ITEM 1. BUSINESS
In response to this Item, the information set forth on page 1 under the caption “Financial Highlights”, page 7 under the caption “CSX Transportation,” page 8 under the caption “CSX Intermodal,” page 8 under the caption “CSX World Terminals,” and page 9 “Other Activities,” and pages 17-29 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report is incorporated herein by reference.
ITEM 2.
ITEM 2. PROPERTIES
In response to this Item, the information set forth on pages 17-29 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, page 34 under the caption “Properties” and page 41 under the caption “Note 8. Properties.” of the Annual Report is incorporated herein by reference.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
In response to these Item, the information set forth on page 26 under the caption “Claims Arising out of Sale of International Container-Shipping Assets,” on page 26 under the caption “1. Casualty, Legal and Environmental Reserves,” page 52 under the caption “Claims Arising out of Sale of International Container-Shipping Assets,” page 53 under the captions “Contract Settlement” and “Other Legal Proceedings and Arbitrations.”
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders in the fourth quarter of 2002.
Executive Officers of the Registrant
Executive officers of CSX Corporation are elected by the CSX Board of Directors and hold office until the next annual election of officers. Officers of CSX business units are elected annually by the respective Boards of Directors of the business units. There are no family relationships or any arrangement or understanding between any officer and any other person pursuant to which such officer was selected.
Andrew B. Fogarty, 57
Executive Vice President-Corporate Services of CSX since July 2001. Prior to July 2001, Mr. Fogarty served as Senior Vice President-Corporate Services from September 1997 to July 2001, and prior thereto as Senior Vice President-Finance and Planning, Sea-Land.
Ellen M. Fitzsimmons, 42
Senior Vice President-Law since February 2001. Prior to February 2001, Ms. Fitzsimmons served as General Counsel-Corporate.
Lester M. Passa, 49
Senior Vice President-Strategic Planning of CSX since November 2000. Prior to November 2000, Mr. Passa served as President and CEO of CSX Intermodal
Jesse R. Mohorovic, 60
Senior Vice President-Corporate Communications and Investor Relations since July 2001. Prior to July 2001, Mr. Mohorovic served as CSX Group Vice President-Corporate Communications and Investor Relations from April 1998 to July 2001, and prior thereto, as CSX Vice President-Corporate Relations.
Carolyn T. Sizemore, 40
Vice President and Controller of CSX since April 2002. Prior to April 2002, Ms. Sizemore served as Assistant Vice President and Assistant Controller from July 2001 to April 2002; Assistant Vice President Financial Planning from June 1999 to July 2001; and prior thereto, as Senior Director-Financial and Strategic Measurement.
P. Michael Giftos, 56
Executive Vice President and Chief Commercial Officer of CSXT since April 2000. Prior to April 2000, Mr. Giftos served as CSXT Senior Vice President and General Counsel.
Alan F. Crown, 55
Executive Vice President of CSXT since December 2000. Prior to December 2000, Mr. Crown served as an officer of CSXT as Senior Vice President-Transportation from May 2000 to December 2000; Vice President-Central Region from August 1999 to May 2000; and prior thereto, General Manager-C&O Coal Business Unit and Vice President-Coal from October 1997 to August 1999.
Frederick J. Favorite, Jr., 49
Senior Vice President-Finance of CSXT since February 2000. Prior to February 2000, Mr. Favorite served as Vice President-Finance, CSXT, from December 1998 to January 2000; and prior thereto, as Vice President-Planning, CSXT.
Robert J. Grassi, 56
President and Chief Executive Officer of CSX World Terminals since June 1999. Prior to June 1999, Mr. Grassi served as an officer of Sea-Land as Senior Vice President-Finance and Planning.
Charles G. Raymond, 59
President and Chief Executive Officer of CSX Lines since June 1999. Prior to June 1999, Mr. Raymond served as an officer of Sea-Land as Senior Vice President and Chief Transportation Officer.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
In response to this Item, the information set forth on page 58, “Shareholder Information”, and page 59, “Corporate Information”, of the Annual Report is incorporated herein by reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
In response to this Item, the information set forth on page 1 of the Annual Report under the caption “Financial Highlights” is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
In response to this Item, the information set forth on pages 17-29 of the Annual Report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is incorporated herein by reference.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In response to this Item, the information set forth on page 24 of the Annual Report under the caption “Market Risk” is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
In response to this Item, the information set forth on pages 30-56, and page 57 under the caption “Quarterly Financial Data (Unaudited)” of the Annual Report is incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
In accordance with Instruction G(3) of Form 10-K, the information required by this Item is incorporated herein by reference to the Proxy Statement, except for the information regarding the executive officers of the Registrant which is included in Part I of this report under the caption “Executive Officers of the Registrant.”
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
In accordance with Instruction G(3) of Form 10-K, the information required by this Item is incorporated herein by reference to the Proxy Statement.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In accordance with Instruction G(3) of Form 10-K, the information required by this Item is incorporated herein by reference to the Proxy Statement.
The following table summarizes the equity compensation plans under which CSX Corporation common stock may be issued as of December 27, 2002.
(1)
The number of shares remaining available for future issuance under plans approved by shareholders includes 1,030,345 shares available for employee purchase pursuant to the 2001 Employee Stock Purchase Plan; 678,411 shares available for stock option grants, payment of director compensation, and stock grants pursuant to the CSX Stock Plan for Directors; and 6,878,033 shares available for grant in the form of stock options, performance units, restricted stock, stock appreciation rights, and stock awards pursuant to the CSX Omnibus Incentive Plan.
(2)
The 1990 Stock Award Plan (“1990 Plan”) is the only CSX equity compensation plan that has not been approved by shareholders. Upon approval of the CSX Omnibus Incentive Plan by shareholders in 2000, the plan was closed to further grants. No options have been granted under the 1990 Plan since 1999.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In accordance with Instruction G(3) of Form 10-K, the information required by this Item is incorporated herein by reference to the Proxy Statement.
PART IV
ITEM 14.
ITEM 14. CONTROLS AND PROCEDURES
As of February 18, 2003, under the supervision and with the participation of the Company’s Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), management has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of February 18, 2003. There were no significant changes in the Company’s internal controls or in the other factors that could significantly affect those controls subsequent to the date of the evaluation.
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)
(1) Financial Statements
The following consolidated financial statements and independent auditor’s report, which appear on pages 30-56 of the Annual Report, are incorporated herein by reference:
Consolidated Statement of Earnings for the Fiscal Years Ended December 27, 2002, December 28, 2001, and December 29, 2000
Consolidated Statement of Cash Flows for the Fiscal Years Ended December 27, 2002, December 28, 2001, and December 29, 2000
Consolidated Statement of Financial Position at December 27, 2002 and December 28, 2001
Consolidated Statement of Changes in Shareholders’ Equity for the Fiscal Years Ended December 27, 2002, December 28, 2001, and December 29, 2000
Notes to Consolidated Financial Statements
Report of Independent Auditors
The following financial statement footnote was not included in the Annual Report:
Note 19. Summarized Consolidating Financial Data - CSX Lines (formerly Sea-Land)
During 1987, Sea-Land entered into agreements to sell and lease back, by charter, three new U.S. -built, U.S. -flag, D-7 class container ships. The ships were not included in the sale of international liner assets to Maersk in December 1999 and the related debt remains an obligation of CSX Lines. CSX has guaranteed the obligations of CSX Lines pursuant to the related charters which, along with the container ships, serve as collateral for debt securities registered with the Securities and Exchange Commission (SEC). As noted in Note 3 of the Annual Report, Divestitures, CSX agreed to convey certain assets of CSX Lines to Horizon Lines LLC. These obligations are not part of this transaction and another CSX entity will become the obligor in 2003. In accordance with SEC disclosure requirements, consolidating summarized financial information for the parent and obligor are as follows (Certain prior year amounts have been reclassified to conform to the 2002 presentation) (In millions):
Consolidating Statement of Earnings
Consolidating Statement of Earnings
Consolidating Statement of Cash Flows
Consolidating Statement of Cash Flows
Consolidating Statement of Financial Position
Consolidating Statement of Financial Position
(2) Financial Statement Schedules
The information required by Rule 3-09 is included in the Annual Report in Note 2 to the consolidated financial statements, “Investment in and Integrated Rail Operations with Conrail” and the Audited Consolidated Financial Statements of Conrail Inc., filed herewith as exhibit 99.3. The information required by Schedule II is included in the Annual Report in Note 9 to the consolidated financial statements, “Casualty, Environmental and Other Reserves.” All other financial statement schedules are not applicable.
(3) Exhibits
3.1
Amended and Restated Articles of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form 10-Q dated August 4, 2000)
3.2*
Bylaws of the Registrant, amended as of January 31, 2003
4.1
Amended and Restated Articles of Incorporation of the Registrant (see Exhibit 3.1)
4.2
Bylaws of the Registrant, as amended (see Exhibit 3.2)
4.3(a)
Rights Agreement, dated as of May 29, 1998, between the Registrant and Computershare Investor Services, Inc. (successor to Harris Trust Company of New York), as Rights Agent (incorporated by reference to Exhibit 99.1 to the Registrant’s Registration on Form 8-A (File No. 001-8022) filed with the SEC on May 29, 1998)
4.3(b)
Amendment No. 1 to the Rights Agreement, dated as of June 27, 2000, between the Registrant and Computershare Investor Services, Inc. (successor to Harris Trust Company of New York), as Rights Agent, (incorporated by reference to Exhibit 3 to the Registrant’s Registration on Form 8-A/A (File No. 1-8022) filed with the SEC on June 28, 2000)
4.4(a)
Indenture, dated August 1, 1990, between the Registrant and The Chase Manhattan Bank, as Trustee (incorporated herein by reference to the Registrant’s Form SE, dated September 7, 1990, filed with the Commission)
4.4(b)
First Supplemental Indenture, dated as of June 15, 1991, between the Registrant and The Chase Manhattan Bank, as Trustee (incorporated herein by reference to Exhibit 4(c) to the Registrant’s Form SE, dated May 28, 1992, filed with the Commission)
4.4(c)
Second Supplemental Indenture, dated as of May 6, 1997, between the Registrant and The Chase Manhattan Bank, as Trustee (incorporated herein by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-4 (Registration No. 333-28523) filed with the Commission on June 5, 1997)
4.4(d)
Third Supplemental Indenture, dated as of April 22, 1998, between the Registrant and The Chase Manhattan Bank, as Trustee (incorporated herein by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 12, 1998)
10.36
Amended and Restated Credit Agreement (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 4, 1997)
10.37
Transaction Agreement (incorporated herein by reference to Exhibit 10 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 8, 1997)
10.38
Amendment No. 1, dated as of August 22, 1998, to the Transaction Agreement, dated as of June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation, and CRR Holdings LLC. (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 11, 1999)
10.39
Amendment No. 2, dated as of June 1, 1999, to the Transaction Agreement, dated June 10, 1997, by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation, and CRR Holdings, LLC. (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 11, 1999)
10.40
Amendment No. 3, dated as of August 1, 2000, to the Transaction Agreement by and among CSX Corporation, CSX Transportation, Inc., Norfolk Southern Corporation, Norfolk Southern Railway Company, Conrail Inc., Consolidated Rail Corporation, and CRR Holdings LLC. (incorporated herein by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K dated March 1, 2001)
10.41
Operating Agreement, dated as of June 1, 1999, by and between New York Central Lines LLC and CSX Transportation, Inc. (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 11, 1999)
10.42
Shared Assets Area Operating Agreement for North Jersey, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibit thereto (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 11, 1999)
10.43
Shared Assets Area Operating Agreement for Southern Jersey/Philadelphia, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Company, with exhibit thereto (incorporated herein by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 11, 1999)
10.44
Shared Assets Area Operating Agreement for Detroit, dated as of June 1, 1999, by and among Consolidated Rail Corporation, CSX Transportation, Inc., and Norfolk Southern Railway Corporation, with exhibit thereto (incorporated herein by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 11, 1999)
10.45
Monongahela Usage Agreement, dated as of June 1, 1999, by and among CSX Transportation, Inc., Norfolk Southern Railway Company, Pennsylvania Lines LLC, and New York Central Lines LLC, with exhibit thereto (incorporated herein by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 11, 1999)
10.46*
364-Day, $300 Million Revolving Credit Agreement dated as of May 17, 2002
10.47*
Five-Year Revolving Credit Agreement dated as of June 8, 2001 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on October 29, 2001) [this Agreement was amended by First Amendment, dated as of May 17, 2002]
12*
Computation of Ratio of Earnings to Fixed Charges
13*
Annual Report to Shareholders***
21*
Subsidiaries of the Registrant
23.1*
Consent of Ernst & Young LLP
23.2*
Consent of Ernst & Young LLP and KPMG LLP, Independent Auditors
24*
Powers of Attorney
99.1*
CEO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
99.2*
CFO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
99.3*
Audited Consolidated Financial Statements of Conrail Inc. for the Years Ended December 31, 2002, 2001, and
*
Filed herewith
**
Management Contract or Compensatory Plan or Arrangement
***
Except for those portions of the Annual Report which are expressly incorporated by reference in this Form 10-K, the Annual Report is furnished for the information of the Securities and Exchange Commission only and is not to be deemed “filed” as part of this Form 10-K.
(b)
Reports on Form 8-K
Form 8-K filed on October 30, 2002 reporting that CSX Corporation had entered into an Underwriting Agreement for the public offering of $200,000,000 aggregate principal amount of the Company’s 4.875% Notes due 2009
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CSX CORPORATION
(Registrant)
By:
/s/ CAROLYN T. SIZEMORE
Carolyn T. Sizemore
Vice President and Controller
(Principal Accounting Officer)
Dated: February 25, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 24, 2003.
Signature
Title
/s/ MICHAEL J. WARD*
Michael J. Ward
Chairman of the Board, President,
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ PAUL R. GOODWIN*
Paul R. Goodwin
Executive Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer)
/s/ ELIZABETH E. BAILEY*
Elizabeth E. Bailey
Director
/s/ ROBERT L. BURRUS, JR.*
Robert L. Burrus, Jr.
Director
/s/ BRUCE C. GOTTWALD*
Bruce C. Gottwald
Director
/s/ JOHN R. HALL*
John R. Hall
Director
/s/ EDWARD J. KELLY, III*
Edward J. Kelly, III
Director
/s/ ROBERT D. KUNISCH*
Robert D. Kunisch
Director
/s/ JAMES W. MCGLOTHLIN*
James W. McGlothlin
Director
/s/ SOUTHWOOD J. MORCOTT*
Southwood J. Morcott
Director
/s/ DAVID M. RATCLIFFE*
David M. Ratcliffe
Director
/s/ CHARLES E. RICE*
Charles E. Rice
Director
/s/ WILLIAM C. RICHARDSON*
William C. Richardson
Director
/s/ FRANK S. ROYAL, M.D.*
Frank S. Royal, M.D
Director
/s/ DONALD J. SHEPARD*
Donald J. Shepard
Director
CERTIFICATE OF CHIEF EXECUTIVE OFFICER
I, Michael J. Ward, certify that:
1.
I have reviewed this annual report on Form 10-K of CSX Corporation;
2.
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a)
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)
evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
c)
presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a)
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.
The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: February 25, 2003
CERTIFICATE OF CHIEF FINANCIAL OFFICER
I, Paul R. Goodwin, certify that:
1.
I have reviewed this annual report on Form 10-K of CSX Corporation;
2.
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a)
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)
evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
c)
presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a)
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.
The registrant’s other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date:
February 25, 2003