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 December 31, 2001
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
CSX CORPORATION
CAPITAL BUILDER PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001 AND 2000
Contents
Report of Independent Certified Public Accountants ...................... 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
Signature ............................................................... 14
Exhibit 23 - Consent of Ernst & Young LLP, Independent
Certified Public Accountants ........................................... I-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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 (the Plan) as of December 31, 2001
and 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2001. 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 as of
December 31, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Jacksonville, Florida
June 24, 2002
3
CSX CORPORATION
CAPITAL BUILDER PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollars in Thousands)
December 31,
2001 2000
-------------------
ASSETS
Investment in Master Trust, at fair value (see Note 3) $332,468 $270,303
-------------------
TOTAL ASSETS 332,468 270,303
LIABILITY
Accrued expenses 152 114
-------------------
NET ASSETS AVAILABLE FOR BENEFITS $332,316 $270,189
===================
See Notes to Financial Statements.
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CSX CORPORATION
CAPITAL BUILDER PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the YEAR ENDED DECEMBER 31, 2001
(Dollars in Thousands)
ADDITIONS
Net gain on investment in Master Trust $ 44,824
Employer contributions 7,622
Member contributions 27,450
--------
79,896
DEDUCTIONS
Distributions to members 17,144
Fees and expenses 625
--------
17,769
--------
NET INCREASE 62,127
Net Assets Available for Benefits at Beginning of Period 270,189
--------
Net Assets Available for Benefits at End of Period $332,316
========
See Notes to Financial Statements.
5
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
(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. Members 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). During 2001, the Internal Revenue Service confirmed
the Plan is an Employee Stock Ownership Plan (ESOP) and is designed to comply
with Section 4975(e)(7) of the Internal Revenue Code of 1986, as amended (Code)
and is subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA), as amended. The designation of the Plan as an ESOP had no
material impact on the Plan provisions except as noted below.
Contributions: Each year, members may contribute, in 1% multiples, up to 15% of
annual compensation, as defined by the Plan. Certain eligible members may also
contribute other compensatory awards to the Plan. Subject to certain
limitations, members may reinvest distributions received from another qualified
plan. Members may revise investment direction of their contributions daily.
After December 31, 2001, a member may defer up to 50% of his or her eligible
compensation instead of 15%.
The Company contributes a specified number of shares of CSX common stock on an
annual basis to certain member accounts of the eligible groups, as defined by
the Plan. These shares may be purchased throughout the year and are held by CSX
Corporation in a rabbi trust until they are contributed to the Plan and credited
to the members' accounts.
The Plan also provides for a Company matching contribution of stock or cash to
certain eligible members. The amount and timing of the Company contributions
varies according to individual agreements. All Company contributions are
invested in CSX common stock, except for certain contributions which can be
directed by certain eligible groups as defined by the Plan.
6
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(Dollars in Thousands)
NOTE 1 - DESCRIPTION OF THE PLAN, Continued
Member Accounts: Each member's account is credited with the member'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 member earnings or account balances, as defined.
Forfeited balances of terminated members' nonvested accounts are allocated to
active members' accounts. The benefit to which a member is entitled is the
benefit that can be provided from the member's account.
Vesting: Members are immediately vested in their contributions plus actual
earnings thereon. Members are immediately vested in Company matching
contributions made in cash and are vested after five years of credited service
in Company matching contributions made in stock (ESOP.) A member is immediately
vested upon death, disability or retirement. Effective January 1, 2002, all
accounts under the Plan are fully vested.
Loans: Members may borrow from their fund account in 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. Members may not borrow from an ESOP account
or the Company match account even though those accounts are used in the
calculation to determine the amount available for the loan. 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
member'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 payroll deductions.
Payment of Benefits: Upon termination of service, a member may receive a
lump-sum amount equal to the vested value of his or her account, or upon
disability or retirement, elect to receive monthly installments over a 240-month
period. Surviving spouses of retired or disabled members may elect to continue
monthly installments or to initiate monthly installments. A member with an
account balance of $5,000 or less shall be paid in lump sum.
7
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(Dollars in Thousands)
NOTE 1 - DESCRIPTION OF THE PLAN, Continued
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, members will become 100% 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. All of the
administrative expenses of the Plan during the year ended December 31, 2001 were
paid from Plan funds.
Diversification: Investment diversification is offered to participants close to
retirement so that they may have the opportunity to move part of the value of
their investment in Company stock into investments which are more diversified.
Members who are at least age 55 may elect to diversify their company match
contributions or ESOP allocation. Effective January 1, 2002 members who are at
least 50 years old may elect to diversify their accounts. Effective May 31, 2002
all restrictions were removed and members may diversify their accounts
immediately.
Dividends: Dividends paid on shares of Company stock held in a member's account
are reinvested in shares of Company stock. Effective January 1, 2001, a member
or spousal beneficiary may elect to have dividends paid to them in cash. Any
change in an election will apply only to ex-dividend dates occurring after the
date such election is received. A member who does not make a timely election
will have the dividends paid to their account and reinvested in shares of
Company stock.
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CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(Dollars in Thousands)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The financial statements have been prepared under the
accrual method of accounting in accordance with accounting principles generally
accepted in the United States.
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.
NOTE 3 - INVESTMENT IN MASTER TRUST
Investments in CSX Common Stock (stated at fair value) are valued at the last
reported sales price on the last business day of the year. Investments in mutual
funds are measured by quoted market prices and are reported at aggregate fair
value at year-end. Synthetic guaranteed investment contracts are reported at
fair value, which in the case of such contracts approximates contract value.
Member loans are valued at their outstanding balances, which approximates 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.
At December 31, 2001, the Plan's interest in the net assets of the Master Trust
was approximately 31%.
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CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(Dollars in Thousands)
NOTE 3 - INVESTMENT IN MASTER TRUST (continued)
Summarized financial information of the Master Trust is presented below:
December 31,
2001
------------
Assets:
Accrued income $ 15
Receivables:
Employer contributions 658
Member contributions 1,984
Investments at fair value:
Cash and cash equivalents 6,327
Mutual funds:
Fidelity Equity-Income Fund 90,403
Vanguard Institutional Index Fund 140,309
Twentieth Century Select Fund 91,642
Other 58,760
CSX Corporation common stock 399,644*
Guaranteed investment contracts:
AIG Life Contract 108,038
JP Morgan Contract 100,403
Collective trust fund 36,313
Loans to members 24,761
-------------
Total assets 1,059,257
Liabilities:
Accrued expenses 485
-------------
Total Master Trust net assets $1,058,772
=============
*Includes nonmember-directed (see Note 4)
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CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(Dollars in Thousands)
NOTE 3 - INVESTMENT IN MASTER TRUST, Continued
Investment income and expenses are allocated to each plan based upon its
pro-rata share in the net assets of the Master Trust. Investment income (loss)
for the Master Trust is as follows:
Year Ended
December 31, 2001
---------------------
Net appreciation (depreciation) in fair
value of investments determined by quoted
market prices:
Mutual funds $(52,394)
CSX Corporation common stock 101,935
Collective trust fund 1,666
---------------
51,207
Interest and dividend income 24,826
---------------
$ 76,033
===============
Synthetic guaranteed investment contracts (SICs) represent a diversified
portfolio of high quality bonds held in the name of the Master Trust in
conjunction with a corresponding contract with the issuer of the SIC to provide
a variable rate of return (based on investment experience and reset quarterly)
on the cost of the investment. The crediting rate for the AIG Life Contract and
the JP Morgan Contract at December 31, 2001 was 6.17% and 6.19%, respectively
(6.76% and 6.89%, respectively, at December 31, 2000). The average crediting
rate during 2001 was 6.54% for the AIG Life Contract and 6.61% for the J.P.
Morgan Contract.
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CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(Dollars in Thousands)
Note 4 - NONMEMBER-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonmember-directed investments is as follows:
December 31,
2001 2000
---------------------------
Net Assets:
CSX Corporation common stock $147,579 $107,173
Year Ended
December 31, 2001
---------------------------
Changes in Net Assets:
Contributions $ 7,601
Dividends 3,273
Transfers to other funds (487)
Net appreciation in fair value of CSX
Corporation common stock 36,905
Distributions to members (6,886)
-----------------
$40,406
=================
NOTE 5 - RELATED PARTY TRANSACTIONS
CSX and its subsidiaries provide the Plan with certain management and accounting
services. During the year ended December 31, 2001, the Master Trust reimbursed
CSX and its subsidiaries approximately $148 for these services.
During the year ended December 31, 2001, the Master Trust received cash
dividends from investments in CSX common stock of $8,772. The Plan's share of
these dividends was $4,481.
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CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(Dollars in Thousands)
NOTE 5 - RELATED PARTY TRANSACTIONS (continued)
The Trustee, Northern Trust Company, routinely invests assets in its Collective
Short-Term Investment Fund. During the year ended December 31, 2001, the Master
Trust earned interest of $264 for transactions with this fund, a portion of
which was allocated to the Plan based upon the Plan's pro-rata share in the net
assets of the Master Trust and included in the net gain on investment in Master
Trust in the statement of changes in net assets available for benefits.
NOTE 6 - INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated December 5, 2000, 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.
NOTE 7 - SUBSEQUENT EVENT
January 1, 2002, the Plan was amended and restated to comply with rules and
regulations contained in the Economic Growth and Tax Relief Reconciliation Act
of 2001 (EGTRRA). The Plan has received a determination letter from the Internal
Revenue Service dated March 12, 2002 for the amended and restated plan effective
January 1, 2002, stating that the Plan is qualified under Section 401(a) of the
Code and, therefore, the related trust is exempt from taxation. The Plan
restatement had no material effect on the Plan provisions except as noted in
Note 1.
13
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/CAROLYN T. SIZEMORE
Carolyn T. Sizemore
Vice President and Controller
CSX Corporation
(Plan Sponsor)
Date: June 24, 2002
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