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