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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, 1999
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 SCHEDULES
<TABLE>
<CAPTION>
Page No.
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<S> <C>
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............................................ 4-8
Supplemental Schedules:
Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes
at End of Year as of December 31, 1999................................ 10
Schedule G, Part III - Schedule of Nonexempt Transactions................ 11
Exhibit 23 - Consent of Independent Auditors................................ 13
</TABLE>
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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, 1999 and 1998, and the related statement of changes in net assets available
for benefits for the year ended December 31, 1999. 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, 1999 and 1998, and the changes in net assets available for benefits
for the year ended December 31, 1999, 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 for investment purposes at end of year as of December 31, 1999 and the
schedule of nonexempt transactions for the year ended December 31, 1999 are
presented for purposes of additional analysis and are not a required part of the
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in our audits
of the financial statements and, in our opinion, are fairly stated in all
material respects in relation to the financial statements taken as a whole.
ERNST & YOUNG LLP
May 26, 2000
Houston, Texas
1
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31
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1999 1998
------------- -------------
<S> <C> <C>
ASSETS
------
Investments (Note 3).................................. $11,422,374 $11,429,652
Employee Contributions Receivable..................... -- 81,257
Employer Contributions Receivable..................... -- 16,414
Loan Payments Withheld................................ -- 3,689
Accrued Investment Income............................. -- 7,363
------------- -------------
Total Assets................................... 11,422,374 11,538,375
LIABILITIES
-----------
Accrued Expenses...................................... 898 406
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS..................... $11,421,476 $11,537,969
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
2
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
Additions:
Interest and dividend income............................... $ 794,268
Net depreciation in fair value
of investments (Note 3).................................... (62,712)
Contributions:
Employee................................................... 968,033
Employer................................................... 207,567
Rollovers from participants'
previous plans............................................. 692
-------------
1,907,848
Deductions:
Distributions to plan participants......................... (2,020,681)
Administrative expenses.................................... (3,660)
-------------
Net decrease............................................... (116,493)
Net assets available for benefits:
Beginning of year.......................................... 11,537,969
-------------
End of year................................................ $11,421,476
=============
</TABLE>
See accompanying Notes to Financial Statements.
3
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
The Plan is a combination profit sharing and employee stock ownership plan
under Sections 401 (a), 401 (k), 401 (m) and 4975 (e) (7) of the Internal
Revenue Code ("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 combination employee stock
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ownership and profit sharing plan 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 and its participating subsidiaries
are eligible to participate in the Plan. Participation is voluntary.
A committee appointed by the EEX Board of Directors is responsible for the
general administration, management and operation of the Plan ("plan
committee"). Chase Bank of Texas, ("the Trustee"), a federally chartered
bank, has served as trustee since September 1, 1997 and manages the assets
of the Plan.
Participants' Contributions - Under the Plan, a participant may invest
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pre-tax and/or after-tax dollars through payroll deductions each pay period
in increments of 1 percent up to a maximum of 16 percent of regular monthly
salary or wages. The Omnibus Budget Reconciliation Act of 1993 placed an
annual limitation of $160,000 for 1999 on all pay, which can be used in
computing benefits for participants under the Plan. The maximum
contribution for certain highly compensated participants is subject to
further reduction pursuant to limitations under the Internal Revenue Code.
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.
4
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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 six mutual fund investment
options: the Fidelity Puritan Fund, the Fidelity Magellan Fund, the
Fidelity Equity Income Fund and the Fidelity Spartan U.S. Equity Index
Fund, all of which invest in equity securities; the Fidelity U.S. Bond
Index Fund, which invests in fixed income bond securities; and the Fidelity
Retirement Government Money Market Portfolio, which invests in short-term
U.S. government securities. A participant can change investment elections
for future contributions and can transfer (or exchange) any existing mutual
fund balances among the offered investment elections at any time, in
accordance with the Plan guidelines.
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 non-participant
directed.
Participant Loans - Participants may borrow up to 50% of the fair value of
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their pre-tax employee contribution account or rollover account; however,
the loan cannot exceed the lesser of $50,000 or one-half of the account
from which the loan is made less the maximum outstanding loan balance in
the previous one-year period. The interest rate on the loan is equal to the
prime interest rate of the Trustee that is in effect on the date the loan
is made plus one (1) percentage point. The interest rate on loans
outstanding at the end of the year ranged from 8.75% to 9.5%. Loans are
funded by withdrawals from the individual's investment accounts as
determined by the plan committee. The maximum term of a loan cannot exceed
5 years or, if earlier, severance from service.
Withdrawal from the Plan - Withdrawals from the Plan are governed by
------------------------
applicable 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 less than $5,000 are required
to receive a distribution after termination. To avoid 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.
The Internal Revenue Service ("IRS") has established rules governing
distributions from the Plan after the participant has attained 70 1/2 years
of age.
5
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
Termination of Plan - The Board of Directors of the Corporation has the
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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.
Expenses - All charges and expenses incurred in the administration of the
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Plan and fees and expenses of the Trustee are paid by the Corporation.
Record keeping fees are deducted from participants' accounts.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are prepared
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under the accrual method of accounting.
Use of Estimates - The preparation of financial statements in conformity
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with accounting principles generally accepted in the United States requires
the use of significant estimates and assumptions by management; actual
results could differ from those estimates.
Investment Valuation and Income Recognition - The Plan's investments are
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stated at fair value. Investments in common stock of EEX and TXU are valued
at their quoted market value. Investments in Fidelity mutual funds are
valued at quoted net asset value of the respective funds reflecting the
closing sales price of the underlying securities. 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.
Reclassification - Certain prior year amounts have been reclassified to
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conform to the current year presentation.
Benefits Payable - Benefits are recorded when paid.
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6
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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:
<TABLE>
<CAPTION>
December 31
-----------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
EEX Corporation Common Stock $ 443,868 $ 615,061
Texas Utilities Company Common Stock 657,642 1,052,056
Fidelity Magellan Fund 4,038,830 3,580,745
Fidelity Puritan Fund 2,602,748 2,955,351
Fidelity Equity Income Fund 891,230 909,725
Fidelity Spartan U.S. Equity Index Fund 1,247,736 1,111,148
Fidelity Retirement Government Money Market Portfolio 909,441 581,524
</TABLE>
During 1999, the Plan's investments (including investments bought, sold,
and held during the year) appreciated (depreciated) in value as follows:
<TABLE>
<CAPTION>
<S> <C>
Common stock $(538,978)
Mutual funds 476,266
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$ (62,712)
=========
</TABLE>
7
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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:
<TABLE>
<CAPTION>
December 31
------------------------------------------
1999 1998
----------------- ------------------
<S> <C> <C>
Net assets:
EEX Corporation Common Stock $169,075 $127,331
Employer Contribution Receivable -- 16,414
----------------- ------------------
$169,075 $143,745
================= ==================
</TABLE>
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
-------------------------
<S> <C>
Changes in net assets:
Employer contributions $ 207,567
Interest and dividends 497
Net depreciation in fair value of investments (148,518)
Benefits paid to participants (34,301)
Interfund transfers 85
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Net increase 25,330
Net assets at:
Beginning of year 143,745
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End of year $ 169,075
=========================
</TABLE>
5. TAX STATUS OF THE PLAN
The Plan has received a determination letter dated February 10, 1999
stating that the Plan meets the requirements of Section 401(a) of the Code.
EEX believes that the Plan is designed and currently being operated in
compliance with the applicable requirements of the Code.
8
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SUPPLEMENTAL SCHEDULES
9
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
SCHEDULE H, LINE 4(i)-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT END OF YEAR
EIN: 75-2421863 PN: 002
December 31, 1999
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Description or Identity Description of Cost Current
of Issuer Investment Value
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* EEX Corporation 151,104 shares, par value of
Common Stock $0.01 per share $1,741,871 $ 443,868
Texas Utilities Company 18,493 shares, par value of
Common Stock $1.00 per share ** 657,642
Fidelity Mutual Funds:
Fund Number of Shares
------------------------------- ---------------------------------------
Magellan 29,560.345 ** 4,038,830
Puritan 136,770.732 ** 2,602,748
Equity Income 16,664.715 ** 891,230
Spartan U.S. Equity Index 23,953.461 ** 1,247,736
U.S. Bond Index 49,535.951 ** 504,771
Retirement Government 909,440.920 ** 909,441
Money Market Portfolio
* Loans to Participants Interest Rate
Ranges from 8.75% to 9.5%
(Based on prime rate on date
of loan) ** 126,108
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Total $11,422,374
===================
</TABLE>
* Party-In-Interest.
** Participant-directed amounts are not required to be disclosed.
10
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EEX CORPORATION EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
SCHEDULE G, PART III - SCHEDULE OF NONEXEMPT TRANSACTIONS
EIN: 75-2421863 PN: 002
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Relationship to Plan, Current
Identity of Employer, or other Cost of Value of
Party Involved Party-In-Interest Description of Transaction Asset* Asset Net Gain**
----------------------- --------------------- ------------------------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
EEX Corporation Employer Failure to timely remit salary $41,460 $44,227 $2,767
deferral contributions for the
period of December 15, 1998
</TABLE>
* Represents the employee contributions which were not remitted timely.
** Represents interest for the use of the amount involved. In October 1999, the
Company filed Form 5330 and paid the required excise taxes to the Internal
Revenue Service in connection with this transaction.
11
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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 to be signed on its behalf by the undersigned hereunto
duly authorized.
EEX CORPORATION
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
Date: June 22, 2000 By: /s/ Carol W. Barnes
------------------------------------------------
Carol W. Barnes, Member
EEX Corporation
Employee Stock Purchase and Savings Plan
Committee
12
