PAGE 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 1997 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- PAGE 2 CSX CORPORATION CAPITAL BUILDER PLAN INDEX TO FINANCIAL STATEMENTS Audited Financial Statements Page No. Report of Independent Auditors 3 Statement of Net Assets Available for Plan Benefits - September 30, 1997 4 Statement of Net Assets Available for Plan Benefits - September 30, 1996 5 Statement of Changes in Net Assets Available for Plan Benefits - Fiscal Year Ended September 30, 1997 6 Statement of Changes in Net Assets Available for Plan Benefits - Fiscal Year Ended September 30, 1996 7 Notes to Financial Statements 8-12 Supplemental Schedules Schedule of Assets Held for Investment Purposes - September 30, 1997 14 Schedule of Reportable Transactions 15 Signature 16 -2- PAGE 3 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 plan benefits of the CSX Corporation Capital Builder Plan ("Plan") as of September 30, 1997 and 1996, and the related statements of changes in net assets available for plan benefits for the fiscal years then ended. 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 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 financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at September 30, 1997 and 1996, and the changes in its net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes as of September 30, 1997 and reportable transactions for the fiscal year then ended, are presented for the purpose of additional analysis and are not a required part of the basic 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. The 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 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ ERNST & YOUNG LLP --------------------- Ernst & Young LLP Jacksonville, Florida March 23, 1998 - 3 - PAGE 4 CSX CORPORATION CAPITAL BUILDER PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS SEPTEMBER 30, 1997 (Dollars in Thousands) Non-Participant Participant Directed Directed ------------------------------------------------ ----------- S & P CSX Guaranteed 500 Aggressive CSX ESOP Interest Index Growth Stock Stock Fund Fund Fund Fund Fund Total ----------------------------------------------- ---------------------- ASSETS Investments Common Stock of CSX Corporation $ - $ - $ - $52,173 $202,319 $254,492 Collective Trust Fund 17,073 - - - - 17,073 Mutual Funds - 26,074 14,396 - - 40,470 Cash and Cash Equivalents - 5 (33) 483 4 459 ---------- -------- ---------- --------- ----------- --------- 17,073 26,079 14,363 52,656 202,323 312,494 Accrued Investment Income - 1 - 1 3 5 ---------- -------- ---------- --------- ----------- --------- TOTAL ASSETS 17,073 26,080 14,363 52,657 202,326 312,499 ---------- -------- ---------- --------- ----------- --------- LIABILITIES Due to Brokers for Securities - - - 346 1,024 1,370 Purchased Accrued Expenses 9 15 8 28 102 162 ---------- -------- ---------- --------- ----------- --------- TOTAL LIABILITIES 9 15 8 374 1,126 1,532 ---------- -------- ---------- --------- ----------- --------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $17,064 $26,065 $14,355 $52,283 $201,200 $310,967 ========== ======== ========== ========= =========== ========= See Notes to Financial Statements. - 4 - PAGE 5 CSX CORPORATION CAPITAL BUILDER PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS SEPTEMBER 30, 1996 (Dollars in Thousands) Non-Participant Participant Directed Directed ------------------------------------------------- ------------ S & P CSX Guaranteed 500 Aggressive CSX ESOP Interest Index Growth Stock Stock Fund Fund Fund Fund Fund Total ------------------------------------------------- ---------------------- ASSETS Investments Common Stock of CSX Corporation $ - $ - $ - $40,210 $170,106 $210,316 Collective Trust 15,463 - - - - 15,463 Fund Mutual Funds - 14,991 9,310 - - 24,301 Cash and Cash Equivalents 73 3 2 182 305 565 ---------- --------- ---------- --------- ------------ --------- 15,536 14,994 9,312 40,392 170,411 250,645 Accrued Investment Income - - - 1 3 4 ---------- --------- ---------- --------- ------------ --------- TOTAL ASSETS 15,536 14,994 9,312 40,393 170,414 250,649 ---------- --------- ---------- --------- ------------ --------- LIABILITIES Due to Brokers for Securities Purchased - - - 176 - 176 Accrued Expenses 24 10 7 24 88 153 ---------- --------- ---------- --------- ------------ --------- TOTAL LIABILITIES 24 10 7 200 88 329 ---------- --------- ---------- --------- ------------ --------- NET ASSETS AVAILABLE FOR PLAN $15,512 $14,984 $9,305 $40,193 $170,326 $250,320 BENEFITS ========== ========= ========== ========= ============ ========= See Notes to Financial Statements. - 5 - PAGE 6 CSX CORPORATION CAPITAL BUILDER PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FISCAL YEAR ENDED SEPTEMBER 30, 1997 (Dollars in Thousands) Non-Participant Participant Directed Directed ----------------------------------------------- ----------- S & P CSX Guaranteed 500 Aggressive CSX ESOP Interest Index Growth Stock Stock Fund Fund Fund Fund Fund Total ----------------------------------------------- ----------------------- ADDITIONS Investment Income: Dividends and Interest $ 1,007 $ 381 $ 78 $ 888 $ 3,524 $ 5,878 Employer Contributions 193 143 50 719 6,403 7,508 Participant 1,737 4,076 1,870 4,802 - 12,485 Contributions Net Realized and Unrealized Appreciation in Fair Value of Investments - 6,501 3,560 7,216 27,232 44,509 ---------- ------- ----------- -------- ----------- -------- 2,937 11,101 5,558 13,625 37,159 70,380 DEDUCTIONS Distributions to Participants 829 483 243 1,706 6,007 9,268 Fees and Expenses 62 35 18 72 278 465 ---------- ------- ----------- -------- ----------- -------- 891 518 261 1,778 6,285 9,733 INTERFUND TRANSFERS (494) 498 (247) 243 - - ---------- ------- ----------- -------- ----------- -------- NET INCREASE IN NET 1,552 11,081 5,050 12,090 30,874 60,647 ASSETS Net Assets Available for Plan Benefits at Beginning of Year 15,512 14,984 9,305 40,193 170,326 250,320 ---------- ------- ----------- -------- ----------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $17,064 $26,065 $14,355 $52,283 $201,200 $310,967 ========== ======= =========== ======== =========== ======== See Notes to Financial Statements. - 6 - PAGE 7 CSX CORPORATION CAPITAL BUILDER PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FISCAL YEAR ENDED SEPTEMBER 30, 1996 (Dollars in Thousands) Non-Participant Participant Directed Directed ----------------------------------------------- ------------ S & P CSX Guaranteed 500 Aggressive CSX ESOP Interest Index Growth Stock Stock Fund Fund Fund Fund Fund Total ----------------------------------------------- ----------------------- ADDITIONS Investment Income: Dividends and Interest $ 947 $ 248 $ 52 $ 779 $ 3,324 $ 5,350 Employer Contributions 231 118 50 650 11,844 12,893 Participant 1,763 2,429 1,418 3,750 --- 9,360 Contributions Net Realized and Unrealized Appreciation in Fair Value of Investments --- 1,985 1,011 6,216 26,991 36,203 ---------- --------- ---------- -------- ------------ --------- 2,941 4,780 2,531 11,395 42,159 63,806 DEDUCTIONS Distributions to Participants 515 297 215 1,197 4,232 6,456 Fees and Expenses 82 25 16 65 259 447 ---------- --------- ---------- -------- ------------ --------- 597 322 231 1,262 4,491 6,903 INTERFUND TRANSFERS (1,163) 760 (559) 962 --- --- ---------- --------- ---------- -------- ------------ --------- NET INCREASE IN NET 1,181 5,218 1,741 11,095 37,668 56,903 ASSETS Net Assets Available for Plan Benefits at Beginning of Year 14,331 9,766 7,564 29,098 132,658 193,417 ---------- --------- ---------- -------- ------------ --------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT $15,512 $14,984 $9,305 $40,193 $170,326 $250,320 END OF YEAR ========== ========= ========== ======== ============ ========= See Notes to Financial Statements. - 7 - PAGE 8 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (Dollars in Thousands) NOTE 1. SIGNIFICANT ACCOUNTING POLICIES The accounting records of the CSX Corporation Capital Builder Plan ("the Plan") are maintained on the accrual basis. All securities transactions of the Plan are recorded as of the trade date. Investments in CSX Corporation ("CSX") common stock and mutual funds are presented at fair value. Fair value is based upon the last reported sales price on the last business day of the Plan year. Collective trust fund participation units are carried at cost plus accrued interest as determined by the fund manager, which is contract value. Contract value approximates fair value. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses, and other additions to and deductions from net assets. Actual results may differ from those estimates. Certain amounts have been reclassified from the 1996 financial statements to be consistent with the presentation in the 1997 financial statements. NOTE 2. DESCRIPTION OF THE PLAN A complete description of Plan provisions including those relating to contributions, vesting, withdrawals and distributions is contained in the Summary Plan Description and the Plan document. The prospectus relating to the Plan, which includes the Summary Plan Description, was filed with the Securities and Exchange Commission on June 9, 1989. Copies of these documents are available from the CSX Benefits Department. The following summary should be read in conjunction with the aforementioned documents. General: The Plan is a defined contribution plan subject to the provisions of - ------- the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan was established effective August 1, 1989 and qualifies as a "cash or deferred" arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended ("IRC"), as a combination profit sharing and stock bonus plan. Plan participation is limited to certain union employees of CSX and affiliated companies (the "Employer"). Under the stock bonus portion of the Plan ("ESOP"), CSX contributes a specified number of shares of CSX common stock on an annual basis to the accounts of participants who have met service requirements for the preceding calendar year and remain employed on specified dates as defined in the applicable Summary Plan Description. These shares may be purchased throughout the year and are classified as "unallocated" shares until credited to the participants' accounts. The CSX ESOP Stock Fund held 155,447 shares valued at $9,094 and 220,797 shares valued at $11,150 representing unallocated shares at September 30, 1997 and 1996, respectively. - 8 - PAGE 9 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED (Dollars in Thousands) NOTE 2. DESCRIPTION OF THE PLAN, Continued Investment Alternatives: Participant contributions may be invested in one or - ------------------------ more of the following investment funds: (1) the Guaranteed Interest Fund, consisting of a collective trust fund that primarily invests in synthetic guaranteed investment contracts; (2) the S&P 500 Index Fund, consisting of a mutual fund that invests in common stocks selected primarily to duplicate the performance of the stock market as a whole; (3) the Aggressive Growth Fund, consisting of a mutual fund that invests in various securities selected primarily for capital growth potential; and (4) the CSX Stock Fund, consisting of investments in CSX common stock. Amounts allocated to any of these funds may be temporarily retained as cash or invested in cash equivalents to facilitate the investment or reinvestment of Plan assets and the distribution of account balances to participants. Participant Contributions: A participant may contribute from 1% to 15% of his or - ------------------------- her annual compensation, in 1% multiples, to the Plan. In addition, the Plan permits certain eligible participants to contribute other compensatory awards to the Plan. All participant contributions may be made on a before- or after-tax basis within the limits imposed by the Internal Revenue Code and may be invested in any combination of the four investment alternatives. Investment direction may be revised by participants as often as four times per year. Employer Contributions: Contributions to the profit sharing and stock bonus - ----------------------- portion of the Plan are made by the Employer in the number of shares of CSX common stock at least equal to the Company Stock Multiple (as defined in the Summary Plan Description) applicable to the participating group or an amount of cash which would permit the acquisition of that number of shares on the open market at the then available market prices. Such employer contributions, if applicable, are funded as defined by the Summary Plan Description each calendar year. The Plan also provides for Employer matching contributions for certain eligible employees in an amount equal to the lesser of 50% of those participants' capital savings contributions or 3% of their annual base compensation. All employer matching contributions are invested in CSX common stock, with the exception of certain eligible employees who may direct up to 50% of the company contribution in 25% multiples in any of the four investment funds. Vesting, Withdrawals, Distributions and Forfeitures: Participants are - ----------------------------------------------------------- immediately vested in their voluntary contributions plus actual earnings thereon. Vesting in the remainder of their accounts is based on years of service. A participant is 100% vested after five years of credited service, or upon death, disability or retirement. Withdrawals and distributions are controlled in accordance with the provisions of the Plan. Amounts not fully vested at the time of withdrawal are redistributed to the individual participant accounts of those participants remaining in the Plan. - 9 - PAGE 10 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED (Dollars in Thousands) NOTE 2. DESCRIPTION OF THE PLAN, Continued Participant Accounts: Each participant's account is credited with the - ---------------------- participant's contributions, the appropriate portion of the Employer's contribution and an allocation of Plan earnings and forfeitures of terminated participants' nonvested accounts. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. Plan Termination: Although it has not expressed any intent to do so, the - ----------------- Employer 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% vested in their accounts. Administrative Expenses: The administrative expenses of the Plan are payable by - ------------------------ CSX or from Plan funds as the Plan Administrative Committee from time to time directs. CSX paid a portion of the administrative expenses of the Plan in 1997 and 1996. NOTE 3. INVESTMENTS The Plan's investments are held by a bank administered trust fund. These investments are more fully described below: Collective Trust Fund: Substantially all of the assets held in the Guaranteed - ---------------------- Interest Fund as of September 30, 1997 are invested in the American Express Stable Capital II Fund, which primarily invests in synthetic guaranteed investment contracts. Substantially all of the assets held in the Guaranteed Interest Fund as of September 30, 1996 were invested in the American Express Trust Collective Income Fund, which primarily invests in guaranteed investment contracts with insurance companies. Both funds are managed by American Express Financial Services. Mutual Funds: Substantially all of the assets held in the S&P 500 Index Fund as - ------------ of September 30, 1997 are invested in the Vanguard Institutional Index Trust Fund, a mutual fund. Substantially all of the assets held in the S & P 500 Index Fund as of September 30, 1996 were invested in the Vanguard Index Trust-500 Portfolio, a mutual fund. Both funds are managed by the Vanguard Group. Aggressive Growth Fund: Substantially all of the assets held in the Aggressive - ----------------------- Growth Fund as of September 30, 1997 and 1996 are invested in Twentieth Century Select Fund, a mutual fund managed by Twentieth Century Investors, Inc. CSX Stock Fund and CSX ESOP Stock Fund: Substantially all of the assets held in - -------------------------------------- these funds as of September 30, 1997 and 1996 are invested in CSX common stock. - 10 - PAGE 11 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED (Dollars in Thousands) NOTE 4. INCOME TAX STATUS The Internal Revenue Service ruled on March 7, 1996, that the Plan qualifies under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The CSX Administrative Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. No provision for income taxes has been included in the Plan's financial statements. NOTE 5. RELATED PARTY TRANSACTIONS CSX and its subsidiaries provide the Plan with certain management and accounting services. During fiscal years 1997 and 1996, the Plan reimbursed CSX and its subsidiaries $62 and $59, respectively, for these services which are considered reasonable and customary expenses of the Plan. During fiscal years 1997 and 1996, the Plan received $4,386 and $4,075, respectively, representing cash dividends from CSX common stock. The trustee, The Northern Trust Company, invests Plan assets in the Collective Short-Term Investment Fund of The Northern Trust Company. For the fiscal year ended September 30, 1997, transactions involving this account included 484 purchases at a total cost of $24,186 and 246 sales with a fair value of $23,091. For the fiscal year ended September 30, 1996 transactions involving this account included 466 purchases at a total cost of $20,416 and 264 sales with a fair value of $20,510. NOTE 6. COMPARISON TO FORM 5500 Form 5500 requires the recording of a liability for participant distributions processed prior to year-end but not yet paid. In financial statements prepared in accordance with generally accepted accounting principles, such amounts remain net assets available for plan benefits until paid. The following is a reconciliation of net assets available for plan benefits per the financial statements to the Form 5500: September 30, 1997 ------------------------- Net assets available for plan benefits per the financial statements $310,967 Distributions due but unpaid - ------------------------- Net assets available for plan benefits per the Form 5500 $310,967 ========================= - 11 - PAGE 12 CSX CORPORATION CAPITAL BUILDER PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED (Dollars in Thousands) NOTE 6. COMPARISON TO FORM 5500, Continued The following is a reconciliation of distributions made by participants per the financial statements to the Form 5500: Fiscal Year Ended September 30, 1997 ----------------------- Distributions to participants per the financial statements $9,268 Add: Distributions due but unpaid at September 30, 1997 - Less: Distributions due but unpaid at September 30, 1996 (2,015) ----------------------- Distributions to participants per the Form 5500 $7,253 ======================= - 12 - PAGE 13 SUPPLEMENTAL SCHEDULES - 13 - PAGE 14 CSX CORPORATION SCHEDULE 27a CAPITAL BUILDER PLAN SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES SEPTEMBER 30, 1997 (Dollars in Thousands) Current Issuer Description of Investment Cost Value - ---------------------------------- ---------------------------- ------------- --------- Common Stock *CSX Corporation 4,350,286 shares $149,240 $254,492 Collective Trust Fund American Express Stable Capital II 1,359,993 shares 16,464 17,073 Fund Mutual Funds Vanguard Instl Index Trust 295,393 shares 21,475 26,074 Twentieth Century Select Fund 288,955 shares 11,270 14,396 Cash and Cash Equivalents * Collective Short-Term Investment 459,000 shares 459 459 Fund of the Northern Trust Company ------------- --------- TOTAL $198,908 $312,494 ============= ========= * Parties-in-Interest. - 14 - PAGE 15 CSX CORPORATION SCHEDULE 27d CAPITAL BUILDER PLAN SCHEDULE OF REPORTABLE TRANSACTIONS FISCAL YEAR ENDED SEPTEMBER 30, 1997 (Dollars in Thousands) Purchases Sales ------------------ ------------------------------------------- Value of Assets Sold on Cost Net Transaction of Gain Description of Asset Number Cost Number Date Asset (Loss) - ---------------------------- ------- -------- ------- ------------ -------- ------- Category (i) - individual transactions in excess of 5% of plan assets - ------------------------------------------------------------------------------------------------- Vanguard Instl Index Fund 1 $19,417 - $ - $ - $ - Vanguard Index Trust-500 Portfolio - - 1 19,477 13,701 5,776 American Express Stable Capital II Fund 1 16,250 - - - - American Express Trust Collective Income Fund - - 1 16,250 14,256 1,994 Category (iii) - series of securities transactions in excess of 5% of plan assets - ------------------------------------------------------------------------------------------------- CSX Corporation Common 73 18,034 36 7,144 4,641 2,503 Stock Vanguard Instl Index Fund 21 21,475 - - - - Vanguard Index Trust - 500 Portfolio - - 8 19,899 13,985 5,914 American Express Stable 12 16,788 - - - - Capital II Fund American Express Trust Collective Income Fund - - 16 17,652 15,510 2,142 Collective Short-Term Investment Fund of the Northern Trust Company 484 24,186 246 23,091 23,091 - There were no category (ii) or (iv) reportable transactions during the fiscal year ended September 30, 1997. -15- PAGE 16 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the administrative committee members have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. CSX CORPORATION CAPITAL BUILDER PLAN By: /s/ JAMES L. ROSS ------------------------------------- James L. Ross Vice President and Controller CSX Corporation (Plan Sponsor) Date: March 26, 1998 - 16 -