EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 2001
CABOT OIL & GAS CORPORATION SAVINGS INVESTMENT PLAN
(Full title of the Plan)
CABOT OIL & GAS CORPORATION
1200 Enclave Parkway, Houston, Texas 77077
(Name of issuer of securities held pursuant to the
plan and address of principal executive offices)
Commission file number 1-10447
CABOT OIL & GAS CORPORATION
SAVINGS INVESTMENT PLAN
INDEX
PAGE
Signature Page 2
Report of Independent Accountants, Financial Statements and Supplemental Schedules F pages
Exhibit 23.1 - Consent of Independent Accountants
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the Administrator
has duly caused this Annual Report to be signed by the undersigned thereunto
duly authorized.
CABOT OIL & GAS CORPORATION
By: /s/ Henry C. Smyth
-------------------------------------------
Henry C. Smyth
Vice President and Controller
June 28, 2002
Cabot Oil & Gas Corporation
Savings Investment Plan
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
Cabot Oil & Gas Corporation Savings Investment Plan
Index to Financial Statements and Supplemental Schedule
Page
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 2001 and 2000 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2001 and 2000 3
Notes to Financial Statements 4 - 9
Supplemental Schedule*:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
as of December 31, 2001 10
* Other schedules required by 29 CFR 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of the
Cabot Oil & Gas Corporation Savings Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Cabot Oil & Gas Corporation Savings Investment Plan (the Plan) at
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States of America. 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 of these statements 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
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic 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
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
Houston, Texas
June 24, 2002
Cabot Oil & Gas Corporation Savings Investment Plan
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
Investments, at fair value (Notes 1, 2 and 3):
Equity $ 6,235,399 $ 5,710,273
Mutual funds 23,458,140 25,053,442
Short-term investments and cash 6,078,425 5,240,199
Loans to participants 624,078 541,951
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Net assets available for plan benefits $36,396,042 $36,545,865
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The accompanying notes are an integral part of these financial statements.
-2-
Cabot Oil & Gas Corporation Savings Investment Plan
Statements of Changes in Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
Additions to net assets attributed to:
Investment income:
Interest $ 54,396 $ 51,998
Dividends 706,453 1,968,923
Net (depreciation)/appreciation in fair value of investments (2,720,055) 469,273
------------------- -------------------
Total investment income (1,959,206) 2,490,194
Contributions:
Employer 1,043,954 728,540
Participants 1,807,529 1,529,838
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Total additions 892,277 4,748,572
------------------- -------------------
Deductions from net assets attributed to:
Benefits paid to participants 1,018,742 2,250,700
Administrative fees 23,358 22,033
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Total deductions 1,042,100 2,272,733
------------------- -------------------
(149,823) 2,475,839
Beginning of year 36,545,865 34,070,026
------------------- -------------------
End of year $36,396,042 $36,545,865
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The accompanying notes are an integral part of these financial statements.
-3-
Cabot Oil & Gas Corporation Savings Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000
1. Description of Plan
The following brief description of the Cabot Oil & Gas Corporation
Savings Investment Plan (the Plan) is provided for general information
purposes only. Participants should refer to the summary plan
description and legal plan document for more complete information.
General
Cabot Oil & Gas Corporation (COGC or Company) was previously a
subsidiary of Cabot Corporation (Cabot). In February 1990, the Company
completed its initial public offering of approximately 18% of the total
outstanding shares of common stock and, accordingly, ceased to be a
wholly-owned subsidiary of Cabot. On March 28, 1991, Cabot completed an
exchange offer. Following the completion of the exchange offer, the
Company became 100% publicly-owned and ceased to be a subsidiary of
Cabot.
Effective January 1, 1991, COGC established the Plan, a defined
contribution plan, in which participation is voluntary on the part of
the employees. Employees are eligible to become a participant in the
Plan upon the first day of employment.
Prior to the commencement of the Plan, COGC employees participated in
the Cabot Profit Sharing and Savings Plan (PSSP) and the Cabot Employee
Stock Ownership Plan (ESOP). All COGC employees who were members of the
PSSP automatically became a participant in the Plan on January 1, 1991,
were 100% vested with respect to balances in the PSSP and ESOP as of
December 31, 1990, and had their PSSP and ESOP account balances
transferred to the Plan. The Plan assumed legal responsibility for the
accrued benefits of such affected employees on January 1, 1991.
Benefits under the ESOP were frozen as of December 31, 1990. The ESOP
balance is comprised of Cabot and/or COGC common stock. Effective
September 1, 2000, the participant is eligible to withdraw, exchange,
or take a loan against the ESOP balance. Dividends earned on the ESOP
common stock are distributed to the other Plan investment election(s)
according to the participant's most recent investment election. If such
an election is not made by a participant, dividends from the ESOP are
placed in the money market fund.
Contributions
A participant can contribute in the aggregate from 1% to 15% of
eligible compensation as defined in the Plan on a pre-tax (before
federal and state taxes are withheld) and/or after-tax basis through
payroll deductions, except for employees residing in the state of
Pennsylvania. Pennsylvania requires that state taxes be withheld before
the pre-tax contribution. The participant is always fully vested in his
or her contributions made on either a pre-tax or after-tax basis.
Effective July 1, 2001, the Company provided an incentive for each
employee to participate in the pre-tax portion of the Plan by matching
100% of the first 6% of eligible compensation contributed.
-4-
Cabot Oil & Gas Corporation Savings Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000
Prior to July 1, 2001, the Company's matching incentive was 100% of the
first 4% of eligible compensation contributed.
Vesting
The participant is credited with a year of vesting service for each
plan year in which he or she has 1,000 or more hours of service. The
Company matching contribution vests 20% per year after the first year
of vesting service, with 100% vesting attained after five years of
vesting service. Service with Cabot prior to January 1, 1991 counts as
vesting service under the Plan to the extent and in the same manner as
computed under the PSSP. A participant's account becomes 100% vested
with less than five years of vesting service as a result of either (i)
permanent and total disability, (ii) death (account value is paid to
the designated beneficiary), or (iii) attainment of age 65. The Plan
was amended in March 2000 to fully vest certain participants who were
terminated due to a reduction in workforce. Additionally, the Amendment
grants service credits to all employees who become employed by the
Company as a result of an acquisition or merger for purposes of
eligibility and vesting.
If a participant leaves COGC and is rehired within five years, the
prior service with COGC will be restored under the Plan. Additionally,
if the participant was partially vested when the employment was
initially terminated, COGC will redeposit any amount of the matching
contribution which was forfeited from the account (because the
participant left before becoming 100% vested) after repayment by the
participant of his or her previous distribution, if any.
Investment Elections
The Plan also allows the participants to (i) change the percentage of
pay withheld through payroll deduction a maximum of four times per
year, with changes taking effect the first pay period after advance
notice, (ii) change investment fund options for future contributions at
any time, directly by telephone with the Fidelity Management Trust
Company (Trustee) or via internet, (iii) transfer the total balance of
his or her accumulated investments from one fund to another twelve
times per year, and (iv) discontinue participation in the Plan at any
time, to be effective the first pay period after advance notice.
Re-enrollment can be at any time, except after a hardship withdrawal.
Payment of Benefits
A participant eligible for a distribution from the Plan may elect to
receive an immediate lump sum payment, or if the participant's account
balance exceeds $5,000 he or she can defer the payment up to age 70.5.
An exception is made for those participants who (i) had shares of Cabot
stock transferred from the PSSP and/or ESOP to the Plan and (ii)
exchanged shares of Cabot common stock in his or her PSSP and/or ESOP
account for shares of COGC common stock pursuant to an exchange offer
completed by Cabot in March 1991. Such participants can have the stock
balance paid in cash or as common stock certificates. If the
participant decides to sell such stock certificates, the commission fee
will be reflected in the net asset value of the stock trade. Balances
transferred to the Plan from the PSSP and/or ESOP retain payment
options provided under the PSSP and/or ESOP.
-5-
Cabot Oil & Gas Corporation Savings Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000
Withdrawals During Employment
A participant is eligible to make certain withdrawals while employed.
The first category of funds that are eligible for withdrawal represent
amounts that were transferred from the PSSP. The second category
represents amounts contributed under the Plan. Different rules apply to
the withdrawal depending on the category. If the participant was a
former member in the PSSP, the participant is eligible to make either a
voluntary withdrawal or a hardship withdrawal from the amounts that
were transferred. A voluntary withdrawal may be made from the PSSP
after-tax and employer contribution accounts. Two voluntary withdrawals
can be made per year, provided that not more than two are made within
three months of each other. A voluntary withdrawal will be deducted
from the participant's account in a specific order as provided for in
the Plan.
A participant is also eligible for a hardship withdrawal from his or
her PSSP pre-tax account under the following conditions, (i) in a year
in which the participant has already made two voluntary withdrawals and
(ii) when three months have not elapsed since the time of the last
voluntary withdrawal. Special rules apply which determine the hierarchy
of access to the various sources of funds including (i) the participant
has already withdrawn the full amount of both the after-tax
contributions and the vested Company contributions, (ii) the
participant must have fully exhausted the ability to obtain funds from
any other source, including a loan from the Plan, and (iii) the
participant submitted an application to the administrative committee
for a hardship withdrawal. Following a hardship withdrawal, there will
be an automatic 12-month suspension of the participant's pre-tax
contributions.
A participant can withdraw at any time an amount equal to the after-tax
contributions made to the Plan after January 1, 1991. The minimum
withdrawal amount is $500. A withdrawal of after-tax contributions
requires a withdrawal of a proportionate share of investment earnings
thereon, which will be taxable and will include 10% early distribution
tax if made before age 59.5 under current tax laws. Additionally, the
participant can withdraw an amount equal to the pre-tax contributions
made to the plan after January 1, 1991 at any time after age 59.5. This
withdrawal will be taxable, but will not include the 10% early
distribution tax under current tax laws.
Loans to Participants
A participant can borrow up to 50% of his or her vested account balance
(including ESOP) while in the Plan. The amount borrowed may be from a
minimum of $1,000 to a maximum of $50,000, but never more than 50% of
the vested account balance. Only one loan can be outstanding at any one
time. A loan must be repaid by payroll deduction over a period not to
exceed five years; early payoff is permitted. The loan interest rate is
set by the administrative committee and, for the 2001 plan year, it was
1% above the prime rate charged by COGC's principal commercial bank in
effect at the time of the loan. The set-up fee and the ongoing
administrative fee for the loan are charged directly to the
participant's account on a quarterly basis. Loans are limited to
members who are active employees.
Withdrawals Upon Termination of Employment
A participant can withdraw the total vested amount in the Plan account
as a result of either (i) termination of employment (ii) retirement at
age 65 or at age 55 or later with 10 years of service or (iii)
permanent and total disability or death. The full value of the Plan
-6-
Cabot Oil & Gas Corporation Savings Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000
account will be paid and will be subject to income tax when the
participant retires or qualifies as permanently and totally disabled,
unless an election is made by the participant to rollover the funds as
allowed by the Internal Revenue Code. If death occurs before
retirement, the full value of the account will be paid to the
designated beneficiary. Any portion of an eligible rollover
distribution can be paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
Disposition of Forfeitures by Participants
A forfeiture of unvested benefits shall be accounted for in the
following manner. First, the forfeiture shall be credited to the
Company contribution account of a re-employed participant for whom a
reinstatement of prior forfeiture is required. Second, the forfeiture
shall be applied toward the account of a former participant pursuant to
the unclaimed benefit provisions of the Plan. To the extent that
forfeitures for any Plan year exceed the amounts required to reinstate
the accounts noted above, they will be applied against the next
succeeding Company contribution.
For the years ended 2001 and 2000, employer contributions were reduced
by approximately $31,158 and $38,057, respectively, from forfeited
nonvested accounts.
Rollover Contributions
Generally, if a participant received a qualified total distribution as
defined in the Internal Revenue Code of 1986 as amended, the
participant can deposit or rollover those funds into the Plan if
approved by the Administrative Committee.
Participant Accounts
Each participant's account is credited with the employee's
contribution, the Company contributions and the proportionate
allocation of the earnings of the Plan, as defined.
Plan Trustee
Fidelity Management Trust Company was appointed trustee of the Plan by
a contract dated June 1, 1991. Under the contract, the trustee shall
hold all property received, manage the Plan and invest and reinvest
Plan assets.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with accounting principles generally
accepted in the United States of America.
Use of Estimates
The preparation of 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 amounts of changes in net assets
available for benefits during the reporting period. Actual results
could differ from those estimates.
-7-
Cabot Oil & Gas Corporation Savings Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000
Valuation of Investments
Investments are recorded at fair market value based on market prices
that have been provided by the Trustee.
Net (Depreciation)/Appreciation in Fair Market Value of Investments
The statement of changes in net assets available for Plan benefits
presents the net (depreciation)/appreciation in the fair market value
of investments which consists of realized gains or losses and the
unrealized (depreciation)/appreciation on those investments.
Administrative Expenses
Administrative expenses consist of all expenses incident to the
administration, termination or protection of the Plan, including, but
not limited to, legal, accounting, investment manager and trustee fees.
Substantially all administrative expenses, except for expenses
associated with loans to participants, were paid by the Company in
2001.
Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks and mutual funds. Investment securities are exposed to various
risks, such as market and credit risk. Due to the level of risk
associated with certain investment securities, it is at least
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 statement of net assets available
for benefits.
3. Investments
The following presents investments that represent five percent or more
of the Plan's net assets as of December 31, 2001 and 2000 at their
current value.
2001 2000
------------------------------ ------------------------------
Value Shares Value Shares
Cabot Corporation common stock $ 4,421,750 123,859 $ 3,468,276 131,499
Cabot Oil & Gas Corporation
common stock 1,813,649 75,412 2,241,997 71,877
Fidelity Magellan Fund 8,298,818 79,628 9,136,325 76,583
Fidelity Growth & Income Fund 2,859,137 76,488 2,863,838 68,025
Fidelity Independence Fund 2,416,822 153,254 3,139,594 142,644
Fidelity U.S. Bond Index Portfolio 2,568,550 237,829 1,812,454 171,148
Fidelity Money Market Trust:
Retirement Money Market Portfolio 6,078,425 6,078,425 5,240,199 5,240,199
Spartan U.S. Equity Index Portfolio 4,934,105 121,410 5,606,933 119,781
-8-
Cabot Oil & Gas Corporation Savings Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000
The Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year)
(depreciated)/appreciated in value as follows:
Net (depreciation)/
appreciation
-------------------------------
Investments 2001 2000
Equity $ 768,131 $3,756,964
Mutual funds (3,488,186) (3,287,691)
-------------------------------
Total net (depreciation)/appreciation $(2,720,055) $ 469,273
-------------------------------
4. Plan Termination
While the Company has not expressed any intent to discontinue its
contributions or terminate the Plan, it may do so at any time. In the
event of such a discontinuance or termination of the Plan, all amounts
credited to the accounts of participants shall become fully vested and
non-forfeitable.
5. Tax Status of Plan
The Plan is designed to constitute a "Qualified Plan" under the
provisions of Section 401(a) of the Internal Revenue Code and,
therefore, be exempt from federal income tax under the provisions of
Section 501(a). The Plan obtained its latest determination letter on
October 23, 1993, in which the Internal Revenue Service stated that the
Plan was in compliance with the applicable requirements of the Internal
Revenue Code. The Plan was amended in 1994, 1998, 1999, 2000 and 2001,
subsequent to the receipt of the determination letter. The Plan has a
pending request for a new determination letter, which was filed on
February 27, 2002. The Plan Administrator believes the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, no provision for
income taxes has been included in the Plan's financial statements.
6. Party-in-Interest Transactions
The Plan invests in various Fidelity mutual funds and portfolios. These
investments are considered party-in-interest transactions because
Fidelity Management Trust Company serves as trustee of the Plan. The
Plan management has approved these investment options.
The Plan also invests in COGC common stock. Transactions in Company
stock are considered party-in-interest transactions because COGC is the
Plan sponsor.
-9-
Cabot Oil & Gas Corporation Savings Investment Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Current
Description Units held value
* Fidelity Retirement Money Market Portfolio 6,078,425 $ 6,078,425
* Fidelity Magellan Fund 79,628 8,298,818
* Spartan U.S. Equity Index Portfolio 121,410 4,934,105
* Fidelity U.S. Bond Index Portfolio 237,829 2,568,550
* Fidelity Growth & Income Fund 76,488 2,859,137
* Fidelity Independence Fund 153,254 2,416,822
* Fidelity Balanced Fund 20,927 311,810
* Fidelity Diversified International Fund 9,012 171,941
Dreyfus Founders Discovery Fund 26,962 767,081
* Fidelity Stock Selector Fund 53,473 1,129,876
* Cabot Oil & Gas Corporation common stock 75,412 1,813,649
Cabot Corporation common stock 123,859 4,421,750
* Participant loans (interest rates range from 6% to
10.50% and maturities range from February 2001
to December 2005) 624,078
------------------ ------------------
7,056,679 $ 36,396,042
------------------ ------------------
* Represents a party-in-interest
-10-
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No.'s 333-37632, 33-53723, 33-35476, 33-35478, 33-71134,
33-53723, 333-83819) and Form S-3 (No.'s 333-68350, 333-83819) of Cabot Oil &
Gas Corporation of our report dated June 24, 2002 relating to the financial
statements and supplemental schedule of the Cabot Oil & Gas Corporation Savings
Investment Plan, which appears in this Form 10-K/A.
PricewaterhouseCoopers LLP
Houston, Texas
June 28, 2002