CSX Corporation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
|
|
|
þ |
|
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
OR
|
|
|
o |
|
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
For the Year Ended December 31, 2005
Commission file number 1-8022
CSX CORPORATION
CAPITAL BUILDER PLAN
CSX CORPORATION
A Virginia Corporation
IRS Employer Identification Number 62-1051971
500 Water Street
15th Floor
Jacksonville, Florida 32202
Telephone (904) 359-3200
CSX CORPORATION
CAPITAL BUILDER PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2005 AND 2004
Contents
Report of Independent Registered Public Accounting Firm
The Finance Committee of the Board of Directors
CSX Corporation Capital Builder Plan
CSX Corporation
Jacksonville, Florida
We have audited the accompanying statements of net assets available for benefits of CSX Corporation
Capital Builder Plan as of December 31, 2005 and 2004, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2005. These financial statements are
the responsibility of the Plans management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (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. We
were not engaged to perform an audit of the Plans internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Plans internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and 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 December 31, 2005 and 2004, and the
changes in its net assets available for benefits for the year ended December 31, 2005, in
conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken
as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December
31, 2005 is presented for purposes of additional analysis and is not a required part of the
financial statements, but is supplementary information required by the Department of Labors Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plans management. The supplemental
schedule has been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
Independent Certified Public Accountants
Jacksonville, Florida
June 2, 2006
1
CSX CORPORATION
CAPITAL BUILDER PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
|
2005 |
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Investments, at fair value: |
|
|
|
|
|
|
|
|
Investment in Master Trust (see Note 3) |
|
$ |
470,286 |
|
|
$ |
400,826 |
|
Loans to members |
|
|
12,801 |
|
|
|
10,618 |
|
|
|
|
|
|
|
483,087 |
|
|
|
411,444 |
|
|
|
|
|
|
|
|
|
|
RECEIVABLES |
|
|
|
|
|
|
|
|
Employer contributions |
|
|
47 |
|
|
|
46 |
|
Member contributions |
|
|
1,010 |
|
|
|
861 |
|
|
|
|
|
|
|
1,057 |
|
|
|
907 |
|
|
|
|
TOTAL ASSETS |
|
|
484,144 |
|
|
|
412,351 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Accrued expenses |
|
|
40 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS AVAILABLE FOR BENEFITS |
|
$ |
484,104 |
|
|
$ |
412,311 |
|
|
|
|
See accompanying Notes to Financial Statements.
2
CSX CORPORATION
CAPITAL BUILDER PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2005
(Dollars in Thousands)
|
|
|
|
|
ADDITIONS |
|
|
|
|
Net appreciation in fair value of investment in Master Trust (see Note 3) |
|
$ |
66,772 |
|
Interest from loans to members |
|
|
513 |
|
Employer contributions |
|
|
9,355 |
|
Member contributions |
|
|
29,267 |
|
|
|
|
|
|
|
|
105,907 |
|
|
|
|
|
|
DEDUCTIONS |
|
|
|
|
Distributions to members |
|
|
33,581 |
|
Fees and expenses |
|
|
533 |
|
|
|
|
|
|
|
|
34,114 |
|
|
|
|
|
|
|
|
|
|
NET INCREASE |
|
|
71,793 |
|
|
|
|
|
|
Net Assets Available for Benefits at Beginning of Year |
|
|
412,311 |
|
|
|
|
|
|
|
|
|
|
Net Assets Available for Benefits at End of Year |
|
$ |
484,104 |
|
|
|
|
|
See accompanying Notes to Financial Statements.
3
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
(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 Plans provisions.
General: The Plan is a defined contribution plan effective August 1, 1989 covering certain
union employees of CSX Corporation (CSX or Plan Sponsor) and affiliated companies (collectively,
the Company). Effective January 1, 2001, CSX established a portion of the Plan as an Employee Stock
Ownership Plan (ESOP) designed to comply with Section 4975(e)(7) of the Internal Revenue Code (the
Code) of 1986, as amended. The Plan also contains a cash or deferred arrangement described in
Section 401(k) of the Code, and is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA), as amended. The ESOP component is designed to invest primarily in CSX
common stock and may invest 100% in such securities.
Contributions: Members, as defined in the Plan document, may contribute from 1% to 50%, (in
1% multiples) of eligible compensation, as defined by the Plan, on a pre-tax or after-tax basis up
to the current Code limit. Beginning January 1, 2003, members who are age 50 or older by the end of
the applicable calendar year are eligible to make catch-up contributions in accordance with the
Code. Certain eligible members may also contribute other compensatory awards and/or sellback
contributions (unused sick, vacation or personal leave) to the Plan. Subject to certain
limitations, members may transfer distributions from another qualified plan or an individual
retirement account (Rollover Account). Members may change contribution rates and investment
elections daily.
The Company contributes the value of 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 (ESOP allocation).
During 2005, the estimated number of shares required to fund the 2005 ESOP allocation were
purchased on the open market. The stock was held in the Rabbi Trust for a short period of time
between purchase and allocation to members accounts. All other Company contributions to the Plan
were funded by the general assets of the Plan Sponsor.
The Plan also provides for a Company matching contribution to certain eligible members. The amount
and timing of the Company contributions varies according to the applicable collective
4
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2005
(Dollars in Thousands)
NOTE 1 DESCRIPTION OF THE PLAN (continued)
bargaining agreements but cannot exceed 50% of the Basic Capital Savings contribution made by or on
behalf of the member. Basic Capital Savings contributions are limited to 6% of each members
eligible compensation as defined in the Plan document. In accordance with the applicable collective
bargaining agreement CSX may also make additional discretionary Company contributions to the Plan.
Diversification: All Company contributions are initially invested in CSX common stock,
except for certain contributions that can be directed by the members of certain eligible groups as
defined under the Plan. Members may immediately transfer these contributions made in CSX common
stock to other investment options offered under the Plan.
Transfer/Reallocations: Beginning June 1, 2005, a trading restriction was placed on trade
activities in all available investment funds. These restrictions require a 30-day period of time
during which investments must remain in the fund (the holding period). If these trading
restrictions are not followed, a redemption fee of 2% will apply to the current value of the units
withdrawn prior to the expiration of the holding period. The trading restrictions will apply only
to amounts transferred on or after June 1, 2005.
Member Accounts: Each members account is credited with the members contributions and
allocations of (a) Company contributions and (b) Plan earnings and is charged for administrative
expenses. Company contributions are calculated in accordance with a bargained formula or benefit
amount. Plan earnings are allocated on a proportionate share of the increase or decrease in the
fair market value of each Fund in which the members accounts are invested on each valuation date.
Expense allocations are made on the basis of assets in the individual account. A member is entitled
to the value of his account.
Vesting: Members are 100% vested in their accounts.
Loans: Certain members may borrow from their accounts an amount equal to the lesser of
fifty thousand dollars in the aggregate (reduced by the highest outstanding balance during the
one-year period preceding the loan) or 50% of their account balance (reduced by the outstanding
balance of all Plan loans at the time of the loan). Members may not borrow from an ESOP
account or the Company match account even though those accounts are used in the calculation to
5
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2005
(Dollars in Thousands)
NOTE 1 DESCRIPTION OF THE PLAN (continued)
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. Loans are secured by
the balance in the members account and bear interest at the prime rate in effect at CitiBank at
the beginning of the quarter in which the loan originated. Principal and interest are paid ratably
through payroll deductions.
Dividends: Dividends paid on shares of CSX common stock held in a members account are
reinvested in shares of CSX common stock. 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 his or her account and reinvested in shares of CSX common stock.
Payment of Benefits: Upon termination of service, a member may receive a lump-sum amount
equal to the value of his or her account, or upon disability or retirement, elect to receive
monthly installments over a period not to exceed the lesser of 240 months or the life expectancy of
the last survivor of the member and his beneficiary. Surviving spouses of retired or disabled
members may also elect monthly installments. A terminated members account balance of five thousand
dollars or less (excluding the Rollover Account) as of his or her date of termination or the last
day of any plan year shall be rolled over into an individual retirement account (IRA) at Centier
Bank unless the member makes an alternate distribution request.
Plan Termination: Although it has not expressed any intent to do so, the Company has the
right to discontinue its contributions to the Plan at any time and to terminate the Plan subject to
the provisions of ERISA.
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, 2005 were paid from Plan funds.
6
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2005
(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 U.S. generally accepted accounting principles.
Investments: The CSX Corporation Master Retirement Savings Plan Trust (Master Trust) holds
all investments of the Plan, except for loans to members, along with investments of the Tax Savings
Thrift Plan for Employees of CSX Corporation and Affiliated Companies. Loans to members are valued
at their outstanding balances, which approximate fair value. Each participating retirement plan has
an undivided interest in the Master Trust.
Use of Estimates: The preparation of financial statements in conformity with U.S. generally
accepted accounting principles 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
All investments of the Master Trust are held by The Northern Trust Company, the Master Trusts
trustee.
Cash and cash equivalents are valued at face value. Investments in CSX common stock, which are
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 December 31. The collective trust fund has a benefit responsive feature and
is valued at initial investment plus accrued income. Synthetic guaranteed investment contracts
(defined on page 9) are reported at their contract values, which approximates fair value, because
these investments have fully benefit responsive features.
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.
7
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2005
(Dollars in Thousands)
NOTE 3 INVESTMENT IN MASTER TRUST (continued)
Summarized financial information of the Master Trust is presented below:
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
|
2005 |
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Investments at fair value: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,683 |
|
|
$ |
4,884 |
|
Mutual funds |
|
|
393,608 |
|
|
|
427,518 |
|
CSX common stock |
|
|
451,154 |
|
|
|
367,382 |
|
Common stock |
|
|
33,669 |
|
|
|
|
|
Collective trust fund |
|
|
28,554 |
|
|
|
24,820 |
|
Synthetic guaranteed investment contracts |
|
|
327,070 |
|
|
|
311,130 |
|
Synthetic guaranteed investment contract wrappers |
|
|
(11,406 |
) |
|
|
(20,225 |
) |
|
|
|
|
|
|
1,230,332 |
|
|
|
1,115,509 |
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
Accrued expenses |
|
|
127 |
|
|
|
106 |
|
|
|
|
Net assets |
|
$ |
1,230,205 |
|
|
$ |
1,115,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plans investment in the Master Trusts net assets |
|
$ |
470,286 |
|
|
$ |
400,826 |
|
|
|
|
|
|
|
|
|
|
Percentage of Plans investment in the Master Trusts net assets |
|
|
38 |
% |
|
|
36 |
% |
8
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2005
(Dollars in Thousands)
NOTE 3 INVESTMENT IN MASTER TRUST (continued)
Investment income and expenses, other than those related to CSX common stock, are allocated to each
plan in a pro-rata fashion based on the members average daily investment balances. Investment
income and expenses related to CSX common stock are allocated based on actual shares held.
Investment income for the Master Trust for the year ended December 31, 2005 is as follows:
|
|
|
|
|
Net appreciation in fair value of investments in Master
Trust determined by quoted market prices: |
|
|
|
|
Mutual funds |
|
$ |
10,961 |
|
CSX common stock |
|
|
96,685 |
|
Common stock |
|
|
2,161 |
|
Collective trust fund |
|
|
933 |
|
|
|
|
|
|
|
|
110,740 |
|
Interest and dividend income |
|
|
26,362 |
|
|
|
|
|
Investment income for the Master Trust |
|
$ |
137,102 |
|
|
|
|
|
Synthetic guaranteed investment contracts (SICs) represent a diversified portfolio of
primarily corporate and government bonds held in the name of the Master Trust in conjunction with a
corresponding contract wrapper 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. A summary of
the SICs at December 31, 2005 and 2004 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIG Life |
|
|
JP Morgan |
|
|
|
|
|
|
Contract |
|
|
Contract |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2005: |
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of investments |
|
$ |
164,268 |
|
|
$ |
162,802 |
|
|
$ |
327,070 |
|
Fair value of corresponding contract wrapper |
|
|
(3,039 |
) |
|
|
(8,367 |
) |
|
|
(11,406 |
) |
|
|
|
Contract value |
|
$ |
161,229 |
|
|
$ |
154,435 |
|
|
$ |
315,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crediting rate |
|
|
4.86 |
% |
|
|
5.82 |
% |
|
|
|
|
Average crediting rate |
|
|
4.88 |
% |
|
|
5.84 |
% |
|
|
|
|
9
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2005
(Dollars in Thousands)
NOTE 3 INVESTMENT IN MASTER TRUST (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIG Life |
|
|
JP Morgan |
|
|
|
|
|
|
Contract |
|
|
Contract |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2004: |
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of investments |
|
$ |
156,765 |
|
|
$ |
154,365 |
|
|
$ |
311,130 |
|
Fair value of corresponding contract wrapper |
|
|
(7,417 |
) |
|
|
(12,808 |
) |
|
|
(20,225 |
) |
|
|
|
Contract value |
|
$ |
149,348 |
|
|
$ |
141,557 |
|
|
$ |
290,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crediting rate |
|
|
4.71 |
% |
|
|
6.24 |
% |
|
|
|
|
Average crediting rate |
|
|
4.62 |
% |
|
|
5.76 |
% |
|
|
|
|
NOTE 4 RELATED PARTY TRANSACTIONS
During the year ended December 31, 2005, the Master Trust received cash dividends from investments
in CSX common stock of $3,863. The Plans share of these dividends was $2,226.
The Trustee routinely invests assets in its Collective Short-Term Investment Fund. During the year
ended December 31, 2005, the Master Trust earned interest of $223 for transactions with this fund,
a portion of which is allocated to the Plan based upon the Plans pro-rata share in the net assets
of the Master Trust and is included in net appreciation in fair value investment in Master Trust in
the statement of changes in net assets available for benefits.
NOTE 5 INCOME TAX STATUS
The Plan received a determination letter from the Internal Revenue Service dated March 12, 2002,
stating that the Plan is qualified under Section 401(a) of 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. If necessary, the Plan Sponsor will take the required
steps, if any, to bring the Plans operations into compliance with the Code.
10
CSX CORPORATION
CAPITAL BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2005
(Dollars in Thousands)
NOTE 6 RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are exposed to various
risks such as interest rate, market and credit risks. Due to the level of risk associated with
certain investment securities, it is possible that changes in the values of investment securities
will occur in the near term and that such changes could materially affect the amounts reported in
the statements of net assets available for benefits.
11
CSX CORPORATION
CAPITAL BUILDER PLAN
EIN: 62-1051971 Plan Number: 004
SCHEDULE H, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2005
|
|
|
|
|
|
|
|
|
Description of |
|
|
|
|
Investment Including |
|
|
Identity of Issue, |
|
Maturity Date, Rate of |
|
|
Borrower, Lessor, or |
|
Interest, Collateral, |
|
|
Similar Party |
|
Par or Maturity Value |
|
Current Value |
|
|
|
|
|
|
|
|
*Members
|
|
Loans with interest
rates of 4.0% to 11.0%,
maturing through 2029
|
|
$ |
12,801,185 |
|
|
* Indicates a party-in-interest to the Plan.
|
|
Note: Cost information has not been included, because all investments are member directed.
|
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the CSX Administrative
Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
|
|
|
|
CSX CORPORATION CAPITAL BUILDER PLAN
|
|
|
By: |
/s/ JOANN M. BLIGH
|
|
|
|
Joann M. Bligh |
|
|
|
Assistant Vice President
Compensation and Benefits
CSX Corporation
(Plan Sponsor) |
|
|
Date: June 8, 2006
13