11-K 1 form11k.txt =========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 F 1934 For the transition period from to Commission file number 33-42696 Coastal Aruba Refining Company N.V. Thrift Plan (Full title of the plan) El Paso Corporation El Paso Building 1001 Louisiana Street Houston, Texas 77002 (Name of issuer of the securities held pursuant to the plan and address of its prinipal executive office) =========================================================================== COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN ____________ FINANCIAL STATEMENTS AND FINANCIAL SCHEDULES WITH REPORT OF INDEPENDENT ACCOUNTANTS INDEX Page ---- Report of Independent Accountants - PricewaterhouseCoopers LLP.............................. 2 Independent Auditors' Report-Deloitte & Touche LLP........ 3 Financial Statements: Statements of Net Assets Available for Plan Benefits as of December 31, 2001 and 2000..................... 4 Statements of Changes in Net Assets Available for Plan Benefits for the years ended December 31, 2001, 2000 and 1999........................................ 5 Notes to Financial Statements........................... 6 Financial Schedules: Schedule I - Schedule of Assets Held for Investment Purposes as of December 31, 2001...................... 12 Schedule II - Allocation of Plan Assets and Liabilities to Investment Programs as of December 31, 2001 and 2000............................ 13 Schedule III - Allocation of Plan Income and Changes in Plan Equity to Investment Programs for the years ended December 31, 2001, 2000 and 1999................ 14 Exhibits: Consent Of Independent Accountants - PricewaterhouseCoopers LLP........................... 16 Independent Auditors' Consent-Deloitte & Touche LLP..... 17 Report of Independent Accountants To the Administrator of Coastal Aruba Refining Company N.V. Thrift Plan In our opinion, the accompanying statement of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of Coastal Aruba Refining Company N.V. Thrift Plan (the "Plan") at December 31, 2001, and the changes in net assets available for benefits for the year ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. These financial statements and schedules are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements and schedules based on our audit. We conducted our audit of these statements and schedules in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedules, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement and schedule presentation. We believe that our audit provides a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Houston, Texas March 22, 2002 INDEPENDENT AUDITORS' REPORT We have audited the statement of net assets available for Plan benefits of Coastal Aruba Refining Company N.V. Thrift Plan (the "Plan") as of December 31, 2000, and the related statements of changes in net assets available for Plan benefits for the two years in the period ended December 31, 2000. Our audits also included the financial statement schedules on pages 12 through 15. These financial statements and financial statement schedules are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance that 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, such financial statements present fairly, in all material respects, the net assets available for Plan benefits as of December 31, 2000 and the changes in net assets available for Plan benefits for the two years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. /S/ Deloitte & Touche LLP Houston, Texas March 28, 2001 COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, ---------------------- 2001 2000 ASSETS --------- ---------- Investments, at market Securities of El Paso Corporation Common Stock (cost: 2001- $3,524,316; 2000-$3,441,396) $7,732,923 $12,330,458 Other 207,851 205,591 ---------- ----------- Total Investments 7,940,774 12,536,049 Receivables Dividends 25,785 6,051 Contributions 210,397 8,725 ---------- ----------- Total Receivables 236,182 14,776 ---------- ----------- TOTAL ASSETS 8,176,956 12,550,825 LIABILITIES Payable to employer - 95,687 Other - 1,240 ---------- ----------- TOTAL LIABILITIES - 96,927 ---------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $8,176,956 $12,453,898 ========== =========== The accompanying notes are an integral part of these financial statements. COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the years ended December 31, -------------------------------- 2001 2000 1999 ---------- ---------- ---------- Net (depreciation)/appreciation in fair value of investments $(4,680,455) $7,101,280 $ 333 Investment income Dividends, net of withholding tax 102,654 23,525 21,169 Interest 9,446 9,573 8,169 ---------- ---------- ---------- Net investment (loss)/income (4,568,355) 7,134,378 29,671 Contributions Employer 595,848 514,301 434,406 Participants 724,938 601,717 533,265 ---------- ---------- ---------- Total contributions 1,320,786 1,116,018 967,671 ---------- ---------- ---------- Net (reduction)/addition (3,247,569) 8,250,396 997,342 Less: Benefits paid to participants 1,029,373 480,921 438,009 ---------- ---------- ---------- Net (decrease)/increase in net assets available for Plan benefits (4,276,942) 7,769,475 559,333 Beginning of period 12,453,898 4,684,423 4,125,090 ---------- ---------- ---------- End of period $ 8,176,956 $12,453,898 $4,684,423 ========== ========== ========== COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN ____________ NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF PLAN ------------------- The following description of the Coastal Aruba Refining Company N.V. Thrift Plan (the "Plan") provides general information about the Plan's provisions in effect for the year ended December 31, 2001. Participants should refer to the Plan documents and summary plan description for a more complete description of the Plan's provisions. General ------- On January 29, 2001, Coastal Aruba Refining Company N.V. (the "Company") became an indirect, wholly owned subsidiary of El Paso Corporation ("El Paso") through the merger of a wholly owned El Paso subsidiary with The Coastal Corporation ("Coastal"). In the merger, each share of Coastal common stock and Class A common stock was converted on a tax-free basis into 1.23 shares of El Paso common stock. The shares of Coastal stock previously held in this Plan were exchanged for El Paso stock on the merger date. The Plan is an employee retirement savings plan, registered under the Securities Act of 1933, as amended, covering eligible employees of the Company. The Management Board of the Coastal Aruba Thrift Foundation (the "Foundation") administers the Plan. Contributions ------------- Upon enrollment, a participant may elect to contribute to the Plan, by means of regular payroll deductions, from two percent to eight percent, in increments of one percent, of the participant's basic compensation. Basic compensation means fixed salaries or wages per hour, excluding compensation for bonuses, overtime, commissions and incentive compensation. The Company makes matching contributions at an amount equal to the employee's contributions up to a maximum of two percent of the employee's basic compensation during the first and second year of active participation in the Plan. Thereafter, the matching contributions are increased to not more than four percent during the third and fourth years of active participation, six percent during the fifth and sixth years of active participation and eight percent after six years of active participation in the Plan. Participant Accounts -------------------- Each participant's account is credited with the participant's contributions, the Company's matching contribution, and the participant's share of net earnings or losses of his or her respective investment funds elected under the Plan. Net investment gains and losses in a particular investment fund are allocated in proportion to the respective participant's account balances in that fund. COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 1. DESCRIPTION OF PLAN (Continued) Vesting ------- A participant's interest in the balance credited to his or her account is fully vested at all times. Investment Options ------------------ The Plan maintains three investment funds in which current employee contributions are invested: 1) Stock Fund - invested in common stock of El Paso Corporation (NYSE:EP). Prior to the merger date, these funds were invested in The Coastal Corporation (NYSE: CGP). As with investments in any single stock, this fund may be more volatile (that is, subject to larger swings in value, both up and down) than a fund that is diversified among the stocks of many companies. Participants who invest in the Stock Fund may instruct the trustee regarding the voting of the common stock allocated to the participant's account. Cash dividends thereon are reinvested in El Paso common stock. Prior to November 1, 2001, employer-matched contributions were invested in the Stock Fund only. Effective November 1, 2001, the Plan was amended to allow participants to direct their employer-matched contributions among all investment options. JP Morgan Chase is the custodian of the Stock Fund. Contributions attributable to the Stock Fund are temporarily held in an interest-bearing account at JP Morgan Chase pending investment in the Stock Fund. 2) Interest Income Fund - an unsegregated fund invested in interest-bearing investments such as bonds, notes, debentures, savings accounts, savings certificates, commercial paper, deposit accounts maintained by one or more legal reserve life insurance companies that provide for the payment of fixed or variable rates of interest for specified periods of time, and other similar types of investments. A portion of the Interest Income Fund may be retained in cash. 3) Diversified Fund - an unsegregated fund invested in capital stocks of issuers (other than El Paso common stock), notes, bonds, debentures, and other similar types of investments. A portion of the Diversified Fund may be retained in cash or invested temporarily in commercial paper, certificates of deposit or savings accounts. The contributions attributable to the Interest Income Fund and the Diversified Fund are temporarily held in a foreign currency, Aruban Florin, in interest-bearing accounts at the Caribbean Mercantile Bank N.V., which are translated into U.S. dollars using the conversion rate at December 31, 2001 and 2000. See Schedule I - Schedule of Assets Held for Investment Purposes. Contributions will remain in the interest-bearing accounts pending a determination by the investment manager that sufficient funds have accumulated to warrant one of the investments described above for each fund. 1. DESCRIPTION OF PLAN (Continued) ------------------- The following numbers of participants were invested in the various funds at December 31, 2001: Number of Fund Participants ---- ------------ 2001 2000 ---- ---- Stock Fund 430 400 Interest Income Fund 34 44 Diversified Fund 29 38 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Accounting Basis ---------------- The financial statements of the Plan are prepared on the accrual basis of accounting. Use of Estimates ---------------- The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements, and the reported changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates. Marketable Securities --------------------- Securities valuations are based on the last recorded sales price at December 31, 2001 and 2000, as reported by the principal securities exchange on which the security is traded, or the average of the bid and the ask price if sold over the counter. Realized gains and losses reported herein on the sale or withdrawal of securities are based on the difference between market values of the securities sold and/or issued at the effective dates and the market value at the beginning of the year and cost of securities purchased during the year. Taxes ----- The Plan is not a qualified plan for purposes of the laws of the United States pursuant to Section 401(a) of the Internal Revenue Code of 1986, as amended, nor is it subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. The Plan was reviewed in 1991 by the Centrale Bank van Aruba, which concluded that the Plan was not subject to the prudential supervision of the Centrale Bank because it is designed in accordance with United States customs and does not conform to the requirements for a savings plan in Aruba. No subsequent reviews have been conducted to assert otherwise. COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ------------------------------------------ Under present United States tax laws, the purchase and sale of El Paso common stock by the Foundation is not subject to income or withholding tax. However, dividends paid on the common stock are subject to a 30 percent withholding tax. Expenses -------- Generally, reasonable expenses of administering the Plan are paid by the Company, although it is not obligated to do so. All taxes that may be levied or assessed under future laws upon the assets or the income of the Plan will be paid by the Plan. Change In Recordkeeper ---------------------- Prior to the merger with El Paso, administrative recordkeeping of the Plan was performed in-house by Coastal. Effective July 1, 2001, El Paso out-sourced the administrative recordkeeping function of the Plan to Hewitt Associates. 3. NET (DEPRECIATION) / APPRECIATION IN THE STOCK FUND --------------------------------------------------- During 2001, 2000 and 1999, the fair value of investments (including investments bought and sold, as well as held during the year) (depreciated)/appreciated as follows: Stock Fund ---------- Balance at December 31, 1998 $ 1,787,449 Appreciation during 1999 333 ----------- Balance at December 31, 1999 1,787,782 Appreciation during 2000 7,101,280 ----------- Balance at December 31, 2000 8,889,062 Depreciation during 2001 (4,679,003) ----------- Balance at December 31, 2001 $ 4,210,059 =========== 4. PLAN TERMINATION ---------------- Although the Company has not expressed any intent to do so, it reserves the right to discontinue contributions at any time and to terminate the Plan. Upon termination, Plan assets would be distributed to the participants, as directed by the Management Board of the Foundation upon the Company's recommendation, on the basis of their account balances existing at the date of termination, as adjusted for investment gains and losses. COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN ____________ NOTES TO FINANCIAL STATEMENTS (Continued) 5. FINAL DISTRIBUTIONS AND BENEFITS PAID ------------------------------------- Final distributions and participant withdrawals that have been processed and approved, but not paid by the Plan, are not considered Plan obligations until paid under generally accepted accounting principles and therefore, are not presented as liabilities or benefits paid in the accompanying financial statements. Final distributions and participant withdrawals that were processed and approved, but not paid, amounted to $32,889 and $222,387 as of December 31, 2001 and 2000. 6. AMENDMENTS ---------- The Management Board of the Foundation, upon the Company's recommendation, may amend the Plan at any time. Each participant who is an active employee on or after July 1, 2001, is fully vested in his or her entire account balance in the Plan. Effective November 1, 2001, all employer matched contributions and employee unmatched contributions may be allocated among all investment options as directed by the participant's written election. Also, effective November 1, 2001, participants shall have the right once each calendar quarter to file a written notice directing the transfer of funds among all investment options in which the participants' account is invested. FINANCIAL SCHEDULES COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN SCHEDULE I - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES as of December 31, 2001 Number of shares (units) or principal Identity of issuer, borrower, or amount of similar party, and bonds and Current description of investment notes Cost value --------------------------------------- ----------- ---------- ---------- STOCK FUND El Paso Corporation common stock 173,345 $3,524,316 $7,732,923 Short-term securities JP Morgan Chase Securities of Texas Money Market Fund 152 152 152 ---------- ---------- Total investments - Stock Fund 3,524,468 7,733,075 ---------- ---------- INTEREST INCOME FUND Short-term securities Caribbean Mercantile Bank N.V. 116,375 116,375 116,375 ----------- ---------- Total deposits - Interest Income Fund 116,375 116,375 ----------- ---------- DIVERSIFIED FUND Short-term securities Caribbean Mercantile Bank N.V. 91,324 91,324 91,324 ----------- ---------- Total deposits - Diversified Fund 91,324 91,324 ----------- ---------- Total Assets Held For Investment Purposes $3,732,167 $7,940,774 =========== ========== COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN SCHEDULE II - ALLOCATION OF PLAN ASSETS AND LIABILITIES TO INVESTMENT PROGRAMS
as of December 31, 2001 ---------------------------------------------- El Paso Interest Common Income Diversified Total Plan Stock Fund Fund Fund ---------- ---------- -------- ------------ Investments, at market Securities of El Paso Common Stock (Cost $3,524,316) $7,732,923 $7,732,923 $ - $ - Other 207,851 152 116,375 91,324 ---------- ---------- --------- ----------- 7,940,774 7,733,075 116,375 91,324 Receivables Dividends 25,785 25,785 - - Contributions 210,397 187,391 13,513 9,493 --------- --------- -------- ---------- 236,182 213,176 13,513 9,493 --------- --------- -------- ---------- Net assets availiable for plan benefits $8,176,956 $7,946,251 $ 129,888 $ 100,817 ========= ========= ========= ========== as of December 31, 2000 ----------------------------------------------- Coastal Interest Common Income Diversified Total Plan Stock Fund Fund Fund ---------- ---------- -------- ------------ Investments, at market Securities of Coastal Common Stock (Cost $3,441,396) $12,330,458 $12,330,458 $ - $ - Other 205,591 86 113,203 92,302 ----------- ----------- ---------- ------------ 12,536,049 12,330,544 113,203 92,302 Receivables Dividends 6,051 6,051 - - Contributions 8,725 - 4,072 4,653 ---------- ----------- ----------- ----------- 14,776 6,051 4,072 4,653 Liabilities Payables to employer 95,687 95,687 - - Other 1,240 1,240 - - ---------- ----------- ----------- ---------- 96,927 96,927 - - ---------- ----------- ----------- ---------- Net assets availiable for plan benefits $12,453,898 $12,239,668 $ 117,275 $ 96,955
COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN SCHEDULE III - ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT PROGRAMS
for the year ended December 31, 2001 ---------------------------------------------- El Paso Interest Common Income Diversified Total Plan Stock Fund Fund Fund ---------- ---------- -------- ------------ Investments income Dividends $ 102,654 $ 102,654 $ - $ - Interest 9,446 66 5,240 4,140 --------- --------- --------- ----------- Total investment income 112,100 102,720 5,240 4,140 (Depreciation)/appreciation of investments (4,680,455) (4,679,003) 2,036 (3,488) Contributions Employer 595,848 595,848 - - Employee 724,938 683,558 23,509 17,871 --------- ---------- --------- ----------- Total contributions 1,320,786 1,279,406 23,509 17,871 Less: Benefits paid to participants 1,029,373 996,540 18,172 14,661 Net (decrease)/increase in net assets available for plan benefits (4,276,942) (4,293,417) 12,613 3,862 --------- --------- -------- ----------- Beginning of period 12,453,898 12,239,668 117,275 96,955 ---------- ---------- -------- ----------- End of period $8,176,956 $7,946,251 $ 129,888 $ 100,817 ========== ========== ========= =========== for the year ended December 31, 2000 ---------------------------------------------- Coastal Interest Common Income Diversified Total Plan Stock Fund Fund Fund ---------- ---------- -------- ------------ Investments income Dividends $ 23,525 $ 23,525 $ - $ - Interest 9,573 427 5,007 4,139 ---------- ---------- --------- ------------ Total Investment Income 33,098 23,952 5,007 4,139 Appreciation of investments Coastal common stock 7,101,280 7,101,280 - - Contributions Employer 514,301 514,301 - - Employee 601,717 565,114 21,581 15,022 --------- --------- ---------- ----------- Total contributions 1,116,018 1,079,415 21,581 15,022 Less: Benefits paid to participants 480,921 472,292 7,556 1,073 Net increase in net assets available for plan benefits 7,769,475 7,732,355 19,032 18,088 ---------- --------- ---------- ----------- Beginning of period 4,684,423 4,507,313 98,243 78,867 ---------- ---------- ---------- ----------- End of period $12,453,898 $12,239,668 $ 117,275 $ 96,955 =========== ========== ========== ===========
COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN SCHEDULE III - ALLOCATION OF PLAN INCOME AND CHANGES IN PLAN EQUITY TO INVESTMENT PROGRAMS (continued)
for the year ended December 31, 1999 ---------------------------------------------- Coastal Interest Common Income Diversified Total Plan Stock Fund Fund Fund ---------- ---------- -------- ------------ Investments income Dividends $ 21,169 $ 21,169 $ - $ - Interest 8,169 160 4,398 3,611 ---------- --------- --------- --------- Total Investment Income 29,338 21,329 4,398 3,611 Appreciation of investments Coastal common stock 333 333 - - Contributions Employer 434,406 434,406 - - Employee 533,265 497,117 20,536 15,612 ---------- ---------- --------- --------- Total contributions 967,671 931,523 20,536 15,612 Less: Benefits paid to participants 438,009 412,130 12,098 13,781 Net increase in assets available for plan benefits 559,333 541,055 12,836 5,442 --------- ---------- --------- --------- Beginning of period 4,125,090 3,966,258 85,407 73,425 ---------- ---------- --------- --------- End of period $4,684,423 $4,507,313 $ 98,243 $ 78,867 ========== ========== ========= ========
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Management Board of the Coastal Aruba Thrift Foundation, as Administator, has duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized. MANAGEMENT BOARD OF THE COASTAL ARUBA THRIFT FOUNDATION, AS ADMINISTRATOR OF COASTAL ARUBA REFINING COMPANY N.V. THRIFT PLAN By: /s/ Joel Richards III ________________________________ Joel Richards III Member of Management Board Dated: March 28, 2002 Exhibit Index ------------- Exhibit No. Description ----------- ----------- 23.1 Consent of PricewaterhouseCoopers LLP 23.2 Consent of Deloitte & Touche LLP