his termination of employment or the
Committee's determination of detrimental conduct, as the case may be, and
shall be in lieu of all other benefits which may be payable to the Member or
former Member under this Plan.
6.7 Status of Account Pending Distribution: Pending distribution, a
former Member's Account (and, if applicable, a former Member's Sub-accounts)
shall continue to be credited with earnings and losses as provided in Section
5.1. The former Member shall be entitled to change his investment elections
under Section 5.3 or apply for Hardship withdrawals under Section 6.3 to the
same extent as if he were a Member of the Plan. In the event of the death of
a Member or former Member, his Account (and, if applicable, his Sub-accounts)
shall be credited with earnings and losses as if the Account had earned the
same rate of return as the CSX Corporation Cash Pool Earnings Rate or, in the
sole discretion of the Committee, the rate of return of such other index of
investment performance or investment fund which may be designated by the
Committee as a measure for investment performance of Members' or former
Members' Accounts (and, if applicable, their Sub-accounts), commencing with
the Valuation Date coincident with or next following the Member's or former
Member's date of death.
6.8 Installments and Withdrawals Pro-Rata: In the event of an
installment payment or hardship withdrawal, such payment or withdrawal shall
be made on a pro-rate basis from the portions of the Member's or former
Member's existing Account balance which are subject to different measures of
investment performance In the event of a hardship withdrawal, the withdrawal
shall be made on a pro-rata basis from the Member's or former Member's Sub-
accounts.
6.9 Acceleration of Payments: If the Committee determines that a
Change of Control has occurred, each Participant (whether or not then
receiving payments under the Plan) shall be entitled to receive, and the
Committee shall cause the Corporation to pay within 7 days of such
determination, a lump sum payment equal to the value of each Member or former
Member's Accounts (determined under Article 5) as of the Valuation Date
coinciding with or next preceding the date of Change of Control. The value of
each Member or former Member's Accounts and the amount of the lump sum to be
paid pursuant to this Section 6.9 shall be determined by the Corporation's
accountants after consultation with the entity then maintaining the Plan
records for each Member's Account. Upon payment of the lump sum, all further
Deferrals under the Plan shall terminate.
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PAGE 19
ARTICLE 7. AMENDMENT OR TERMINATION
7.1 Right to Terminate: The Board may, in its sole discretion,
terminate this Plan and the related Deferral Agreements at any time. In the
event the Plan and related Deferral Agreements are terminated, each Member,
former Member and Beneficiary shall receive a single sum payment equal to the
balance in his Account. The single sum payment shall be made as soon as
practicable following the date the Plan is terminated and shall be in lieu of
any other benefit which may be payable to the Member, former Member or
Beneficiary under this Plan.
7.2 Right to Amend: The Board may, in its sole discretion, amend
this Plan and the related Deferral Agreements in any way on 30 days prior
notice to the Members and, where applicable, former Members. If any amendment
to this Plan or to the Deferral Agreements shall adversely affect the rights
of a Member or former Member, such individual must consent in writing to such
amendment prior to its effective date. if such individual does not consent to
the amendment, the Plan and related Deferral Agreements shall be deemed to be
terminated with respect to such individual and he shall receive a single sum
payment of his Account as soon thereafter as is practicable. Notwithstanding
the foregoing, the Committee's change in any investment funds or investment
index under Section 5.1(b) or the restriction of future deferrals under the
salary deferral program or award deferral program shall not be deemed to
adversely affect any Member's or former Member's rights.
7.3 Uniform Action: Notwithstanding anything in the Plan to the
contrary, any action to amend or terminate the Plan or the Deferral Agreements
must be taken in a uniform and nondiscriminatory manner.
ARTICLE 8. GENERAL PROVISIONS
8.1 No Funding: Nothing contained in this Plan or in a Deferral
Agreement shall require the Affiliated Companies to segregate any monies from
their general funds, or to create any trusts, or to make any special deposits
for any amounts to be paid to any Member, former Member, beneficiary or
contingent beneficiary. Neither the Member, former Member, his beneficiary,
contingent beneficiaries, heirs or personal representatives shall have any
right, title or interest in or to any funds of the Affiliated Companies on
account of this Plan or on account of having completed a Deferral Agreement.
8.2 No Contract of Employment: The existence of this Plan or of a
Deferral Agreement does not constitute a contract for continued employment
between an Eligible Executive or a Member and an Affiliated Company. The
Affiliated Companies reserve the right to modify an Eligible Executive's or
Member's remuneration and to terminate an Eligible Executive or a Member for
any reason and at any time, notwithstanding the existence of this Plan or of a
Deferral Agreement.
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PAGE 20
8.3 Withholding Taxes: All payments under this Plan shall be net of
an amount sufficient to satisfy any federal, state or local withholding tax
requirements.
8.4 Nonalienation: The right to receive any benefit under this Plan
may not be transferred, assigned, pledged or encumbered by a Member, former
Member, beneficiary or contingent beneficiary in any manner and any attempt to
do so shall be void. No such benefit shall be subject to garnishment,
attachment or other legal or equitable process without the prior written
consent of the Affiliated Companies.
8.5 Administration:
(a) This Plan shall be administered by the Compensation and
Pension Committee of the Board. The Committee shall
interpret the Plan, establish regulations to further the
purposes of the Plan and take any other action necessary to
the proper operation of the Plan.
(b) The Board, in its sole discretion and upon such terms as it
may prescribe, may permit any company or corporation
directly or indirectly controlled by the Corporation to
participate in the Plan.
(c) Prior to paying any benefit under this Plan, the Committee
may require the Member, former Member, beneficiary or
contingent beneficiary to provide such information or
material as the Committee, in its sole discretion, shall
deem necessary for it to make any determination it may be
required to make under this Plan. The Committee may
withhold payment of any benefit under this Plan until it
receives all such information and material and is reasonably
satisfied of its correctness and genuineness.
(d) The Committee shall provide adequate notice in writing to
any Member, former Member, beneficiary or contingent
beneficiary whose claim for benefits under this Plan has
been denied, setting forth the specific reasons for such
denial. A reasonable opportunity shall be afforded to any
such Member, former Member, beneficiary or contingent
beneficiary for a full and fair review by the Committee of
its decision denying the claim. The Committee's decision on
any such review shall be final and binding on the Member,
former Member, beneficiary or contingent beneficiary and all
other interested persons.
(e) All acts and decisions of the Committee shall be final and
binding upon all Members, former Members, beneficiaries,
contingent beneficiaries and employees of the Affiliated
Companies.
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PAGE 21
8.6 Construction
(a) The Plan is intended to constitute an unfunded deferred
compensation arrangement for a select group of management or
highly compensated personnel and all rights hereunder shall
be governed by and construed in accordance with the laws of
the Commonwealth of Virginia.
(b) The masculine pronoun shall mean the feminine wherever
appropriate.
(c) The captions inserted herein are inserted as a matter of
convenience and shall not affect the construction of the
Plan.
ARTICLE 9. POST-SECONDARY EDUCATION SUB-ACCOUNTS
9.1 Post-Secondary Education Sub-accounts:
(a) Notwithstanding any provision of this Plan to the contrary,
with respect to amounts deferred under Salary Deferral
Agreements and Award Deferral Agreements effective on or
after December 31, 1990, a Member may direct the Committee
to establish a separate sub-account in the name of one or
more of:
(i) each of the Member's children,
(ii) each of the Member's brothers, sisters, their spouses, the
Member's spouse, or
(iii)each of the foregoing's lineal descendants, for the payment
of their expenses directly or indirectly arising from
enrollment in a college, university, or any other post-
secondary institution of higher learning. Each sub-account
established pursuant to this paragraph 9.1(a) shall be
referred to as a "Post-Secondary Education Sub-account."
(b) The Member may instruct the Committee to allocate all or a
portion of any amount deferred under an Award Deferral
Agreement in respect to an Award granted after December 31,
1990 to one or more of the Post-Secondary Education Sub-
accounts established pursuant to Section 9.1(a).
(c) A Member may instruct the Committee to allocate all or any
portion of the amount he defers for periods commencing after
December 31, 1990 pursuant to his Salary Deferral Agreement
to one or more of the Post-Secondary Education Sub-accounts
established pursuant to Section 9.1(a).
(d) Any elections pursuant to paragraphs 9.1(a) and 9.1(b) shall
be made in whole percentages.
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PAGE 22
(e) No Matching Credits shall be allocated to any Post-Secondary
Education Sub-account.
9.2 Distribution of Post-Secondary Education Sub-accounts:
(a) Amounts allocated to one or more of a Member's Post-
Secondary Education Sub-accounts shall be distributed to the
Member upon the attainment of the certain age of the Member,
specifically designated by the Member for this purpose with
regard to that Sub-account.
(b) A Member or former Member may transfer the entire amount but
not less than that amount in any Post-Secondary Education
Sub-account to one or more other Post-Secondary Education
Sub-accounts, his Retirement Sub-account, or any combination
thereof, by filing the appropriate form or forms with the
Committee not later than the last business day of the
calendar year preceding the year in which distribution of
that Post-Secondary Education Sub-account was to begin. A
transfer under this paragraph 9.2(b) shall result in the
forfeiture of five percent (5%) of the Member's or former
Member's Sub-account so transferred, determined as of the
Valuation Date upon which the transfer is effective. In no
event may a Member transfer all or any portion of the amount
in his Retirement Sub-account to his Post-Secondary
Education Sub-accounts. Except as provided in this
paragraph 9.2(b) or 9.2(c) below, a Member or former Member
may not change the time or form of distribution of his Post-
Secondary Education Sub-accounts.
(c) In the event that the individual for whom a Post-Secondary
Education Sub-account is established dies while funds remain
in that Sub-account, a Member or former Member may transfer
without penalty the entire amount but not less than that
amount in that Sub-account in accordance with the provisions
of (i) or (ii) below:
(i) to one or more existing Post-Secondary Education Sub-
accounts and/or a new Post-Secondary Education Sub-account
established in accordance with the provisions of Section
9.01 hereof; or
(ii) to a Retirement Sub-account.
If a Member or former Member elects to transfer funds in
accordance with (ii) and he has not previously established a
Retirement Sub-account, such a Sub-account shall be
established automatically and the Member or former Member
promptly thereafter will be required to execute an amendment
to his initial Deferral Agreement which shall specify the
option under Section 6.1(a) which will entitle him to
distribution of the Retirement Sub-account and the form of
distribution under Section 6.2(a).
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PAGE 23
(d) A Member's or former Member's Post-Secondary Education Sub-
accounts shall be distributed to him, or in the event of his
death to his Beneficiary, in a cash single sum payment as
soon as administratively practicable following the January 1
coincident with or next following the date the Member incurs
the distributable event or events elected under paragraph
9.2(a) or his date of death, as the case may be.
Notwithstanding the foregoing, a Member or former Member may
elect to receive distribution of one or more of his Post-
Secondary Education Sub-accounts in installments over a
period not to exceed six (6) years. Installments shall be
determined as of each June 30 and December 31 and shall be
paid as soon as administratively practicable thereafter.
installments shall commence s of the June 30 or December 31
coincident with or next following the date the Member incurs
the distributable event elected under paragraph 9.2(a) with
regard to a Sub-account, or as soon as administratively
practicable thereafter. The amount of each installment
shall equal the balance in the applicable Post-Secondary
Education Sub-account as of the Valuation Date of
determination, divided by the number of remaining
installments (including the installment being determined).
If a Member or former Member dies before payment of the
entire balance of all of his Post-Secondary Education Sub-
accounts, the remaining balance or balances, as the case may
be, shall be paid in a single sum to his Beneficiary as soon
as administratively practicable following the January 1
coincident with or next following his date of death.
9.3 Construction: To the extent any provision in this Article 9 is
inconsistent with any other provision of this Plan, the provisions in Article
9 shall govern.
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PAGE 1
Exhibit 10.14
SPECIAL RETIREMENT PLAN
OF CSX CORPORATION AND AFFILIATED CORPORATIONS
AS AMENDED AND RESTATED
DECEMBER 1, 1991
TABLE OF CONTENTS
Section I - INTRODUCTION . . . . . . . . . . . . . . . . . . 1
Section II - MEMBERSHIP . . . . . . . . . . . . . . . . . . . 3
Section III - CREDITABLE SERVICE . . . . . . . . . . . . . . . 4
Section IV - COMPENSATION AND AVERAGE COMPENSATION. . . . . . 7
Section V - SPECIAL RETIREMENT ALLOWANCES. . . . . . . . . . 7
Section VI - FUNDING METHOD . . . . . . . . . . . . . . . . . 15
Section VII - ADMINISTRATION OF SPECIAL PLAN . . . . . . . . . 17
Section VIII -MODIFICATION, AMENDMENT AND TERMINATION. . . . . 17
Section IX - NON-ALIENATION OF BENEFITS . . . . . . . . . . . 20
Section X - MISCELLANEOUS PROVISIONS . . . . . . . . . . . . 21
Section XI - ACCELERATION OF PAYMENTS . . . . . . . . . . . . 22
Section XII - CONSTRUCTION . . . . . . . . . . . . . . . . . . 27
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PAGE 2
Special Retirement Plan
of CSX Corporation and Affiliated Corporations
As Amended and Restated December 1, 1991
Section I - INTRODUCTION
I. The purpose of this retirement plan, hereinafter called the
"Special Plan," is to provide an incentive for corporate officers comprising a
select group of management or highly compensated personnel to exert maximum
efforts for the Company's success and to remain in the service of the Company
until retirement.
I. The Special Plan as provided herein shall be effective as of March
1, 1983, and supersedes the Employees' Special Pension Plan of The Chesapeake
and Ohio Railway Company and the Plan for Additional Annuities for Qualifying
Members under the Supplemental Pension Plan of The Baltimore and Ohio Railroad
Company, hereinafter called the "Former Plans."
I. The "Company" as used herein shall refer to CSX Corporation and
such other of its affiliated corporations as shall adopt this Special Plan by
action of their Boards of Directors for the benefit of corporate officers who
are covered or may become covered by the Special Plan. The term "Compensation
and Pension Committee" shall refer to the Compensation and Pension Committee
of the Board of Directors of CSX Corporation (the "Board of Directors").
I. The incentives under the Special Plan shall consist of special
retirement allowances provided by the Company at retirement to certain
officers, hereinafter referred to as "Participants," who shall participate as
provided herein (eligibility for participation is set forth in Section II).
I. The Special Plan shall, where appropriate, refer to and have
meanings consistent with all of the relevant terms of any other regularly
maintained pension plan which currently provides or did provide immediately
prior to March 1, 1983, retirement benefits for non-contract employees of the
Company and is or was maintained by CSX Corporation or any of its affiliated
corporations whose officers participate in the Special Plan. Such existing
regularly maintained pension plans which provided benefits immediately prior
to March 1, 1983 for employees of the Company, and covered periods of service
granted in paragraphs 4(a) and 4(b) of Section V, or those which may be
established hereafter, as amended from time to time, shall be referred to
herein as the "Pension Plans." Accordingly, regardless of formal differences
which may exist between the Special Plan and the Pension Plans in the use of
terminology, the definitions and principles which are set forth in the Pension
Plans with respect to compensation, average compensation, credited service,
and similar terms shall be applied and construed hereunder in a manner
consistent with the purposes of the Special Plan and the Pension Plans. In
any instance in which the male gender is used herein, it shall also include
persons of the female gender in appropriate circumstances.
Section II - MEMBERSHIP
1. Every person who was a Participant in the Former Plans as in
effect immediately prior to March 1, 1983, shall continue as a Participant in
the Special Plan on and after such date for the purpose of any applicable
provisions hereof.
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PAGE 3
2. On and after March 1, 1983, Participants shall include any
employees who participate in the Pension Plans and who are entitled to
benefits provided under Section V, Subsection 8 hereof; provided, however,
that the only benefit that such employees shall be eligible to receive under
this Special Plan shall be the benefit provided in accordance with such
Subsection unless they are otherwise entitled to benefits under other
provisions of this Special Plan.
3. On and after March 1, 1983, additional persons eligible to be
Participants shall be those specified in Section V, Subsection 4(c).
Section III - CREDITABLE SERVICE
1. Creditable service under the Special Plan shall have the same
meaning and apply in the same manner as creditable service under the Pension
Plans, except that it shall also include any additional creditable service
which may have been or which may be granted to a Participant in accordance
with the provisions of Section V, Subsections 3 and/or 4 hereof. Provided,
however, notwithstanding any provisions of the Pension Plans to the contrary,
a Participant in the Special Plan who is in the employ of the Company and who
does not receive compensation in any calendar month due to amounts deferred
under the Company's Deferred Compensation Program and any other amounts of
compensation deferred under any other arrangement approved by the Compensation
and Pension Committee nevertheless shall receive creditable service under the
Special Plan.
2. Notwithstanding any other provisions of this Special Plan or the
Pensions Plans to the contrary, effective January 1, 1989:
(a) Prior to January 1, 1992, a Participant must have been
continuously employed by the Company for a period of not
less than 10 years to become entitled upon retirement to
receive payment of a special retirement allowance from this
Special Plan in respect of any additional creditable
service, pension supplement, pension or benefit granted
under Section V, Subsections 3(a) or 3(b) of this Special
Plan. After December 31, 1991, this Subsection (a) shall
only apply to Section V, Subsection 3(b); and,
(b) Prior to January 1, 1992, a Participant must have been
continuously employed by the Company for a period of not
less than 5 years to become entitled to receive payment of a
special retirement allowance from this Special Plan in
respect of any additional creditable service granted under
Section V, Subsection 4(d), of this Special Plan; provided,
however, a person who has already attained age 60 and then
first becomes employed by the Company, and who also becomes
and continuously remains a Participant from that date of
first employment until attainment of age 65, shall become
entitled upon retirement to receive payment of a special
retirement allowance from this Special Plan in respect of
any additional creditable service granted under Section V,
Subsection 4(d) of this Special Plan; and
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PAGE 4
(c) After December 31, 1991, a Participant must have been
continuously employed by the Company for a period of not
less than 10 years and must have attained age 55 to become
entitled to receive a special retirement allowance from this
Special Plan in respect to any additional creditable service
accrued after December 31, 1991, granted under Section V,
Subsection 4(d), of this Special Plan or a pension or
benefit granted after December 31, 1991 under Section V,
Subsection 3(a) of this Special Plan; provided, however, a
Participant who has at least 5 years of continuous service
and who dies while actively employed shall be entitled to
the additional creditable service accrued after December 31,
1991; and provided, further, a Participant who terminates
employment with the consent of the Chief Executive Officer
of CSX Corporation ("Chief Executive Officer") prior to age
55 with 10 years of continuous service shall be entitled to
the additional creditable service accrued after December 31,
1991.
(d) In no event shall a Participant be eligible to receive a
payment in respect of any benefits granted under Section V,
Subsections 3(a), 3(b) or 4(d) of this Special Plan before
such date as the Participant attains the earliest retirement
age specified in the particular Pension Plan in which the
Participant also participates, unless an earlier payment
from the Special Plan is specifically authorized by the
Compensation and Pension Committee. The Compensation and
Pension Committee shall have full authority and sole
discretion to interpret and administer the foregoing rules,
and any decision made by such Committee shall be final and
binding.
Section IV - COMPENSATION AND AVERAGE COMPENSATION
Compensation and average compensation under the Special Plan shall
have the same meanings and apply in the same manner as those terms do under
the Pension Plans, except as provided in Section V, Subsection 3(b) hereof;
provided, however, that amounts deferred under the Company's Deferred
Compensation Program and any other amounts of compensation deferred under any
other arrangement approved by the Compensation and Pension Committee shall be
included in the determination of compensation and average compensation; and
further provided, that compensation and average compensation hereunder shall
not be limited to the amount of $222,200, or such other amount as adjusted by
regulation, as imposed by Sections 401(a)(17) and 415(d) of the Internal
Revenue Code.
Section V - SPECIAL RETIREMENT ALLOWANCES
1. All of the provisions, conditions, and requirements set forth in
the Pension Plans with respect to the granting and payment of retirement
benefits thereunder shall be equally applicable to the granting of the special
retirement allowances hereunder to Participants in the Special Plan and to the
payment thereof from the Company's general assets. Except as otherwise may be
provided in this Special Plan, whenever a Participant's rights under the
Special Plan are to be determined, appropriate reference shall be made to the
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PAGE 5
particular Pension Plan in which such person is also a participant.
Notwithstanding the preceding sentence, if a special retirement allowance
under the Special Plan shall be paid to a surviving spouse in conformance with
the provisions of the Pension Plans, the final installment payment hereunder
shall be made only to the estate of such surviving spouse and shall not be
otherwise paid, regardless of any different provision for such payment which
may be prescribed in the Pension Plans.
2. All special retirement allowances being paid on March 1, 1983,
under the Former Plans as they existed immediately prior to such date shall be
continued and be paid hereunder, and, persons participating under the Former
Plans shall continue to participate hereunder in accordance with the terms and
conditions of the Former Plans and any applicable provisions of this Special
Plan.
3. The Compensation and Pension Committee, upon the recommendation of
the Chief Executive Officer, may grant to an officer of the Company the
following benefits under the Special Plan:
(a) Additional creditable service, pensions or benefits
hereunder other than as provided in the Pension Plan, in
recognition of previous service deemed to be of special
value to the Company.
(b) A pension supplement hereunder in a particular instance as
determined by the Compensation and Pension Committee, to be
calculated on the basis of specific instructions which may
depart only for such purpose from any of the terms,
conditions or requirements of the Pension Plans,
notwithstanding the provisions of Section I, Subsection 5,
and Section V, Subsection 1, hereof.
4. The following additional creditable service under the Special Plan
shall be granted by the Company at retirement under the Pension Plans:
(a) To those Participants of the "Former Plans," creditable
service equal to that accrued under Section V, Subsection 4
of The Employees' Special Plan of The Chesapeake and Ohio
Railway Company or under paragraphs 1, 2 and 3 of the Plan
for Additional Annuities for Qualifying Members Under the
Supplemental Pension Plan of the Baltimore and Ohio Railroad
Company, provided that, effective upon a Participant's
retirement on or after March 1, 1983, creditable service
under the Special Plan and Pension Plans shall not exceed 44
years.
(b) To those Participants in the Special Plan who are listed in
Appendix I, and who are also participants in the Pension
Plans, additional creditable service under the Special Plan
will be granted as indicated for each individual as shown in
Appendix I, provided that additional creditable service
under the Special Plan and credited service under the
Pension Plans at retirement shall not exceed 44 years.
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PAGE 6
(c) On and after March 1, 1983, new admissions into the class of
persons who may become Participants in the Special Plan to
receive additional creditable service hereunder shall only
include participants in the Pension Plans who are
recommended by the Chief Executive Officer and approved
under guidelines adopted by the Compensation and Pension
Committee.
(d) In addition to the additional creditable service granted to
Participants under (a) or (b) above, beginning March 1,
1983, one year of additional creditable service shall be
granted for each year of actual service (with allowances for
months less than twelve) between ages 45 and 65 during which
a person is a Participant. Those who become qualified as
provided in (c) above shall have one year of additional
credited service granted, beginning no earlier than the date
they are both a Participant and at least age 45, for each
year of actual service (with allowances made for months less
than twelve) during which they remain a Participant, but
only up to age 65. Additional creditable service granted
under the Special Plan shall be combined with credited
service under the Pension Plan (but only if credited service
under the Pension Plans does not exceed 44 years), to result
in total credited service and additional creditable service
under the Pension Plans and the Special Plan which shall not
exceed a maximum of 44 years. The position, compensation,
and other conditions upon which a non-contract employee's
participation herein is based shall be determined from time
to time in the absolute discretion of the Compensation and
Pension Committee.
(e) Anything to the contrary notwithstanding, any Participant in
the Special Plan receiving additional creditable service
under this Subsection 4, and whose responsibilities and
compensation are reduced, may, in the discretion of the
Compensation and Pension Committee or the Chief Executive
Officer, cease to receive any further additional creditable
service hereunder.
(f) A Participant's accrual of additional creditable service as
provided herein shall not be subject to termination except
as provided in subparagraph (e) above, or upon retirement or
termination of employment.
(g) Prior to January 1, 1992, a Participant who receives
benefits under a Salary Continuance and Long-Term Disability
Income Plan of the Company shall continue to accrue
additional creditable service hereunder subject to the same
rules that are applicable in such instances under the
Pension Plans.
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PAGE 7
(h) It is the intent of this Section V that, for the purpose of
the Special Plan, the additional creditable service provided
hereunder when added to credited service under the Pension
Plans or otherwise, shall not in any case exceed 44 years in
the aggregate.
(i) To those Participants who become qualified as provided in
(a), (b) or (c) above, a special retirement allowance shall
be payable under the Special Plan to such Participants or
their surviving spouses equal to any amount due under the
Pension Plans which is not paid in full under the Pension
Plans.
5. The Company shall accrue and pay under this Special Plan as an
additional supplement benefit any annual pension benefits that would have been
payable under the Pension Plans as in effect on September 1, 1974, or
thereafter, if Sections 415(b) and 401(a)(17) of the Internal Revenue Code,
and any other relevant provisions of law that impose limitations or have the
effect of limiting the accrual of benefits under the Pension Plans, had not
been enacted into law, unless such additional supplemental benefit is provided
by the Company through another plan created for that purpose.
6. The Company shall accrue reserves to the credit of the Special
Plan in advance to cover the costs of any additional creditable service,
pensions or benefits granted under Subsections 3 and 4 hereof, and such
pensions or benefits or special retirement allowances reflecting such credit
shall be paid under the Special Plan. Where additional creditable service is
granted, upon retirement in accordance with the provisions of the Pension
Plans, the Participant shall receive a special retirement allowance equal to
the difference between the retirement allowance computed under the Pension
Plans and the amount which would be payable if the additional credit granted
hereunder had been included with the actual credited service in the
computation of the retirement allowance payable under the Pension Plans.
Where a pension or other benefit is granted to a Participant, such pension or
benefit shall be payable as a special retirement allowance from the Special
Plan.
7. In the event any Participant in the Special Plan receives as a
participant in the Pension Plans, a pension or retirement benefit payable in a
form other than a straight life annuity in accordance with the provisions of
the Pension Plans, his special retirement allowance under this Section V shall
also be payable in a similar form.
8. The Company shall accrue and pay under this Special Plan any
annual pension benefit which otherwise would have been payable under the
Pension Plans but for the Participant's deferral of compensation under the
Company's Deferred Compensation Program or under any other deferred
compensation arrangement approved by the Compensation and Pension Committee.
9. If a Participant receives a lump sum distribution pursuant to the
provisions of Section XI, the amount of any benefit to which the Participant
becomes entitled under Section V hereof shall be reduced by a benefit
actuarially equivalent to the lump sum amount distributed. Such actuarial
equivalence shall be determined under the same mortality and interest
assumptions used to compute the lump sum amount.
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PAGE 8
Section VI - FUNDING METHOD
1. The benefits provided under the Special Plan shall be financed by
the Company and no contribution shall be required of Participants. The
Company shall accrue reserves on its books as follows:
(a) As of March 1, 1983, an amount shall be calculated with
respect to the Former Plans which shall be the actuarially
determined present value as of that date of all special
retirement allowances payable under the Former Plans and,
under a schedule approved by the Company's independent
accountant, the reserve previously accrued will be adjusted.
(b) As of March 1, 1983, the actuarially determined present
value as of that date of all special retirement allowances
payable under Section V, Subsection 4(b) shall be calculated
and, under a schedule approved by the Company's independent
accountant, a reserve equal to that amount established.
(c) During the year 1983, there shall be accrued the amount
required to allow regular interest on the adjusted reserve
provided in (a) and (b) above. Each year thereafter there
shall be accrued the amount required to allow regular
interest on the average reserves standing to the credit of
the Special Plan during the preceding year.
(d) Each year the reserves shall be adjusted to reflect the
payment of special retirement allowances during the year.
(e) Such additional reserves shall be accrued from time to time
as may be required in accordance with Section V, Subsections
3 and 4, on account of grants thereunder made after March 1,
1983.
(f) There shall be accrued from time to time, as required,
additional reserves on account of benefits pursuant to
Section V, Subsection 6.
(g) At such times as the Plan Administrator shall recommend, the
reserves accrued to the credit of the Special Plan shall be
adjusted on the basis of actuarial valuations to reflect the
experience under the Special Plan, or amendments thereto, or
changes in the rate of regular interest, or any other
actuarial assumptions.
2. The Company shall provide all funds required for the
administration expenses of the Special Plan.
Section VII - ADMINISTRATION OF SPECIAL PLAN
The Named Plan Administrators under ERISA for the Pension Plans of
CSX Corporation or of any affiliated corporation which shall adopt this
Special Plan and whose officers participate in the Special Plan shall be
responsible for the general administration of the Special Plan and for
carrying out its provisions.
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PAGE 9
Section VIII - MODIFICATION, AMENDMENT AND TERMINATION
The Special Plan represents a contractual obligation heretofore
entered into by the Company in consideration of services rendered and to be
rendered by Participants covered under the Special Plan. The Company reserves
the right at any time and from time to time to modify or amend in whole or in
part any or all of the provisions of this Special Plan, or to terminate this
Special Plan; provided, however, prior to December 1, 1991, no modification or
amendment shall be made to this Special Plan unless there have been
modifications or amendments to correlative provisions of the Pension Plans,
and any modifications or amendments to this Special Plan shall coincide with
the modifications or amendments of the Pension Plans (except nonconforming
revisions to administrative provisions shall be permitted); and provided,
further, that this Special Plan shall only be terminated if the Pension Plans
are terminated, subject to the following limitations:
1. In the event any modification or amendment adversely affects the
benefits to be received by a retired Participant and the designated surviving
spouse of a retired Participant, they shall be entitled to receive for life
the special retirement allowance they would have received had not the Special
Plan been modified or amended, and each designated surviving spouse of a
retired Participant shall become entitled to receive for life the special
retirement allowance that such designated surviving spouse would have received
had not the Special Plan been modified or amended.
2. In the event of the termination of this Special Plan, each retired
Participant and designated surviving spouse of a retired Participant shall be
entitled to receive for life the special retirement allowance they would have
received had the Special Plan not been terminated, and each designated
surviving spouse of a retired Participant shall become entitled to receive for
life the special retirement allowance that such designated surviving spouse
would have received had the Special Plan not been terminated.
3. In the event any modification or amendment adversely affects the
benefit which an active Participant would have been entitled to receive if
such amendment or modification had not been made, such active Participant
shall, so long as he remains in the active service of the Company, only
continue to accrue creditable service and benefits prospectively in accordance
with the provisions of the Special Plan as so modified or amended, unless the
Participant shall earlier cease to receive any additional creditable service
as provided in Section V, Subsection 4, Subparagraph (e).
4. In the event this Special Plan is terminated, each active
Participant, in consideration of his continued service to the Company until
the date of his termination from active employment by retirement or otherwise,
shall be entitled to retain his accrued additional service, or pension or
benefits as granted hereunder to such Participant, in accordance with the
provisions of this Special Plan in effect on the day prior to the date of
termination, unless the Participant shall earlier cease to receive any
additional creditable service as provided in Section V, Subsection 4,
Subparagraph (e).
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PAGE 10
5. In lieu of paying special retirement allowances in accordance with
the foregoing provisions, the Named Plan Administrator, at its election, may
direct the discharge of all obligations to retired Participants, designated
spouses of retired Participants, and active Participants by cash payments of
equivalent actuarial value or through the provision of immediate or deferred
annuities or other periodic payments of equivalent actuarial value, as it
shall in its sole discretion determine.
Section IX - NON-ALIENATION OF BENEFITS
To the extent permitted by applicable law, no benefit under the
Special Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so
shall be void, except as specifically provided in the Special Plan, nor shall
any benefit be in any manner liable for or subject to the debt, contracts,
liabilities, engagements, or torts of the person entitled to such benefit; and
in the event that the Named Plan Administrators shall find that any active or
retired Participant or designated spouse or spouse under the Special Plan has
become bankrupt or that any attempt has been made to anticipate, alienate,
sell, transfer, assign, pledge, encumber, or charge any of his benefits under
the Special Plan, except as specifically provided in the Special Plan, then
such benefits shall cease to accrue and shall be determined, and in that
event, the Administrators shall hold or apply the same to or for the benefit
of such active or retired Participant or spouse, in such manner as the
Administrators may deem proper.
Section X - MISCELLANEOUS PROVISIONS
1. Anything in the Special Plan to the contrary notwithstanding, if
the Named Plan Administrators find that any retired Participant or spouse is
engaged in acts detrimental to the Company or is engaged or employed in any
occupation which is in competition with the Company, and if after due notice
such retired Participant or spouse continues to be so engaged or employed, the
Administrators shall suspend the special retirement allowance of such person,
which suspension shall continue until removed by notice from the Named Plan
Administrators; provided, however, that if such suspension has continued for
one year, the Named Plan Administrators shall forthwith cancel such
Participant's or spouse's special retirement allowance. Furthermore, if the
Named Plan Administrators find that any Participant has been discharged for
having performed acts detrimental to the Company, then regardless of any other
provision in the Special Plan, no benefit shall be payable to or on account of
any such Participant's coverage under this Special Plan.
2. The establishment of the Special Plan shall not be construed as
conferring any legal rights upon any employee for a continuation of
employment, nor shall it interfere with the rights of the Company to discharge
any employee and to treat him without regard to the effect which such
treatment might have upon him as a Participant in the Special Plan.
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PAGE 11
Section XI - ACCELERATION OF PAYMENTS
If the Compensation and Pension Committee determines that a Change of
Control has occurred, each Participant (whether or not then receiving a
special retirement allowance) shall be entitled to receive, and the
Compensation and Pension Committee shall cause the Company to pay within 7
days of such determination, a lump sum payment equal to the actuarial present
value of the special retirement allowance the Participant (or any beneficiary
of a Participant) has accrued as of the date of such Change of Control
pursuant to the terms of Section V of the Special Retirement Plan. If the
Participant's benefit has not commenced as of the date of such Change of
Control, such lump sum shall be determined assuming that:
(a) The Participant's benefit would commence at the earliest
date he would qualify for early or normal retirement under
the Plan, were his employment with the Company to continue,
but in no event earlier than the later of age 55 or the date
of such Change on Control.
(b) The Participant would qualify for an early (or normal)
retirement benefit as of the date determined in (a).
(c) If married, the Participant would receive his benefit under
the 50% Joint and Survivor form of payment with the spouse
as beneficiary; if not married, the benefit would be payable
in the form of a single life annuity.
The actuarial present value shall be determined on the basis of the
UP 1984 Mortality Table, set back one year, and a discount rate equal to 120%
of the applicable Federal rate determined under Section 1274(d) of the
Internal Revenue Code compounded semiannually the interest rates promulgated
by the Pension Benefit Guaranty Corporation for use in determining the
sufficiency of single employer defined benefit pension plans terminating on
the date of such Change in Control.
The amount of each Participant's lump sum payment shall be determined
by the CSX Corporation's actuaries.
As used in this Section XI the term "Change of Control" means any of
the following:
(i) The acquisition, other than from CSX Corporation, by any
individual, entity or group [within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")] of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either the then outstanding
shares of common stock of CSX Corporation or the combined
voting power of the then outstanding voting securities of
CSX Corporation entitled to vote generally in the election
of directors, but excluding for this purpose any such
acquisition by CSX Corporation or any of its subsidiaries,
or any employee benefit plan (or related trust) of CSX
Corporation or its subsidiaries, or any corporation with
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PAGE 12
respect to which, following such acquisition, more than 50%
of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by the
individuals and entitles who were the beneficial owners,
respectively, of the common stock and voting securities of
CSX Corporation immediately prior to such acquisition in
substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then
outstanding shares of common stock of CSX Corporation or the
combined voting power of the then outstanding voting
securities of CSX Corporation entitled to vote generally in
the election of directors, as the case may be; or
(ii) Individuals who, as of the date hereof, constitute the Board
of Directors (as of the date hereof the "Incumbent Board")
cease for any reason to constitute at least a majority of
the Board of Directors; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election or nomination for election by CSX
Corporation's shareholders was approved by a vote of at
least a majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of
the Board of Directors of CSX Corporation (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(iii) Approval by the stockholders of CSX Corporation of a
reorganization, merger or consolidation, in each case, with
respect to which the individuals and entities who were the
respective beneficial owners of the common stock and voting
securities of CSX Corporation immediately prior to such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or a complete
liquidation or dissolution of CSX Corporation or of its sale
or other disposition of all or substantially all of the
assets of CSX Corporation.
Section XII - CONSTRUCTION
The Special Plan and the rights and obligations of the parties
hereunder shall be construed in accordance with the laws of Virginia.
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PAGE 1
Exhibit 10.15
Supplemental Retirement Benefit Plan
of CSX Corporation And Affiliated Corporations
Effective January 1, 1989
Section 1 - INTRODUCTION
1. The purpose of this plan, hereinafter called the "Supplemental
Plan" is to provide benefit payments to individuals who are participants (or
members, as the case may be) in funded, tax-qualified retirement benefit plans
maintained by CSX Corporation and certain of its affiliated corporations
(whose participation in the Supplemental Plan as a participating employer is
approved by the Board of Directors of any such affiliated corporation and by
the Compensation and Pension Committee of CSX Corporation) and whose benefits
would otherwise be reduced by Sections 415 or 401(a)(17) of the Internal
Revenue Code ("Code") which impose limitations on benefits and limit the
amount of compensation that can be taken into account in computing benefits
("Code Limitations").
2. Notwithstanding the limitations on benefits imposed by Code
Limitations, supplemental benefits shall be provided under this Supplemental
Plan equal to the reduction of benefits which shall occur as a result of the
application of limitations included in a Defined Contribution Plan or in a
Defined Benefit Plan in accordance with Code Limitations.
3. This Supplemental Plan preserves and continues in effect all
provisions for accruals based upon limitations of benefits imposed by Code
Limitations, heretofore credited to Participants under Section V, paragraph
(subsection) 5, of the Special Retirement Plan of CSX Corporation and
Affiliated Corporations ("Special plan"), the Supplemental Benefits Plan of
Sea-Land Corporation and Participating Companies, and the American Commercial
Lines Benefit Restoration Plan ("Predecessor Plans").
Section II - DEFINITION
1. Supplemental Benefit means the benefit described in Section IV of
this Supplemental Plan.
2. The Supplemental Plan shall, where appropriate, refer to and have
meanings consistent with all of the relevant terms of the CSX Pension Plan and
any other regularly maintained funded, tax-qualified pension plan of any other
corporation affiliated with CSX Corporation whose participation in the
Supplemental Plan as a participating employer is approved by the Board of
Directors of any such affiliated corporation and by the Compensation and
Pension Committee of CSX Corporation. Such existing regularly maintained
pension plans which provided benefits for employees of CSX Corporation or its
affiliates prior to the Effective Date of this Supplemental Plan document, or
those which may be established hereafter, as amended from time to time, shall
be referred to herein as the "Pension Plan."
3. Regardless of formal differences which may exist between the
Supplemental Plan and the Pension Plan or the Predecessor Plans in the use of
terminology, the definitions and principles which are set forth in the Pension
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PAGE 2
Plan or the Predecessor Plans with respect to compensation, average
compensation, credited service and similar terms shall be construed and
applied hereunder in a manner consistent with the purposes of this
Supplemental Plan and the Pension Plan or the Predecessor Plans. In any
instance in which the male gender is used herein, it shall also include
persons of the female gender in appropriate circumstances.
Section III - MEMBERSHIP
1. Every person who was a Participant in the Predecessor Plans for
the purpose of accruals of supplemental benefits heretofore notwithstanding
limitations of benefits imposed by Code Limitations, shall be a Participant in
this Supplemental Plan on and after the Effective Date.
2. Each employee who is a Participant in a Pension Plan on or after
the Effective Date shall participate in this Supplemental Plan to the extent
of the benefits provided herein.
3. A Participant's participation in this Supplemental Plan shall
terminate coincident with the termination of such individual's participation
in one of the Pension Plans; provided, however, in the event that the
Participant shall be reassigned or transferred into the employ of CSX
Corporation or any of its affiliates which also is a participating employer in
this Supplemental Plan, the Participant's participation shall be continued to
the extent of the benefits provided herein.
Section IV - SUPPLEMENTAL BENEFITS
1. All of the provisions, conditions and requirements set forth in
the Pension Plan with respect to the granting and payment of retirement
benefits thereunder shall be equally applicable to the payment of supplemental
benefits hereunder to Participants in the Supplemental Plan and to the payment
thereof from the employer's general assets. Whenever an individual
Participant's rights under the Supplemental Plan are to be determined,
appropriate reference shall be made to the particular Pension Plan in which
such person is also a participant. Notwithstanding the preceding sentence, if
a supplemental benefit under this Supplemental Plan shall be paid to a
surviving spouse in conformance with the provisions of the Pension Plans, the
final installment payment hereunder shall be made only to the estate of the
surviving spouse and shall not be otherwise paid, regardless of any different
provisions for such payment which may be prescribed in the Pension Plan.
2. Each Participant shall receive a Supplemental Benefit under this
Supplemental Plan in an amount equal to the difference, if any, between (i)
the Participant's monthly retirement income benefit under the provisions of
the particular Pension Plan in which such person is also a participant
calculated before the application of any Code Limitations and (ii) the
Participant's monthly retirement income benefit determined after application
of the Code Limitations.
3. Notwithstanding any other provision of this Supplemental Plan to
the contrary, a Supplemental Benefit shall not be determined or paid which
would duplicate a payment of benefit provided to a Participant under the
Pension Plan, the Predecessor Plans or any other unfunded or funded, tax
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PAGE 3
qualified retirement plan of CSX Corporation or any of its affiliated
corporations.
4. A Supplemental Benefit payable under the provisions of this
Supplemental Plan shall be paid in such forms and at such times as shall be
consistent with the payment of the Participant's retirement income benefit
under the particular Pension Plan in which such person is also a participant.
Section V - FUNDING METHOD
1. The Supplemental Benefit shall be paid exclusively from the
general assets of the employers participating in the Supplemental Plan and no
Participant or other person shall have any rights or claims which are superior
to or different from the right or claim of a general, unsecured creditor of
any participating employer.
2. The employers participating in the Supplemental Plan shall
provide all funds required for the administrative expenses of the Supplemental
Plan.
Section VI - ADMINISTRATION OF SPECIAL PLAN
The Plan Administrator of the CSX Pension Plan shall be responsible
for the general administration of the Supplemental Plan and for carrying out
its provisions. Administration of this Supplemental Plan shall be carried out
consistent with the terms and conditions of the Pension Plan and the
Supplemental Plan and the decision of the Plan Administrator shall be binding
and conclusive on Participants, their beneficiaries, heirs and assigns.
Section VII - CERTAIN RIGHTS AND OBLIGATIONS
1. The Compensation and Pension Committee of CSX Corporation may
terminate the Supplemental Plan only upon the occurrence of conditions which
require the termination of one or more of the Pension Plans. The Board of
Directors of CSX Corporation may terminate an affiliated corporation from
participation as a participating employer for any reason at any time. The
Board of Directors of any affiliated corporation may terminate that
corporation's participation as a participating employer for any reason at any
time.
2. The participating employers agree in the event that the
Supplemental Plan is terminated:
(a) Each retired Participant and surviving spouse of a retired
Participant shall be entitled to receive for life the
Supplemental Benefit they would have received had not the
Supplemental Plan been terminated, and each surviving spouse
of a deceased Participant shall become entitled to receive
for life the Supplemental Benefit that such surviving spouse
of a deceased Participant shall become entitled to receive
for life the Supplemental Benefit that such surviving spouse
would have received had not the Supplemental Plan been
terminated; and
- 3 -
PAGE 4
(b) Each active Participant shall be entitled to receive for
life the Supplemental Benefit he or she would have received
had not the Supplemental Plan been terminated, calculated on
the basis of the Supplemental Benefit which had accrued at
the time of termination; provided, however, that the
Participant shall become entitled to such Supplemental
Benefit only at the time and in accordance with the
provisions of the Supplemental Plan had it continued in
effect.
(c) In lieu of paying a Supplemental Benefit in accordance with
the foregoing provisions, the Plan administrator, at its
election, may direct the discharge of all obligations to
retired Participants, spouses of deceased Participants, and
active Participants by cash payment of equivalent actuarial
value or through the provision of immediate or deferred
annuities or such other periodic payments of equivalent
actuarial value, as it shall in its sole discretion
determine.
3. Anything in he Supplemental Plan to the contrary notwithstanding,
if the Plan Administrator finds that any Participant, retired Participant or
spouse is engaged in acts detrimental to CSX Corporation or any of its
affiliated corporations, and if after due notice such Participant, the retired
Participant or spouse continues to be so engaged or employed, the
Administrator shall suspend the Supplemental Benefit of such person, which
suspension shall continue until removed by notice from the Administrator;
provided, however, that if such suspension has continued for one year, the
Administrator shall forthwith cancel such Participant's or spouse's
Supplemental Benefit. Furthermore, if the Administrator finds that any
Participant had been discharged for having performed acts detrimental to CSX
Corporation or any of its affiliated corporations, then regardless of any
other provision in the Pension Plan or the Supplemental Plan, no benefit shall
be payable to or on account of any such Participant's coverage under this
Supplemental Plan.
4. The establishment of the Supplemental Plan shall not be construed
as conferring any legal rights upon any employee for a continuation of
employment, nor shall it interfere with the rights of an employing corporation
to discharge any employee and to treat him without regard to the effect which
such treatment might have upon him as a Participant in the Supplemental Plan.
Section VIII - NON-ALIENATION OF BENEFITS
To he extent permitted by applicable law, no benefit under the
Supplemental Plan shall be subject in any manner to anticipating, alienation,
sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt so
to do shall be void, except as specifically provided in the Supplemental Plan,
nor shall any benefit be in any manner liable for or subject to the debts,
contracts, liabilities, engagements, or torts of the person entitled to such
benefits; and in the event that the Plan Administrator shall find that any
active or retired Participant or spouse under the Supplemental Plan has become
bankrupt or that any attempt has been made to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge any of his benefits under the
- 4 -
PAGE 5
Supplemental Plan, except as specifically provided in the Supplemental plan,
then such benefits shall cease and determine, and in that event, the
Administrator shall hold or apply the same to or for the benefit of such
active or retired Participant or apply the same to or for the benefit of such
active or retired Participant or spouse, in such manner as the Administrator
may deem proper.
Section IX - AMENDMENTS
The Supplemental Plan represents a contractual obligation entered
into by a participating employer in consideration of services rendered and to
be rendered by Participants covered under the Supplemental Plan, and
1. Any Participant in this Supplemental Plan who remains in the
active service of a participating employer shall not be deprived of his or her
participation or benefit which shall accrue under the Supplemental Plan except
as provided hereunder.
2. No modification or amendment may be made which shall deprive any
active or retired participant, or the spouse of an active or retired
Participant, without the consent of such active or retired Participant, or
spouse of an active or retired Participant, of any Supplemental Benefit under
the Supplemental Plan to which he or she would otherwise be entitled by reason
of the Supplemental Benefit standing to his or her credit to the date of such
modification or amendment, and in the event of any modification or amendment
which adversely affects such Supplemental Benefit, the amount of all reserves
required to be accrued on the books of a participating employer shall
thereupon be determined and accrued, if the same has not already been done,
and such Supplemental benefit shall become and remain a fixed liability of the
participating employers for the payment of such benefits accrued to the date
of such modification or amendments;
3. Subject to the foregoing, the Board of Directors of CSX
Corporation reserves the right at any time and from time to time to modify or
amend in whole or in part any or all of the provisions of this Plan.
Section X - ACCELERATION OF PAYMENTS UPON CHANGE OF CONTROL
1. If the Compensation Committee determines that a Change of Control
has occurred, each Participant (whether or not then receiving a benefit) shall
be entitled to receive, and the Compensation Committee shall cause the Company
to pay within 7 days of such determination, a lump sum payment equal to the
actuarial present value of the Supplemental Benefit the Participant (or any
beneficiary of a Participant) has accrued as of the date of such Change of
Control pursuant to the terms of Section IV of the Supplemental Plan. If the
Participant's benefit has not commenced as of the date of such Change in
Control, such lump sum shall be determined assuming that
(a) The Participant's benefit would commence at the earliest
date he would qualify for early or normal retirement under
the Plan, were his employment with the Company to continue,
but in no event earlier than the later of age 55 or the date
of such Change in Control.
- 5 -
PAGE 6
(b) The Participant would qualify for an early (or normal)
retirement benefit as of the date determined in (a).
(c) If married, the Participant would receive his benefit under
the 50% Joint and Survivor form of payment with the spouse
as beneficiary; if not married, the benefit would be payable
in the form of a single life annuity.
The actuarial present value shall be determined on the basis of the
UP 1984 Mortality Table, set back one year, and a discount rate equal to 120%
of the applicable Federal rate determined under Code Section 1274(d)
compounded semiannually the interest rates promulgated by the Pension Benefit
Guaranty Corporation for use in determining the sufficiency of single employer
defined benefit pension plans terminating on the date of such Change in
Control.
2. As used in this Section X the term "Change of Control" means:
(a) The acquisition, other than from the Company, by any
individual, entity or group [within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")] of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either the then outstanding
shares of common stock of the company or the combined voting
power of the then outstanding voting securities of the
Company entitled to vote generally in the election of
directors, but excluding for this purpose, any such
acquisition by the Company or any of its subsidiaries, or
any employee benefit plan (or related trust) of the Company
or its subsidiaries, or any corporation with respect to
which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by the
individuals and entities who were the beneficial owners,
respectively, of the common stock and voting securities of
the Company immediately prior to such acquisition in
substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then
outstanding shares of common stock of the Company or the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors, as the case may be; or
(b) Individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent
to the date hereof whose election or nomination for election
by the Company's shareholders was approved by a vote of at
least a majority of the directors then comprising the
- 6 -
PAGE 7
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of
the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(c) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with
respect to which the individuals and entities who were the
respective beneficial owners of the common stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation, beneficially
own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Company or of its sale or
other disposition of all or substantially all of the assets
of the Company.
3. The computation of the amount of any payment or benefit under this
Agreement shall be made at the time by the Company's independent actuaries.
4. If a Participant receives a lump sum distribution pursuant to the
provisions of this Section X, the amount of any benefit to which the
Participant become entitled under Section IV hereof shall be reduced by a
benefit actuarial equivalent to the lump sum amount distributed. Such
actuarial equivalence shall be determined under the same mortality and
interest assumptions used to compute the lump sum amount.
Section XI - CONSTRUCTION
The Supplemental Plan and the rights and obligations of the parties
hereunder shall be construed in accordance with the laws of Virginia.
Section XII - EFFECTIVE DATE
The Effective Date of this Supplemental Benefit Plan shall be
January 1, 1989.
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PAGE 1
Exhibit 21
CSX CORPORATION
SUBSIDIARIES OF THE REGISTRANT
As of December 31, 1993, registrant was the beneficial owner of 100 percent of
the Common Stock of CSX Transportation Inc. (a Virginia corporation).
As of December 31, 1993, registrant was the beneficial owner of 100 percent of
the Common Stock of Sea-Land Service Inc. (a Delaware corporation).
As of December 31, 1993, registrant was the beneficial owner of 100 percent of
the Common Stock of CSX Intermodal Inc. (a Delaware corporation).
As of December 31, 1993, registrant was the beneficial owner of 100 percent of
the Common Stock of American Commercial Lines Inc. (a Delaware corporation).
As of December 31, 1993, the other subsidiaries included in registrant's
consolidated financial statements, and all other subsidiaries considered in
the aggregate as a single subsidiary, did not constitute a significant
subsidiary.
- 1 -
PAGE 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements of our report dated January 28, 1994, with respect to the
consolidated financial statements and schedule of CSX Corporation and
subsidiaries included in its Annual Report (Form 10-K) for the year ended
December 31, 1993:
Registration Statement
Number Description
- ---------------------- -------------------------
33-2083 Post-Effective Amendment No. 1
to Form S-3
33-2084 Post-Effective Amendment No. 1
to Form S-3
33-16230 Form S-8
33-25537 Form S-8
33-27338 Form S-8
33-29136 Form S-8
33-37449 Form S-8
33-41236 Form S-3
33-41498 Form S-8
33-41499 Form S-8
33-41735 Form S-8
33-41736 Form S-8
33-48841 Form S-3
33-49767 Form S-8
/s/ ERNST & YOUNG
------------------
Ernst & Young
Richmond, Virginia
February 28, 1994
- 1 -
PAGE 1
Exhibit 27
<TABLE>
SCHEDULE II-AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN
RELATED PARTIES
CSX CORPORATION
The following summarizes notes receivable from officers and other senior managers of CSX Corporation (the
"Company") and its operating units as a result of their participation in the Company's 1991 Stock Purchase
and Loan Plan ("SPLP") (filed on Form S-8 July 2, 1991, SEC Registration Statement Number 33-41498). The
SPLP, which was approved by shareholders in 1991, provided for increased ownership of CSX common stock by
the senior management group of the Company and its operating units, thereby more closely linking the
interests of the senior management group with those of the shareholders of the Company.
<CAPTION>
Deductions
Balance at ----------------------- Balance at end of Period
Beginning Amounts ------------------------
Name of Debtor(1) of Period Additions Collected(2) Other(3) Current Not Current
- ----------------- --------- --------- ------------ -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
(Millions of Dollars)
J.W. SNOW $6 $0 $0 $2 $0 $4
A.R. CARPENTER $3 $0 $0 $1 $0 $2
J.P. CLANCEY $2 $0 $0 $1 $0 $1
J.R. DAVIS $2 $0 $0 $1 $0 $1
J. ERMER $2 $0 $0 $1 $0 $1
All participating employees as a
group (165 employees, including
those named above) $105 $0 $4 $19 $0 $82
Notes:
(1) The notes receivable from participating employees represent stock purchase loans which resulted from
participation in the SPLP. The notes receivable, which bear interest at the weighted average rate of 7.72%
per annum, are due July 31, 1996. Under the terms of the SPLP, the principal and net interest receivable
balances of each loan are subject to various adjustments as a result of the market price of the CSX common
stock having equalled or exceeded certain threshold levels for a period of 10 consecutive business days.
These adjustments may consist of forgiveness of net interest and up to a 25 percent reduction of the
principal balance. The total non-current balance at December 31, 1993 represents recourse amounts totaling
$5 million and non-recourse amounts totaling $77 million. The total non-current balance at December 31,
1993, is secured by 2,118,518 shares of CSX common stock (aggregate market value at January 31, 1994, $192
million).
(2) Amounts collected include forfeitures and cash payments.
(3) As of August 1, 1993, the principal and net interest receivable balances of each loan was subject to
forgiveness adjustments as a result of the market price of the common stock having exceeded certain
threshold levels for a period of 10 consecutive business days.
</TABLE>
- 1 -
PAGE 2
<TABLE>
SCHEDULE II-AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN
RELATED PARTIES
CSX CORPORATION
The following summarizes notes receivable from officers and other senior managers of CSX Corporation (the
"Company") and its operating units as a result of their participation in the Company's 1991 Stock Purchase
and Loan Plan ("SPLP") (filed on Form S-8 July 2, 1991, SEC Registration Statement Number 33-41498). The
SPLP, which was approved by shareholders in 1991, provided for increased ownership of CSX common stock by
the senior management group of the Company and its operating units, thereby more closely linking the
interests of the senior management group with those of the shareholders of the Company.
<CAPTION>
Deductions
Balance at ----------------------- Balance at end of Period
Beginning Amounts ------------------------
Name of Debtor(1) of Period Additions Collected(2) Other Current Not Current
- ----------------- --------- --------- ------------ -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1992
(Millions of Dollars)
J.W. SNOW $6 $0 $0 $0 $0 $6
A.R. CARPENTER $2 $1 $0 $0 $0 $3
J.P. CLANCEY $1 $1 $0 $0 $0 $2
J.R. DAVIS $2 $0 $0 $0 $0 $2
J. ERMER $2 $0 $0 $0 $0 $2
All participating employees as a
group (174 employees, including
those named above) $97 $14 $6 $0 $0 $105
Notes:
(1) The notes receivable from participating employees represent stock purchase loans which resulted from
participation in the SPLP. The notes receivable, which bear interest at the weighted average rate of 7.72%
per annum, are due July 31, 1996. Under the terms of the SPLP, the principal and net interest receivable
balances of each loan are subject to various adjustments as a result of the market price of the CSX common
stock having equalled or exceeded certain threshold levels for a period of 10 consecutive business days.
These adjustments may consist of forgiveness of net interest and up to a 25 percent reduction of the
principal balance. The total non-current balance at December 31, 1992 represents recourse amounts totaling
$5 million and non-recourse amounts totaling $100 million. The total non-current balance at December 31,
1992, is secured by 2,204,444 shares of CSX common stock (aggregate market value at January 29, 1993, $162
million).
(2) Amounts collected include forfeitures and cash payments.
</TABLE>
- 2 -
PAGE 3
<TABLE>
SCHEDULE II-AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN
RELATED PARTIES
CSX CORPORATION
The following summarizes notes receivable from officers and other senior managers of CSX Corporation (the
"Company") and its operating units as a result of their participation in the Company's 1991 Stock Purchase
and Loan Plan ("SPLP") (filed on Form S-8 July 2, 1991, SEC Registration Statement Number 33-41498). The
SPLP, which was approved by shareholders in 1991, provided for increased ownership of CSX common stock by
the senior management group of the Company and its operating units, thereby more closely linking the
interests of the senior management group with those of the shareholders of the Company.
<CAPTION>
Deductions
Balance at ----------------------- Balance at end of Period
Beginning Amounts ------------------------
Name of Debtor(1) of Period Additions Collected(2) Other Current Not Current
- ----------------- --------- --------- ------------ -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991
(Millions of Dollars)
J.W. SNOW $0 $6 $0 $0 $0 $6
A.R. CARPENTER $0 $2 $0 $0 $0 $2
J.P. CLANCEY $0 $1 $0 $0 $0 $1
J.R. DAVIS $0 $2 $0 $0 $0 $2
J. ERMER $0 $2 $0 $0 $0 $2
All participating employees as a
group (163 employees, including
those named above) $0 $98 $1 $0 $0 $97
Notes:
(1) The notes receivable from participating employees represent stock purchase loans which resulted from
participation in the SPLP. The notes receivable, which bear interest at the rate of 7.87% per annum, are
due July 31, 1996. Under the terms of the SPLP, the principal and net interest receivable balances of each
loan are subject to various adjustments as a result of the market price of the CSX common stock having
equalled or exceeded certain threshold levels for a period of 10 consecutive business days. These
adjustments may consist of forgiveness of net interest and up to a 25 percent reduction of the principal
balance. The total non-current balance at December 31, 1991 represents recourse amounts totaling $5 million
and non-recourse amounts totaling $92 million. The total non-current balance at December 31, 1991, is
secured by 2,096,991 shares of CSX common stock (aggregate market value at January 31, 1992, $121 million).
(2) Amounts collected include forfeitures.
</TABLE>
- 3 -
