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FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-12905
EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
(Full Title of Plan)
EEX CORPORATION
(Name of Issuer of Securities Held Pursuant to the Plan)
2500 CityWest Blvd., Suite 1400, Houston, Texas 77042
(Address of Plan and Principal Executive Office of Issuer)
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
AND SUPPLEMENTAL SCHEDULE
Page No.
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Independent Auditors' Report.............................................. 1
Financial Statements:
Statements of Net Assets Available for Benefits..................... 2
Statement of Changes in Net Assets Available for Benefits........... 3
Notes to Financial Statements....................................... 4
Supplemental Schedule:
Schedule H, Line 4(i) - Schedule of Assets (Held at End of Year).... 10
Exhibit 23 - Consent of Independent Auditors.............................. 12
INDEPENDENT AUDITORS' REPORT
EEX Corporation Employee Stock Purchase and Savings Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of the EEX Corporation Employee Stock Purchase and Savings Plan as of December
31, 2001 and 2000, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2001. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2001, is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ERNST & YOUNG LLP
Houston, Texas
May 24, 2002
1
EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31
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2001 2000
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ASSETS
Investment Income Receivable $ 8,135 $ --
Investments (Note 3)............................................... 8,244,038 10,457,038
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Total Assets................................................... $8,252,173 $10,457,038
LIABILITIES
Accrued Expenses................................................... 1,362 --
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Net Assets Available for Benefits.............................. $8,253,535 $10,457,038
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See accompanying Notes to Financial Statements.
2
EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001
Additions:
Interest and dividend income........................................... $ 42,861
Contributions:
Employee........................................................... 776,813
Employer........................................................... 150,679
Rollovers from participants' previous plans............................ 200
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970,553
Deductions:
Distributions to plan participants..................................... 1,545,651
Net depreciation in fair value of investments (Note 3)................. 1,626,515
Administrative expenses................................................ 1,890
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Net decrease............................................................... (2,203,503)
Net assets available for benefits:
Beginning of year...................................................... 10,457,038
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End of year............................................................ $ 8,253,535
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See accompanying Notes to Financial Statements.
3
EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
The EEX Corporation Employee Stock Purchase and Savings Plan (the "Plan")
is a profit sharing plan with a qualified cash or deferred feature under
Sections 401(a), 401(k) and 401(m) of the Internal Revenue Code (the
"Code"). The Plan is subject to the applicable provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
The following description is provided for general information only.
Participants should refer to the Plan document for more complete
information.
General - The Plan is a defined contribution profit sharing plan with a
qualified cash or deferred feature established by EEX Corporation and its
participating subsidiary companies ("EEX" or the "Corporation") to
encourage and assist employees in establishing an individual savings and
investment program. All employees of EEX are eligible to participate in the
Plan, other than leased employees and employees covered by a collective
bargaining agreement, unless the agreement provides for coverage.
Participation is voluntary. A committee appointed by the EEX Board of
Directors ("Plan Committee") is responsible for the general administration,
management and operation of the Plan.
The Plan was originally adopted effective August 5, 1997, and was amended
and restated effective November 1, 2000, by the adoption of the
Massachusetts Mutual Life Insurance Company Flexinvest (R) - Plus
Prototype Profit-Sharing/401(k) Plan (the "MM Prototype") with certain
amendments. Also on November 1, 2000, the Plan Committee engaged
Massachusetts Mutual Life Insurance Company ("MMLIC") to provide
administrative services to the Plan and appointed Investors Bank & Trust
Company, a Massachusetts trust company, as trustee of the plan assets.
Participants' Contributions - Under the Plan, a participant may invest
pre-tax and/or after-tax dollars through payroll deductions each pay period
in increments of 1% up to a maximum of 16% of regular monthly salary or
wages. The Omnibus Budget Reconciliation Act of 1993 placed an annual
limitation of $170,000 for 2001 on all pay, which can be used in computing
benefits for participants under the Plan.
Eligible employees can rollover to the Plan any distributions received from
other qualified retirement plans. Individual Retirement Account ("IRA")
distributions are not eligible for rollover into the Plan unless the
distribution consists of funds which had previously been distributed from a
qualified retirement plan.
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
Each participant is entitled to direct the allocation of his or her
contributions among the common stock of EEX or ten pooled separate account
investment options. A participant can change investment elections for
future contributions and can transfer (or exchange) any existing pooled
separate account or participant-directed EEX Common Stock balance among the
offered investment elections at any time, in accordance with the Plan
guidelines. Texas Utilities Company ("TXU") Common Stock (acquired in
August 1997 in connection with the spin-off of assets into the Plan) may be
held in participants' accounts and transferred into any offered investment
election, but is not an investment option.
Employer's Matching Contributions ("company matching") - The maximum
participant contribution eligible for company matching ranges from 3% to 6%
of the participant's eligible compensation, depending on length of service.
Company matching contributions as a percentage of participant contributions
are at a rate of 50% or 60% depending on length of service. Employees are
100% vested in the matching contributions. All company matching
contributions are invested in EEX common stock and are
nonparticipant-directed.
Participant Loans - Participants may borrow up to 50% of the fair value of
their pre-tax employee contribution account or rollover account; however,
the loan cannot exceed the lesser of (i) $50,000, reduced by the maximum
outstanding loan balance in the previous one-year period, less the
outstanding balance on the date the loan application is approved, or (ii)
one-half of the account from which the loan is made. The interest rate on
the loan is equal to the prime interest rate in effect on the date of the
loan plus 1%. The interest rate on loans outstanding at the end of the year
ranged from 8.0% to 10.5%. Loans are funded by withdrawals from the
individual's investment accounts in the priority set forth in the Plan. The
maximum term of a loan cannot exceed 5 years or, if earlier, severance from
service.
Withdrawals from the Plan - Withdrawals from the Plan are governed by
applicable Internal Revenue Service ("IRS") regulations and provisions of
ERISA. Penalties may apply in certain instances.
A participant who terminates employment and has an account balance of more
than $5,000 can retain the funds in the Plan or withdraw them at any time.
Participants that terminate with balances of $5,000 or less are required to
receive a distribution after termination. To avoid current taxation, the
taxable portion of any withdrawal made upon termination can be rolled into
an IRA or a qualified retirement plan sponsored by another employer.
Termination of Plan - The Board of Directors of the Corporation has the
right under the Plan to amend or modify the Plan at any time and may
terminate the Plan in its entirety, subject to the provisions of ERISA.
Participants are 100% vested in their accounts at all times.
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
Expenses - All charges and expenses incurred in the administration of the
Plan and fees and expenses of the third-party administrator and the trustee
of the Plan are paid by the Corporation. Certain record keeping fees are
deducted from participants' accounts.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are prepared
under the accrual method of accounting in accordance with accounting
principles generally accepted in the United States.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value. Investments in common stock of EEX and TXU are valued
at their quoted market value. Investments in short-term money market
securities are stated at cost, which approximates fair value. Investments
in pooled separate accounts are stated at the fair value established by the
issuer based upon quoted market prices of the underlying investments within
each fund. Participant loans are stated at cost, which approximates fair
value. Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
Benefits Payable - Benefits are recorded when paid.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
the use of estimates by management; actual results could differ from those
estimates.
Risk and Uncertainties - The Plan provides for various investments in
common stock and pooled separate accounts. Investment securities, in
general, are exposed to various risks, such as interest rate, credit and
overall market volatility risk. Due to the level of risk associated with
certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and that
such changes could materially affect the amounts reported in the statements
of net assets available for benefits and participant account balances.
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
3. INVESTMENTS
Individual investments that represent 5% or more of the Plan's net assets
are as follows:
December 31
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2001 2000
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EEX Corporation Common Stock* $ 473,014 $ 884,095
Texas Utilities Company Common Stock 635,535 752,781
MMLIC Pooled Separate Accounts:
JCC Balanced (Janus) 1,821,384 2,238,051
MM Growth Equity (MFS) 1,956,123 3,239,209
MM Indexed Equity 1,136,525 1,324,167
MM Large Cap Value (Davis) 650,150 918,004
MM Money Market (Babson) 803,243 581,997
*Includes nonparticipant-directed transactions.
During 2001, the Plan's investments (including investments bought, sold,
and held during the year) appreciated (depreciated) in value as follows:
Common stock $ (542,076)
Pooled separate accounts (1,084,439)
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$(1,626,515)
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7
EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to nonparticipant-directed investments is as
follows:
December 31
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2001 2000
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Net assets:
EEX Corporation Common Stock $276,560 $486,117
Year Ended
December 31, 2001
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Changes in net assets:
Employer contributions $ 150,679
Net depreciation in fair value of investments (320,802)
Benefits paid to participants (37,380)
Administrative expenses (1,528)
Interfund transfers (526)
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Net decrease (209,557)
Net assets at:
Beginning of year 486,117
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End of year $ 276,560
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5. TAX STATUS OF THE PLAN
The Plan (before its amendment and restatement) received a determination
letter from the IRS dated February 10, 1999 stating that the Plan is
qualified under Section 401(a) of the Code. The Plan was amended and
restated on November 1, 2000. On December 14, 2001, the Company applied
for, but has not yet received, a new determination letter.
The Plan is required to operate in conformity with the Code to maintain its
qualification. The plan administrator believes the Plan is being operated
in compliance with the applicable requirements of the Code and, therefore,
believes that the Plan is qualified.
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. SUBESEQUENT EVENT
On May 29, 2002, EEX announced that it had entered into a definitive merger
agreement with Newfield Exploration Company. EEX will be merged with and
become a subsidiary of Newfield. The merger is subject to the approval of
EEX's shareholders, certain regulatory approvals and other conditions. The
transaction is expected to close in the third quarter of 2002. As of the
date of this report, there is no information available concerning the
disposition of the Plan if the merger is consummated.
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SUPPLEMENTAL SCHEDULE
EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EIN: 75-2421863 PN: 002
December 31, 2001
Description or Identity Description of Current
of Issuer Investment Cost Value
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* EEX Corporation
Common Stock 257,073 Shares $ 920,720 $ 473,014
Texas Utilities Company
Common Stock 13,479 Shares ** 635,535
* IBT Money Market Account 65,018 Units ** 65,018
MassMutual Pooled Separate Accounts:
Fund Number of Units
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* JCC Balanced (Janus) 19,767.392 ** 1,821,384
* MM Growth Equity (MFS) 21,569.956 ** 1,956,123
* MM Indexed Equity 11,248.028 ** 1,136,525
* MM International Eq (Oppenheimer) 229.965 ** 23,393
* MM Large Cap Value (Davis) 7,393.407 ** 650,150
* MM Small Cap Growth (W & R / Wellington) 281.780 ** 34,352
* Strategic Income (Oppenheimer) 3,707.196 ** 396,822
* MM Money Market (Babson) 6,883.392 ** 803,243
* MM Blue Chip Growth (Fidelity) 430.517 ** 91,589
* MM Focused Value (Harris) 795.422 ** 109,903
* Loans to Participants Interest Rate Ranges
from 8.0% to 10.5%
(Based on prime rate on date
of loan) ** 46,987
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Total $8,244,038
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* Party-In-Interest.
** Participant-directed amounts are not required to be disclosed.
10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this Annual Report (Form 11-K) to be signed on its behalf by the
undersigned hereunto duly authorized.
EEX CORPORATION
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
Date: June 28, 2002 By: /s/ Carol W. Barnes
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Carol W. Barnes, Member
EEX Corporation
Employee Stock Purchase and Savings
Plan Committee
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