Filed pursuant to Rule 424(b)(5)
Registration No. 333-60134
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 17, 2001
$490,000,000
Principal Amount at Maturity
[CSX CORPORATION LOGO]
Zero Coupon Convertible Debentures due October 30, 2021
---------------
The debentures are general unsecured unsubordinated obligations of CSX
Corporation. The issue price represents an initial yield to maturity of 1.00%
per annum, which will be reset (but not below 1.00% or above 3.00%) on October
30, 2007, October 30, 2011 and October 30, 2016. We will not pay interest on
the debentures before maturity unless we elect to do so following a tax event.
Instead, on October 30, 2021, the maturity date of the debentures, a holder
will receive $1000 per debenture. We may elect to pay cash interest on the
debentures in lieu of accreting interest on the debentures following a tax
event.
On or after October 30, 2008, we may redeem for cash all or part of the
debentures that have not previously been converted or purchased at a price
equal to the accreted value of the debentures up to but not including the date
of redemption. Holders may require us to purchase all or part of their
debentures on October 30, 2003, October 30, 2006, October 30, 2008, October 30,
2011 and October 30, 2016 at a price equal to the accreted value of the
debentures up to but not including the date of purchase. We may choose to pay
the purchase price on the first three purchase dates in cash, shares of our
common stock or a combination of cash and shares of our common stock. We may
pay the purchase price on the last two purchase dates in cash only. In
addition, upon a change of control, each holder may require us to purchase for
cash all or a portion of that holder's debentures.
Holders may surrender their debentures for conversion into shares of our
common stock at a conversion rate of 17.7461 shares of our common stock per
debenture. This is equivalent to an initial conversion price of $46.16 per
share, subject to adjustment in some events. Holders may surrender their
debentures for conversion if any of the following conditions is satisfied:
. if the closing sale price of our common stock for at least 20 trading days
in the 30 trading day period ending on the trading day before the day of
surrender is more than the applicable percentage (which will initially be
120% and will decline over the life of the debentures to 110% as described
in this prospectus) of the accreted conversion price per share of our
common stock at that preceding trading day;
. if our senior long-term unsecured credit ratings are downgraded by Moody's
Investors Service, Inc. to below Ba1 and by Standard & Poor's Rating
Services to below BB+;
. if we have called the debentures for redemption; or
. upon the occurrence of specified corporate transactions.
Our common stock issuable upon conversion of the debentures will be eligible
for trading on The New York Stock Exchange on which our common stock is listed
for trading under the symbol "CSX." On October 24, 2001, the closing price of
our common stock as reported on The New York Stock Exchange was $33.57 per
share. We do not plan to list the debentures on any securities exchange or to
include them in any automated quotation system.
The underwriters have an option to purchase a maximum of $73,500,000
aggregate principal amount at maturity of additional debentures to cover over-
allotments, if any.
Investing in the debentures involves risks. See "Risk Factors" on page S-11
of this prospectus supplement.
Underwriting Proceeds to
Price to Discounts and CSX
Public(1) Commissions Corporation(1)
------------ ------------- --------------
Per Debenture......................... $ 819.14 $ 16.38 $ 802.76
Total................................. $401,378,600 $8,026,200 $393,352,400
(1) Plus accreted value and accrued interest, if any, from October 30, 2001.
Delivery of the debentures in book-entry form only will be made on or about
October 30, 2001.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the debentures or determined if this
prospectus supplement or the prospectus to which it relates is truthful or
complete. Any representation to the contrary is a criminal offense.
Credit Suisse First Boston
JPMorgan Salomon Smith Barney
Goldman, Sachs & Co. Morgan Stanley BNY Capital Markets, Inc. Mizuho International plc
PNC Capital Markets, Inc. Scotia Capital Tokyo-Mitsubishi International plc Wachovia Securities
The date of this prospectus supplement is October 24, 2001.
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Special Note Regarding Forward-Looking Statements.......................... S-2
Where You Can Find More Information........................................ S-3
Summary.................................................................... S-5
Risk Factors............................................................... S-11
Ratio of Earnings to Fixed Charges......................................... S-12
Use of Proceeds............................................................ S-12
Price Range of Common Stock and Dividends.................................. S-13
Capitalization............................................................. S-14
Description of Debentures.................................................. S-15
Description of Common Stock................................................ S-33
Certain United States Federal Income Tax Considerations.................... S-34
Underwriting............................................................... S-40
Notice to Canadian Residents............................................... S-42
Legal Matters.............................................................. S-43
Page
----
Prospectus
About This Prospectus.................................................... 2
Where You Can Find More Information...................................... 3
CSX Corporation.......................................................... 4
CSX Capital Trust I...................................................... 5
Forward-Looking Statements............................................... 6
Ratio of Earnings to Fixed Charges....................................... 6
Use of Proceeds.......................................................... 7
Description of Debt Securities........................................... 8
Additional Terms of Subordinated Debt Securities......................... 21
Description of Trust Preferred Securities................................ 23
Description of the Guarantee............................................. 32
Relationship Among the Trust Preferred Securities, the Guarantee and the
Subordinated Debt Securities Held by the Trust.......................... 35
Accounting Treatment..................................................... 36
Description of Capital Stock............................................. 36
Description of Depositary Shares......................................... 41
Description of Securities Warrants....................................... 42
Plan of Distribution..................................................... 43
Legal Opinions........................................................... 44
Experts.................................................................. 44
----------------
This document consists of two parts. The first part is the prospectus
supplement, which describes the specific terms of the debentures we are
offering and certain other matters relating to CSX Corporation. The second
part, the base prospectus, gives more general information about securities we
may offer from time to time, some of which does not apply to the debentures we
are offering. Generally, when we refer to the prospectus, we are referring to
both parts of this document combined. If the description of the debentures in
the prospectus supplement differs from the description in the base prospectus,
the description in the prospectus supplement supersedes the description in the
base prospectus.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including documents incorporated by reference, contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Estimates,
forecasts and other forward-looking statements included, or incorporated by
reference, in this prospectus are based on many assumptions about complex
economic and operating factors with respect to industry performance, general
business and economic conditions and other matters that cannot be predicted
accurately and that are subject to contingencies over which CSX Corporation has
no control. Forward-looking statements are subject to uncertainties and other
factors that may cause actual results to differ materially from the views,
beliefs, and projections expressed in those statements. The words "believe,"
"expect," "anticipate," "project," and similar expressions signify forward-
looking statements.
S-2
Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the
following possibilities:
. general economic or business conditions, either nationally or
internationally, an increase in fuel prices, a tightening of the labor
market or changes in demands of organized labor resulting in higher
wages, or increased benefits or other costs or disruption of operations
may adversely affect our businesses;
. legislative or regulatory changes, including possible enactment of
initiatives to re-regulate the rail industry, may adversely affect our
businesses;
. possible additional consolidation of the rail industry in the near future
may adversely affect our operations and business; and
. changes may occur in the securities and capital markets.
You are cautioned not to place undue reliance on any forward-looking
statements made by or on behalf of CSX. Forward-looking statements speak only
as of the date the statement was made. We undertake no obligation to update or
revise any forward-looking statement.
WHERE YOU CAN FIND MORE INFORMATION
CSX files annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at http://www.sec.gov. You may also read and copy any document we file
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. You may also read and copy these
documents at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The SEC allows CSX to incorporate by reference the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. CSX
incorporates by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act
until CSX sells all of the debentures.
. Annual Report on Form 10-K for the fiscal year ended December 29, 2000;
. Quarterly Reports on Form 10-Q and 10-Q/A for the fiscal quarters ended
March 30, 2001 and June 29, 2001;
. Current Reports on Form 8-K filed with the SEC on January 31, 2001, March
12, 2001 and May 4, 2001; and
. The description of CSX common stock contained in our Registration
Statement on Form 8-B (File No. 1-8022) filed with the SEC on September
25, 1980; and the description of the Rights (described below) contained
in our Registration Statement on Form 8-A (File No. 1-8022) filed with
the SEC on May 29, 1998 and Form 8-A/A (File No. 1-8022) filed with the
SEC on June 28, 2000.
You may request a copy of any filings referred to above, at no cost, by
contacting CSX at the following address: Stephen R. Larson, Vice President--
General Counsel and Corporate Secretary, CSX Corporation, One James Center, 901
East Cary Street, Richmond, Virginia 23219, telephone number 1-804-782-1400.
S-3
You should rely only on the information contained or incorporated by
reference in this prospectus. CSX has not authorized anyone to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. CSX will not make an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus, as well as
information CSX previously filed with the SEC and incorporated by reference in
this prospectus, is accurate only as of the date on the front cover of this
prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
S-4
SUMMARY
The following information supplements, and should be read together with, the
information contained or incorporated by reference in other parts of this
prospectus supplement and in the base prospectus. When used in this document,
the terms "CSX," "we," "our" and "us" refer to CSX Corporation and our
consolidated subsidiaries, unless otherwise specified. This summary highlights
selected information from this prospectus supplement and the base prospectus to
help you understand the debentures. You should carefully read this prospectus
supplement and the base prospectus to understand fully the terms of the
debentures, as well as the tax and other considerations that may be important
to you in making a decision about whether to invest in the debentures. You
should pay special attention to the "Risk Factors" section beginning on page S-
8 of this prospectus supplement to determine whether an investment in the
debentures is appropriate for you.
CSX Corporation
CSX, headquartered in Richmond, Virginia, operates the largest rail network
in the eastern United States and also provides intermodal, container shipping
and international terminal services. CSX's goal, advanced at each of our
business units, is to provide efficient, competitive transportation and related
services for our customers and to deliver superior value to our shareholders.
See "CSX Corporation" in the accompanying base prospectus for additional
information concerning CSX. The principal executive offices of CSX are located
at One James Center, 901 East Cary Street, Richmond, Virginia 23219, telephone
number 1-804-782-1400.
Ratio of Earnings to Fixed Charges
For the Nine
Months Ended For the Fiscal Years Ended
------------------- --------------------------------------------
Sept. 28, Sept. 29, Dec. 29, Dec. 31, Dec. 25, Dec. 26, Dec. 27,
2001 2000 2000 1999 1998 1997 1996
--------- --------- -------- -------- -------- -------- --------
Ratio of earnings to
fixed charges.......... 1.7x 1.4x 1.4x 1.1x 1.7x 2.5x 3.9x
CSX Third Quarter Earnings
On October 23, 2001, CSX reported third-quarter earnings from continuing
operations of $100 million, or $0.47 per diluted share, up 69 percent from $59
million, or $0.28 per diluted share, in the same period a year ago. In the 2000
third quarter, CSX had an after tax gain of $365 million, or $1.73 per diluted
share, from the sale of CSX's contract logistics business. Including
discontinued operations and the gain, net earnings for the 2000 third quarter
totaled $427 million, or $2.02 per diluted share.
CSX earned $228 million, or $1.07 per diluted share, from continuing
operations for the first nine months of 2001, compared with $132 million, or
$0.62 per diluted share, for the same period in 2000.
Events of September 11, 2001
In connection with the terrorist attacks of September 11, 2001, CSX is
participating actively in industry task forces to identify and implement
additional security measures. At the same time, the industry is working with
governmental agencies, including the Federal Railroad Administration, and the
Congress to coordinate our security efforts and to identify specific areas that
may justify government participation.
S-5
It is not possible to predict the effects of the terrorist attacks and
subsequent developments related to those attacks, particularly their impact on
the United States and international economies, or the impact, if any, on our
future results of operations.
The Offering
Debentures................ $490,000,000 aggregate principal amount at maturity
($563,500,000 aggregate principal amount at
maturity if the underwriters exercise their over-
allotment option in full) of our Zero Coupon
Convertible Debentures due October 30, 2021,
subject to an upward adjustment as described below.
Issue Price............... Each debenture will initially be offered to
investors at an issue price of $819.14 per
debenture and with a principal amount at maturity
of $1,000, subject to a possible upward adjustment
in the event there is a reset in the yield to
maturity.
Maturity.................. October 30, 2021.
Yield to Maturity......... The debentures will accrete in value such that the
initial yield to maturity will be 1.00% per annum,
which will be reset on October 30, 2007, October
30, 2011 and October 30, 2016 to a rate per annum
equal to the interest rate payable 120 days before
that reset date on 5-year United States Treasury
Notes minus 2.80%. In no event, however, will the
yield to maturity be reset below the initial rate
per annum or above 3.00% per annum. If a reset
results in an increased yield to maturity, the
increased yield to maturity will accrete and will
be payable at maturity, redemption or the purchase
date.
Interest.................. We will not pay cash interest on the debentures
unless we elect to do so following a tax event as
described below. We will compute accretion (1) for
each full semi-annual period ending on October 30
and April 30 of each year, on the basis of a 360-
day year comprised of twelve 30-day months, (2) for
any period shorter than a full semi-annual period,
on the basis of a 30-day month and (3) for any
period shorter than one month, on the basis of the
actual number of days elapsed.
Optional Conversion to
Semi-Annual Coupon
Debentures upon a Tax
Event..................... From and after the occurrence of a tax event, at
our option, cash interest will accrue on each
debenture from the date on which we exercise our
option at a rate per annum equal to the yield to
maturity then in effect in respect of the
debentures on the restated principal amount of each
debenture (i.e., the accreted value of the
debenture to the date we exercise our option). The
cash interest rate will also be subject to the same
reset provisions described above under "Yield to
Maturity."
S-6
Cash interest will be computed (1) for each full
semi-annual period, on the basis of a 360-day year
comprised of twelve 30-day months, (2) for any
period shorter than a full semi-annual period, on
the basis of a 30-day month and (3) for any period
shorter than one month, on the basis of the actual
number of days elapsed. Cash interest will
initially accrue from the date we exercise our
option and thereafter from the last date to which
cash interest has been paid or duly provided and
will be payable semi-annually on the interest
payment dates of October 30 and April 30 of each
year to the holders of record at the close of
business on October 15 and April 15, respectively,
immediately preceding the interest payment dates.
If we elect to accrue cash interest upon a tax
event, the redemption price, purchase price and
change of control purchase price will be adjusted
as described in this prospectus supplement.
However, there will be no changes in a holder's
conversion rights.
Conversion Rights......... For each debenture surrendered for conversion, a
holder will initially receive 17.7461 shares of our
common stock which is the equivalent to an initial
conversion price of $46.16 per share of our common
stock based on the issue price of the debentures.
The initial conversion rate will be adjusted for
reasons specified in the senior indenture, but will
not be adjusted for accretion. Upon conversion, a
holder will not receive any cash payment
representing accretion on the debentures. Instead,
accretion on the debentures will be deemed paid by
the common stock received by the holder on
conversion.
Holders may convert their debentures at any time
into shares of our common stock if any of the
following conditions is satisfied:
. the closing sale price of our common stock
for at least 20 trading days in the 30
trading day period ending on the trading day
before the date of conversion is more than
the applicable percentage (which will
initially be 120% and will decline by 0.50%
on each anniversary of the date of original
issue of the debentures over the life of the
debentures to 110%) of the accreted
conversion price per share of our common
stock at that preceding trading day;
. our senior long-term unsecured credit ratings
are downgraded by Moody's Investors Service,
Inc. to below Ba1 and by Standard & Poor's
Rating Services to below BB+;
. the debentures have been called for
redemption (until the close of business on
the business day before the redemption date);
or
. if we make a significant distribution to
holders of our common stock or if we are a
party to specified
S-7
consolidations, mergers or transfers or leases
of all or substantially all of our assets.
The ability to surrender debentures for conversion
will expire at the close of business on the date of
maturity of the debentures, unless the debentures
previously have been redeemed or purchased.
Exchange in Lieu of
Conversion................ We have the option to designate a financial
institution to which debentures surrendered for
conversion by a holder of debentures will be
initially offered by the conversion agent for
exchange in lieu of our converting those
debentures. In order to accept debentures
surrendered for conversion, the designated
institution must agree to exchange for those
debentures a number of shares of our common stock
equal to the number of shares the holder of those
debentures would receive upon conversion, plus cash
for any fractional shares. If the designated
institution declines to accept for exchange any
debentures in whole or in part, or if the
designated institution agrees to accept any
debentures for exchange but does not timely deliver
the related shares of our common stock and cash,
those debentures or parts of debentures will be
converted.
Ranking................... The debentures will be our general unsecured
unsubordinated obligations and will rank on a
parity in right of payment with all of our existing
and future unsecured and unsubordinated
indebtedness. The senior indenture governing the
debentures does not limit the amount of
indebtedness (including additional senior
indebtedness) or lease obligations incurred by CSX.
Sinking Fund.............. None.
Redemption of Debentures
at Our Option............. We may redeem all or a portion of the debentures
for cash at any time on or after October 30, 2008,
at a redemption price equal to the accreted value
of the debentures up to but not including the date
of redemption. "Accreted value" for a debenture
means, as of any date, the sum of the issue price
of the debenture and the accretion in value on the
debenture based on the yield to maturity from time
to time in effect from the date of issuance up to
but not including the redemption date.
Purchase of Debentures at
the Option of the
Holder.................... Holders may require us to purchase all or a portion
of their debentures on October 30, 2003, October
30, 2006, October 30, 2008, October 30, 2011 and
October 30, 2016, at a purchase price equal to the
accreted value of the debentures up to but not
including the purchase date. We may elect to pay
the purchase price on the first three purchase
dates in cash, shares of our common stock or a
combination of cash and common stock. We may pay
the purchase price on the last two purchase dates
in cash only.
S-8
Change of Control......... If a change of control (as defined in this
prospectus supplement) occurs, each holder of
debentures will have the right, at the holder's
option, to require us to purchase for cash all or a
portion of that holder's debentures at a purchase
price equal to the accreted value of the debentures
up to but not including the change of control
purchase date (as defined in this prospectus
supplement).
Events of Default......... If there is an event of default on the debentures,
an amount equal to the accreted value (or, if
applicable, the restated principal amount upon the
occurrence of a tax event) of the debentures, in
respect of the debentures, may be declared
immediately due and payable.
Trading................... We do not plan to list the debentures on any
securities exchange or to include them in any
automated quotation system. Our common stock
issuable upon conversion of the debentures will be
eligible for trading on The New York Stock Exchange
under the symbol "CSX."
Use of Proceeds........... CSX expects to use substantially all of the net
proceeds of this offering to redeem $400 million
aggregate principal amount of our floating rate
medium-term notes and/or to refinance a portion of
our outstanding commercial paper. The balance, if
any, will be used for general corporate purposes.
DTC Eligibility........... The debentures will initially be issued in book-
entry form and will be represented by one or more
permanent global certificates deposited with a
custodian for and registered in the name of a
nominee of The Depository Trust Company ("DTC").
Beneficial interests in those securities will be
shown on, and transfers will be effected only
through, records maintained by DTC and its direct
and indirect participants and those interests may
not be exchanged for certificated securities,
except in limited circumstances.
United States Federal
Income Tax
Considerations............ We will treat the debentures as indebtedness
subject to the United States Treasury regulations
governing contingent payment debt instruments. Each
holder will agree, for United States federal income
tax purposes, to treat the debentures as
"contingent payment debt instruments" and to be
bound by our application of the Treasury
regulations that govern contingent payment debt
instruments, including our determination that the
rate at which interest will be deemed to accrue for
United States federal income tax purposes will be
5.93%, which is the rate comparable to the rate at
which we have determined we would borrow on a non-
contingent, non-convertible borrowing with terms
and conditions otherwise comparable to the
debentures (including the level of subordination,
term, timing of payments and general market
conditions). Accordingly, each holder will be
required to accrue interest on a constant yield to
S-9
maturity basis at that rate, with the result that
the holder will recognize taxable income without
the receipt of any cash payment while the
debentures are outstanding. A holder will also
recognize gain or loss on the sale, exchange,
conversion or redemption of a debenture in an
amount equal to the difference between the amount
realized on the sale, exchange, conversion or
redemption, including the fair market value of any
common stock received upon conversion or otherwise,
and the holder's adjusted tax basis in the
debenture. Any gain recognized on the sale,
exchange, conversion or redemption of a debenture
generally will be ordinary interest income; any
loss will be ordinary loss to the extent of the
interest previously included in income, and
thereafter, capital loss. However, there is some
uncertainty as to the proper application of the
Treasury regulations that govern contingent payment
debt instruments to a holder of a debenture, and if
our treatment were successfully challenged by the
Internal Revenue Service, it might be determined
that, among other differences, a holder should have
accrued interest income at a lower rate, should not
have recognized ordinary income upon the
conversion, and should have recognized capital gain
or loss rather than ordinary income or loss upon a
taxable disposition of its debenture.
Holders should consult their tax advisors regarding
the tax treatment of the debentures and whether a
purchase of the debentures is advisable in light of
the agreed upon tax treatment and the holder's
particular tax situation.
Governing Law............. The senior indenture is, and the debentures will
be, governed by the laws of the State of New York.
S-10
RISK FACTORS
You should consider carefully, in addition to the other information contained
in this prospectus supplement and the base prospectus, the following factors
before purchasing the debentures.
You should consider the United States federal income tax consequences of owning
the debentures.
While the proper tax treatment of a holder of the debentures is uncertain, we
and each holder have agreed in the senior indenture to treat the debentures as
"contingent payment debt instruments" and to be bound by our application of the
Treasury regulations that govern contingent payment debt instruments. Pursuant
to this agreement, a holder will be required to accrue interest on a constant
yield to maturity basis at a rate comparable to the rate at which we would
borrow in a non-contingent, non-convertible borrowing (5.93%). A holder will
recognize taxable income without the receipt of any cash payment while the
debentures are outstanding. In addition, a holder will recognize ordinary
income, if any, upon a sale, exchange, conversion or redemption of the
debentures at a gain. See "Certain United States Federal Income Tax
Considerations."
An active trading market for the debentures may not develop.
The debentures comprise a new issue of securities for which there is
currently no public market. We do not plan to list the debentures on any
securities exchange or to include them in any automated quotation system. We
cannot assure you that an active trading market for the debentures will develop
or as to the liquidity or sustainability of any such market, the ability of
holders to sell their debentures or the price at which holders of the
debentures will be able to sell their debentures. Future trading prices of the
debentures will depend on many factors, including, among other things,
prevailing interest rates, our operating results, the price of our common stock
and the market for similar securities.
We may not be able to raise the funds necessary to finance a change of control
purchase.
Upon the occurrence of specific kinds of change of control events occurring
on or before October 30, 2021, holders of debentures may require us to purchase
their debentures for cash. However, it is possible that we would not have
sufficient funds at that time to make the required purchase of debentures. See
"Description of Debentures--Purchase at Option of Holder Upon a Change of
Control."
The value of the conversion rights associated with the debentures may be
substantially lessened or eliminated if we are a party to a merger,
consolidation or other similar transaction.
If we are a party to a consolidation, merger or transfer or lease of all or
substantially all of our assets pursuant to which our common stock would be
converted into cash, securities or other assets, the debentures would become
convertible solely into such cash, securities or other assets. As a result, the
value of the conversion rights associated with the debentures may be
substantially lessened or eliminated since you would no longer be able to
convert your debenture into shares of our common stock. See "Description of
Debentures--Conversion Rights--Conversion Rate and Delivery of Our Common
Shares."
S-11
RATIO OF EARNINGS TO FIXED CHARGES
CSX's consolidated ratio of earnings to fixed charges for each of the fiscal
periods indicated is as follows:
For the Nine
Months Ended For the Fiscal Years Ended
------------------- --------------------------------------------
Sept. 28, Sept. 29, Dec. 29, Dec. 31, Dec. 25, Dec. 26, Dec. 27,
2001 2000 2000 1999 1998 1997 1996
--------- --------- -------- -------- -------- -------- --------
Ratio of earnings to
fixed charges
(a)(b)(c)(d).......... 1.7x 1.4x 1.4x 1.1x 1.7x 2.5x 3.9x
--------
(a) For purposes of computing the ratio of earnings to fixed charges, earnings
represent earnings from operations before income taxes plus interest
expense related to indebtedness, amortization of debt discount, the
interest portion of fixed rent expense, and undistributed earnings of
affiliates accounted for using the equity method. Fixed charges include
interest on indebtedness (whether expensed or capitalized), amortization of
debt discount and the interest portion of fixed rent expense.
(b) The year ended December 27, 1996 was before the acquisition of CSX's
interests in Conrail Inc. and therefore does not include the increased
interest expense incurred by CSX subsequent to that transaction.
(c) All periods' calculations have been restated to exclude from earnings the
activities of CSX's contract logistics segment which was sold in September
2000.
(d) Pretax earnings for the years ended December 25, 1998 and December 31, 1999
include the effects of various non-recurring gains and charges. These items
are summarized as follows:
(1) A pretax loss of $360 million related to an impairment charge related
to the sale of assets comprised of the international liner business of
Sea-Land and certain container terminal facilities is included in the
year ended December 31, 1999.
(2) A pretax gain of $27 million from the sale of CSX's investment in Grand
Teton Lodge Company, a wholly-owned subsidiary located in Jackson Hole,
Wyoming, is included in the year ended December 31, 1999.
(3) A pretax gain of $154 million primarily from the conveyance of CSX's
barge subsidiary to a joint venture is included for the year ended
December 25, 1998.
(4) A restructuring credit of $30 million to reverse a charge taken in 1995
related to a restructuring plan is included for the year ended December
25, 1998.
Excluding these items, the ratio of earnings to fixed charges for each of
the periods indicated below would have been:
Fiscal year ended December 31, 1999................................... 1.5x
Fiscal year ended December 25, 1998................................... 1.4x
USE OF PROCEEDS
CSX expects to use substantially all of the net proceeds from the sale to the
debentures to:
. redeem a portion of our outstanding floating rate medium-term notes,
and/or
. refinance a portion of our outstanding commercial paper.
At September 28, 2001, CSX had $400 million of floating rate medium-term
notes outstanding with maturities between February 11, 2002 and June 24, 2002
and interest rates ranging from 3.2% to 4.1%.
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At September 28, 2001, CSX had approximately $423 million of commercial paper
outstanding. At September 28, 2001, the weighted average maturity of our
outstanding commercial paper was approximately 33.1 days and the weighted
average interest rate was approximately 3.6%.
The balance, if any, of the net proceeds will be used for general corporate
purposes, which may include capital expenditures, working capital requirements,
implementation of work force reductions, improvements in productivity and other
cost reductions at our major transportation units.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is listed and traded on the New York Stock Exchange under
the symbol "CSX." The following table sets forth the intra-day high and low
sale prices per share of our common stock as quoted on the New York Stock
Exchange and the cash dividends declared on our common stock for the periods
indicated:
High Low Dividends
------ ------ ---------
Fiscal 1999
First Quarter........................................... $45.50 $36.00 $.30
Second Quarter.......................................... 53.94 36.81 .30
Third Quarter........................................... 51.63 41.44 .30
Fourth Quarter.......................................... 43.56 28.81 .30
Fiscal 2000
First Quarter........................................... 33.44 20.25 .30
Second Quarter.......................................... 24.56 19.50 .30
Third Quarter........................................... 27.63 21.00 .30
Fourth Quarter.......................................... 27.69 20.06 .30
Fiscal 2001
First Quarter........................................... 34.11 24.81 .30
Second Quarter.......................................... 40.20 31.60 .30
Third Quarter........................................... 41.30 25.44 .10
Fourth Quarter (through October 24)..................... 35.98 29.37 .10
On October 24, 2001, the last reported sale price of our common stock as
reported on the New York Stock Exchange was $33.57 per share.
We pay quarterly dividends on our 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. On July 11, 2001 our
board of directors announced that the regular quarterly dividend payable
September 14, 2001, to shareholders of record as of August 24, 2001, would be
reduced to $0.10 per share. We had paid a regularly quarterly dividend of $0.30
per share since the fourth quarter of 1997. The dividend action brought CSX's
annual dividend yield generally in line with leading United States railroads
and affords more financial flexibility to reduce debt, increase cash flows and
pursue other measures to increase shareholder value.
S-13
CAPITALIZATION
The following table sets forth our unaudited capitalization as of September
28, 2001:
. on an actual basis; and
. as adjusted to give effect to the issuance of the debentures being
offered and the anticipated application of the net proceeds from their
sale.
This table should be read in conjunction with our financial statements,
related notes and the other information included or incorporated by reference
in the base prospectus or this prospectus supplement.
September 28,
2001
----------------
As
Actual Adjusted
------- --------
(in millions)
Long-term debt, including current portion................... $ 6,635 $ 6,242
Zero coupon convertible debentures due 2021................. -- 401
------- -------
Total long-term debt........................................ 6,635 6,643
------- -------
Shareholders' equity
Common stock, par value $1 per share........................ 213 213
Other capital............................................... 1,485 1,485
Retained earnings........................................... 4,415 4,415
------- -------
Total shareholders' equity.................................. 6,113 6,113
------- -------
Total capitalization........................................ $12,748 $12,756
======= =======
S-14
DESCRIPTION OF DEBENTURES
Set forth below is a description of the specific terms of the debentures.
This description supplements, and should be read together with, the description
of the general terms and provisions of the debt securities set forth in the
accompanying base prospectus under the caption "Description of Debt
Securities." The following description does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the description
in the base prospectus and the senior indenture. The debentures are "senior
debt securities" as described in the base prospectus. If the description of the
debentures in this prospectus supplement differs from the description of the
debt securities in the base prospectus, the description in this prospectus
supplement supersedes the description in the base prospectus.
The debentures will be issued under a senior indenture dated as of August 1,
1990 between CSX and The Chase Manhattan Bank, as trustee (the "trustee"), as
amended and supplemented, including the supplemental indenture pertaining to
the debentures. The statements under this caption relating to the senior
indenture and the debentures are summaries and do not purport to be complete.
These summaries make use of a number of terms defined in the senior indenture
and are qualified in their entirety by express reference to the senior
indenture. The terms of the debentures will also include those made a part of
the senior indenture by reference to the Trust Indenture Act of 1939. For
purposes of this description of the debentures, the terms "CSX," "we," "us" and
"our" mean only CSX Corporation and not our subsidiaries.
General
The debentures will be our general unsecured unsubordinated obligations and
will be limited to an initial aggregate principal amount at maturity of
$490,000,000 ($563,500,000 aggregate principal amount at maturity if the
underwriters' over-allotment option is exercised in full), subject to an upward
adjustment as described below. The debentures will initially be offered at an
issue price to investors of $819.14 per debenture and with an initial principal
amount at maturity of $1,000 per debenture.
The debentures are being offered at a substantial discount from their
principal amount at maturity. We will not pay cash interest on the debentures
unless we elect to do so following a Tax Event as described under "--Tax Event"
below. However, the debentures will accrue original issue discount while they
remain outstanding. Original issue discount is the difference between the issue
price and the principal amount at maturity of a debenture (which is subject to
an upward adjustment in the event of a reset of the yield to maturity).
Original issue discount will be calculated on a semi-annual bond equivalent
basis at the yield to maturity of the debentures each semi-annual period ending
on October 30 and April 30 of each year, (1) for any semi-annual period, using
a 360-day year comprised of twelve 30-day months, (2) for any period shorter
than a full semi-annual period, using a 30-day month and (3) for any period
shorter than one month, using the actual number of days elapsed. The expected
issue date for the debentures and the commencement date for the accrual of
original issue discount will be October 30, 2001.
The debentures will accrete in value such that the initial yield to maturity
will be 1.00% per annum. The principal amount at maturity of each debenture may
exceed $1,000 in the event there is a reset in the yield to maturity to a rate
in excess of 1.00% per annum. The debentures will mature on October 30, 2021
unless earlier redeemed at our option, converted into our common stock at the
option of the holder or repurchased by us at the option of the holder.
On October 30, 2007, October 30, 2011 and October 30, 2016, the yield to
maturity on the debentures will be reset to a rate per annum equal to the
interest rate payable 120 days before that reset date on 5-year United States
Treasury Notes minus 2.80%. However, in no event will the yield to maturity be
reset below the initial rate per annum or above 3.00% per annum. If a reset
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results in an increased yield to maturity, the increased yield to maturity will
accrete and will be payable at maturity, redemption or the purchase date.
See "--Book-Entry, Delivery and Form" below and "Description of Debt
Securities--Form, Exchange, Registration and Transfer" in the base prospectus
for information regarding the form, documents and mechanics for transferring
the debentures.
Ranking; Holding Company Structure
The debentures will be unsecured unsubordinated obligations of CSX and will
rank on a parity in right of payment with all other unsecured and
unsubordinated indebtedness of CSX.
The debentures are obligations exclusively of CSX. CSX is a holding company
and substantially all of our consolidated assets are held by our subsidiaries.
Accordingly, the cash flow of CSX and the consequent ability to service our
debt, including the debentures, are largely dependent upon the earnings of
those subsidiaries.
Because CSX is a holding company, the debentures will be effectively
subordinated to all existing and future indebtedness, trade payables,
guarantees, lease obligations and letter of credit obligations of CSX's
subsidiaries. Therefore, CSX's rights and the rights of our creditors,
including the holders of the debentures, to participate in the assets of any
subsidiary upon the latter's liquidation or reorganization will be subject to
the prior claims of that subsidiary's creditors, except to the extent that CSX
may itself be a creditor with recognized claims against the subsidiary, in
which case the claims of CSX would still be effectively subordinate to any
security interest in, or mortgages or other liens on, the assets of that
subsidiary and would be subordinate to any indebtedness of that subsidiary
senior to that held by CSX. Although certain debt instruments impose
limitations on CSX and our subsidiaries on the incurrence of additional
indebtedness, both CSX and our subsidiaries retain the ability to incur
substantial additional indebtedness and lease and letter of credit obligations.
Conversion Rights
General
Holders may surrender debentures at any time for conversion into shares of
our common stock at an initial conversion rate of 17.7461 shares of common
stock per debenture (subject to adjustment as described below) if any of the
following conditions is satisfied:
. if the closing sale price of our common stock for at least 20 trading
days in the 30 trading day period ending on and including the trading day
before the day of surrender is more than the applicable percentage of the
accreted conversion price per share of our common stock at that preceding
trading day;
. if our senior long-term unsecured credit rating is downgraded by Moody's
to below Ba1 and by S&P to below BB+;
. if we have called the debentures for redemption; or
. upon the occurrence of specified corporate transactions.
We describe each of these conditions in greater detail below.
Conversion Upon Satisfaction of Market Price Condition
Holders may surrender debentures for conversion into shares of our common
stock if the closing sale price of our common stock on the principal national
or regional securities exchange on which our common stock is listed, or if our
common stock is not so listed, on the Nasdaq Stock Market or other automated
quotation system on which our common stock is quoted, for at least 20 trading
days in a period of 30 consecutive trading days ending on and including the
trading day before the day of
S-16
surrender, exceeds the applicable percentage of the accreted conversion price
per share of our common stock on that preceding trading day. The "applicable
percentage" will initially be 120% and will decline by 0.50% on each
anniversary of the date of original issue of the debentures over the life of
the debentures to 110% on the stated maturity of the debentures. The "accreted
conversion price" per share of our common stock as of any day equals the
quotient of the accreted value of a debenture, divided by the number of shares
of our common stock issuable upon conversion of that debenture on that day.
Conversion Upon a Ratings Downgrade
If at any time Moody's has downgraded our senior long-term unsecured credit
rating to below Ba1 and S&P has downgraded our senior long-term unsecured
credit rating to below BB+, then, so long as both of those downgrades are in
effect, holders may surrender their debentures for conversion into our common
stock.
Conversion Upon Notice of Redemption
A holder may surrender for conversion a debenture called for redemption at
any time before the close of business on the business day before the redemption
date, even if it is not otherwise convertible at that time. If a holder has
already delivered a purchase notice with respect to a debenture, however, the
holder may not surrender that debenture for conversion until the holder has
withdrawn the purchase notice in accordance with the senior indenture. The
holder may not convert debentures called for redemption after the close of
business on the business day preceding the date fixed for redemption, unless we
default in payment of the redemption price.
Conversion Upon Specified Corporate Transactions
Even if the market price contingency described above under "--Conversion Upon
Satisfaction of Market Price Condition" has not occurred, if we elect to
distribute to all holders of our common stock:
. rights, warrants or options (excluding rights governed by our shareholder
rights plan) specified in the senior indenture entitling them to purchase
shares of common stock for a period expiring within 60 days after the
record date for that distribution at less than the current market price
(as defined below) of our common stock calculated as of the earlier of
the record date or the ex-dividend time for that distribution; or
. cash, debt securities (or other evidence of indebtedness) or other assets
(excluding dividends or distributions described in the first and third
bullet points in the description below of adjustments to the conversion
rate under the caption "--Conversion Rate and Delivery of Our Common
Shares"), which distribution has a per share value exceeding 15% of the
current market price of our common stock as of the trading day
immediately preceding the declaration date for that distribution,
we must notify the holders of debentures at least 20 days before the ex-
dividend date for that distribution. Once we have given that notice, holders
may surrender their debentures for conversion at any time until the earlier of
the close of business on the business day before the ex-dividend date or our
announcement that the distribution will not take place. Holders of debentures
will not be permitted to surrender their debentures for conversion in
connection with a distribution described in the bullet points above if holders
of debentures are to participate in the transaction without conversion on the
same basis as holders of our common stock.
The "market price" of our common stock on any date means the average of the
closing sale prices of our common stock for the five trading day period ending
on and including the third business day (if the third business day before that
date is a trading day or, if not, then on the last trading day
S-17
immediately before the third business day before that date) before that date,
appropriately adjusted to take into account the occurrence, during the period
commencing on the first of those trading days during that five trading day
period and ending on and including that date, of specified events with respect
to our common stock that would result in an adjustment of the conversion rate.
The "closing sale price" of our common stock on any date means the closing
sale price per share (or if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on that date (or if that date is not a
trading day, on the trading day immediately preceding that date) as reported in
composite transactions for the principal United States securities exchange on
which our common stock is traded or, if our common stock is not listed on a
United States national or regional securities exchange, as reported by the
Nasdaq Stock Market or other automated quotation system on which our common
stock is then listed.
A "trading day" means each day on which the securities exchange or quotation
system which is used to determine the closing sale price is open for trading or
quotation.
In addition, if we are party to a consolidation, merger or transfer or lease
of all or substantially all of our assets pursuant to which our common stock
would be converted into, or into the right to receive, cash, securities or
other assets, a holder may surrender debentures for conversion at any time
beginning 15 days before the anticipated effective date of the transaction
until 15 days after the actual effective date of that transaction. If we are a
party to a consolidation, merger or transfer or lease of all or substantially
all of our assets pursuant to which our common stock is converted into, or into
the right to receive, cash, securities or other assets, then at the effective
time of the transaction, the right to convert a debenture into our common stock
will be changed into a right to convert it into, or into the right to receive,
as applicable, the kind and amount of cash, securities or other property which
the holder would have received if the holder had converted that holder's
debenture immediately before the transaction (assuming, in a case in which our
shareholders may exercise rights of election, that a holder of debentures would
not have exercised any rights of election as to the stock, other securities or
other property or assets receivable in connection therewith and received per
share the kind and amount of cash, securities or other property received per
share by a plurality of nonelecting shares). If the transaction also
constitutes a "change of control," as defined below, the holder can require us
to purchase all or a portion of that holder's debentures as described under
"--Purchase at Option of Holder Upon a Change of Control."
Conversion Rate and Delivery of Our Common Shares
The initial conversion rate is 17.7461 shares of our common stock per
debenture, subject to adjustment upon the occurrence of certain events
described below. This is the equivalent to an initial conversion price of
$46.16 per share of our common stock based on the issue price of the
debentures. You may convert fewer than all of your debentures so long as the
debentures converted are in multiples of $1,000 principal amount at maturity. A
holder of a debenture otherwise entitled to a fractional share will receive a
cash payment based on the closing sale price for our common stock on the
trading day immediately before the conversion date. No payment or adjustment
will be made for accretion (including any interest accrued for United States
federal income tax purposes) on a converted debenture or for dividends or
distributions on any of our common stock issued upon conversion of a debenture.
Our delivery to the holder of the fixed number of shares of our common stock
into which the debenture is converted, together with any cash payment for
fractional shares, will be deemed to satisfy our obligation to pay the accreted
value (including any interest accrued for United States federal income tax
purposes) of the debenture and the accrued and unpaid cash interest, if any,
attributable to the period from the issue date to the conversion date. As a
result, the accretion (including any interest accrued for United States federal
income tax purposes) on the debenture and the accrued and unpaid cash interest,
if any, will be deemed to be paid in full rather than canceled, extinguished or
forfeited.
S-18
If a holder surrenders debentures for conversion after we have elected to pay
cash interest upon the occurrence of a tax event and during the period after
any interest record date and before the corresponding interest payment date,
the holder must pay us the cash interest, if any, payable on those debentures,
unless they have been called for redemption on a redemption date within the
period or on the interest payment date. The holder may not convert debentures
called for redemption after the close of business on the business day preceding
the date fixed for redemption, unless we default in payment of the redemption
price.
We will adjust the conversion rate for:
. dividends or distributions on shares of our common stock payable in
shares of our common stock or other capital stock of CSX;
. subdivisions, combinations or reclassifications of our common stock
specified in the senior indenture;
. distributions to all holders of our common stock of rights, warrants or
options (excluding rights governed by our shareholder rights plan)
specified in the senior indenture entitling them to purchase shares of
common stock for a period expiring within 60 days after the record date
for that distribution at less than the current market price of our common
stock calculated as of the earlier of the record date or the ex-dividend
time for that distribution; and
. distributions (other than the dividends and distributions described in,
or expressly excluded from, the bullet points above) to all holders of
our common stock of our assets or debt securities or certain rights to
purchase our securities, but excluding cash dividends or other cash
distributions from current or retained earnings unless the annualized
amount of those cash dividends or other cash distributions per share
exceeds 5% of the current market price of our common stock on the day
preceding the date of declaration of that dividend or other distribution.
We will not adjust the conversion rate, however, if holders of debentures are
to participate in the transaction without conversion on the same basis as a
holder of our common stock, or in other cases specified in the senior
indenture. We will not adjust the conversion rate for accretion on the
debentures.
We will not adjust the conversion rate as a result of:
. the distribution of separate certificates representing rights under our
shareholder rights plan;
. the exercise or redemption of those rights in accordance with the rights
agreement; or
. the termination or invalidation of those rights.
See "Description of Capital Stock--Shareholder Rights Plan" for a discussion
of the rights and our shareholder rights plan.
No adjustment in the conversion rate will be required unless that adjustment
would require a change of at least 1% in the conversion rate then in effect;
provided that any adjustment that would otherwise be required to be made will
be carried forward and taken into account in any subsequent adjustment. From
time to time, we may voluntarily increase the conversion rate for a period of
at least 20 days.
If we are a party to a consolidation, merger or transfer or lease of all or
substantially all of our assets pursuant to which our common stock would be
converted into, or into the right to receive, cash, securities or other assets,
each debenture would become convertible into the cash, securities or other
property receivable by a holder of the number of shares of our common stock
into which that debenture was convertible immediately before that transaction.
This change could substantially
S-19
lessen or eliminate the value of the conversion privilege associated with the
debentures in the future. For example, if CSX were acquired in a cash merger,
each debenture would become convertible solely into cash and would no longer be
convertible into securities whose value would vary depending on our future
prospects and other factors.
Holders of the debentures may be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of:
. a taxable distribution to holders of our common stock that results in an
adjustment of the conversion rate; or
. an increase in the conversion rate at our discretion.
See "Certain United States Federal Income Tax Considerations--United States
Holders--Constructive Dividends."
The right of conversion attaching to any debenture may be exercised:
. if that debenture is represented by a global debenture, by book-entry
transfer to the conversion agent through the facilities of DTC, or
. if that debenture is represented by a certificated debenture, by delivery
of that debenture at the specified office of the conversion agent,
accompanied, in either case, by a duly signed and completed notice of
conversion and appropriate endorsements and transfer documents if required by
the conversion agent.
The conversion date will be the date on which the debenture and all of the
items required for conversion have been so delivered and the requirements for
conversion have been met. A holder delivering a debenture for conversion will
be required to pay any taxes or duties payable in respect of the issue or
delivery of our common stock upon conversion in a name other than that of the
holder.
The number of full shares of our common stock into which any debenture is
converted, together with any cash payment for fractional shares, will be
delivered as soon as practicable following the conversion date. For a
discussion of the United States federal income tax treatment of a holder
receiving shares of our common stock upon conversion, see "Certain United
States Federal Income Tax Considerations--United States Holders--Sale,
Exchange, Conversion or Redemption."
If we exercise our option to restate the principal amount at maturity of the
debentures following a tax event, the holder will be entitled on conversion to
receive the same number of shares of our common stock that holder would have
received if we had not exercised our option. See "--Tax Event." If a holder
surrenders debentures for conversion:
. after we have exercised our option to pay cash interest instead of
accreting interest following a tax event, and
. during the period after any interest record date and before the
corresponding interest payment date,
the holder must pay us the cash interest, if any, payable on those debentures,
unless they have been called for redemption on a redemption date within the
period or on the interest payment date.
Exchange In Lieu of Conversion
We have the option to designate a financial institution to which debentures
surrendered for conversion by a holder of debentures will be initially offered
by the conversion agent for exchange in lieu of our converting the debentures.
When a holder surrenders debentures for conversion, the
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conversion agent will cause the debentures first to be offered to a financial
institution chosen by us for exchange in lieu of conversion. We expect that
when the debentures are convertible, the designated institution will submit to
the conversion agent a non-binding offer to accept debentures surrendered for
conversion. In order to accept debentures surrendered for conversion, the
designated institution must agree to exchange for those debentures a number of
shares of our common stock equal to the number of those shares the holder of
those debentures would receive upon conversion, plus cash for any fractional
shares. If the institution accepts any of those debentures, it will deliver the
appropriate number of shares of our common stock, plus cash for any fractional
shares, to the holder who surrendered the debentures. The designation of an
institution to which debentures may be submitted for exchange does not require
the institution to accept any debentures from the conversion agent. If the
designated institution declines to accept any debentures in whole or in part,
those debentures or parts of debentures will be converted into shares of our
common stock at the close of business on the business day following the
business day on which the debentures are surrendered for conversion. If the
designated institution agrees to accept any debentures for exchange but does
not promptly deliver the related common shares, the debentures will be
converted and the shares of our common stock will be delivered. Any debentures
accepted for exchange by the designated institution will remain outstanding
until maturity or until redeemed, converted or purchased by us at the option of
the holder.
We anticipate that we will initially designate Credit Suisse First Boston
Corporation as the institution to which offers described above will be made,
although we may change this designation at any time.
Maturity; Redemption of Debentures at Our Option Before Maturity
We must repay the debentures at their stated maturity on October 30, 2021, at
a price equal to the accreted value of the debentures up to but not including
the stated maturity, unless earlier redeemed by us, purchased by us at your
option, or converted.
Beginning on October 30, 2008, we may redeem the debentures at our option, in
whole at any time, or in part from time to time, for cash at a redemption price
equal to the accreted value for the debentures up to but not including the date
of redemption. We will give not less than 15 days nor more than 60 days notice
of redemption by mail to holders of debentures.
The table below shows redemption prices of a debenture on October 30, 2008,
at each following October 30 before maturity and at maturity on October 30,
2021, assuming that neither a reset of the yield to maturity nor a tax event
occurs. These prices reflect the issue price of a debenture plus the accretion
in value on that debenture, based on the yield to maturity from time to time in
effect. The redemption price of a debenture redeemed between those dates will
include any additional increase in the accreted value since the immediately
preceding redemption date set forth below up to but not including the
redemption date.
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(2)
Accretion in (3)
(1) Value from Redemption
Redemption Date Issue Price Date of Issuance Price (1) + (2)
--------------- ----------- ---------------- ---------------
October 30, 2008............... $819.14 $ 59.24 $ 878.38
October 30, 2009............... 819.14 68.05 887.19
October 30, 2010............... 819.14 76.94 896.08
October 30, 2011............... 819.14 85.92 905.06
October 30, 2012............... 819.14 95.00 914.14
October 30, 2013............... 819.14 104.16 923.30
October 30, 2014............... 819.14 113.42 932.56
October 30, 2015............... 819.14 122.77 941.91
October 30, 2016............... 819.14 132.21 951.35
October 30, 2017............... 819.14 141.75 960.89
October 30, 2018............... 819.14 151.38 970.52
October 30, 2019............... 819.14 161.11 980.25
October 30, 2020............... 819.14 170.94 990.08
At maturity.................. $819.14 $180.86 $1,000.00
If the principal amount at maturity of the debentures has been restated
following the occurrence of a tax event, we must repay the debentures at their
stated maturity at a price equal to the restated principal amount plus accrued
and unpaid cash interest, if any. In that event, the debentures will be
redeemable at a redemption price equal to the restated principal amount of the
debentures plus accrued and unpaid cash interest, if any, up to but not
including the date of redemption. See "--Tax Event." If the redemption date is
on or after an interest record date but on or before the related interest
payment date, cash interest, if any, will be paid to the holder who was the
record holder on the relevant record date.
Holders may convert debentures or portions of debentures called for
redemption even if the market price contingency described under "--Conversion
Rights" has not occurred, until the close of business on the business day
before the redemption date.
If we redeem less than all of the outstanding debentures, the trustee will
select the debentures to be redeemed on a pro rata basis in principal amounts
at maturity of $1,000 (which $1,000 amount is subject to an upward adjustment)
or integral multiples of $1,000 (or that increased amount). If a portion of a
holder's debentures is selected for partial redemption and the holder converts
a portion of the debentures, the converted portion will be deemed to be the
portion selected for redemption.
Purchase of Debentures at the Option of the Holder
On October 30, 2003, October 30, 2006, October 30, 2008, October 30, 2011 and
October 30, 2016, each holder may require us to purchase any outstanding
debentures for which that holder has properly delivered and not withdrawn a
written purchase notice, subject to additional conditions specified in the
senior indenture. Holders may submit their debentures for purchase to the
paying agent (which will initially be the trustee) at any time from the opening
of business on the date that is 20 business days before the purchase date until
the close of business on the fifth business day before the purchase date.
We will purchase each outstanding debenture for which that holder has
properly delivered and not withdrawn a written purchase notice at a purchase
price equal to the accreted value of that debenture up to but not including the
purchase date.
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The purchase price of a debenture as of each of the purchase dates (assuming
that neither a reset of the yield to maturity nor a tax event occurs) will be:
Purchase
Purchase Date Price
------------- --------
October 30, 2003................................................. $835.65
October 30, 2006................................................. 861.03
October 30, 2008................................................. 878.38
October 30, 2011................................................. 905.06
October 30, 2016................................................. 951.35
We may, at our option, elect to pay the purchase price on the first three
purchase dates (October 30, 2003, October 30, 2006 and October 30, 2008) in
cash or shares of our common stock valued at the market price (as defined
below) or any combination thereof. See "--Election to Pay Purchase Price in
Shares of Our Common Stock." We may pay the purchase price on the last two
purchase dates (October 30, 2011 and October 30, 2016) in cash only.
If before a purchase date the principal amount at maturity of the debentures
has been restated following the occurrence of a tax event, the purchase price
for the debentures being purchased will be equal to the restated principal
amount of those debentures plus accrued and unpaid cash interest, if any, up to
but not including the purchase date. See "--Tax Event." If the purchase date is
on or after an interest record date but on or before the related interest
payment date, cash interest, if any, will be paid to the holder who was the
record holder on the relevant record date.
For a discussion of the tax treatment of a holder receiving cash, shares of
common stock or any combination of cash and shares of common stock on the
purchase of debentures, see "Certain United States Federal Income Tax
Considerations--United States Holders--Sale, Exchange, Conversion or
Redemption."
Required Notices and Procedure
If we choose to pay the purchase price for the debentures, in whole or in
part, in shares of our common stock, we will be required to give notice on a
date not less than 20 business days before each purchase date to all holders at
their addresses shown in the register of the registrar (which will initially be
the trustee), and to beneficial owners as required by applicable law, stating,
among other things:
. the purchase price per debenture;
. whether we will pay the purchase price for the debentures in common stock
or any combination of cash and common stock, specifying the applicable
percentages of each;
. the method for calculating the market price of our common stock; and
. the procedures that holders must follow to require us to purchase their
debentures.
If we choose to pay the purchase price entirely in cash, no notice will be
given by CSX.
The purchase notice given by each holder electing to require us to purchase
debentures must be given so as to be received by the paying agent no later than
the close of business on the fifth business day before the purchase date and
must state:
. the certificate numbers of the holder's debentures to be delivered for
purchase or, if those debentures are not in certificated form,
appropriate DTC procedures;
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. the aggregate principal amount at maturity (or, if the principal amount
at maturity of the debentures has been restated following a tax event,
the restated principal amount) of debentures to be purchased, in
multiples of $1,000;
. that the debentures are to be purchased by us pursuant to the applicable
provisions of the debentures; and
. for the first three purchase dates, if we elect, pursuant to the notice
we are required to give, to pay any or all of the purchase price in
shares of our common stock, but instead must pay the purchase price
entirely in cash because one or more of the conditions to payment of any
or all of the purchase price in our common stock (described below in "--
Election to Pay Purchase Price in Shares of Our Common Stock") is not
satisfied before the close of business on the purchase date, whether that
holder elects:
. to withdraw the purchase notice as to some or all of the debentures to
which it relates, stating the principal amount at maturity (or, if the
principal amount at maturity of the debentures has been restated
following a tax event, the restated principal amount) and certificate
numbers of the debentures as to which that withdrawal shall relate or,
if those debentures are not in certificated form, appropriate DTC
procedures; or
. to receive cash in that event in respect of the entire purchase price
for all debentures or portions of debentures subject to that purchase
notice.
If the holder fails to indicate in the purchase notice and in any written
notice of withdrawal a choice with respect to the election described in the
fourth bullet point above, the holder will be deemed to have elected to receive
cash in respect of the entire purchase price for all debentures subject to the
purchase notice in those circumstances. For a discussion of the tax treatment
of a holder receiving cash instead of shares of common stock, see "Certain
United States Federal Income Tax Considerations--United States Holders--Sale,
Exchange, Conversion or Redemption."
A holder may withdraw any purchase notice by delivering a written notice of
withdrawal to the paying agent before the close of business on the second
business day before the purchase date. The notice of withdrawal must state:
. the certificate numbers of the debentures being withdrawn or, if those
debentures are not in certificated form, appropriate DTC procedures;
. the aggregate principal amount at maturity (or, if the principal amount
at maturity of the debentures has been restated following a tax event,
the restated principal amount) of the debentures being withdrawn; and
. the aggregate principal amount at maturity (or, if the principal amount
at maturity of the debentures has been restated following a tax event,
the restated principal amount), if any, of the debentures that remains
subject to the purchase notice.
Payment of the purchase price for a debenture for which a purchase notice has
been delivered and not validly withdrawn is conditioned upon book-entry
transfer or delivery of the debenture, together with necessary endorsements, to
the paying agent at any time after delivery of the purchase notice. Payment of
the purchase price for the debenture will be made promptly following the later
of the purchase date or the time of book-entry transfer or physical delivery of
the debenture.
If the paying agent holds money or securities sufficient to pay the purchase
price of a debenture on the business day following the purchase date in
accordance with the senior indenture, then, immediately after the purchase
date, the debenture will cease to be outstanding, the debenture will cease to
accrete in value (or, if the debentures have been converted to interest-bearing
debentures following a tax event, interest will cease to accrue) whether or not
book-entry transfer is made or the
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debenture is delivered to the paying agent. Thereafter, all other rights of the
holder will terminate, other than the right to receive the purchase price upon
book-entry transfer or delivery of the debenture.
Under the senior indenture, we will not be permitted to purchase any
debentures at the option of holders if an event of default described under
"--Events of Default" below has occurred and is continuing.
In connection with any purchase offer, we will, to the extent applicable:
. comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which may then be applicable, and
. file Schedule TO or any other required schedule under the Exchange Act.
Election to Pay Purchase Price in Shares of Our Common Stock
For the first three purchase dates, if we elect to pay the purchase price, in
whole or in part, in shares of our common stock, the number of shares of common
stock to be delivered by us will be equal to the portion of the purchase price
to be paid in shares of common stock divided by the market price.
We will pay cash based on the closing sale price for all fractional shares of
common stock in the event we elect to deliver shares of common stock in
payment, in whole or in part, of the purchase price.
Because the market price of our common stock is determined before the
applicable purchase date, holders of debentures bear the market risk with
respect to the value of our common stock to be received from the date that
market price is determined to that purchase date. We may pay the purchase price
or any portion of the purchase price in our common stock only if the
information necessary to calculate the market price is published in a daily
newspaper of national circulation.
Simultaneously with the delivery of our notice that we have elected to pay
the purchase price for the debentures, in whole or in part, in shares of our
common stock, we will disseminate a press release containing information
concerning the determination of the actual number of shares of our common stock
issuable upon purchase of the debentures through two national news services. We
may also publish this information on our Web site or through any other public
medium that we may use at that time.
Our right to purchase debentures, in whole or in part, with shares of our
common stock is subject to our satisfying various conditions, including:
. the listing of those shares of our common stock on the principal United
States national or regional securities exchange on which our common stock
is then listed or, if not so listed, on the Nasdaq Stock Market or other
automated quotation system on which our common stock is then quoted;
. the registration of our common stock under the Securities Act and the
Exchange Act, if required; and
. any necessary qualification or registration under applicable state
securities laws or the availability of an exemption from that
qualification and registration.
If those conditions are not satisfied with respect to a holder before the
close of business on the purchase date, we will pay the purchase price of the
debentures of that holder entirely in cash. We may not change the form or
components or percentages of components of consideration to be paid for the
debentures once we have given the notice that we are required to give to
holders of debentures, except as described in the first sentence of this
paragraph.
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Our delivery to the holder of cash and/or shares of our common stock in
payment of the purchase price for a debenture, together with any cash payment
for fractional shares, will be deemed to satisfy our obligation to pay the
accreted value (including any interest accrued for United States federal income
tax purposes) of the debenture and accrued and unpaid cash interest, if any,
attributable to the period from the issue date to the purchase date. As a
result, the accretion (including any interest accrued for United States federal
income tax purposes) on the debenture and the accrued and unpaid cash interest,
if any, will be deemed to be paid in full rather than canceled, extinguished or
forfeited.
Purchase at Option of Holder Upon a Change of Control
If a change of control (as defined below) occurs, each holder of debentures
will have the right, at that holder's option, to require us to purchase all or
any portion of that holder's debentures that is an integral multiple of $1,000
principal amount at maturity (which $1,000 amount is subject to an upward
adjustment), on the date (the "change of control purchase date") selected by us
that is not less than 10 nor more than 30 days after the final surrender date
(as defined below). The purchase price will be equal to the accreted value for
those debentures up to but not including the change of control purchase date.
If, before the change of control purchase date, we elect to restate the
principal amount at maturity of the debentures following a tax event, the
purchase price will be equal to the restated principal amount of the debentures
plus accrued and unpaid cash interest, if any, up to but not including the
change of control purchase date. See "--Tax Event."
Unless we have previously called for redemption of all of the debentures,
within 30 days after the occurrence of a change of control, we are obligated to
deliver to the trustee and mail to all holders of record of the debentures a
notice (the "company notice") describing, among other things, the occurrence of
that change of control and of the purchase right arising as a result of that
change of control. We must cause a copy of the company notice to be published
in a newspaper of general circulation in the Borough of Manhattan, The City of
New York.
To exercise the purchase right, a holder of debentures must, on or before the
date that is, subject to any contrary requirements of applicable law, 60 days
after the date of mailing of the company notice (the "final surrender date"):
. give irrevocable written notice of the holder's exercise of that right;
and
. surrender the debentures (if those debentures are represented by a global
debenture, by book-entry transfer to the conversion agent through the
facilities of DTC) with respect to which the right is being exercised,
duly endorsed for transfer to us, at any place where principal is
payable.
The submission of that notice together with those debentures pursuant to the
exercise of a purchase right will be irrevocable on the part of the holder
(unless we fail to purchase the debentures on the change of control purchase
date) and the right to convert the debentures will expire upon that submission.
A "change of control" means any of the following:
. any person, including our affiliates and associates, other than CSX, our
subsidiaries or our or their employee benefit plans, files a Schedule 13D
or Schedule TO, or any successor schedule, form or report, under the
Exchange Act, disclosing that that person has become the beneficial owner
of 50% or more of the voting power of our common stock or other capital
stock into which our common stock is reclassified or changed, subject to
exceptions specified in the senior indenture; or
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. any share exchange, consolidation or merger is consummated pursuant to
which our common stock would be converted into, or into the right to
receive, cash, securities or other property, in each case other than any
share exchange, consolidation or merger of CSX in which the holders of
our common stock immediately before the share exchange, consolidation or
merger have, directly or indirectly, at least a majority of the total
voting power in the aggregate of all classes of capital stock of the
continuing or surviving corporation immediately after the share exchange,
consolidation or merger,
unless, in each case, at least 80% of the consideration, other than cash
payments for fractional shares, in the transaction or transactions constituting
the change of control, consists of shares of voting common stock of the person
that are, or upon issuance will be, traded on a national securities exchange or
approved for trading on an established automated over-the-counter trading
market in the United States.
If a change of control were to occur, we may not have enough funds to pay the
change of control purchase price. In addition, we may in the future incur other
indebtedness with similar change of control provisions permitting holders of
that indebtedness to accelerate or to require us to purchase our indebtedness
upon the occurrence of similar events or on some specified dates. The right to
require us to purchase the debentures as a result of the occurrence of a change
of control could create an event of default under our future senior
indebtedness. Our failure to purchase the debentures when required will result
in an event of default with respect to the debentures. The senior indenture
does not permit us to waive our obligation to purchase debentures at the option
of holders in the event of a change of control.
The holders' right to require us to purchase the debentures upon the
occurrence of a change of control could make more difficult or discourage a
potential takeover of CSX and, thus, removal of incumbent management. The
change of control purchase right, however, is not the result of management's
knowledge of any specific effort to accumulate shares of our common stock or to
obtain control of CSX by means of a merger, tender offer, solicitation or
otherwise. Instead, the change of control purchase feature is a standard term
contained in other similar debt offerings and the terms of that feature have
resulted from negotiations between us and the underwriters.
We could in the future enter into transactions, including highly leveraged
recapitalizations, that would not constitute a change of control and would,
therefore, not provide the holders with the protection of requiring us to
purchase the debentures.
Under the senior indenture, we will not be permitted to purchase any
debentures upon the occurrence of a change of control if an event of default
described under "--Events of Default" below has occurred and is continuing.
Rule 13e-4 under the Exchange Act requires the dissemination of specified
information to security holders in the event of an issuer tender offer and may
apply in the event that the purchase option becomes available to holders of the
debentures. We will comply with this rule to the extent applicable at that
time.
Tax Event
From and after the date of the occurrence of a tax event (as defined below),
we may elect to have cash interest accrue on the debentures. Cash interest
would accrue at the rate per annum equal to the yield to maturity then in
effect in respect of the debentures on a principal amount at maturity per
debenture (the "restated principal amount") equal to the accreted value of the
debentures on the date on which we exercise our option to have cash interest
accrue on the debentures (the "option exercise date"). The cash interest rate
will be subject to the reset provisions described under "--General."
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That cash interest will accrue from the option exercise date and will be
payable in cash semi-annually on the interest payment dates of October 30 and
April 30 of each year to holders of record at the close of business on October
15 or April 15, respectively, immediately preceding the interest payment date.
Cash interest will be computed (1) for each full semi-annual period, on the
basis of a 360-day year comprised of twelve 30-day months, (2) for any period
shorter than a full semi-annual period, on the basis of a 30-day month and (3)
for any period shorter than one month, on the basis of the actual number of
days elapsed, and will initially accrue from the option exercise date and
thereafter from the last date to which cash interest has been paid or duly
provided.
A "tax event" means that we have received an opinion from independent tax
counsel experienced in those matters to the effect that, on or after the date
of this prospectus supplement, as a result of:
. any amendment to, or change (including any announced prospective change)
in, the laws (or rules or regulations thereunder) of the United States or
any political subdivision or taxing authority of, or in, the United
States; or
. any amendment to, or change in, an interpretation or application of those
laws, rules or regulations by any legislative body, court, governmental
agency or regulatory authority,
in each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after the date of this prospectus supplement, there is more than
an insubstantial risk that interest (including amounts reflecting accretion in
value of the debentures) payable on the debentures either:
. would not be deductible on a current accrual basis; or
. would not be deductible under any other method,
in either case in whole or in part, by us (by reason of deferral, disallowance,
or otherwise) for United States federal income tax purposes.
Federal legislation has previously been proposed to change the tax law to
defer the deduction of original issue discount on convertible debt instruments
until the issuer pays the original issue discount. Congress did not enact those
proposed changes. If a similar proposal were ever reintroduced, enacted and
made applicable to the debentures in a manner that would limit our ability to
either:
. deduct the interest, including accrued interest, payable on the
debentures on a current accrual basis; or
. deduct the interest, including accrued interest, payable on the
debentures under any other method for United States federal income tax
purposes,
that enactment would result in a tax event and the terms of the debentures
would be subject to modification at our option as described above.
The modification of the terms of debentures by us upon a tax event, as
described above, could possibly alter the timing of income recognition by
holders of the debentures with respect to the semi-annual payments of cash
interest due on the debentures after the option exercise date.
Events of Default
The following are "events of default" under the debentures:
. failure to pay interest, if any, on any debenture when due that continues
for 30 days or more,
. failure to pay principal of any debenture at maturity,
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. a default in the performance of any other covenants or agreements in the
senior indenture that continues for 90 days after written notice to us by
the trustee or the holders of at least 25% in principal amount at
maturity of outstanding debentures, and
. specified events involving bankruptcy, insolvency or reorganization of
CSX.
If any event occurs and is continuing that after notice or lapse of time
would become an event of default and if it is known to the trustee, the trustee
is required to mail to each holder of the debentures a notice of that event
within 90 days after that event occurs. Except in the case of a default in
payment of the principal of, or accrued interest, if any, on, any debenture,
the trustee may withhold the notice if and so long as the trustee in good faith
determines that withholding the notice is in the interests of the holders of
the debentures.
If an event of default occurs and is continuing, the trustee or the holders
of not less than 25% in aggregate principal amount at maturity of outstanding
debentures may declare an amount equal to the accreted value of the debentures
(or, if the principal amount at maturity of the debentures has been restated
following a tax event, the restated principal amount) to be immediately due and
payable.
If an event of default occurs and is continuing, the trustee will be required
to exercise its powers with the degree of care and skill that a prudent person
would exercise under the circumstances in the conduct of that person's own
affairs.
Holders of the debentures may not enforce the senior indenture or debentures
except as provided in the senior indenture. Subject to the provisions of the
senior indenture relating to the duties of the trustee in case an event of
default shall occur and be continuing, the trustee will be under no obligation
to exercise any of the rights or powers under the senior indenture at the
request or direction of any holders of the debentures, unless the holders shall
have offered the trustee security or indemnity reasonably satisfactory to it.
Subject to the indemnification provisions and limitations contained in the
senior indenture, the holders of a majority in principal amount at maturity of
the debentures at the time outstanding will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee or exercising any trust or power conferred on the trustee. Those
holders may waive any default except a default in payment of the principal
amount at maturity (or, if the principal amount at maturity of the debentures
has been restated following a tax event, the restated principal amount) or
provisions of the senior indenture that cannot be modified or amended without
the consent of all of the holders of the debentures. See "--Modification and
Waiver."
We are required to furnish the trustee annually with a certificate as to our
compliance with the conditions and covenants provided for in the senior
indenture.
Discharge
The senior indenture provides that we may terminate our obligations with
respect to all of the debt securities, including the debentures, issued under
the senior indenture at any time by delivering all outstanding debt securities
issued under the senior indenture to the trustee for cancellation if we have
paid all sums payable by us under the senior indenture.
Covenants
The senior indenture does not limit the amount of indebtedness or lease
obligations that may be incurred by CSX and our subsidiaries. The senior
indenture does not contain provisions that would give a holder of the
debentures the right to require CSX to repurchase the debentures in the event
of a decline in the credit rating of our debt securities resulting from a
takeover, recapitalization or similar restructuring.
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Neither CSX nor our subsidiaries may create liens of any kind upon any stock
or indebtedness of any principal subsidiary to secure any obligation of CSX
(other than our senior debt securities), any subsidiary or any other person,
unless all of our outstanding senior debt securities (and other outstanding
debt securities issued from time to time pursuant to the senior indenture) will
be secured equally and ratably with that obligation. This provision does not
restrict any other property of CSX or our subsidiaries. The senior indenture
defines "principal subsidiary" as CSX Transportation, Inc. The senior indenture
does not prohibit the sale of any stock or indebtedness of any of our
subsidiaries, including any principal subsidiary.
Merger and Consolidation
We may, without the consent of the holders of any of the outstanding
debentures, consolidate with, merge into or transfer our assets substantially
as an entirety to any corporation organized and existing under the laws of any
domestic or foreign jurisdiction, provided that
. the successor corporation assumes, by a supplemental indenture, our
obligations on the debentures and under the senior indenture,
. after giving effect to the transaction, no event of default, and no event
which, after notice or lapse of time, or both, would become an event of
default, will have occurred and be continuing, and
. CSX delivers to the trustee an officer's certificate and an opinion of
counsel each stating that the transaction and supplemental indenture, if
any, comply with the applicable article of the senior indenture and that
all conditions precedent in the senior indenture relating to the
transaction have been complied with.
Modification and Waiver
Subject to exceptions summarized below, supplements of and amendments to the
senior indenture or the debentures may be made by us and the trustee with the
consent of the holders of not less than a majority in aggregate principal
amount at maturity of the outstanding debentures and any existing default or
compliance with any provisions may be waived with the consent of the holders of
at least a majority in aggregate principal amount at maturity of the
outstanding debentures.
Without the consent of any holders of the debentures, we and the trustee may
amend or supplement the senior indenture or the debentures, among other things,
to cure any ambiguity or inconsistency, to provide for the assumption of our
obligations to holders of the debentures, to make changes specified in the
senior indenture with respect to conversion rights in case of a merger or
acquisition otherwise in compliance with the senior indenture, or to make any
change that does not adversely affect the rights of any holder of the
debentures in any material respect.
Without the consent of the holders of each debenture affected thereby, an
amendment, supplement or waiver may not
. change the stated maturity date of any debenture, or adversely affect the
right to convert any debenture,
. reduce the principal amount at maturity, restated principal amount, issue
price, redemption price, purchase price or change of control purchase
price of, or alter the manner or rate of accretion or accrual of cash
interest, if any (or extend the time for payment of interest, if any), on
any debenture,
. change the currency for payment in respect of any debenture,
. impair the right to institute suit for the enforcement of any payment on
or with respect to any debenture on or after the maturity date or a
redemption date or purchase date, as applicable,
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. reduce the above stated percentage of outstanding debentures necessary to
amend or supplement the senior indenture or waive defaults or compliance,
. change any obligation of CSX to maintain an office or agency in the
places and for the purposes required by the senior indenture, or
. modify (with specified exceptions) any provisions of the senior indenture
relating to modification and amendment of the senior indenture or waiver
of compliance with conditions and defaults under the senior indenture.
Concerning the Trustee
The Chase Manhattan Bank, the trustee under the senior indenture, has been
appointed by us as the initial paying agent, conversion agent and registrar
with regard to the debentures. We may maintain deposit accounts, conduct other
banking transactions and have other commercial relationships with the trustee
or its affiliates in the ordinary course of business, and the trustee and its
affiliates may from time to time in the future provide us with banking and
financial services in the ordinary course of their businesses.
The Trust Indenture Act of 1939 contains limitations on the rights of a
trustee, should it become a creditor of CSX, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
those claims, as security or otherwise. The trustee is permitted to engage in
other transactions with CSX and our subsidiaries from time to time, provided
that if the trustee acquires any conflicting interest it must eliminate the
conflict upon the occurrence of an event of default under the senior indenture,
or else resign.
Governing Law
The senior indenture is, and the debentures will be, governed by and
construed in accordance with the laws of the State of New York.
Book-Entry, Delivery and Form
We will initially issue the debentures in the form of one or more global
securities. The global securities will be deposited with the trustee as
custodian for DTC and registered in the name of a nominee of DTC. Except as set
forth below, the global securities may be transferred, in whole and not in
part, only to DTC or another nominee of DTC. You may hold your beneficial
interests in a global security directly through DTC if you have an account with
DTC or indirectly through organizations which have accounts with DTC.
Debentures in definitive certificated form (called "certificated securities")
will be issued only in the limited circumstances described below.
DTC has advised us that it is:
. a limited purpose trust company organized under the laws of the State of
New York;
. a member of the Federal Reserve System;
. a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
. a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
DTC was created to hold securities of institutions that have accounts with
DTC (called "participants") and to facilitate the clearance and settlement of
securities transactions among its participants in those securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, which may include the
underwriters, banks, trust companies,
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clearing corporations and certain other organizations. Access to DTC's book-
entry system is also available to others such as banks, brokers, dealers and
trust companies (called "indirect participants") that clear through or maintain
a custodial relationship with a participant, whether directly or indirectly.
We expect that pursuant to procedures established by DTC, upon the deposit of
the global securities with DTC, DTC will credit on its book-entry registration
and transfer system the principal amount at maturity of debentures represented
by those global securities to the accounts of participants. The accounts to be
credited will be designated by the underwriters. Ownership of beneficial
interests in the global securities will be limited to participants or persons
that may hold interests through participants. Ownership of beneficial interests
in the global securities will be shown on, and the transfer of those ownership
interests will be effected only through, records maintained by DTC (with
respect to participants' interests), the participants and the indirect
participants. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of those securities in
definitive form. These limits and laws may impair the ability to transfer or
pledge beneficial interests in the global securities.
Beneficial owners of interests in global securities who desire to convert
their interests into common stock should contact their brokers or other
participants or indirect participants through whom they hold those beneficial
interests to obtain information on procedures, including proper forms and cut-
off times, for submitting requests for conversion.
So long as DTC, or its nominee, is the registered owner or holder of a global
security, DTC or its nominee, as the case may be, will be considered the sole
owner or holder of the debentures represented by the global security for all
purposes under the senior indenture and the debentures. In addition, no
beneficial owner of an interest in a global security will be able to transfer
that interest except in accordance with the applicable procedures of DTC.
Except as set forth below, as an owner of a beneficial interest in a global
security you will not be entitled to have the debentures represented by that
global security registered in your name, will not receive or be entitled to
receive physical delivery of certificated securities and will not be considered
to be the owner or holder of any debentures under that global security. We have
been advised that under existing industry practice, if an owner of a beneficial
interest in a global security desires to take any action that DTC, as the
holder of the global security, is entitled to take, DTC would authorize the
participants to take that action and the participants would authorize
beneficial owners owning through those participants to take that action or
would otherwise act upon the instructions of beneficial owners owning through
them.
We will make payments on the debentures represented by the global securities
registered in the name of and held by DTC or its nominee to DTC or its nominee,
as the case may be, as the registered owner and holder of the global
securities. Neither we, the trustee, nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
securities or for maintaining, supervising or reviewing any records relating to
those beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
of or interest on the global securities, will credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount at maturity of the respective global security as shown
on the records of DTC or its nominee. We also expect that payments by
participants or indirect participants to owners of beneficial interests in the
global securities held through those participants or indirect participants will
be governed by standing instructions and customary practices and will be the
responsibility of those participants or indirect participants. We will not have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the global
securities for any debenture or for maintaining,
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supervising or reviewing any records relating to those beneficial ownership
interests or for any other aspect of the relationship between DTC and its
participants or indirect participants or the relationship between those
participants or indirect participants and the owners of beneficial interests in
the global securities owning through those participants.
Transfers between participants in DTC will be effected in the ordinary way in
accordance with DTC rules and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of debentures only at the direction of one or more participants to whose
account the DTC interests in the global securities are credited and only in
respect of that portion of the aggregate principal amount at maturity (or, if
the principal amount at maturity of the debentures has been restated following
the occurrence of a tax event, the restated principal amount) of debentures as
to which that participant or those participants has or have given that
direction. However, DTC will exchange that global security for certificated
securities which it will distribute to its participants if
. DTC notifies us that they are unwilling to be a depository for a global
security or ceases to be a clearing agency,
. CSX so elects and notifies the trustee or
. there is an event of default under the debentures.
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the global securities among participants
of DTC, they are under no obligation to perform or continue to perform those
procedures, and those procedures may be discontinued at any time. Neither we
nor the trustee will have any responsibility or liability for the performance
by DTC or the participants or indirect participants of their respective
obligations under the rules and procedures governing their respective
operations.
DESCRIPTION OF COMMON STOCK
As of the date of this prospectus supplement, we are authorized to issue up
to 300,000,000 shares of common stock, par value $1.00 per share, and
25,000,000 shares of preferred stock, without par value. Our preferred stock is
issuable in series, of which 3,000,000 shares of Series B Preferred Stock have
been reserved for issuance under the Shareholders Rights Plan. As of September
28, 2001, 213,162,313 shares of common stock were issued and outstanding, and
no shares of preferred stock were outstanding. CSX common stock is listed on
the New York Stock Exchange under the symbol "CSX." For a description of our
common stock and the Shareholder Rights Plan, see "Description of Capital
Stock" in the base prospectus and our Amended and Restated Articles of
Incorporation and the By-laws and the Rights Agreement, as amended, copies of
which have been incorporated by reference or filed as exhibits to the
registration statement of which the base prospectus is a part.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
General
This is a summary of certain United States federal income tax consequences of
the purchase, ownership and disposition of the debentures. This summary is
based upon laws, regulations, rulings and decisions now in effect, all of which
are subject to change (including retroactive changes) or possible differing
interpretations. We have not obtained nor do we intend to obtain a ruling from
the Internal Revenue Service with respect to the United States federal income
tax consequences of acquiring, owning or disposing of the debentures or common
stock. This summary deals only with debentures held as capital assets and does
not purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, tax-exempt entities, persons holding debentures in a
tax-deferred or tax-advantaged account, or persons holding debentures as a
hedge against currency risks, as a position in a "straddle" or as part of a
"hedging" or "conversion" transaction or "constructive sale" or other
integrated transaction for tax purposes, persons who own 10% or more of our
voting power directly or indirectly, or United States Holders, as defined
below, whose functional currency is not the United States dollar.
We do not address all of the tax consequences that may be relevant to an
investor in debentures. In particular, we do not address:
. The United States federal income tax consequences to shareholders in, or
beneficiaries of, an entity that is a holder of debentures;
. The United States federal income tax consequences to partnerships or
other entities classified as partnerships for United States federal
income tax purposes;
. The United States federal estate, gift or alternative minimum tax
consequences of the purchase, ownership or disposition of debentures;
. Any state, local or foreign tax consequences of the purchase, ownership
or disposition of debentures; or
. Any federal, state, local or foreign tax consequences of owning or
disposing of the common stock into which the debentures are convertible.
Accordingly, holders should consult their own tax advisors regarding the tax
consequences of purchasing, owning or disposing of the debentures and the
common stock in light of their own circumstances.
A United States Holder is a beneficial owner of the debentures who or which
is:
. A citizen or individual resident of the United States, as defined in
section 7701(b) of the Internal Revenue Code of 1986, as amended (which
we refer to as the Code);
. A corporation, including any entity treated as a corporation for United
States federal income tax purposes, created or organized in or under the
laws of the United States, any state thereof or the District of Columbia;
. An estate if its income is subject to United States federal income
taxation regardless of its source; or
. A trust if
. a United States court can exercise primary supervision over its
administration and
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. one or more United States persons have the authority to control all of
its substantial decisions.
Notwithstanding the preceding sentence, certain trusts in existence on August
20, 1996 and treated as United States persons before that date, may also be
treated as United States Holders.
A Non-United States Holder is a holder of debentures other than a United
States Holder. We urge prospective investors that are Non-United States Holders
to consult their own tax advisors regarding the United States federal income
tax consequences of an investment in the debentures, including the application
of United States federal withholding taxes.
No statutory, administrative or judicial authority directly addresses the
treatment of the debentures or instruments similar to the debentures for United
States federal income tax purposes. No assurance can be given that the Internal
Revenue Service, which we refer to as the IRS, will not take contrary
positions. As a result, no assurance can be given that the IRS will agree with
the tax characterizations and the tax consequences described below.
We urge prospective investors to consult their own tax advisors with respect
to the tax consequences to them of the purchase, ownership and disposition of
the debentures and the common stock in light of their own particular
circumstances, including the tax consequences under state, local, foreign and
other tax laws and the possible effects of changes in United States federal or
other tax laws.
Classification of the Debentures
We have received an opinion from our counsel, McGuireWoods LLP, that the
debentures will be treated as indebtedness for United States federal income tax
purposes and that the debentures will be subject to the special regulations
governing contingent payment debt instruments (which we refer to as the CPDI
regulations).
United States Holders
Accrual of Interest on the Debentures
Pursuant to the terms of the senior indenture, we and each holder of the
debentures agree, for United States federal income tax purposes, to treat the
debentures as debt instruments that are subject to the CPDI regulations.
Pursuant to these regulations, United States Holders of the debentures will be
required to accrue interest income on the debentures at the "comparable yield",
as described below, regardless of whether the United States Holder uses the
cash or accrual method of tax accounting. Accordingly, United States Holders
will be required to include interest in taxable income in each year in excess
of the accruals on the debentures for non-tax purposes.
The CPDI regulations provide that a United States Holder must accrue an
amount of ordinary interest income, as original issue discount for United
States federal income tax purposes, for each accrual period before and
including the maturity date of the debentures that equals:
. the product of
. the adjusted issue price (as defined below) of the debentures as of the
beginning of the accrual period; and
. the comparable yield to maturity (as defined below) of the debentures,
adjusted for the length of the accrual period;
. divided by the number of days in the accrual period; and
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. multiplied by the number of days during the accrual period that the
United States Holder held the debentures.
A debenture's issue price is the first price at which a substantial amount of
the debentures is sold to the public, excluding sales to bond houses, brokers
or similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers. The adjusted issue price of a debenture is its
issue price increased by any interest income previously accrued, determined
without regards to any adjustments to interest accruals described below, with
respect to the debentures.
Based in part on the advice of McGuireWoods LLP, we intend to treat the term
"comparable yield" as the annual yield we would pay, as of the initial issue
date, on a fixed-rate, non-convertible debt security with no contingent
payments, but with terms and conditions otherwise comparable to those of the
debentures. Based in part on that advice, we intend to take the position that
the comparable yield for the debentures is 5.93%, compounded semi-annually. The
precise manner of calculating the comparable yield is not absolutely clear. If
the comparable yield were successfully challenged by the IRS, the redetermined
yield could be materially greater or less than the comparable yield provided by
us. Moreover, the projected payment schedule (as defined below) could differ
materially from the projected payment schedule provided by us.
The CPDI regulations require that we provide to United States Holders, solely
for United States federal income tax purposes, a schedule of the projected
amounts of payments, which we refer to as the projected payment schedule, on
the debentures. This schedule must produce the comparable yield. The projected
payment schedule includes an estimate for a payment at maturity taking into
account the conversion feature.
The comparable yield and the schedule of projected payments will be set forth
in the senior indenture. United States Holders may also obtain the projected
payment schedule by submitting a written request for that information to CSX
Corporation, Attention: Corporate Secretary, One James Center, 901 East Cary
Street, Richmond, Virginia 23219.
The comparable yield and the schedule of projected payments are not
determined for any purpose other than for the determination of a United States
Holder's interest accruals and adjustments thereof in respect of the debentures
for United States federal income tax purposes and do not constitute a
projection or representation regarding the actual amounts payable on the
debentures.
Amounts treated as interest under the CPDI regulations are treated as
original issue discount for all purposes of the Code.
Adjustments to Interest Accruals on the Debentures
If, during any taxable year, a United States Holder receives actual payments
with respect to the debentures for that taxable year that in the aggregate
exceed the total amount of projected payments for that taxable year, the United
States Holder will incur a "net positive adjustment" under the CPDI regulations
equal to the amount of that excess. The United States Holder will treat a "net
positive adjustment" as additional interest income for the taxable year. For
this purpose, the payments in a taxable year include the fair market value of
property received in that year.
If, during any taxable year, a United States Holder receives actual payments
with respect to the debentures for that taxable year that in the aggregate were
less than the amount of projected payments for that taxable year, the United
States Holder will incur a "net negative adjustment" under the CPDI regulations
equal to the amount of that deficit. This adjustment will
. reduce the United States Holder's interest income on the debentures for
that taxable year, and
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. to the extent of any excess after the application of that reduction, give
rise to an ordinary loss to the extent of the United States Holder's
interest income on the debentures during prior taxable years, reduced to
the extent that interest was offset by prior net negative adjustments.
If a United States Holder purchases debentures at a discount or premium to
the adjusted issue price, the discount will be treated as a positive adjustment
and the premium will be treated as a negative adjustment. The United States
Holder must reasonably allocate the adjustment over the remaining term of the
debentures by reference to the accruals of original issue discount at the
comparable yield or to the projected payments. It may be reasonable to allocate
the adjustment over the remaining term of the debentures pro rata with the
accruals of original issue discount at the comparable yield. Holders should
consult their tax advisors regarding these allocations.
Sale, Exchange, Conversion or Redemption
Generally, the sale or exchange of a debenture, or the redemption of a
debenture for cash, will result in taxable gain or loss to a United States
Holder. As described above, our calculation of the comparable yield and the
schedule of projected payments for the debentures includes the receipt of stock
upon conversion as a contingent payment with respect to the debentures.
Accordingly, we intend to treat the receipt of our common stock by a United
States Holder upon the conversion of a debenture, or upon the repurchase of a
debenture at the option of a holder when we elect to pay in common stock, as a
contingent payment under the CPDI regulations. Under this treatment, a
conversion or a repurchase that includes payment in common stock will also
result in taxable gain or loss to a United States Holder.
The amount of gain or loss on a taxable sale, exchange, conversion or
redemption will be equal to the difference between
. the amount of cash plus the fair market value of any property received by
the United States Holder, including the fair market value of any of our
common stock received, and
. the United States Holder's adjusted tax basis in the debentures.
A United States Holder's adjusted tax basis in a debenture at any time will
generally be equal to the United States Holder's original purchase price for
the debenture, increased by any interest income previously accrued by the
United States Holder (determined without regard to any adjustments to interest
accruals described above, other than adjustments to reflect discount or premium
to the adjusted issue price, if any), and decreased by the amount of any
projected payments, as defined above, scheduled to have been made through that
date. Gain recognized upon a sale, exchange, conversion or redemption of a
debenture will generally be treated as ordinary interest income; any loss will
be ordinary loss to the extent of interest previously included in income, and
thereafter, capital loss (which will be long-term if the debenture is held for
more than one year). The deductibility of net capital losses by individuals and
corporations is subject to limitations.
A United States Holder's tax basis in our common stock received upon a
conversion of a debenture or upon a United States Holder's exercise of a put
right that we elect to pay in common stock will equal the then current fair
market value of that common stock. The United States Holder's holding period
for the common stock received may commence on the day immediately following the
date of conversion or repurchase of a debenture. However, the matter is not
entirely certain and holders may be entitled to include their holding period
for the debenture as part of their holding period for the common stock received
upon conversion (except where the common stock is delivered by the designated
financial institution in exchange for a debenture surrendered for conversion)
or repurchase with respect to some or all of the shares. Holders should consult
their own tax advisors regarding the proper application of the holding period
rules to their situation.
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Constructive Dividends
If at any time we make a distribution of property to our shareholders that
would be taxable to the shareholders as a dividend for United States federal
income tax purposes and, in accordance with the anti-dilution provisions of the
debentures, the conversion rate of the debentures is increased, that increase
may be deemed to be the payment of a taxable dividend to the holders of the
debentures.
For example, an increase in the conversion rate in the event of distribution
of evidences of our indebtedness or our assets or an increase in the event of
an extraordinary cash dividend will generally result in deemed dividend
treatment to holders of the debentures, but generally an increase in the event
of share dividends or the distribution of rights to subscribe for common stock
will not.
Treatment of Non-United States Holders
All payments on the debentures made to a Non-United States Holder, including
a payment in common stock pursuant to a conversion or repurchase of a
debenture, and any gain realized on a sale or exchange of the debentures, will
be exempt from United States federal income and withholding tax, provided that:
. that Non-United States Holder does not own, actually or constructively,
10 percent or more of the total combined voting power of all classes of
our stock entitled to vote, is not a controlled foreign corporation
related, directly or indirectly, to us through stock ownership, and is
not a bank receiving interest described in section 881(c)(3)(A) of the
Code and with respect to the gain, is not an individual who is present in
the United States for 183 days or more in the year of the sale, exchange
or disposition of the debentures;
. the statement requirement set forth in section 871(h) or section 881(c)
of the Code has been fulfilled with respect to the beneficial owner, as
discussed below;
. those payments and gain are not effectively connected (or, with respect
to the gain, deemed effectively connected by virtue of section 897 of the
Code, if we became a United States real property holding corporation, or
USRPHC, as described below) with the conduct by that Non-United States
Holder of a trade or business in the United States, and where a tax
treaty applies, are not attributable to a United States permanent
establishment; and
. our common stock continues to be actively traded within the meaning of
section 871(h)(4)(C)(v)(I) of the Code (which, for these purposes and
subject to certain exceptions, includes trading on the NYSE).
A corporation is generally a USRPHC if more than 50% of its fair market value
consists of U.S. real property interests. We believe that we are not a USRPHC
for United States federal income tax purposes although we may become a USRPHC
in the future. However, if a Non-United States Holder were deemed to have
received a constructive dividend (see "--United States Holders--Constructive
Dividends" above), the Non-United States Holder will generally be subject to
United States withholding tax at a 30% rate, subject to a reduction by an
applicable treaty, on the taxable amount of such dividend.
The statement requirement referred to in the preceding paragraph will be
fulfilled if the beneficial owner of a debenture certifies on IRS Form W-8BEN,
under penalties of perjury, that it is not a United States person and provides
its name, address and any other information the form may require.
If a Non-United States Holder of the debentures is engaged in a trade or
business in the United States, and if interest or gain on the debentures is
effectively connected with the conduct of that trade or business (and where a
tax treaty applies, is attributable to a United States permanent
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establishment), the Non-United States Holder, although exempt from the
withholding tax discussed in the preceding paragraphs, will generally be
subject to regular United States federal income tax on interest and on any gain
realized on the sale or exchange of the debentures in the same manner as if it
were a United States Holder. In lieu of the certificate described in the
preceding paragraph, a Non-United States Holder described in the previous
sentence will be required to provide to the withholding agent a properly
executed IRS Form W-8ECI (or successor form) in order to claim an exemption
from withholding tax. In addition, if that Non-United States Holder is a
foreign corporation, that Non-United States Holder may be subject to a branch
profits tax equal to 30% (or that lower rate provided by an applicable treaty)
of its effectively connected earnings and profits for the taxable year, subject
to certain adjustments.
Backup Withholding Tax and Information Reporting
Payments of principal, premium, if any, and interest (including original
issue discount and a payment in common stock pursuant to a conversion or
repurchase of the debentures) on, and the proceeds of disposition or retirement
of, the debentures may be subject to information reporting and United States
federal backup withholding tax if the United States Holder of debentures fails
to supply an accurate taxpayer identification number or otherwise fails to
comply with applicable United States information reporting or certification
requirements. Any amounts so withheld will be allowed as a credit against that
United States Holder's United States federal income tax liability, provided
that the required information is provided to the IRS.
A Non-United States Holder may also be subject to United States federal
backup withholding tax on these payments unless the Non-United States Holder
establishes that it is not a United States person. The certification procedures
required to claim the exemption from withholding tax on certain payments on the
debentures described above will satisfy the certification requirements
necessary to avoid the backup withholding tax as well. The amount of any backup
withholding from a payment to the Non-United States Holder will be allowed as a
credit against the Non-United States Holder's United States federal income tax
liability and may entitle the Non-United States Holder to a refund, provided
that the required information is furnished to the IRS.
Tax Event
The modification of the terms of the debentures by us upon a Tax Event as
described in "Description of Debentures--Tax Event" may alter the timing of the
income recognition by the holders with respect to the semi-annual payments of
interest due after the option exercise date.
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UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated October 24, 2001, we have agreed to sell to the underwriters
named below, for whom Credit Suisse First Boston Corporation is acting as
representative, the following respective principal amounts at maturity of the
debentures:
Principal
Amount
Underwriter at Maturity
----------- -------------
Credit Suisse First Boston Corporation....................... $275,625,000
J.P. Morgan Securities Inc................................... 61,250,000
Salomon Smith Barney Inc..................................... 61,250,000
Goldman, Sachs & Co.......................................... 7,350,000
Morgan Stanley & Co. Incorporated............................ 7,350,000
BNY Capital Markets, Inc..................................... 11,025,000
Mizuho International plc..................................... 14,700,000
PNC Capital Markets, Inc..................................... 11,025,000
Scotia Capital (USA) Inc..................................... 14,700,000
Tokyo-Mitsubishi International plc........................... 14,700,000
First Union Securities, Inc.................................. 11,025,000
-------------
Total ................................................... $490,000,000
=============
First Union Securities, Inc., one of the underwriters, is an indirect,
wholly-owned subsidiary of Wachovia Corporation. Wachovia Corporation conducts
its investment banking, institutional, and capital markets businesses through
its various bank broker-dealer and nonbank subsidiaries (including First Union
Securities, Inc.) under the trade name of Wachovia Securities. Any references
to Wachovia Securities in this prospectus, however, do not include Wachovia
Securities, Inc., member NASD/SIPC and a separate broker-dealer subsidiary of
Wachovia Corporation and an affiliate of First Union Securities, Inc., which
may or may not be participating as a selling dealer in the distribution of the
securities offered by this prospectus.
The underwriting agreement provides that the underwriters are obligated to
purchase all of the debentures if any are purchased, other than those
debentures covered by the over-allotment option described below. The
underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of debentures may be terminated.
We have granted to the underwriters a 13-day option to purchase on a pro rata
basis up to a maximum of $73,500,000 aggregate principal amount at maturity of
additional debentures at the initial public offering price, less the
underwriting discounts and commissions, plus accreted value. The option may be
exercised only to cover any over-allotments in the sale of the debentures.
The underwriters propose to offer the debentures initially at the public
offering price on the cover page of this prospectus supplement and to selling
group members at that price less a selling concession of 1.2% of the issue
price per debenture. After the initial public offering the underwriters may
change the public offering price and concession to dealers.
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The following table summarizes the compensation and estimated expenses we
will pay.
Per Debenture Total
----------------------------- -----------------------------
Without With Without With
Over-allotment Over-allotment Over-allotment Over-allotment
-------------- -------------- -------------- --------------
Underwriting Discounts
and Commissions paid by
us..................... $16.38 $16.38 $8,026,200 $9,230,130
Expenses payable by us.. $ 0.56 $ 0.49 $ 275,000 $ 275,000
The debentures are a new issue of securities with no established trading
market. One or more of the underwriters intend to make a secondary market for
the debentures. However, they are not obligated to do so and may discontinue
making a secondary market for the debentures at any time without notice. No
assurance can be given as to how liquid the trading market for the debentures
will be.
We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the SEC a
registration statement under the Securities Act relating to, any additional
shares of our common stock, or securities convertible into or exchangeable or
exercisable for any shares of our common stock, or publicly disclose our
intention to make any offer, sale, pledge or disposition or filing, without the
prior written consent of Credit Suisse First Boston Corporation for a period of
90 days after the date of this prospectus supplement.
These restrictions do not apply to the issuance of the debentures or to
common stock issued upon conversion of the debentures, issuances of common
stock upon the exercise of existing warrants or options, grants of employee
stock options under existing plans, issuances of common stock pursuant to
existing employee or director compensation, incentive or benefit plans or
arrangements, issuances of common stock under the CSXDirectInvestSM plan, the
filing of any shelf registration statement or a registration statement related
to any existing stock option plan or compensation, incentive or benefit plan or
arrangement, or the issuance of securities as consideration pursuant to an
acquisition.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be
required to make in that respect.
Certain of the underwriters have performed investment banking or financial
advisory services for us, for which they have received customary fees and
commissions, and expect to provide these services to us in the future, for
which they also expect to receive customary fees and commissions. J.P. Morgan
Securities Inc. is an affiliate of the trustee.
In connection with the offering the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Over-allotment involves sales by the underwriters of an aggregate
principal amount of debentures in excess of the aggregate principal
amount of debentures the underwriters are obligated to purchase, which
creates a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the principal amount of the debentures over-allotted by the
underwriters is not greater than the aggregate principal amount at
maturity of the debentures that they may purchase in the over-allotment
option. In a naked short position, the aggregate principal amount at
maturity of the debentures involved is greater than the aggregate
principal amount of the debentures in the over-allotment option. The
underwriters may close out any short position by either exercising their
over-allotment option and/or purchasing debentures in the open market.
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. Syndicate covering transactions involve purchases of the debentures in
the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of debentures
to close out the short position, the underwriters will consider, among
other things, the price of the debentures available for purchase in the
open market as compared to the price at which they may purchase the
debentures through the over-allotment option. If the underwriters sell
more debentures than could be covered by the over-allotment option, a
naked short position, that position can only be closed out by buying
debentures in the open market. A naked short position is more likely to
be created if the underwriters are concerned that there may be downward
pressure on the price of the debentures in the open market after pricing
that could adversely affect investors who purchase in the offering.
. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the debentures originally sold by the
syndicate member are purchased in a stabilizing transaction or a
syndicate covering transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
debentures or preventing or retarding a decline in the market price of the
debentures. As a result the price of the debentures may be higher than the
price that might otherwise exist in the open market. These transactions, if
commenced, may be discontinued at any time.
The prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the debentures in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of debentures are made. Any resale of the debentures in Canada must be
made under applicable securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to
seek legal advice before any resale of the debentures.
Representations of Purchasers
By purchasing debentures in Canada and accepting a purchase confirmation a
purchaser is representing to us and the dealer from whom the purchase
confirmation is received that
. the purchaser is entitled under applicable provincial securities laws to
purchase the debentures without the benefit of a prospectus qualified
under those securities laws,
. where required by law, that the purchaser is purchasing as principal and
not as agent, and
. the purchaser has reviewed the text above under the caption "Resale
Restrictions".
Rights of Action (Ontario Purchasers)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the United States federal securities laws.
S-42
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named in
this prospectus may be located outside of Canada and, as a result, it may not
be possible for Canadian purchasers to effect service of process within Canada
upon the issuer or those persons. All or a substantial portion of the assets of
the issuer and those persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or those
persons in Canada or to enforce a judgement obtained in Canadian courts against
the issuer or those persons outside of Canada.
Taxation and Eligibility for Investment
Canadian purchasers of debentures should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the
debentures in their particular circumstances and about the eligibility of the
debentures for investment by the purchaser under relevant Canadian legislation.
LEGAL MATTERS
Certain legal matters in connection with the offering of the debentures will
be passed upon for CSX by McGuireWoods LLP, Richmond, Virginia, and for the
underwriters by Shearman & Sterling, New York, New York. Robert L. Burrus, Jr.,
a partner of McGuireWoods LLP, is a director of CSX. As of October 11, 2001,
lawyers of McGuireWoods LLP owned approximately 20,000 shares of CSX common
stock.
S-43
PROSPECTUS
$1,000,000,000
[LOGO OF CSX CORPORATION APPEARS HERE]
One James Center
901 East Cary Street
Richmond, Virginia 23219
(804) 782-1400
DEBT SECURITIES, TRUST PREFERRED SECURITIES (AND RELATED GUARANTEE AND
AGREEMENT AS TO EXPENSES AND LIABILITIES), COMMON STOCK, PREFERRED STOCK,
DEPOSITARY SHARES AND SECURITIES WARRANTS
----------------
We may sell from time to time, in one or more offerings:
. debt securities
. trust preferred securities, related guarantee and agreement as to
expenses and liabilities
. common stock
. preferred stock
. depositary shares
. warrants for debt securities, common stock or preferred stock
----------------
The total offering price of these securities, in the aggregate, will not
exceed $1,000,000,000. We will provide specific terms of these securities in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated May 17, 2001.
TABLE OF CONTENTS
About This Prospectus..................................................... 2
Where You Can Find More Information....................................... 3
CSX Corporation........................................................... 4
CSX Capital Trust I....................................................... 5
Forward-Looking Statements................................................ 6
Ratio of Earnings to Fixed Charges........................................ 6
Use of Proceeds........................................................... 7
Description of Debt Securities............................................ 8
Additional Terms of Subordinated Debt Securities.......................... 21
Description of Trust Preferred Securities................................. 23
Description of the Guarantee.............................................. 32
Relationship Among the Trust Preferred Securities, the Guarantee and the
Subordinated Debt Securities Held by the Trust........................... 35
Accounting Treatment...................................................... 36
Description of Capital Stock.............................................. 36
Description of Depositary Shares.......................................... 41
Description of Securities Warrants........................................ 42
Plan of Distribution...................................................... 43
Legal Opinions............................................................ 44
Experts................................................................... 44
ABOUT THIS PROSPECTUS
This prospectus is part of a shelf registration statement that CSX
Corporation filed with the Securities and Exchange Commission. Under the shelf
registration statement, CSX may sell any combination of the securities
described in this prospectus in one or more offerings up to a total dollar
amount of $1,000,000,000. For further information about our business and the
securities, you should refer to the registration statement and its exhibits.
The exhibits to the registration statement and the documents we incorporate by
reference contain the full text of certain contracts and other important
documents summarized in this prospectus. Since these summaries may not contain
all the information that you may find important in deciding whether to purchase
the securities CSX may offer, you should review the full text of those
documents. The registration statement can be obtained from the SEC as indicated
under the heading "Where You Can Find More Information."
This prospectus provides you with a general description of the securities CSX
may offer. Each time CSX sells securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. Material United States federal income tax considerations will also be
discussed in the applicable prospectus supplement. The prospectus supplement
may also add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together with
additional information described under the heading "Where You Can Find More
Information".
2
WHERE YOU CAN FIND MORE INFORMATION
CSX files annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. You may
also read and copy these documents at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The SEC allows CSX to incorporate by reference the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. CSX
incorporates by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), until CSX sells all of
the securities.
. Annual Report on Form 10-K for the fiscal year ended December 29, 2000;
. Quarterly Report on Form 10-Q and Form 10-Q/A for the fiscal quarter
ended March 30, 2001;
. Current Reports on Form 8-K filed with the SEC on January 31, 2001,
March 12, 2001 and May 4, 2001; and
. The description of CSX common stock contained in our Registration
Statement on Form 8-B (File No. 1-8022) filed with the SEC on September
25, 1980; and the description of the Rights (described below) contained
in our Registration Statement on Form 8-A (File No.1-8022) filed with
the SEC on May 29, 1998 and Form 8-A/A (File No. 1-8022) filed with the
SEC on June 28, 2000.
You may request a copy of any filings referred to above, at no cost, by
contacting CSX at the following address: Alan A. Rudnick, Vice President--
General Counsel and Corporate Secretary, CSX Corporation, One James Center, 901
East Cary Street, Richmond, Virginia 23219, telephone number (804) 782-1400.
You should rely only on the information contained or incorporated by
reference in this prospectus and any prospectus supplement. CSX has not
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. CSX
will not make an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information
appearing in this prospectus, as well as information CSX previously filed with
the SEC and incorporated by reference in this prospectus, is accurate only as
of the date on the front cover of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since that
date.
3
CSX CORPORATION
CSX, incorporated in Virginia in 1978 and headquartered in Richmond,
Virginia, operates the largest rail network in the eastern United States and
also provides intermodal, domestic container shipping and international
terminal services. CSX's goal, advanced at each of our business units, is to
provide efficient, competitive transportation and related services for our
customers and to deliver superior value to our shareholders. Unless the context
indicates otherwise, references in this prospectus to CSX are to CSX
Corporation and our consolidated subsidiaries.
CSX Transportation Inc. ("CSXT")
CSXT is the largest rail network in the eastern United States, providing rail
freight transportation over a network of more than 23,400 route miles in 23
states, the District of Columbia and two Canadian provinces. Headquartered in
Jacksonville, Florida, CSXT accounted for 74% of CSX's operating revenue and
76% of operating income in 2000.
CSX Intermodal Inc. ("CSXI")
CSXI is the nation's only transcontinental intermodal transportation service
provider, operating a network of dedicated intermodal facilities across North
America. The CSXI network runs approximately 500 dedicated trains between our
48 terminals every week. CSXI accounted for 14% of CSX's operating revenue and
12% of operating income in 2000. CSXI's headquarters are located in
Jacksonville, Florida.
CSX Lines LLC
CSX Lines was formed in 1999 to operate the domestic liner business of Sea-
Land Service, Inc. ("Sea-Land"), consisting of a fleet of 16 vessels and 27,000
containers serving the trade between ports on the United States mainland and
Alaska, Guam, Hawaii and Puerto Rico. The domestic container-shipping business
was retained by CSX when Sea-Land's international container-shipping operations
were sold to A.P. Moller-Maersk Line ("Maersk") in December 1999. CSX Lines
accounted for 8% of CSX's operating revenue and broke even on operating income
in 2000. CSX Lines is headquartered in Charlotte, North Carolina.
CSX World Terminals LLC
CSX World Terminals, formed in 1999, operates container-freight terminal
facilities at 12 locations in Hong Kong, China, Australia, Europe and the
Dominican Republic. These operations also were retained by CSX when Sea-Land's
international liner business was sold to Maersk. CSX World Terminals accounted
for 4% of CSX's operating revenue and 9% of operating income in 2000. CSX World
Terminals is headquartered in Charlotte, North Carolina.
Non-Transportation
Our non-transportation holdings include: the AAA Five-Diamond hotel, The
Greenbrier, in White Sulphur Springs, West Virginia; CSX Real Property Inc.,
which is responsible for sales, leasing and development of CSX-owned
properties; and a majority interest in Yukon Pacific Corporation, which is
promoting construction of the Trans-Alaska Gas System to transport Alaska's
North Slope natural gas to Valdez for export to Asian markets.
4
CSX CAPITAL TRUST I
CSX Capital Trust I (the "Trust") is a statutory business trust newly formed
under Delaware law by us, as sponsor for the Trust, and Chase Manhattan Bank
USA, National Association, who will serve as trustee in the State of Delaware
for the purpose of complying with the provisions of the Delaware Business Trust
Act. The trust agreement for the Trust will be amended and restated
substantially in the form filed as an exhibit to the registration statement,
effective when securities of the Trust are initially issued. The amended trust
agreement will be qualified as an indenture under the Trust Indenture Act of
1939. The Trust exists for the exclusive purposes of:
. issuing two classes of trust securities, trust preferred securities and
trust common securities, which together represent undivided beneficial
interests in the assets of the Trust;
. investing the gross proceeds of the trust securities in our subordinated
debt securities;
. making distributions; and
. engaging in only those other activities necessary, advisable or
incidental to the purposes listed above.
Subordinated debt securities of CSX will be the sole assets of the Trust, and
our payments under those subordinated debt securities and the agreement as to
expenses and liabilities will be the sole revenue of the Trust. No separate
financial statements of the Trust are included in this prospectus. CSX
considers that those financial statements would not be material to holders of
the trust preferred securities because the Trust has no independent operations
and the purpose of the Trust is as described above. The Trust is not required
to file annual, quarterly or special reports with the SEC.
The principal place of business of the Trust will be c/o CSX Corporation, One
James Center, 901 East Cary Street, Richmond, Virginia 23219, telephone number
(804) 782-1400.
5
FORWARD-LOOKING STATEMENTS
This prospectus, including documents incorporated by reference, contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange
Act. Estimates, forecasts and other forward-looking statements included, or
incorporated by reference, in this prospectus are based on many assumptions
about complex economic and operating factors with respect to industry
performance, general business and economic conditions and other matters that
cannot be predicted accurately and that are subject to contingencies over which
CSX has no control. Forward-looking statements are subject to uncertainties and
other factors that may cause actual results to differ materially from the
views, beliefs, and projections expressed in those statements. The words
"believe," "expect," "anticipate," "project," and similar expressions signify
forward-looking statements.
Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the
following possibilities:
. costs and operating difficulties related to the integration of the
Conrail rail system may not be eliminated or resolved within the time
frame currently anticipated and revenue and cost synergies expected from
the integration of Conrail may not be fully realized or realized within
the time frame anticipated;
. general economic or business conditions, either nationally or
internationally, an increase in fuel prices, a tightening of the labor
market or changes in demands of organized labor resulting in higher
wages, or increased benefits or other costs or disruption of operations
may adversely affect our businesses;
. legislative or regulatory changes, including possible enactment of
initiatives to re-regulate the rail industry, may adversely affect our
businesses;
. possible additional consolidation of the rail industry in the near
future may adversely affect our operations and business; and
. changes may occur in the securities and capital markets.
You are cautioned not to place undue reliance on any forward-looking
statements made by or on behalf of CSX. Forward-looking statements speak only
as of the date the statement was made. We undertake no obligation to update or
revise any forward-looking statement.
RATIO OF EARNINGS TO FIXED CHARGES
CSX's consolidated ratio of earnings to fixed charges for each of the fiscal
periods indicated is as follows:
For the Three
Months Ended For the Fiscal Years Ended
----------------- --------------------------------------------
Mar. 30, Mar. 31, Dec. 29, Dec. 31, Dec. 25, Dec. 26, Dec. 27,
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
Ratio of earnings to
fixed charges
(a)(b)(c)(d).......... 1.2x 1.1x 1.4x 1.1x 1.7x 2.5x 3.9x
--------
(a) For purposes of computing the ratio of earnings to fixed charges, earnings
represent earnings from operations before income taxes plus interest
expense related to indebtedness, amortization of debt discount, the
interest portion of fixed rent expense, and undistributed earnings of
affiliates accounted for using the equity method. Fixed charges include
interest on indebtedness (whether expensed or capitalized), amortization of
debt discount and the interest portion of fixed rent expense.
6
(b) The year ended December 27, 1996 was prior to the acquisition of CSX's
interests in Conrail Inc. and therefore does not include the increased
interest expense incurred by CSX subsequent to that transaction.
(c) All periods' calculations have been restated to exclude from earnings the
activities of CSX's contract logistics segment which was sold in September
2000.
(d) Pretax earnings for certain periods include the effects of various non-
recurring gains and charges. These items are summarized as follows:
(1) A pretax loss of $360 million related to an impairment charge related
to the sale of assets comprised of the international liner business of
Sea-Land and certain container terminal facilities is included in the
year ended December 31, 1999.
(2) A pretax gain of $27 million from the sale of CSX's investment in Grand
Teton Lodge Company, a wholly-owned subsidiary located in Jackson Hole,
Wyoming is included in the year ended December 31, 1999.
(3) A pretax gain of $154 million primarily from the conveyance of CSX's
barge subsidiary to a joint venture is included for the year ended
December 25, 1998.
(4) A restructuring credit of $30 million to reverse a charge taken in 1995
related to a restructuring plan is included for the year ended December
25, 1998.
Excluding these items, the ratio of earnings to fixed charges for each of the
periods indicated below would have been:
Fiscal year ended December 31, 1999 1.5x
Fiscal year ended December 25, 1998 1.4x
USE OF PROCEEDS
CSX will use the net proceeds from the sale of the securities for general
corporate purposes, which may include reduction or refinancing of outstanding
indebtedness, capital expenditures, working capital requirements,
implementation of work force reductions, improvements in productivity and other
cost reductions at our major transportation units, and redemptions and
repurchases of certain outstanding securities. CSX has not specifically
allocated the proceeds to those purposes as of the date of this prospectus. The
precise amount and timing of the application of proceeds from the sale of
securities will depend upon the funding requirements of CSX and the
availability and cost of other funds at the time of the sale. Allocation of the
proceeds of a particular series of securities, or the principal reasons for the
offering if no allocation has been made, will be described in the applicable
prospectus supplement.
7
DESCRIPTION OF DEBT SECURITIES
CSX may issue debt securities either separately, or together with, or upon
the conversion of or in exchange for, other securities. The debt securities
will be either senior unsecured obligations or subordinated unsecured
obligations of CSX. Senior debt securities will be issued under a senior
indenture dated as of August 1, 1990 between CSX and The Chase Manhattan Bank,
as trustee, as supplemented by a First Supplemental Indenture dated as of June
15, 1991, a Second Supplemental Indenture dated as of May 6, 1997 and a Third
Supplemental Indenture dated as of April 22, 1998, as further supplemented and
amended from time to time. Subordinated debt securities will be issued under a
subordinated indenture to be entered into between CSX and The Chase Manhattan
Bank, as trustee, as further supplemented and amended from time to time. Copies
of the senior indenture and a form of the subordinated indenture have been
incorporated by reference in, or filed as exhibits to, the registration
statement of which this prospectus is a part. The senior indenture and the
subordinated indenture are sometimes referred to collectively as the
"indentures". The trustee under the senior indenture and the trustee under the
subordinated indenture are sometimes referred to collectively as the
"trustees".
The summary of certain provisions of the indentures and the debt securities
set forth below and the summary of certain terms of a particular series of debt
securities set forth in the applicable prospectus supplement do not purport to
be complete and are subject to and are qualified in their entirety by reference
to all of the provisions of the indentures, which provisions of the indentures
(including defined terms) are incorporated in this description of debt
securities by reference.
The debt securities may be issued from time to time in one or more series of
senior debt securities and one or more series of subordinated debt securities.
Neither indenture limits the aggregate principal amount of debt securities that
may be issued under it and provides that debt securities of any series may be
issued under that indenture up to an aggregate principal amount that may be
authorized from time to time by CSX. The terms of each series of debt
securities will be established by or pursuant to a resolution of our Board of
Directors and set forth or determined in the manner provided in an officer's
certificate or by a supplemental indenture. The following description of debt
securities summarizes certain general terms and provisions of the series of
debt securities to which any prospectus supplement may relate. The particular
terms of each series of debt securities offered by a prospectus supplement or
prospectus supplements will be described in the prospectus supplement or
prospectus supplements relating to that series.
Unless otherwise indicated, currency amounts in this prospectus and any
prospectus supplement are stated in United States dollars.
General
The prospectus supplement for a particular series of debt securities will
describe the specific terms of that series, including (where applicable):
. the title of the debt securities;
. any limit on the aggregate principal amount of the debt securities;
. whether the debt securities are to be issuable as registered debt
securities or bearer debt securities or both, whether any of the debt
securities are to be issuable initially in temporary global form and
whether any of the debt securities are to be issuable in permanent
global form;
. the price or prices (expressed as a percentage of the aggregate
principal amount of the debt securities) at which the debt securities
will be issued;
. the date or dates on which the debt securities will mature;
8
. the rate or rates per annum at which the debt securities will bear
interest, if any, or the formula pursuant to which the rate or rates
will be determined, and the date or dates from which interest will
accrue;
. the interest payment dates on which interest on the debt securities will
be payable and the regular record date for any interest payable on any
registered debt securities on any interest payment date;
. the person to whom any interest on any registered debt securities of the
series will be payable, if other than the person in whose name that debt
security (or one or more predecessor debt securities) is registered at
the close of business on the regular record date for that interest, the
manner in which, or the person to whom, any interest on any bearer debt
security of the series will be payable, if otherwise than upon
presentation and surrender of the applicable coupons, and the extent to
which, or the manner in which, any interest payable on a temporary
global debt security on an interest payment date will be paid if other
than in the manner provided in the relevant indenture and the extent to
which, or the manner in which, any interest payable on a permanent
global debt security on an interest payment date will be paid;
. each office or agency where, subject to the terms of the indenture as
described below under "Payment and Paying Agents," the principal of and
any premium and interest on the debt securities will be payable and each
office or agency where, subject to the terms of the indenture as
described below under "Form, Exchange, Registration and Transfer," the
debt securities may be presented for registration of transfer or
exchange;
. the period or periods within which and the price or prices at which the
debt securities may, pursuant to any optional redemption provisions, be
redeemed, in whole or in part, at our option and the other detailed
terms and conditions of any optional redemption provisions;
. the obligation, if any, of CSX to redeem or purchase the debt securities
pursuant to any sinking fund or analogous provisions or at the option of
the holder of the debt securities and the period or periods within which
and the price or prices at which the debt securities will be redeemed or
purchased, in whole or in part, pursuant to that obligation, and the
other detailed terms and conditions of that obligation;
. the denominations in which any registered debt securities will be
issuable, if other than denominations of $1,000 and any integral
multiple thereof, and the denomination or denominations in which bearer
debt securities will be issuable, if other than denominations of $5,000;
. the currency or currencies, including currency units, in which payment
of principal of and any premium and interest on the debt securities will
be payable if other than U.S. dollars and the ability, if any, of CSX or
the holders of the debt securities to have payments made in any currency
other than those in which the debt securities are stated to be payable;
. whether the amount of payments of principal of, premium, if any, and
interest, if any, on the debt securities may be determined with
reference to an index and the manner in which those amounts will be
determined;
. the portion of the principal amount of the debt securities which shall
be payable upon acceleration if other than the full principal amount;
. any limitation on the application of the terms of the indenture
described below under "Discharge, Defeasance and Covenant Defeasance";
. the terms, if any, upon which the debt securities may be convertible
into or exchangeable for other securities;
9
. whether the debt securities will be senior debt securities or
subordinated debt securities; and
. any other terms of the debt securities not inconsistent with the
provisions of the relevant indenture.
The prospectus supplement will also describe any special provisions for the
payment of additional amounts relating to specified taxes, assessments or other
governmental charges in respect of the debt securities of that series and
whether CSX has the option to redeem the affected debt securities rather than
pay those additional amounts.
As used in this prospectus and any prospectus supplement relating to the
offering of any debt securities, references to the principal of and premium, if
any, and interest, if any, on the debt securities will be deemed to include
mention of the payment of additional amounts, if any, required by the terms of
the debt securities.
If the purchase price of any debt securities is payable in a currency other
than U.S. dollars or if principal of, or premium, if any, or interest, if any,
on any of the debt securities is payable in any currency other than U.S.
dollars, the specific terms and other information with respect to those debt
securities and that currency will be specified in the related prospectus
supplement.
Debt securities of a series may also be issued under the indenture upon the
exercise of debt warrants issued by CSX. See "Description of Debt Warrants."
The indentures do not contain any provisions that may afford the holders of
debt securities of any series protection in the event of a highly leveraged
transaction or other transaction that may occur in connection with a takeover
attempt resulting in a decline in the credit rating of the debt securities.
Those provisions, if applicable to the debt securities of any series, will be
described in the related prospectus supplement.
Form, Exchange, Registration and Transfer
Unless otherwise indicated in the applicable prospectus supplement, each
series of debt securities will be issued in registered form only, without
coupons. The indentures, however, provide that CSX may also issue debt
securities in bearer form only, or in both registered and bearer form. Bearer
debt securities shall not be offered, sold, resold or delivered in connection
with their original issuance in the United States or to any United States
person other than offices located outside the United States of certain United
States financial institutions. Purchasers of bearer debt securities will be
subject to certification procedures and may be affected by certain limitations
under United States tax laws. Those procedures and limitations will be
described in the prospectus supplement relating to the offering of the bearer
debt securities. Unless otherwise indicated in an applicable prospectus
supplement or prospectus supplements, bearer debt securities will have interest
coupons attached. The indentures also will provide that debt securities of a
series may be issuable in temporary or permanent global form. See "Global Debt
Securities."
At the option of the holder, subject to the terms of the relevant indenture,
registered debt securities of any series will be exchangeable for other
registered debt securities of the same series of any authorized denominations
and of a like aggregate principal amount and tenor. In addition, if debt
securities of any series are issuable as both registered debt securities and
bearer debt securities, at the option of the holder, subject to the terms of
the relevant indenture, bearer debt securities (with all unmatured coupons,
except as provided below, and with all matured coupons in default) of that
series will be exchangeable for registered debt securities of the same series
of any authorized denominations and of a like aggregate principal amount and
tenor. Bearer debt securities surrendered in exchange for registered debt
securities between a regular record date or a special record date and the
relevant date for payment of interest shall be surrendered without the coupon
10
relating to that date for payment of interest and interest will not be payable
in respect of the registered debt security issued in exchange for that bearer
debt security, but will be payable only to the holder of the coupon when due in
accordance with the terms of the indenture. Registered debt securities,
including registered debt securities received in exchange for bearer debt
securities, may not be exchanged for bearer debt securities. Each bearer debt
security and coupon will bear a legend to the following effect:
"Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue
Code."
Debt securities may be presented for exchange as provided above, and
registered debt securities may be presented for registration of transfer (with
the form of transfer duly executed), at the office of the security registrar or
at the office of any transfer agent designated by CSX for that purpose with
respect to any series of debt securities and referred to in an applicable
prospectus supplement, without a service charge and upon payment of any taxes
and other governmental charges as described in the relevant indenture. The
transfer or exchange will be effected upon the records of the security
registrar or the transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. CSX has
appointed the trustee as security registrar. If a prospectus supplement refers
to any transfer agent (in addition to the security registrar) initially
designated by CSX with respect to any series of debt securities, CSX may at any
time rescind the designation of that transfer agent or approve a change in the
location through which that transfer agent acts, except that, if debt
securities of a series are issuable solely as registered debt securities, CSX
will be required to maintain a transfer agent in each place of payment for that
series and, if debt securities of a series are issuable as bearer debt
securities, CSX will be required to maintain (in addition to the security
registrar) a transfer agent in a place of payment for that series located
outside the United States and its possessions. CSX may at any time designate
additional transfer agents with respect to any series of debt securities.
In the event of any partial redemption, CSX will not be required to
. issue, register the transfer of or exchange any debt security during a
period beginning at the opening of business 15 days before any selection
for redemption of debt securities of like tenor and of the series of
which that debt security is a part, and ending at the close of business
on the earliest date on which the relevant notice of redemption is
deemed to have been given to all holders of debt securities of like
tenor and of the series to be redeemed;
. register the transfer of or exchange any registered debt security so
selected for redemption, in whole or in part, except the unredeemed
portion of any debt security being redeemed in part; or
. exchange any bearer debt security so selected for redemption, except to
exchange that bearer debt security for a registered debt security of
that series and like tenor which is immediately surrendered for
redemption.
Payment and Paying Agents
Unless otherwise indicated in an applicable prospectus supplement, principal
of and any premium and interest on bearer debt securities will be payable,
subject to any applicable laws and regulations, at the offices of paying agents
outside the United States and its possessions that CSX may designate from time
to time or, at the option of the holder, by check or by transfer to an account
maintained by the payee with a financial institution located outside the United
States and its possessions. Unless otherwise indicated in an applicable
prospectus supplement, payment of interest on a bearer debt security on any
interest payment date will be made only against surrender to the paying agent
of the coupon relating to that interest payment date. No payment with respect
to any
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bearer debt security will be made at any office or agency of CSX in the United
States or its possessions or by check mailed to any address in the United
States or its possessions or by transfer to any account maintained with a
financial institution located in the United States or its possessions. However,
payments of principal of and any premium and interest on bearer debt securities
denominated and payable in U.S. dollars will be made at the office of the
paying agent in the Borough of Manhattan, The City of New York, if (but only
if) payment of the full amount in U.S. dollars at all offices or agencies
outside the United States and its possessions is illegal or effectively
precluded by exchange controls or other similar restrictions.
Unless otherwise indicated in an applicable prospectus supplement, principal
of and any premium and interest on registered debt securities will be payable,
subject to any applicable laws and regulations, at the office of the paying
agent or paying agents that CSX may designate from time to time, except that at
our option payment of any interest may be made by check mailed to the address
of the person entitled to that payment as that address appears in the security
register. Unless otherwise indicated in an applicable prospectus supplement,
payment of interest on a registered debt security on any interest payment date
will be made to the person in whose name that registered debt security (or
predecessor debt security) is registered at the close of business on the
regular record date for that interest.
Unless otherwise indicated in an applicable prospectus supplement, the
corporate trust office of the trustee in The City of New York will be
designated as a paying agent for CSX for payments with respect to debt
securities of each series which are issuable solely as registered debt
securities and as a paying agent for payments with respect to debt securities
of each series (subject to the limitations described above in the case of
bearer debt securities) which are issuable solely as bearer debt securities or
as both registered debt securities and bearer debt securities. Any paying
agents outside the United States and its possessions and any other paying
agents in the United States or its possessions initially designated by CSX for
the debt securities of each series will be named in the applicable prospectus
supplement. CSX may at any time designate additional paying agents or rescind
the designation of any paying agent or approve a change in the office through
which any paying agent acts, except that if debt securities of a series are
issuable solely as registered debt securities, CSX will be required to maintain
a paying agent in each place of payment for that series and, if debt securities
of a series are issuable as bearer debt securities, CSX will be required to
maintain
. a paying agent in the Borough of Manhattan, The City of New York for
payments with respect to any registered debt securities of the series
(and for payments with respect to bearer debt securities of the series
in the circumstances described above, but not otherwise), and
. a paying agent in a place of payment located outside the United States
and its possessions where debt securities of that series and any related
coupons may be presented and surrendered for payment;
provided, however, that if the debt securities of that series are listed on The
International Stock Exchange of the United Kingdom and the Republic of Ireland
Limited, the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and its possessions and that stock exchange requires
CSX to do so, CSX will maintain a paying agent in London, Luxembourg or any
other required city located outside the United States and its possessions, as
the case may be, for the debt securities of that series.
All moneys paid by CSX to a paying agent for the payment of the principal of
and any premium or interest on any debt security of any series which remain
unclaimed at the end of two years after that principal, premium or interest has
become due and payable will be repaid to CSX and the holder of that debt
security or any related coupon will after that time look only to CSX for
payment of that principal, premium or interest.
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Ranking of Debt Securities; Holding Company Structure
The senior debt securities will be unsecured unsubordinated obligations of
CSX and will rank on a parity in right of payment with all other unsecured and
unsubordinated indebtedness of CSX. The subordinated debt securities will be
unsecured obligations of CSX and will be subordinated in right of payment to
all existing and future senior indebtedness (as defined below) of CSX. See
"Additional Terms of Subordinated Debt Securities--Subordination."
The debt securities are obligations exclusively of CSX. CSX is a holding
company, substantially all of whose consolidated assets are held by our
subsidiaries. Accordingly, the cash flow of CSX and the consequent ability to
service our debt, including the debt securities, are largely dependent upon the
earnings of those subsidiaries.
Because CSX is a holding company, the debt securities will be effectively
subordinated to all existing and future indebtedness, trade payables,
guarantees, lease obligations and letter of credit obligations of CSX's
subsidiaries. Therefore, CSX's rights and the rights of our creditors,
including the holders of the debt securities, to participate in the assets of
any subsidiary upon the latter's liquidation or reorganization will be subject
to the prior claims of that subsidiary's creditors, except to the extent that
CSX may itself be a creditor with recognized claims against the subsidiary, in
which case the claims of CSX would still be effectively subordinate to any
security interest in, or mortgages or other liens on, the assets of that
subsidiary and would be subordinate to any indebtedness of that subsidiary
senior to that held by CSX. Although certain debt instruments to which CSX and
our subsidiaries are parties impose limitations on the incurrence of additional
indebtedness, both CSX and our subsidiaries retain the ability to incur
substantial additional indebtedness and lease and letter of credit obligations.
Global Debt Securities
The debt securities of a series may be issued in whole or in part in the form
of one or more global securities that will be deposited with, or on behalf of,
a depositary identified in the prospectus supplement relating to that series.
Global debt securities may be issued in either registered or bearer form and in
either temporary or permanent form. Unless and until it is exchanged in whole
or in part for individual certificates evidencing debt securities in definitive
form, a global debt security may not be transferred except as a whole by the
depositary for that global debt security to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee of the
depositary or by the depositary or any nominee to a successor of the depositary
or a nominee of the successor.
The specific terms of the depositary arrangement with respect to a series of
global debt securities and certain limitations and restrictions relating to a
series of global bearer debt securities will be described in the prospectus
supplement relating to that series.
Redemption and Repurchase
The debt securities of any series may be redeemable at our option, may be
subject to mandatory redemption pursuant to a sinking fund or otherwise, or may
be subject to repurchase by us at the option of the holders, in each case upon
the terms, at the times and at the prices set forth in the applicable
prospectus supplement.
Conversion and Exchange
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for our common stock, preferred stock, depositary shares
or other debt securities will be set forth in the applicable prospectus
supplement. Those terms may include provisions for conversion or exchange,
either mandatory, at the option of the holders or at our option.
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Certain Covenants and Agreements of CSX
The indentures do not limit the amount of indebtedness or lease obligations
that may be incurred by CSX and our subsidiaries. The indentures do not contain
provisions that would give holders of the debt securities the right to require
CSX to repurchase their debt securities in the event of a decline in the credit
rating of our debt securities resulting from a takeover, recapitalization or
similar restructuring.
Covenant in the Senior Indenture--Limitation on Liens on Stock of Our
Principal Subsidiaries.
The following covenant will be applicable to senior debt securities but not
to subordinated debt securities. The senior indenture provides that CSX may
not, nor may it permit any subsidiary to, create, assume, incur or suffer to
exist any mortgage, pledge, lien, encumbrance, charge or security interest of
any kind upon any stock or indebtedness, whether owned on the date of the
senior indenture or acquired later, of any principal subsidiary, to secure any
obligation (other than the senior debt securities) of CSX, any subsidiary or
any other person, unless all of the outstanding senior debt securities (and
other outstanding debt securities issued from time to time pursuant to the
senior indenture) will be directly secured equally and ratably with that
obligation. This provision does not restrict any other property of CSX or our
subsidiaries. The senior indenture defines "obligation" as indebtedness for
money borrowed or indebtedness evidenced by a bond, note, debenture or other
evidence of indebtedness; "principal subsidiary" as CSXT and SL Service, Inc.;
and "subsidiary" as a corporation a majority of the outstanding voting stock of
which is owned, directly or indirectly, by CSX or one or more subsidiaries, or
by CSX and one or more subsidiaries. The indentures do not prohibit the sale by
CSX or any subsidiary of any stock or indebtedness of any subsidiary, including
any principal subsidiary.
Provision in Both Indentures--Consolidation, Merger and Sale of Assets.
The following provision will be applicable to both senior debt securities and
subordinated debt securities. Each indenture provides that CSX may, without the
consent of the holders of any of the outstanding debt securities of a series,
consolidate with, merge into or transfer our assets substantially as an
entirety to any corporation organized under the laws of any domestic or foreign
jurisdiction, provided that
. the successor corporation assumes, by a supplemental indenture, CSX's
obligations on the debt securities of each series and under the
indenture,
. after giving effect to the transaction, no event of default, and no
event which, after notice or lapse of time, or both, would become an
event of default will have occurred and be continuing, and
. CSX delivers to the relevant trustee an officer's certificate and an
opinion of counsel each stating that the transaction and supplemental
indenture, if any, comply with the applicable article of the indenture
and that all conditions precedent in the indenture relating to the
transaction have been complied with.
Events of Default
An "event of default" with respect to the debt securities of any series is
defined in the relevant indenture as being a:
. failure to pay principal of or any premium on any of the debt securities
of that series when due;
. failure to pay any interest on any debt security of that series when
due, continued for 30 days;
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. failure to deposit any sinking fund payment, when due, in respect of any
debt security of that series;
. failure to perform any other covenant of CSX in the relevant indenture
(other than a covenant included in that indenture solely for the benefit
of series of debt securities other than that series) continued for 90
days after written notice as provided in the indenture;
. certain events of bankruptcy, insolvency or reorganization of CSX; or
. any other event of default provided with respect to debt securities of
that series.
No event of default with respect to any particular series of debt securities
necessarily constitutes an event of default with respect to any other series of
debt securities. Each indenture provides that the trustee may withhold notice
to the holders of the debt securities of any series of the occurrence of a
default with respect to the debt securities of that series (except a default in
payment of principal, premium, if any, interest, if any, or sinking fund
payments, if any) if the trustee considers it in the interest of the holders to
do so.
Subject to the provisions of the Trust Indenture Act requiring each trustee,
during an event of default under the relevant indenture, to act with the
requisite standard of care, and to the provisions of the relevant indenture
relating to the duties of the trustee in case an event of default occurs and is
continuing, a trustee will be under no obligation to exercise any of its rights
or powers under the indenture at the request or direction of any of the holders
of debt securities of any series or any related coupons unless those holders
offer to the trustee reasonable indemnity. Subject to the provisions for the
indemnification of the relevant trustee, the holders of a majority in aggregate
principal amount of the outstanding debt securities of any series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the relevant trustee, or exercising any trust or power
conferred on the trustee, with respect to debt securities of that series.
If an event of default with respect to debt securities of any series at the
time outstanding occurs and is continuing, either the relevant trustee or the
holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series may declare the principal of all those outstanding
debt securities to be due and payable immediately. At any time after a
declaration of acceleration with respect to debt securities of any series has
been made but before a judgment or decree for payment of money due has been
obtained by the relevant trustee, the holders of a majority in aggregate
principal amount of outstanding debt securities of that series may rescind any
declaration of acceleration and its consequences, if all payments due (other
than those due as a result of acceleration) have been made and all events of
default have been cured or waived.
No holder of any debt securities of any series or any related coupons will
have any right to institute any proceeding with respect to the relevant
indenture or for any remedy under the indenture, unless that holder has
previously given to the relevant trustee written notice of a continuing event
of default with respect to debt securities of that series, the holders of at
least 25% in aggregate principal amount of the outstanding debt securities of
that series have made written request, and offered reasonable indemnity, to the
relevant trustee to institute the proceeding as trustee, and the trustee has
not received from the holders of a majority in aggregate principal amount of
the outstanding debt securities of that series a direction inconsistent with
that request and has failed to institute the proceeding within 60 days.
However, these limitations do not apply to a suit instituted by a holder of an
outstanding debt security of that series for enforcement of payment of the
principal of, or any premium or interest on, that debt security on or after the
respective due dates expressed in that debt security.
CSX is required to furnish to the relevant trustee annually a statement as to
performance or fulfillment of covenants, agreements or conditions in the
relevant indenture and as to the absence of default.
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Meetings, Modification and Waiver
Each indenture contains provisions permitting CSX and the relevant trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the outstanding debt securities of each series issued under
that indenture and affected by a modification or amendment (voting as one
class), to modify or amend any of the provisions of that indenture or of those
debt securities or the rights of the holders of those debt securities under
that indenture, provided that no modification or amendment will, without the
consent of each holder of each outstanding debt security affected by that
modification or amendment:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any debt security, or reduce the principal
amount of or the rate of interest on or any premium payable upon the
redemption of any debt security, or change any obligation of CSX to pay
additional amounts (except as contemplated and permitted by the
indenture), or reduce the amount of the principal of an original issue
discount security that would be due and payable upon a declaration of
acceleration of the maturity of that security or change the coin or
currency in which any debt security or any premium or interest on any
debt security is payable, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity of any debt
security (or, in the case of redemption, on or after the redemption
date),
. reduce the percentage in principal amount of the debt securities, the
consent of the holders of which is required for any modification or
amendment or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the indenture or certain defaults
under the indenture and their consequences) or reduce the requirements
for a quorum or voting at a meeting of holders of the debt securities,
. change any obligation of CSX to maintain an office or agency in the
places and for the purposes required by the indenture,
. solely in the case of the subordinated indenture, modify any of the
provisions of the subordinated indenture relating to subordination of
the subordinated debt securities or the definition of senior
indebtedness in a manner adverse to the holders of the subordinated debt
securities, or
. modify any of the above provisions (except as permitted by the
indenture).
Each indenture also contains provisions permitting CSX and the relevant
trustee, without the consent of the holders of the debt securities issued under
the indenture, to modify or amend the indenture in order, among other things:
. to add any additional events of default or add to the covenants of CSX
for the benefit of the holders of all or any series of debt securities
issued under the indenture;
. to establish the form or terms of debt securities of any series;
. to cure any ambiguity, to correct or supplement any provision in the
indenture which may be inconsistent with any other provision in the
indenture, or to make any other provisions with respect to matters or
questions arising under the indenture which shall not adversely affect
the interests of the holders of any debt securities issued under the
indenture in any material respect; or
. to change or eliminate any of the provisions of the indenture, provided
that the change or elimination will become effective only when there is
no debt security outstanding of any series issued under the indenture
created prior to the execution of the supplemental indenture which is
entitled to the benefit of that provision.
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The holders of at least a majority in aggregate principal amount of the
outstanding debt securities of a series may, on behalf of the holders of all
the debt securities of that series, waive, insofar as that series is concerned,
compliance by CSX with certain restrictive provisions of the indenture,
including the covenant described above under "--Certain Covenants and
Agreements of CSX--Covenant in the Senior Indenture--Limitation on Liens on
Stock of Our Principal Subsidiaries." The holders of not less than a majority
in aggregate principal amount of the outstanding debt securities of a series
may, on behalf of all holders of debt securities of that series and any related
coupons, waive any past default under the indenture with respect to debt
securities of that series, except a default (a) in the payment of principal of
or any premium or interest on any debt security of that series or (b) in
respect of a covenant or provision of the indenture which cannot be modified or
amended without the consent of the holder of each outstanding debt security of
the series affected.
Each indenture provides that in determining whether the holders of the
requisite principal amount of the outstanding debt securities have given any
request, demand, authorization, direction, notice, consent or waiver under that
indenture or are present at a meeting of holders of debt securities for quorum
purposes,
(1) the principal amount of an original issue discount debt security that
will be deemed to be outstanding will be the amount of the principal
that would be due and payable as of the date of the determination upon
acceleration of the maturity thereof,
(2) the principal amount of a debt security denominated in a foreign
currency or currency unit will be the U.S. dollar equivalent,
determined as of the date of original issuance of that debt security,
of the principal amount of that debt security or, in the case of an
original issue discount debt security, the U.S. dollar equivalent,
determined as of the date of original issuance of that debt security,
of the amount determined as provided in (1) above and
(3) any debt security owned by CSX or any other obligor on that debt
security or any affiliate of CSX or other obligor will be deemed not to
be outstanding.
Each indenture contains provisions for convening meetings of the holders of
debt securities of any or all series. A meeting may be called at any time by
the relevant trustee, and also, upon request, by CSX or the holders of at least
10% in aggregate principal amount of the outstanding debt securities of that
series, in each case upon notice given in accordance with "Notices" below and
the provisions of the relevant indenture. Except for any consent which must be
given by the holder of each outstanding debt security that would be affected as
described above, any resolution presented at a meeting, or adjourned meeting
duly reconvened, at which a quorum (as described below) is present may be
adopted by the affirmative vote of the holders of a majority in principal
amount of the outstanding debt securities of that series; provided, however,
that, except for any consent which must be given by the holder of each
outstanding debt security that would be affected, as described above, any
resolution with respect to any consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding
debt securities of a series may be adopted at a meeting, or an adjourned
meeting duly reconvened, at which a quorum is present only by the affirmative
vote of the holders of not less than the specified percentage in principal
amount of the outstanding debt securities of that series.
Any resolution passed or decision taken at any meeting of holders of debt
securities of any series duly held in accordance with the relevant indenture
will be binding on all holders of debt securities of that series and the
related coupons. The quorum required for any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding debt securities
of a series; provided, however, that if any action is to be taken at that
meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding
debt securities of a series, the persons holding or representing that specified
percentage in principal amount of the outstanding debt securities of the series
will constitute a quorum.
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Notices
Except as otherwise provided in the indenture, notices to holders of bearer
debt securities will be given by publication at least twice in a daily
newspaper of general circulation in The City of New York and in any other city
or cities as may be specified in those debt securities. Notices to holders of
registered debt securities will be given by mail to the addresses of those
holders as they appear in the security register.
Title
Title to any bearer debt securities (including bearer debt securities in
temporary global form and in permanent global form) and any related coupons
will pass by delivery. CSX, the trustee and any agent of CSX or the trustee may
treat the bearer of any bearer debt security and the bearer of any coupon and
the registered owner of any registered debt security as the absolute owner
(whether or not that debt security or coupon is overdue and notwithstanding any
notice to the contrary) for the purpose of making payment and for all other
purposes.
Replacement of Debt Securities
Any mutilated debt security or a debt security with a mutilated coupon will
be replaced by CSX at the expense of the holder upon surrender of that debt
security to the relevant trustee. Debt securities or coupons that become
destroyed, lost or stolen will be replaced by CSX at the expense of the holder
upon delivery to the relevant trustee of evidence of the destruction, loss or
theft satisfactory to CSX and the relevant trustee; in the case of any coupon
which becomes destroyed, lost or stolen, that coupon will be replaced by
issuance of a new debt security in exchange for the debt security to which the
coupon appertains. In the case of a destroyed, lost or stolen debt security or
coupon, an indemnity satisfactory to the trustee and CSX may be required at the
expense of the holder of that debt security or coupon before a replacement debt
security will be issued.
Discharge, Defeasance and Covenant Defeasance
Upon the direction of CSX, either indenture will generally cease to be of
further effect with respect to any series of debt securities issued under that
indenture specified by CSX (subject to the survival of certain provisions of
that indenture) when
. CSX has delivered to the relevant trustee for cancellation all debt
securities issued under that indenture or
. all debt securities issued under that indenture not previously delivered
to the relevant trustee for cancellation have become due and payable, or
are by their terms to become due and payable within one year or are to
be called for redemption within one year, and CSX has deposited with the
relevant trustee as trust funds the entire amount sufficient to pay and
discharge at stated maturity or upon redemption the entire indebtedness
on all debt securities issued under that indenture
(and if, in either case, CSX has paid or caused to be paid all other sums
payable under the relevant indenture with respect to the debt securities of
that series by CSX and CSX has delivered an officer's certificate and an
opinion of counsel each stating that the requisite conditions have been
complied with).
In addition, unless otherwise provided in an applicable prospectus
supplement, CSX may elect with respect to any series of debt securities either
(1) to defease and be discharged from any and all obligations with respect
to those debt securities (except as otherwise provided in the relevant
indenture) ("defeasance") or
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(2) to be released from our obligations with respect to those debt
securities described above under "--Certain Covenants and Agreements of
CSX--Covenant in the Senior Indenture--Limitation on Liens on Stock of
Our Principal Subsidiaries" (which covenant appears only in the senior
indenture) and certain other restrictive covenants in the relevant
indenture and, if indicated in the applicable prospectus supplement,
our obligations with respect to any other covenant applicable to the
debt securities of that series ("covenant defeasance").
If we exercise our defeasance option with respect to any series of debt
securities, payment of those debt securities may not be accelerated because of
an event of default. If we exercise our covenant defeasance option with respect
to any series of debt securities, payment of those debt securities may not be
accelerated because of an event of default related to the covenants noted under
clause (2) of the immediately preceding paragraph. We may exercise our
defeasance option with respect to those debt securities even though we may have
previously exercised our covenant defeasance option.
If CSX effects covenant defeasance with respect to any debt securities and
those debt securities are declared due and payable because of the occurrence of
any event of default other than an event of default with respect to the
covenant described above under "--Certain Covenants and Agreements of CSX--
Covenant in the Senior Indenture--Limitation on Liens on Stock of Our Principal
Subsidiaries" (which covenant appears only in the senior indenture and which
would no longer be applicable to those debt securities after the covenant
defeasance) or with respect to any other covenant as to which there has been
covenant defeasance, the amount of monies and/or government obligations
deposited with the applicable trustee to effect the covenant defeasance may not
be sufficient to pay amounts due on those debt securities at the time of any
acceleration resulting from the event of default. However, we would remain
liable to make payment of those amounts due at the time of acceleration.
We may exercise our defeasance option or our covenant defeasance option with
respect to any series of debt securities, only if
(1) CSX irrevocably deposits in trust with the trustee cash and/or U.S.
government obligations for the payment of principal, premium, if any,
and interest with respect to those debt securities to maturity or
redemption, as the case may be, and we deliver to the relevant trustee
a certificate from a nationally recognized firm of independent public
accountants expressing their opinion that the payments of principal and
interest when due and without reinvestment on the deposited U.S.
government obligations plus any deposited money without investment will
provide cash at the times and in the amounts as will be sufficient to
pay the principal, premium, if any, and interest when due with respect
to all those debt securities to maturity or redemption, as the case may
be,
(2) no event of default with respect to the debt securities of that series
has occurred and is continuing
. on the date of the deposit or
. with respect to certain bankruptcy defaults, at any time during the
period ending on the 123rd day after the date of the deposit,
(3) the defeasance or covenant defeasance does not result in the trust
arising from that deposit to constitute, unless it is qualified as, a
regulated investment company under the Investment Company Act of 1940,
as amended,
(4) the defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the relevant indenture or
any other agreement or instrument to which we are a party or by which
we are bound,
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(5) CSX delivers to the trustee an opinion of counsel to the effect that
the holders of the debt securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of the
defeasance or covenant defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if the defeasance or covenant
defeasance had not occurred, and
(6) CSX delivers to the trustee an officer's certificate and an opinion of
counsel, each stating that all conditions precedent to the defeasance
and discharge of the debt securities as contemplated by the indenture
have been complied with.
The opinion of counsel, with respect to defeasance, referred to in clause (5)
above, must refer to and be based upon a ruling of the Internal Revenue Service
or a change in applicable United States federal income tax law occurring after
the date of the relevant indenture.
The trustee must hold in trust cash or U.S. government obligations deposited
with it as described above and must apply the deposited cash and the proceeds
from deposited U.S. government obligations to the payment of principal,
premium, if any, and interest with respect to the debt securities.
The applicable prospectus supplement may further describe the provisions, if
any, permitting or restricting defeasance or covenant defeasance with respect
to the debt securities of a particular series.
Governing Law
The indentures and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
Concerning the Trustees
The Trust Indenture Act of 1939 contains limitations on the rights of a
trustee, should it become a creditor of CSX, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
those claims, as security or otherwise. Each trustee is permitted to engage in
other transactions with CSX and our subsidiaries from time to time, provided
that if the trustee acquires any conflicting interest it must eliminate the
conflict upon the occurrence of an event of default under the relevant
indenture, or else resign.
CSX and certain of our subsidiaries may from time to time maintain lines of
credit, and have other customary banking and commercial relationships, with The
Chase Manhattan Bank, the senior trustee and the subordinated trustee. The
Chase Manhattan Bank acts as trustee under the senior indenture and another
indenture pursuant to which we issued our Series A Medium-Term Notes, Series B
Medium-Term Notes, Series C Medium Term Notes, 7.00% Notes due 2002, 7.05%
Debentures due 2002, 7.25% Debentures due 2004, 9.00% Debentures due 2006,
7.45% Debentures due 2007, 6.25% Notes due 2008, 6.75% Notes due 2011, 7.90%
Debentures due 2017, 8.625% Debentures due 2022, 8.10% Debentures due 2022,
7.95% Debentures due 2027, 6.95% Debentures due 2027, 7.25% Debentures due 2027
and 8.30% Debentures due 2032.
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ADDITIONAL TERMS OF SUBORDINATED DEBT SECURITIES
Additional Covenants Applicable to Subordinated Debt Securities
Under the subordinated indenture, or under one or more supplemental
indentures to the subordinated indenture, we will:
. maintain 100% ownership of the common securities of any trust to which
subordinated debt securities have been issued while those subordinated
debt securities remain outstanding; and
. pay to any trust to which subordinated debt securities have been issued
any taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States or
any other taxing authority on that trust, so that the net amounts
received and retained by that trust (after paying any taxes, duties,
assessments or other governmental charges) will be not less than that
trust would have received had no such taxes, duties, assessments or
other governmental charges been imposed.
Option to Extend Interest Payment Period
If so indicated in the prospectus supplement, we can defer interest payments
by extending the interest payment period for the number of consecutive
extension periods specified in the applicable prospectus supplement. Other
details regarding the extension period will also be specified in the applicable
prospectus supplement. No extension period may extend beyond the maturity of
the applicable subordinated debt securities. At the end of the extension
period(s), we will pay all interest then accrued and unpaid, together with
interest compounded quarterly at the rate for the applicable subordinated debt
securities, to the extent permitted by applicable law.
During any extension period, we will not make distributions related to our
capital stock, including dividends, redemptions, repurchases, liquidation
payments, or guarantee payments. Also, we will not make any payments, redeem or
repurchase any debt securities of equal or junior rank to the subordinated debt
securities or make any guarantee payments on any such debt securities. We may,
however, make the following types of distributions:
. dividends paid in common stock;
. dividends in connection with the implementation of a shareholder rights
plan;
. payments to a trust holding securities of the same series under a
guarantee; or
. repurchases, redemptions or other acquisitions of shares of our capital
stock in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers,
directors or consultants.
Subordination
The payment of the principal of, premium, if any, and interest, if any, on
the subordinated debt securities will be subordinated, to the extent and in the
manner set forth in the subordinated indenture, in right of payment to the
prior payment in full of all senior indebtedness which may at any time and from
time to time be outstanding. Unless otherwise provided in the applicable
prospectus supplement with respect to an issue of subordinated debt securities,
in the event of any distribution of our assets upon any dissolution, winding
up, liquidation, reorganization or other similar proceedings of CSX,
. all senior indebtedness shall first be paid in full, or that payment
shall be provided for, before any payment on account of the principal
of, or premium, if any, or interest, if any, on the subordinated debt
securities is made, and
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. if any payment or distribution of our assets is received by the
subordinated trustee or the holders of any of the subordinated debt
securities before all senior indebtedness is paid in full, that payment
or distribution will be paid over to the holders of senior indebtedness
or on their behalf for application to the payment of all senior
indebtedness remaining unpaid until all senior indebtedness has been
paid in full or that payment provided for, after giving effect to any
concurrent payment or distribution to the holders of senior
indebtedness.
Subject to the payment in full of all senior indebtedness upon any
distribution of our assets, the holders of the subordinated debt securities
will be subrogated to the rights of the holders of the senior indebtedness to
the extent of payments made to the holders of senior indebtedness out of the
distributive share of the subordinated debt securities.
By reason of subordination of the subordinated debt securities, if there is
any distribution of our assets upon dissolution, winding up, liquidation,
reorganization or other similar proceedings of CSX,
. holders of senior indebtedness will be entitled to be paid in full
before payments may be made on the subordinated debt securities and the
holders of subordinated debt securities will be required to pay over
their share of that distribution to the holders of senior indebtedness
until all senior indebtedness is paid in full, and
. creditors of CSX who are neither holders of subordinated debt securities
nor holders of senior indebtedness may recover less, ratably, than
holders of senior indebtedness and may recover more, ratably, than the
holders of the subordinated debt securities.
Furthermore, subordination may result in a reduction or elimination of payments
to the holders of subordinated debt securities. The subordinated indenture
provides that the subordination provisions in the subordinated indenture will
not apply to any money and securities held in trust pursuant to the discharge,
defeasance and covenant defeasance provisions of the subordinated indenture
(see "--Discharge, Defeasance and Covenant Defeasance" above).
The subordinated indenture also provides that no payment on account of the
principal of, or premium, if any, sinking funds, if any, or interest, if any,
on the subordinated debt securities will be made unless full payment of amounts
then due for the principal of, premium, if any, sinking funds, if any, and
interest, if any, on senior indebtedness has been made or duly provided for.
Senior indebtedness means, with respect to any series of subordinated debt
securities, the principal, premium, interest and any other payment in respect
of any of the following:
(1) any liability of CSX
. for borrowed money or under any reimbursement obligation relating to
a letter of credit, or
. evidenced by a bond, note, debenture or similar instrument, or
. for obligations to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, or
. for the payment of money relating to a capitalized lease obligation,
or
. for the payment of money under any swap agreement;
(2) any liability of others described in the preceding clause (1) that CSX
has guaranteed or that is otherwise our legal liability; and
(3) any deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (1) and (2) above,
unless, in the instrument creating or evidencing any liability referred to in
clause (1) or (2) above or any deferral, renewal, extension or refunding
referred to in clause (3) above or pursuant to which the
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same is outstanding, it is expressly provided that the liability, deferral,
renewal, extension or refunding is subordinate in right of payment to all other
indebtedness of CSX or is not senior or prior in right of payment to the
subordinated debt securities or ranks pari passu with or subordinate to the
subordinated debt securities in right of payment; and provided that the
subordinated debt securities shall not constitute senior indebtedness. Swap
agreements are defined as any financial agreement designed to manage our
exposure to fluctuations in interest rates, currency exchange rates or
commodity prices, including without limitation swap agreements, option
agreements, cap agreements, floor agreements, collar agreements and forward
purchase agreements.
Senior indebtedness will be entitled to the benefits of the subordination
provisions in the subordinated indenture irrespective of the amendment,
modification or waiver of any term of the senior indebtedness. We may not amend
the subordinated indenture to change the subordination of any outstanding
subordinated debt securities without the consent of each holder of senior
indebtedness that the amendment would adversely affect.
If this prospectus is being delivered in connection with the offering of a
series of subordinated debt securities, the accompanying prospectus supplement
or the information incorporated by reference in this prospectus will set forth
the approximate amount of senior indebtedness outstanding as of a recent date.
The subordinated indenture does not limit the amount of senior indebtedness
that we may issue.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The following is a summary of the principal terms of the trust preferred
securities. The form of amended trust agreement is filed as an exhibit to the
registration statement of which this prospectus forms a part, or is
incorporated by reference. The terms of the trust preferred securities will
include those stated in the amended trust agreement and those made part of the
amended trust agreement by the Trust Indenture Act.
General
The Trust will exist until terminated as provided in its amended trust
agreement. Except under certain circumstances, CSX will be entitled to appoint,
remove, or replace trustees, who will conduct the business and affairs of the
Trust. The trustees of the Trust will consist of:
. two employees, officers or affiliates of CSX as administrative trustees;
. a financial institution unaffiliated with CSX that will act as property
trustee and as indenture trustee for purposes of the Trust Indenture
Act, under the terms set forth in a prospectus supplement; and
. one trustee with its principal place of business or who resides in the
State of Delaware and who will act under the terms set forth in a
prospectus supplement.
The amended trust agreement will authorize the administrative trustees to
issue, on behalf of the Trust, two classes of trust securities, trust preferred
securities and trust common securities, each of which will have the terms
described in this prospectus and in the applicable prospectus supplement. CSX
will own all of the trust common securities. The trust common securities will
rank equally in right of payment, and payments will be made on the trust common
securities, proportionately with the trust preferred securities. However, if an
event of default occurs and is continuing under the amended trust agreement,
the rights of the holders of the trust common securities to payment of
distributions and payments upon liquidation, redemption and otherwise, will be
subordinated to the rights of the holders of the trust preferred securities.
CSX will acquire, directly or indirectly, trust common securities in a total
liquidation amount of approximately 3% of the total capital of the Trust.
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The proceeds from the sale of the trust preferred securities will be used by
the Trust to purchase our subordinated debt securities. These subordinated debt
securities will be held in trust by the property trustee for the benefit of the
holders of the trust securities. CSX will guarantee the payments of
distributions and payments on redemption or liquidation with respect to the
trust preferred securities, but only to the extent the Trust has funds
available to make those payments and has not made the payments. See
"Description of the Guarantee."
The assets of the Trust available for distribution to the holders of trust
preferred securities will be limited to payments from us under the subordinated
debt securities held by the Trust. If we fail to make a payment on the
subordinated debt securities, the Trust will not have sufficient funds to make
related payments, including distributions, on its trust preferred securities.
The guarantee, when taken together with our obligations under the
subordinated debt securities, the subordinated indenture and the amended trust
agreement, will provide a full and unconditional guarantee of amounts due on
the trust preferred securities issued by the Trust.
The trust preferred securities will have the terms, including distributions,
redemption, voting, liquidation rights and other preferred, deferred or other
special rights or restrictions that will be described in the amended trust
agreement or made part of the amended trust agreement by the Trust Indenture
Act or the Delaware Business Trust Act. The terms of the trust preferred
securities will mirror the terms of the subordinated debt securities held by
the Trust. In other words, the distribution rate and the distribution payment
dates and other payment dates for the trust preferred securities will
correspond to the interest rate and interest payment dates and other payment
dates on the subordinated debt securities. Holders of trust preferred
securities have no preemptive or similar rights.
Provisions of a Particular Series
The Trust may issue only one series of trust preferred securities. The
applicable prospectus supplement will set forth the principal terms of the
trust preferred securities that will be offered, including:
. the name of the trust preferred securities;
. the liquidation amount and number of trust preferred securities issued;
. the annual distribution rate(s) or method of determining such rate(s),
the payment date(s) and the record dates used to determine the holders
who are to receive distributions;
. the date from which distributions will be cumulative;
. the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions on which the trust preferred
securities will be purchased or redeemed, in whole or in part;
. the terms and conditions, if any, upon which the subordinated debt
securities and the related guarantee may be distributed to holders of
those trust preferred securities;
. any securities exchange on which the trust preferred securities will be
listed;
. whether the trust preferred securities are to be issued in book-entry
form and represented by one or more global certificates, and if so, the
depositary for those global certificates and the specific terms of the
depositary arrangements; and
. any other relevant rights, preferences, privileges, limitations or
restrictions of the trust preferred securities.
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The interest rate and interest and other payment dates of each series of
subordinated debt securities issued to a trust will correspond to the rate at
which distributions will be paid and the distribution and other payment dates
of the trust preferred securities of that trust.
Extensions
CSX has the right under the subordinated indenture to defer payments of
interest on the subordinated debt securities by extending the interest payment
period from time to time on the subordinated debt securities. The
administrative trustees will give the holders of the trust preferred securities
notice of any extension period upon their receipt of notice from us. If
distributions are deferred, the deferred distributions and accrued interest
will be paid to holders of record of the trust preferred securities as they
appear on the books and records of the Trust on the record date next following
the termination of such deferral period. See "Additional Terms of Subordinated
Debt Securities--Option To Extend Interest Payment Period."
Distributions
Distributions on the trust preferred securities will be made on the dates
payable to the extent that the Trust has funds available for the payment of
distributions in the property account held by the property trustee. The Trust's
funds available for distribution to the holders of the trust securities will be
limited to payments received from us on the subordinated debt securities. CSX
has guaranteed the payment of distributions out of monies held by the Trust to
the extent set forth under "Description of the Guarantee."
Distributions on the trust preferred securities will be payable to the
holders named on the securities register of the Trust at the close of business
on the record dates, which, as long as the trust preferred securities remain in
book-entry only form, will be one business day prior to the relevant payment
dates. Distributions will be paid through the property trustee who will hold
amounts received in respect of the subordinated debt securities in the property
account for the benefit of the holders of the trust securities. In the event
that the trust preferred securities do not continue to remain in book- entry
only form, the relevant record dates will conform to the rules of any
securities exchange on which the trust preferred securities are listed and, if
none, the administrative trustees will have the right to select relevant record
dates, which will be more than 14 days but less than 60 days prior to the
relevant payment dates. In the event that any date on which distributions are
to be made on the trust preferred securities is not a business day, then
payment of the distributions payable on that date will be made on the next
succeeding day which is a business day and without any interest or other
payment in respect of that delay, except that, if that business day is in the
next succeeding calendar year, the payment will be made on the immediately
preceding business day, in each case with the same force and effect as if made
on the record date.
Mandatory Redemption of Trust Preferred Securities
The trust preferred securities have no stated maturity date, but will be
redeemed upon the maturity of the subordinated debt securities or to the extent
the subordinated debt securities are redeemed prior to maturity. The
subordinated debt securities will mature on the date specified in the
applicable prospectus supplement and may be redeemed at any time, in whole but
not in part, in certain circumstances upon the occurrence of a Tax Event or an
Investment Company Event as described under "Special Event Redemption."
Upon the maturity of the subordinated debt securities, the proceeds of their
repayment will simultaneously be applied to redeem all the outstanding trust
securities at the applicable redemption price. Upon the redemption of the
subordinated debt securities, either at our option or as a result of a Tax
Event or an Investment Company Event, the proceeds from the redemption will
simultaneously
25
be applied to redeem trust securities having a total liquidation amount equal
to the total principal amount of the subordinated debt securities so redeemed
at the redemption price; provided, that holders of trust securities will be
given not less than 20 nor more than 60 days' notice of the redemption. In the
event that fewer than all of the outstanding trust securities are to be
redeemed, the trust securities will be redeemed proportionately.
Special Event Redemption
Both a Tax Event and an Investment Company Event constitute Special Events
for purposes of the redemption provisions described in the preceding paragraph.
A Tax Event means that the administrative trustees have received an opinion
of independent tax counsel experienced in those matters to the effect that, as
a result of any amendment to, change or announced proposed change in:
. the laws or regulations of the United States or any of its political
subdivisions or taxing authorities, or
. any official administrative pronouncement, action or judicial decision
interpreting or applying those laws or regulations,
which amendment or change becomes effective or proposed change, pronouncement,
action or decision is announced on or after the date the trust preferred
securities are issued and sold, there is more than an insubstantial risk that:
. the Trust is or within 90 days would be subject to U.S. federal income
tax with respect to income accrued or received on the subordinated debt
securities,
. interest payable to the Trust on the subordinated debt securities is not
or within 90 days would not be deductible, in whole or in part, by CSX
for U.S. federal income tax purposes, or
. the Trust is or within 90 days would be subject to a material amount of
other taxes, duties or other governmental charges.
An Investment Company Event means that the administrative trustees have
received an opinion of a nationally recognized independent counsel to the
effect that, as a result of an amendment to or change in the Investment Company
Act or regulations thereunder on or after the date the trust preferred
securities are issued and sold, there is more than an insubstantial risk that
the Trust is or will be considered an investment company and be required to be
registered under the Investment Company Act.
Redemption Procedures
The Trust may not redeem fewer than all the outstanding trust securities
unless all accrued and unpaid distributions have been paid on all trust
securities for all distribution periods terminating on or before the date of
redemption. In the event that fewer than all of the outstanding trust
securities are to be redeemed, the trust securities will be redeemed
proportionately.
If the Trust gives a notice of redemption in respect of the trust securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time, on
the redemption date, and if CSX has paid to the property trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
subordinated debt securities, the property trustee will irrevocably deposit
with the depositary funds sufficient to pay the applicable redemption price and
will give the depositary irrevocable instructions and authority to pay the
redemption price to the holders of the trust preferred securities, and the
paying agent will pay the applicable redemption price to the holders of the
trust
26
common securities by check. If notice of redemption has been given and funds
deposited as required, then, immediately prior to the close of business on the
date of the deposit, distributions will cease to accrue and all rights of
holders of trust preferred securities called for redemption will cease, except
the right of the holders of the trust preferred securities to receive the
redemption price but without interest on the redemption price. In the event
that any date fixed for redemption of trust preferred securities is not a
business day, then payment of the redemption price payable on that date will be
made on the next succeeding day that is a business day, without any interest or
other payment in respect of any such delay, except that, if that business day
falls in the next calendar year, payment will be made on the immediately
preceding business day. In the event that payment of the redemption price in
respect of trust preferred securities is improperly withheld or refused and not
paid either by the Trust or by CSX under the guarantee, distributions on the
trust preferred securities will continue to accrue at the then applicable rate
from the original redemption date to the date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the redemption price.
Subject to the foregoing and applicable law, including, without limitation,
U.S. federal securities laws, we or our subsidiaries may at any time, and from
time to time, purchase outstanding trust preferred securities by tender, in the
open market or by private agreement.
Conversion or Exchange Rights
The terms on which the trust preferred securities are convertible into or
exchangeable for common stock or our other securities will be contained in the
applicable prospectus supplement. Those terms will include provisions as to
whether conversion or exchange is mandatory, at the option of the holder or at
our option, and may include provisions under which the number of shares of
common stock or our other securities to be received by the holders of trust
preferred securities would be subject to adjustment.
Distribution of the Subordinated Debt Securities
CSX will have the right at any time to dissolve the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, to cause subordinated debt securities to be distributed to the
holders of the trust preferred securities in a total stated principal amount
equal to the total stated liquidation amount of the trust preferred securities
then outstanding. Prior to any such dissolution, we will obtain any required
regulatory approvals. The right to dissolve the Trust and distribute the
subordinated debt securities will be conditioned on our receipt of an opinion
rendered by an independent tax counsel that the distribution would not result
in the recognition of gain or loss for federal income tax purposes by the
holders.
Liquidation Distribution upon Dissolution
The amended trust agreement will state that the Trust will be dissolved:
. upon our bankruptcy;
. upon the filing of a certificate of dissolution or its equivalent with
respect to CSX;
. upon the filing of a certificate of cancellation with respect to the
Trust after obtaining the consent of at least a majority in liquidation
amount of the trust preferred securities, voting together as a single
class;
. 90 days after the revocation of our charter, but only if the charter is
not reinstated during that 90-day period;
27
. upon the distribution of the related subordinated debt securities
directly to the holders of the trust securities;
. upon the redemption of all of the trust securities; or
. upon entry of a court order for the dissolution of CSX or the Trust.
In the event of a dissolution, after the Trust pays all amounts owed to
creditors, the holders of the trust preferred securities will be entitled to
receive:
. cash equal to the total liquidation amount of each trust preferred
security specified in an accompanying prospectus supplement, plus
accumulated and unpaid distributions to the date of payment, or
. subordinated debt securities in a total principal amount equal to the
total liquidation amount of the trust preferred securities.
If the Trust cannot pay the full amount due on its trust securities because
insufficient assets are available for payment, then the amounts payable by the
Trust on its trust securities will be paid proportionately. However, if an
event of default under the related amended trust agreement occurs, the total
amounts due on the trust preferred securities will be paid before any
distribution on the trust common securities. Under certain circumstances
involving the dissolution of the Trust, subject to obtaining any required
regulatory approval, subordinated debt securities will be distributed to the
holders of the trust securities in liquidation of the Trust.
Trust Enforcement Events
An event of default under the subordinated indenture relating to the
subordinated debt securities will be an event of default under the amended
trust agreement (a "Trust Enforcement Event"). See "Description of Debt
Securities--Events of Default."
In addition, the voluntary or involuntary dissolution, winding up or
termination of the Trust is also a Trust Enforcement Event, except in
connection with:
. the distribution of the subordinated debt securities to holders of the
trust securities of the Trust,
. the redemption of all of the trust securities of the Trust, and
. mergers, consolidations or amalgamations permitted by the amended trust
agreement of the Trust.
Under the amended trust agreement, the holder of the trust common securities
will be deemed to have waived any Trust Enforcement Event with respect to the
trust common securities until all Trust Enforcement Events with respect to the
trust preferred securities have been cured, waived or otherwise eliminated.
Until all Trust Enforcement Events with respect to the trust preferred
securities have been so cured, waived, or otherwise eliminated, the property
trustee will be deemed to be acting solely on behalf of the holders of the
trust preferred securities and only the holders of the trust preferred
securities will have the right to direct the property trustee with respect to
certain matters under the amended trust agreement and the subordinated
indenture. In the event that any Trust Enforcement Event with respect to the
trust preferred securities is waived by the holders of the trust preferred
securities as provided in the amended trust agreement, under the amended trust
agreement the holders of trust common securities have agreed that the waiver
also constitutes a waiver of the Trust Enforcement Event with respect to the
trust common securities for all purposes under the amended trust agreement
without any further act, vote or consent of the holders of trust common
securities.
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CSX and the administrative trustees must file annually with the property
trustee a certificate evidencing compliance with all the applicable conditions
and covenants under the amended trust agreement.
Upon the occurrence of a Trust Enforcement Event the property trustee, as the
sole holder of the subordinated debt securities, will have the right under the
subordinated indenture to declare the principal of, interest and premium, if
any, on the subordinated debt securities to be immediately due and payable.
If a property trustee fails to enforce its rights under the amended trust
agreement or the subordinated indenture to the fullest extent permitted by law
and subject to the terms of the amended trust agreement and the subordinated
indenture, any holder of trust preferred securities may sue us, or seek other
remedies, to enforce the property trustee's rights under the amended trust
agreement or the subordinated indenture without first instituting a legal
proceeding against the property trustee or any other person. If a Trust
Enforcement Event occurs and is continuing as a result of our failure to pay
principal of or interest or premium, if any, on the subordinated debt
securities when payable, then a holder of the trust preferred securities may
directly sue us or seek other remedies, to collect its proportionate share of
payments owed. See "Relationship Among the Trust Preferred Securities, the
Guarantee and the Subordinated Debt Securities Held by the Trust."
Removal and Replacement of Trustees
Only the holders of trust common securities have the right to remove or
replace the trustees of the Trust, except that while an event of default in
respect of the subordinated debt securities has occurred or is continuing, the
holders of a majority of the trust preferred securities will have this right.
The resignation or removal of any trustee and the appointment of a successor
trustee will be effective only on the acceptance of appointment by the
successor trustee in accordance with the provisions of the amended trust
agreement.
Mergers, Consolidations or Amalgamations of the Trust
The Trust may not consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to any other corporation or other body (each, a "Merger Event"),
except as described below. The Trust may, with the consent of a majority of its
administrative trustees and without the consent of the holders of its trust
securities, consolidate, amalgamate, merge with or into, or be replaced by
another trust, provided that:
. the successor entity either
. assumes all of the obligations of the Trust relating to its trust
securities, or
. substitutes other securities for the trust securities that are
substantially similar to the trust securities, so long as the
successor securities rank the same as the trust securities for
distributions and payments upon liquidation, redemption and
otherwise;
. CSX acknowledges a trustee of the successor entity, who has the same
powers and duties as the property trustee of the Trust, as the holder of
the subordinated debt securities;
. the trust preferred securities are listed, or any successor securities
will be listed, upon notice of issuance, on the same securities exchange
or other organization that the trust preferred securities are then
listed;
. the Merger Event does not cause the trust preferred securities or
successor securities to be downgraded by any nationally recognized
rating agency;
29
. the Merger Event does not adversely affect the rights, preferences and
privileges of the holders of the trust securities or successor
securities in any material way, other than with respect to any dilution
of the holders' interest in the new entity;
. the successor entity has a purpose identical to that of the Trust;
. prior to the Merger Event, CSX has received an opinion of counsel from a
nationally recognized law firm stating that
. the Merger Event does not adversely affect the rights of the holders
of the trust preferred securities or any successor securities in any
material way, other than with respect to any dilution of the
holders' interest in the new entity, and
. following the Merger Event, neither the Trust nor the successor
entity will be required to register as an investment company under
the Investment Company Act; and
. CSX guarantees the obligations of the successor entity under the
successor securities in the same manner as in the guarantee.
In addition, unless all of the holders of the trust preferred securities and
trust common securities approve otherwise, the Trust will not consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it,
if, in the opinion of a nationally recognized tax counsel experienced in such
matters, the transaction would cause the Trust or the successor entity to be
classified other than as a grantor trust for U.S. federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
The holders of trust preferred securities have no voting rights except as
discussed under "Mergers, Consolidations or Amalgamations of the Trust" and
"Description of the Guarantee--Amendments", and as otherwise required by law
and the amended trust agreement.
The amended trust agreement may be amended if approved by a majority of the
administrative trustees of the Trust. However, if any proposed amendment
provides for, or the administrative trustees otherwise propose to effect,
. any action that would adversely affect the powers, preferences or
special rights of the trust securities, whether by way of amendment to
the amended trust agreement or otherwise, or
. the dissolution, winding up or termination of the Trust other than under
the terms of its amended trust agreement,
then the holders of the trust preferred securities as a single class will be
entitled to vote on the amendment or proposal. In that case, the amendment or
proposal will only be effective if approved by at least a majority in
liquidation amount of the trust preferred securities affected by the amendment
or proposal.
No amendment may be made to an amended trust agreement if that amendment
would:
. cause the Trust to be characterized as other than a grantor trust for
U.S. federal income tax purposes;
. reduce or otherwise adversely affect the powers of the property trustee;
or
. cause the Trust to be deemed to be an investment company which is
required to be registered under the Investment Company Act.
30
The holders of a majority of the total liquidation amount of the trust
preferred securities have the right to:
. direct the time, method and place of conducting any proceeding for any
remedy available to the property trustee; or
. direct the exercise of any power conferred upon the property trustee
under the amended trust agreement, including the right to direct the
property trustee, as the holder of the subordinated debt securities, to:
. exercise the remedies available under the subordinated indenture
with respect to the subordinated debt securities,
. waive any event of default under the subordinated indenture that is
waivable, or
. cancel an acceleration of the principal of the subordinated debt
securities.
In addition, before taking any of the foregoing actions, the property trustee
must obtain an opinion of counsel stating that, as a result of that action, the
Trust will continue to be classified as a grantor trust for U.S. federal income
tax purposes.
As described in the form of amended trust agreement, holders of trust
preferred securities may vote on a change at a meeting or by written consent.
If a vote by the holders of trust preferred securities is taken or a consent
is obtained, any trust preferred securities owned by CSX or any of our
affiliates will, for purposes of the vote or consent, be treated as if they
were not outstanding, which will have the following consequences:
. we and any of our affiliates will not be able to vote on or consent to
matters requiring the vote or consent of holders of trust preferred
securities; and
. any trust preferred securities owned by CSX or any of our affiliates
will not be counted in determining whether the required percentage of
votes or consents has been obtained.
Information Concerning the Property Trustee
The Chase Manhattan Bank will be the property trustee. The Chase Manhattan
Bank will also be the guarantee trustee, the subordinated indenture trustee and
the senior indenture trustee. CSX and certain of our affiliates may from time
to time maintain deposit accounts and other banking relationships with The
Chase Manhattan Bank. The Chase Manhattan Bank also serves as trustee under
other indentures pursuant to which securities of CSX are outstanding. See
"Description of Debt Securities--Concerning the Trustees."
For matters relating to compliance with the Trust Indenture Act, the property
trustee will have all of the duties and responsibilities of an indenture
trustee under the Trust Indenture Act. The property trustee, other than during
the occurrence and continuance of a Trust Enforcement Event, undertakes to
perform only the duties that are specifically described in the amended trust
agreement and, upon a Trust Enforcement Event, must use the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or
her own affairs. Subject to this provision, the property trustee is under no
obligation to exercise any of the powers given it by the applicable amended
trust agreement at the request of any holder of trust preferred securities
unless it is offered reasonable security or indemnity against the costs,
expenses and liabilities that it might incur.
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Information Concerning the Delaware Trustee
Chase Manhattan Bank USA, National Association, will serve as trustee of the
Trust in the State of Delaware for the purpose of complying with the provisions
of the Delaware Business Trust Act. It is an affiliate of The Chase Manhattan
Bank which will serve as property trustee and in the other capacities described
above under "Information Concerning the Property Trustee."
Information Concerning the Administrative Trustees
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the Trust in a way that:
. will not cause it to be deemed to be an investment company required to
be registered under the Investment Company Act;
. will cause it to be classified as a grantor trust for U.S. federal
income tax purposes; and
. will cause the subordinated debt securities it holds to be treated as
indebtedness of CSX for U.S. federal income tax purposes.
CSX and the administrative trustees are authorized to take any action, so
long as it is not inconsistent with applicable law or the certificate of trust
or amended trust agreement, that we and the administrative trustees determine
to be necessary or desirable for those purposes.
DESCRIPTION OF THE GUARANTEE
CSX will execute the guarantee from time to time for the benefit of the
holders of the trust preferred securities.
The Chase Manhattan Bank will act as guarantee trustee under the guarantee.
The guarantee trustee will hold the guarantee for the benefit of the holders of
the trust preferred securities.
The following description of the guarantee is only a summary. The form of
guarantee is an exhibit to the registration statement.
General
CSX will irrevocably and unconditionally agree under the guarantee to pay the
guarantee payments that are defined below, to the extent specified in the
guarantee, to the holders of the trust preferred securities, to the extent that
the guarantee payments are not paid by or on behalf of the Trust. We are
required to pay the guarantee payments to the extent specified in the guarantee
regardless of any defense, right of set-off or counterclaim that we may have or
may assert against any person.
The following payments and distributions on the trust preferred securities of
the Trust are guarantee payments:
. any accrued and unpaid distributions required to be paid on the trust
preferred securities of the Trust, but only to the extent that the Trust
has funds legally and immediately available for those distributions;
. the redemption price for any trust preferred securities that the Trust
calls for redemption, including all accrued and unpaid distributions to
the redemption date, but only to the extent that the Trust has funds
legally and immediately available for the payment; and
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. upon a dissolution, winding-up or termination of the Trust, other than
in connection with the distribution of subordinated debt securities to
the holders of trust securities of the Trust or the redemption of all
the trust preferred securities of the Trust, the lesser of:
. the sum of the liquidation amount and all accrued and unpaid
distributions on the trust preferred securities of the Trust to the
payment date, to the extent that the Trust has funds legally and
immediately available for the payment; and
. the amount of assets of the Trust remaining available for
distribution to holders of the trust preferred securities of the
Trust in liquidation of the Trust.
We may satisfy our obligation to make a guarantee payment by making that
payment directly to the holders of the related trust preferred securities or by
causing the Trust to make the payment to those holders.
The guarantee will be a full and unconditional guarantee, subject to certain
subordination provisions, of the guarantee payments with respect to the trust
preferred securities from the time of issuance of the trust preferred
securities, except that the guarantee will only apply to the payment of
distributions and other payments on the trust preferred securities when the
Trust has sufficient funds legally and immediately available to make those
distributions or other payments.
If CSX does not make the required payments on the subordinated debt
securities that the property trustee holds under the Trust, the Trust will not
make the related payments on the trust preferred securities.
Subordination
Our obligations under the guarantee will be unsecured obligations. Those
obligations will rank:
. subordinate and junior in right of payment to certain other liabilities
of CSX, as described in the prospectus supplement;
. equal in priority with subordinated debt securities and similar
guarantees that CSX may issue or enter into in respect of the Trust or
any similar financing vehicle sponsored by CSX; and
. senior to our preferred and common stock.
CSX has no subordinated debt securities outstanding that will rank equal in
priority with the guarantee. CSX has common stock outstanding that will rank
junior to the guarantee.
The guarantee will be a guarantee of payment and not of collection. This
means that the guaranteed party may institute a legal proceeding directly
against us, as guarantor, to enforce its rights under the guarantee without
first instituting a legal proceeding against any other person or entity.
The terms of the trust preferred securities will provide that each holder of
the trust preferred securities, by accepting those trust preferred securities,
agrees to the subordination provisions and other terms of the guarantee.
Amendments
CSX may amend the guarantee without the consent of any holder of the trust
preferred securities to which the guarantee relates if the amendment does not
materially and adversely affect the rights of those holders. We may otherwise
amend the guarantee with the approval of the holders of at least 50% of the
outstanding trust preferred securities to which the guarantee relates.
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Termination
The guarantee will terminate and be of no further effect when:
. the redemption price of the trust preferred securities to which the
guarantee relates is fully paid;
. CSX distributes the related subordinated debt securities to the holders
of those trust preferred securities; or
. the amounts payable upon liquidation of the related Trust are fully
paid.
The guarantee will remain in effect or will be reinstated if at any time any
holder of the related trust preferred securities must restore payment of any
sums paid to that holder with respect to those trust preferred securities or
under the guarantee.
Material Covenants
CSX will covenant that, so long as any trust preferred securities remain
outstanding, if there is an event of default under the guarantee or under the
subordinated indenture for the related subordinated debt securities or during
an extension of the interest payment period for the related subordinated debt
securities:
. we will not declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of
CSX's capital stock; and
. we will not make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any CSX debt securities that rank
equally with or junior to the subordinated debt securities issued to the
Trust or make any guarantee payments with respect to any guarantee by
CSX of the debt securities of any subsidiary of CSX if such guarantee
ranks equally with or junior to the subordinated debt securities issued
to the Trust.
We may, however, make the following types of distributions:
. dividends or distributions paid in common stock;
. dividends in connection with the implementation of a shareholder rights
plan or the redemption or repurchase of any rights pursuant to such a
plan;
. payments to a trust holding securities of the same series under a
guarantee; and
. purchases of common stock related to the issuance of common stock or
rights under any of the CSX's benefit plans.
Because we are a holding company that conducts all of our operations through
our subsidiaries, our ability to meet our obligations under the guarantee is
dependent on the earnings and cash flows of those subsidiaries and the ability
of those subsidiaries to pay dividends or to advance or repay funds to us. The
Trust, as holder of the guarantee and the subordinated debt securities will
generally have a junior position to claims of creditors of our subsidiaries,
including trade creditors, debtholders, secured creditors, taxing authorities,
guarantee holders and any preferred shareholders.
Events of Default
An event of default will occur under the guarantee if we fail to perform any
of our payment obligations under the guarantee. The holders of a majority of
the trust preferred securities of any series may waive any such event of
default and its consequences on behalf of all of the holders of the trust
preferred securities of that series. The guarantee trustee is entitled to
enforce the guarantee for the benefit of the holders of the trust preferred
securities of a series if an event of default occurs
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under the related guarantee. The holders of a majority of the trust preferred
securities to which the guarantee relates have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
guarantee trustee with respect to the guarantee or to direct the exercise of
any trust or power that the guarantee trustee holds under the guarantee. Any
holder of the related trust preferred securities may institute a legal
proceeding directly against us to enforce that holder's rights under the
guarantee without first instituting a legal proceeding against the guarantee
trustee or any other person or entity.
Concerning the Guarantee Trustee
The Chase Manhattan Bank will be the guarantee trustee. It will also serve as
the property trustee, the subordinated indenture trustee and the senior
indenture trustee. We and certain of our affiliates may from time to time
maintain deposit accounts and other banking relationships with The Chase
Manhattan Bank. The Chase Manhattan Bank also serves as trustee under another
indenture pursuant to which securities of CSX are outstanding. See "Description
of Debt Securities--Concerning the Trustees." The guarantee trustee will
perform only those duties that are specifically set forth in each guarantee
unless an event of default under the guarantee occurs and is continuing. In
case an event of default occurs and is continuing, the guarantee trustee will
exercise the same degree of care as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs. Subject to
those provisions, the guarantee trustee is under no obligation to exercise any
of its powers under any guarantee at the request of any holder of the related
trust preferred securities unless that holder offers reasonable indemnity to
the guarantee trustee against the costs, expenses and liabilities which it
might incur as a result.
Agreement as to Expenses and Liabilities
CSX will enter into an agreement as to expenses and liabilities as required
under the trust agreement. The agreement as to expenses and liabilities will
provide that we will, with certain exceptions, irrevocably and unconditionally
guarantee the full payment of any indebtedness, expenses or liabilities of the
Trust to each person or entity to whom the Trust becomes indebted or liable.
The exceptions are the obligations of the Trust to pay to the holders of the
trust common securities or other similar interests in the Trust the amounts due
to the holders under the terms of the trust common securities or the similar
interests.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE GUARANTEE AND THE
SUBORDINATED DEBT SECURITIES HELD BY THE TRUST
CSX will guarantee payments of distributions and redemption and liquidation
payments due on the trust preferred securities, to the extent the Trust has
funds available for the payments, as described under "Description of the
Guarantee." No single document executed by us in connection with the issuance
of the trust preferred securities will provide for our full, irrevocable and
unconditional guarantee of the trust preferred securities. It is only the
combined operation of our obligations under the guarantee, the amended trust
agreement and the subordinated indenture that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's obligations under
the trust preferred securities.
As long as we make payments of interest and other payments when due on the
subordinated debt securities held by the Trust, those payments will be
sufficient to cover the payment of distributions and redemption and liquidation
payments due on the trust preferred securities issued by the Trust, primarily
because:
. the total principal amount of the subordinated debt securities will be
equal to the sum of the total liquidation amount of the trust
securities;
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. the interest rate and interest and other payment dates on the
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the trust preferred securities;
. we will pay for any and all costs, expenses and liabilities of the Trust
except its obligations under its trust preferred securities; and
. the amended trust agreement will provide that the Trust will not engage
in any activity that is not consistent with the limited purposes of the
Trust.
If, and to the extent that, we do not make payments on the subordinated debt
securities, the Trust will not have funds available to make payments of
distributions or other amounts due on its trust preferred securities. In those
circumstances, you will not be able to rely upon the guarantee for payment of
these amounts. Instead, you may directly sue us or seek other remedies to
collect your proportionate share of payments owed. If you sue us to collect
payment, then we will assume your rights as a holder of trust preferred
securities under the amended trust agreement to the extent we make a payment to
you in any such legal action.
ACCOUNTING TREATMENT
The Trust will be treated as a subsidiary of ours for financial reporting
purposes. Accordingly, our consolidated financial statements will include the
accounts of the Trust. The trust preferred securities, along with other trust
preferred securities that we guarantee on an equivalent basis, will be
presented as a separate line item in our consolidated balance sheets, and
appropriate disclosures about the trust preferred securities, the guarantee and
the subordinated debt securities will be included in the notes to the
consolidated financial statements. We will record distributions that the Trust
pays on the trust preferred securities as an expense in our consolidated
statement of income.
DESCRIPTION OF CAPITAL STOCK
As of the date of this prospectus, the authorized capital stock of CSX is (i)
300,000,000 shares of common stock, par value $1.00 per share, and (ii)
25,000,000 shares of preferred stock, without par value, issuable in series, of
which 3,000,000 shares of Series B Preferred Stock were reserved for issuance
under the Shareholders Rights Plan. As of March 30, 2001, 211,563,113 shares of
common stock were issued and outstanding, and no shares of preferred stock were
outstanding.
The following summary of certain provisions of common stock, preferred stock,
Series B Preferred Stock, the Amended and Restated Articles of Incorporation
and the By-laws of CSX do not purport to be complete and are qualified in their
entirety by reference to the Amended and Restated Articles of Incorporation and
the By-laws, copies of which have been incorporated by reference or filed as
exhibits to the registration statement.
Common Stock
CSX may issue shares of common stock, either separately, or together with, or
upon the conversion of or in exchange for, other securities. If we offer common
stock, the specific terms of the offering, including the number of shares
offered and the initial public offering price, will be described in the
applicable prospectus supplement.
CSX common stock is listed on the New York Stock Exchange under the symbol
"CSX." All outstanding shares of common stock are fully-paid and non-
assessable. Any additional shares of common stock we issue will also be fully-
paid and non-assessable. Holders of common stock are entitled to one vote per
share on all matters voted on by shareholders, including elections of
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directors, and, except as otherwise required by law or provided by the express
provisions of any series of preferred stock, the holders of those shares
exclusively possess all voting power of CSX. If and when issued and except as
otherwise provided by law, the holders of Series B Preferred Stock will be
entitled to 100 votes per share (subject to adjustment in accordance with the
Amended and Restated Articles of Incorporation) on all matters submitted to a
vote of CSX shareholders, and the holders of Series B Preferred Stock and the
holders of common stock and any other class of stock of CSX then having general
voting rights will vote together as one class. See "--Preferred Stock" and "--
Series B Preferred Stock Reserved for Issuance" below. There is no cumulative
voting in the election of directors, and no holder of common stock is entitled
as such, as a matter of right, to subscribe for or purchase any shares of
common stock or preferred stock. Subject to the preferential rights of any
outstanding series of preferred stock, the holders of common stock are entitled
to receive ratably dividends as may be declared from time to time by our Board
of Directors from funds legally available for that purpose. In the event of a
liquidation, dissolution or winding up of CSX, holders of common stock are
entitled to share ratably in all assets remaining after payment or provision
for liabilities and amounts owing in respect of any outstanding preferred
stock.
The transfer agent for CSX common stock is Harris Trust Company located in
Chicago, Illinois.
Preferred Stock
CSX may issue shares of our preferred stock, in one or more series, either
separately, or together with, or upon the conversion of or in exchange for,
other securities.
The following description of preferred stock sets forth certain general terms
and provisions of any series of preferred stock to which any prospectus
supplement may relate. If we offer preferred stock, the terms of any particular
series of preferred stock, including preferred stock to be represented by
depositary shares, will be described in the applicable prospectus supplement,
including (where applicable):
. the title of the series;
. the number of shares offered,
. the initial public offering price;
. the dividend rate or method of calculation of the dividend rate and the
dividend payment dates or periods;
. the date from which dividends will accrue and whether dividends will be
cumulative;
. any right to vote with holders of shares of any other series or class
and any right to vote as a class;
. the provisions for redemption or repurchase, if applicable, including
any sinking fund provisions for the redemption or repurchase of shares;
. the amount payable with respect to both the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up of
CSX;
. any listing on any securities exchange;
. the procedures for any auction or remarketing, if any;
. the terms and conditions, if any, upon which the preferred stock will be
convertible into or exchangeable for other securities;
. whether interests will be represented by depositary shares; and
. any other specific terms of the offered preferred stock.
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The form of articles of amendment relating to a series of offered preferred
stock will be filed as an exhibit to or incorporated by reference in the
registration statement. The terms of the preferred stock offered under any
prospectus supplement may differ from the general terms set forth in this
prospectus.
Preferred stock may be issued from time to time in one or more series.
Subject to limitations prescribed by Virginia law and the Amended and Restated
Articles of Incorporation, our Board of Directors, without further action by
the shareholders, is authorized to designate and issue in series preferred
stock and to fix as to any series:
. the number of shares constituting that series,
. the rate of dividend, the time of payment and, if cumulative, the dates
from which dividends will be cumulative, and the extent of participation
rights, if any,
. any right to vote with holders of shares of any other series or class
and any right to vote as a class, either generally or as a condition to
specified corporate action,
. the price at and the terms and conditions on which shares may be
redeemed, including any sinking fund provisions for the redemption or
purchase of shares,
. the amount payable in the event of a liquidation, and
. whether shares will have the privilege of conversion, and if so, the
terms and conditions on which shares may be converted.
The issuance of preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting power of the holders of common stock and,
under certain circumstances, make it more difficult for a third party to gain
control of CSX or remove present management and could have the effect of
delaying or preventing a merger, tender offer or other attempted takeover of
CSX. No holder of preferred stock will be entitled, as a matter of right, to
subscribe for or purchase any shares of preferred stock or common stock.
Preferred stock will, when issued, be fully-paid and non-assessable. Unless
otherwise specified in the applicable prospectus supplement, any series of
offered preferred stock will rank, with respect to dividends and the
distribution of assets, senior to Series B Preferred Stock, if issued, and
common stock, and on a parity with shares of any other outstanding series of
preferred stock. Therefore, the Rights (described below) and any preferred
stock that may subsequently be issued may limit the rights of the holders of
our common stock and preferred stock. In addition, under certain circumstance,
preferred stock could also restrict dividend payments to our holders of common
stock.
The transfer agent and registrar for a series of preferred stock will be
named in the applicable prospectus supplement.
Series B Preferred Stock Reserved for Issuance
In connection with the issuance of the Rights (described under "--Shareholder
Rights Plan" below), our Board of Directors designated 3,000,000 shares of
preferred stock as Series B Preferred Stock. No shares of Series B Preferred
Stock are outstanding as of the date of this prospectus, and shares of Series B
Preferred Stock will be issued only in connection with the exercise of Rights.
Subject to the rights of the holders of shares of any other series of
preferred stock ranking prior and superior to Series B Preferred Stock with
respect to dividends, and in preference to common stock or any other junior
series of preferred stock or other stock, each share of Series B Preferred
Stock is generally entitled to receive, when, as and if declared by our Board
of Directors out of funds
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legally available for that purpose, cumulative quarterly cash dividends equal
to the greater of $1.00 per share or, subject to certain adjustments, 100 times
the aggregate per share amount of all cash dividends and non-cash dividends
paid on each share of CSX's common stock in the preceding quarter. Whenever
quarterly dividends or other distributions payable to the holders of Series B
Preferred Stock are in arrears, whether or not those dividends or other
distributions have been declared, CSX cannot
. declare or pay dividends or distributions to holders of common stock or
any shares of stock junior to Series B Preferred Stock or
. purchase or otherwise acquire shares of Series B Preferred Stock or any
shares of stock junior to or on parity with Series B Preferred Stock.
Except as otherwise provided by law, holders of shares of Series B Preferred
Stock are entitled to 100 votes for each share held, and the shares of Series B
Preferred Stock and the shares of common stock of CSX will vote together as one
class. In the event CSX declares or pays any dividend to holders of common
stock payable in common stock, or affects the number of outstanding shares of
common stock by reclassification or otherwise, the number of votes per share of
Series B Preferred Stock will be adjusted to equalize the relative voting
strength of the Series B Preferred Stock vis-a-vis the common stock to the
relative voting strength immediately prior to that event.
Upon any involuntary or voluntary liquidation, dissolution or winding up of
CSX, subject to the rights of any other capital stock prior in rank with
respect to liquidation, dissolution or winding up, the holders of Series B
Preferred Stock will be entitled to be paid out of the assets of CSX legally
available for that purpose the greater of $100 per share, plus accumulated and
unpaid dividends, or an amount per share equal to 100 times the aggregate
amount to be distributed per share to the holders of common stock (subject to
certain adjustments). In that liquidation, dissolution or winding up, Series B
Preferred Stock will be paid prior to any distributions to the holders of
common stock or any other stock ranking junior to Series B Preferred Stock.
Holders of stock ranking on a parity (either as to dividends or liquidation,
dissolution or winding up) with Series B Preferred Stock, will share ratably in
any distribution with holders of Series B Preferred Stock in proportion to the
total amounts to which the holders of all those shares are entitled upon
liquidation, dissolution or winding up of CSX.
In the event that CSX enters into any consolidation, merger, combination or
other transaction in which common stock is exchanged for or changed into other
securities, cash or property, the holders of Series B Preferred Stock will be
entitled to receive 100 times the per share consideration received in
connection with that transaction by holders of common stock (subject to certain
adjustments).
Shares of Series B Preferred Stock which have been acquired by CSX in any
manner whatsoever will not be reissued as Series B Preferred Stock, but will be
retired and cancelled in the manner provided by Virginia law and will
constitute authorized but unissued preferred stock undesignated as to series.
Shares of Series B Preferred Stock are not redeemable.
Shareholder Rights Plan
The following summary of certain provisions of CSX's Shareholder Rights Plan
and the Rights Agreement, dated as of May 29, 1998 as amended by Amendment No.
1 dated as of June 27, 2000 (the "Rights Agreement"), between CSX and Harris
Trust Company of New York does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, including the form of Rights
certificate attached to the Rights Agreement, and the articles of amendment for
Series B Preferred Stock, both of which are incorporated by reference as
exhibits to the registration statement.
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The Rights Agreement contains provisions that could make it more difficult
for a third party to gain control of CSX and that could have the effect of
delaying or preventing a merger, tender offer or other takeover attempt of CSX.
In May 1998, the Board of Directors of CSX declared a dividend of one preferred
share purchase right (each, a "Right") for each share of common stock
outstanding as of June 8, 1998. Each Right entitles its holder to purchase from
CSX, until the earliest of June 8, 2008, or the redemption or exchange of the
Rights, one one-hundredth ( 1/100th) of a share of Series B Preferred Stock at
an exercise price of $180 per Right, subject to certain adjustments or, under
certain circumstances, to obtain additional shares of common stock of CSX in
exchange for each Right. The Rights will not be exercisable or transferable
apart from common stock of CSX until the earlier of 10 days following the
public announcement that a person or affiliated group has acquired or obtained
the right to acquire 10% or more of the outstanding common stock of CSX; or 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 10% or more of the outstanding common stock
of CSX. Our 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 10% or more of the
outstanding common stock of CSX.
Virginia Stock Corporation Act; Anti-takeover Effects
The Virginia Stock Corporation Act contains provisions governing "Affiliated
Transactions." These provisions, with several exceptions discussed below,
generally require approval of certain material transactions between a Virginia
corporation and any beneficial holder of more than 10% of any class of its
outstanding voting shares (an "Interested Shareholder") by a majority of
disinterested directors and by the holders of at least two-thirds of the
remaining voting shares. Affiliated Transactions subject to this approval
requirement include mergers, share exchanges, material dispositions of
corporate assets not in the ordinary course of business, any dissolution of the
corporation proposed by or on behalf of an Interested Shareholder, or any
reclassification, including reverse stock splits, recapitalization or merger of
the corporation with its subsidiaries, which increases the percentage of voting
shares owned beneficially by an Interested Shareholder by more than 5%.
For three years following the time that an Interested Shareholder becomes an
owner of 10% of the outstanding voting shares, a Virginia corporation cannot
engage in an Affiliated Transaction with that Interested Shareholder without
the approval of two-thirds of the voting shares other than those shares
beneficially owned by the Interested Shareholder, and the approval of a
majority of the Disinterested Directors. "Disinterested Director" means, with
respect to a particular Interested Shareholder, a member of our Board of
Directors who was
. a member on the date on which an Interested Shareholder became an
Interested Shareholder, or
. recommended for election by, or was elected to fill a vacancy and
received the affirmative vote of, a majority of the Disinterested
Directors then on the Board.
After the expiration of the three-year period, the statute requires approval of
Affiliated Transactions by two-thirds of the voting shares other than those
beneficially owned by the Interested Shareholder.
The principal exceptions to the special voting requirements apply to
transactions proposed after the three-year period has expired and require
either that the transaction be approved by a majority of CSX's Disinterested
Directors or that the transaction satisfy the fair-price requirements of the
statute. In general, the fair-price requirement provides that in a two-step
acquisition transaction, the Interested Shareholder must pay the shareholders
in the second step either the same amount of cash or the same amount and type
of consideration paid to acquire CSX's shares in the first step.
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None of the limitations and special voting requirements described above
applies to an Interested Shareholder whose acquisition of shares making that
person an Interested Shareholder was approved by a majority of CSX's
Disinterested Directors.
These provisions are designed to deter certain types of takeovers of Virginia
corporations. The statute provides that, by affirmative vote of a majority of
the voting shares other than shares owned by any Interested Shareholder, a
corporation can adopt an amendment to its articles of incorporation or by-laws
providing that the Affiliated Transactions provisions shall not apply to the
corporation. CSX has not "opted out" of the Affiliated Transactions provisions.
Virginia law also generally provides that shares of a Virginia corporation
acquired in a transaction that would cause the acquiring person's voting
strength to meet or exceed any of three thresholds (20%, 33 1/3% or 50%) have
no voting rights with respect to those shares unless granted by a majority vote
of shares not owned by the acquiring person or any officer or employee-director
of the corporation. This provision empowers an acquiring person to require the
Virginia corporation to hold a special meeting of shareholders to consider the
matter within 50 days of its request. The Board of Directors of a Virginia
corporation can opt out of this provision at any time before four days after
receipt of a control share acquisition notice.
DESCRIPTION OF DEPOSITARY SHARES
CSX may offer depositary shares (either separately or together with other
securities) representing fractional interests in shares of our preferred stock
of any series. In connection with the issuance of any depositary shares, CSX
will enter into a deposit agreement with a bank or trust company, as
depositary, which will be named in the applicable prospectus supplement.
Depositary shares will be evidenced by depositary receipts issued pursuant to
the related deposit agreement. Immediately following the issuance by CSX of the
preferred stock related to the depositary shares, we will deposit the shares of
preferred stock with the relevant preferred stock depositary and will cause the
preferred stock depositary to issue, on our behalf, the related depositary
receipts. Subject to the terms of the deposit agreement, each owner of a
depositary receipt will be entitled, in proportion to the fraction of a share
of preferred stock represented by the related depositary share, to all the
rights, preferences and privileges of, and will be subject to all of the
limitations and restrictions on, the preferred stock represented by the
depositary receipt (including, if applicable, dividend, voting, conversion,
exchange, redemption and liquidation rights).
The form of deposit agreement, together with the form of related depositary
receipt, that will be entered into with respect to a particular offering of
depositary shares will be filed as an exhibit to or incorporated by reference
in the registration statement.
The applicable prospectus supplement will describe the terms of the
depositary shares and the related deposit agreement for a particular issue of
depositary shares, which terms may include the following if applicable to those
depositary shares:
. the terms of the series of preferred stock deposited by CSX under the
related deposit agreement;
. the number of depositary shares and the fraction of one share of
preferred stock represented by one depositary share;
. whether the depositary shares will be listed on any securities exchange;
. whether the depositary shares will be sold with any other securities
and, if so, the amount and terms of those securities; and
. any other specific terms of the depositary shares and the related
deposit agreement.
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DESCRIPTION OF SECURITIES WARRANTS
CSX may issue, either separately or together with other securities,
securities warrants for the purchase of debt securities, preferred stock or
common stock. Each securities warrant will entitle the holder to purchase the
principal amount of debt securities or number of shares of preferred stock or
common stock, as the case may be, at the exercise price and in the manner
specified in the prospectus supplement relating to those securities warrants.
Securities warrants may be exercised at any time up to the date and time
specified in the applicable prospectus supplement.
Securities warrants will be issued under one or more warrant agreements to be
entered into between CSX and a bank or trust company, as warrant agent. The
material terms and provisions of the warrant agreement for a particular issue
of securities warrants will be set forth in the applicable prospectus
supplement. The form of securities warrant agreement, including the form of
certificates representing the securities warrants, that will be entered into
with respect to a particular offering of securities warrants will be filed as
an exhibit to or incorporated by reference in the registration statement.
The applicable prospectus supplement will describe the terms of the
securities warrants for a particular issue of securities warrants, which terms
may include the following if applicable to those securities warrants:
. the title and aggregate number of the securities warrants;
. the designation, aggregate principal amount, currency, currencies or
currency units and terms of the debt securities purchasable upon
exercise of the securities warrants; the price, or the manner of
determining the price, at which the debt securities may be purchased
upon exercise of the securities warrants;
. the designation, number of shares and terms of the series of preferred
stock purchasable upon exercise of the securities warrants; the price,
or the manner of determining the price, at which the preferred stock may
be purchased upon exercise of the securities warrants;
. the number of shares of common stock that may be purchased upon exercise
of each securities warrant; the price, or the manner of determining the
price, at which the shares may be purchased upon the exercise of the
securities warrants;
. if other than cash, the property and manner in which the exercise price
of the securities warrants may be paid; and any minimum number of
securities warrants that may be exercisable at any one time;
. the time or times at which, or period or periods during which, the
securities warrants may be exercised and the expiration date of the
securities warrants;
. the terms of any right of CSX to redeem the securities warrants;
. the terms of any right of CSX to accelerate the exercise of the
securities warrants upon the occurrence of certain events;
. whether the securities warrants will be sold with any other securities,
and the date, if any, on and after which the securities warrants and the
other securities will be separately transferable;
. whether the securities warrants will be issued in registered or bearer
form;
. a discussion of certain material Federal income tax, accounting and
other special considerations, procedures and limitations relating to the
securities warrants; and
. any other terms of the securities warrants.
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PLAN OF DISTRIBUTION
CSX may sell securities to one or more underwriters for public offering and
sale by them or may sell securities to institutional investors directly or
through agents who solicit or receive offers on our behalf or through dealers
or through a combination of any these methods of sale. The prospectus
supplement with respect to particular securities will set forth the terms of
the offering of those securities, including the name or names of any
underwriters or agents, the public offering or purchase price and the proceeds
to CSX from that sale, the expenses of the offering, any discounts and
commissions to be allowed or paid to the underwriters or agents, all other
items constituting underwriting compensation, the discounts and commissions to
be allowed or paid to dealers, if any, and the securities exchanges, if any, on
which the securities will be listed.
Underwriters may offer and sell the securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to prevailing market prices or at negotiated
prices. We also may offer and sell securities in exchange for one or more of
our outstanding issues of debt. We may, from time to time, authorize agents
acting on a best or reasonable efforts basis as our agents to solicit or
receive offers to purchase the securities upon the terms and conditions as are
set forth in the applicable prospectus supplement. In connection with the sale
of securities, underwriters or agents may be deemed to have received
compensation from CSX in the form of underwriting discounts or commissions and
may also receive commissions from purchasers of securities for whom they may
act as agent. Underwriters may sell securities to or through dealers, and
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Underwriters, dealers and agents who participate in the distribution of
securities and their controlling persons may be entitled, under agreements
which may be entered into with CSX, to indemnification by us against certain
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters, dealers or agents and their
controlling persons may be required to make in respect of those liabilities.
If so indicated in the applicable prospectus supplement, CSX may authorize
underwriters or other persons acting as our agents to solicit offers by certain
institutions to purchase securities from us pursuant to contracts providing for
payment and delivery on a future date. Institutions with which those contracts
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and
others, but in all cases those institutions must be approved by us. The
obligations of any institutional purchaser under those contracts will not be
subject to any conditions except
. the purchase by that institution of the securities covered by the
contract will not at the time of delivery be prohibited under the laws
of the jurisdiction to which that institution is subject, and
. if the securities are being sold to underwriters, we will have sold to
the underwriters the total principal amount of the securities less the
principal amount covered by delayed delivery contracts.
Each series of offered securities other than common stock will be a new issue
of securities with no established trading market. Any underwriters to whom
offered securities are sold by CSX for public offering and sale may make a
market in such offered securities, but the underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any
offered securities.
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Any underwriter may engage in stabilizing and syndicate covering transactions
in accordance with Rule 104 under the Exchange Act. Rule 104 permits
stabilizing bids to purchase the underlying security so long as the stabilizing
bids to do not exceed a specified maximum. The underwriters may over-allot
offered securities, thereby creating a short position in the underwriters'
account. Syndicate covering transactions involve purchases of offered
securities in the open market after the distribution has been completed to
cover syndicate short positions. Stabilizing and syndicate covering
transactions may cause the price of the offered securities to be higher than it
would otherwise be in the absence of such transactions. These transactions, if
commenced, may be discontinued at any time.
Certain of the underwriters, dealers or agents and their affiliates may
engage in transactions with and perform services for CSX in the ordinary course
of business.
LEGAL OPINIONS
McGuireWoods LLP, Richmond, Virginia will issue an opinion concerning the
validity of the offered securities for CSX. Robert L. Burrus, Jr., a partner of
McGuireWoods LLP, is a director of CSX and owns 15,439 shares of common stock.
Certain matters relating to the formation of the Trust and the issuance of the
trust preferred securities under Delaware law and the trust agreements will be
passed upon by Richards, Layton & Finger, P.A., special Delaware counsel to the
Trust and CSX. Any underwriter, dealer or agent will be advised about other
issues relating to any offering by its own legal counsel.
EXPERTS
Ernst & Young LLP, independent auditors, have audited CSX's consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 29, 2000 and our consolidated financial statements for the year
ended December 31, 1999 as restated in our Current Report on Form 8-K filed
with the SEC on January 31, 2001, as set forth in their respective reports,
which are incorporated by reference in this prospectus and elsewhere in the
registration statement. Our consolidated financial statements are incorporated
by reference in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
The consolidated financial statements of Conrail Inc. as of December 31, 2000
and 1999 and for each of the two years in the period then ended, included in
our Annual Report on Form 10-K for the year ended December 29, 2000, have been
audited by Ernst & Young LLP and KPMG LLP, independent auditors, as set forth
in their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement, and are included in reliance upon such
report given on the authority of said firms as experts in accounting and
auditing.
The consolidated statements of income, of stockholders' equity and of cash
flows of Conrail Inc. for the year ended December 31, 1998 incorporated in this
prospectus by reference to the Annual Report on Form 10-K of CSX Corporation
for the fiscal year ended December 29, 2000, which includes such financial
statements of Conrail Inc. in Exhibit 99, have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
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