UNITED STATES
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 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. 333-62207
A. Full title of the Plan and the address of the Plan,
if different from that of the issuer named below:
Chelsea Property Group 401(K) Savings Plan
B. Name of the issuer of the securities held pursuant to the Plan
and the address of its principal executive office:
CHELSEA PROPERTY GROUP, INC.
103 Eisenhower Parkway
Roseland, New Jersey 07068
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Chelsea Property Group 401(k) Savings Plan
December 31, 2001
Chelsea Property Group 401(k) Savings Plan
Financial Statements and Supplemental Schedules
December 31, 2001
Contents
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Report of Independent Auditors Financial Statements Statements of Net Assets Available for Benefits Statement of Changes in Net Assets Available for Benefits Notes to Financial Statements Supplemental Schedules Schedule H, Line 4a--Schedule of Non-Exempt Transactions Schedule H, Line 4i--Schedule of Assets (Held at End of Year) |
1 2 3 4 8 9 |
Report of Independent Auditors
Chelsea Property Group 401(k) Savings Plan
Retirement and Benefits Committee
We have audited the accompanying statements of net assets available for benefits of Chelsea Property Group 401(k) Savings Plan (the "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 schedules of non-exempt transactions and assets (held at end of year) as of and for the year ended December 31, 2001, 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
New York, New York
June 17, 2002
Chelsea Property Group 401(k) Savings Plan
Statements of Net Assets Available for Benefits
December 31
2001 2000
------------------------
Assets
Investments, at fair value:
Vanguard Growth and Income Fund $ 402,784 $ 419,292
Vanguard Balanced Index Fund 227,099 200,698
Vanguard Intermediate Term Bond Index Fund 282,037 166,341
Vanguard Asset Allocation Fund 208,917 181,915
Vanguard Growth Index Fund 646,767 643,191
Vanguard US Growth Fund 242,690 265,545
Fidelity Advisor Technology Fund 237,666 229,969
Fidelity Advisor Healthcare Fund 129,005 75,572
Vanguard 500 Index Fund 393,144 305,695
Vanguard International Growth Fund 56,844 31,214
Vanguard European Stock Index 47,210 15,948
Vanguard Federal Money Market Fund 278,515 161,354
Chelsea Property Group, Inc. Common Stock and
Money Market 286,766 220,640
Participant loans 81,129 54,040
--------------------------
Total investments 3,520,573 2,971,414
--------------------------
Receivables:
Participant contributions 88,897 46,036
Employer contributions 29,409 13,633
--------------------------
Total receivables 118,306 59,669
--------------------------
Net assets available for benefits $3,638,879 $3,031,083
==========================
See accompanying notes.
Chelsea Property Group 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2001
Additions:
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 59,572
Participant contributions 718,360
Employer contributions 175,888
Participant rollovers 168,998
------------
Total additions 1,122,818
Deductions:
Deductions from net assets attributed to:
Participant withdrawals 176,379
Net depreciation in fair value of investments 338,643
------------
Net increase 607,796
Net assets available for benefits:
Beginning of year 3,031,083
------------
End of year $3,638,879
============
See accompanying notes.
Chelsea Property Group 401(k) Savings Plan
Notes to Financial Statements
December 31, 2001
1. Summary of Significant Accounting Policies
Method of Accounting
The financial statements of Chelsea Property Group 401(k) Savings Plan (the "Plan") are presented on the accrual basis of accounting.
Investments
Investments are valued at fair value using share values of the funds as reported by Trustar Retirement Services ("Trustar") on December 31, 2001 and 2000.
Appreciation or depreciation of securities represents realized gains (losses) and the change in fair value during the year.
Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated August 26, 1998, stating the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Subsequent to the issuance of the determination letter, the Plan was amended and restated, effective February 1, 2000. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator, CPG Partners, L.P., believes the Plan, as amended and restated, is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Chelsea Property Group 401(k) Savings Plan
Notes to Financial Statements (continued)
2. Description of the Plan
The Plan is a defined contribution plan sponsored and administered by CPG Partners, L.P. (formerly Chelsea GCA Realty Partnership, L.P.) (the "Partnership") and was established for the purpose of allowing Plan members to make tax-deferred contributions through voluntary payroll withholdings in order to accumulate benefits to be paid upon retirement. The Partnership pays all administrative expenses incurred by the Plan except for a fee of $.25 per share for all purchase and sale transactions of Chelsea Property Group, Inc. (formerly Chelsea GCA Realty, Inc.) common stock which is paid by the participant. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Effective October 19, 2001, the Plan was updated to reflect new legislation.
All employees of the Partnership were eligible to participate in the Plan after completing 1,000 hours or one year of service and attaining age 21 through November 1, 2000 at which time the Partnership amended the Plan's eligibility requirements (the "Amendment"). Certain employees of the Partnership are eligible to participate in the Plan after 6 months of service with no hours requirement. Employees who elect to enroll in the Plan may elect to have from 1% to 15% of their pre-tax gross pay (for up to a 40 hour work week) contributed to their account each pay period. This deduction may not exceed the maximum amount allowed under the Code of $10,500 for 2001 and 2000. Rollover contributions of $168,998 and $66,357 in 2001 and 2000, respectively, were made by participants from other qualified plans.
Effective February 1, 2000 (the "Transition Date"), Trustar (the "Trustee") began serving as trustee of the Plan. Prior to the Transition Date, Merrill Lynch served as trustee of the plan. The Trustee has invested the assets of the Plan in funds maintained in pooled separate accounts held by Vanguard and Fidelity.
Also effective February 1, 2000, the Company no longer offered Chelsea Property Group, Inc. common stock as an investment option. Participants can keep the common stock they currently have in their account, but they cannot purchase additional stock.
Employees participating in the Plan are eligible to receive a benefit upon their normal retirement date, disability retirement date or termination date, equal to the amount in their individual account. Participants are always 100% vested in their contributions including the earnings thereon.
Chelsea Property Group 401(k) Savings Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Participants are eligible to borrow from their account. The minimum loan is $500. A participant may borrow 50% of his or her vested balance to a maximum of $50,000. The loans must be paid back within five years. The loans bore interest at a rate between 8.0% and 9.75% at December 31, 2001 and 2000.
The Plan provides for an employer discretionary matching contribution. For the 2001 and 2000 Plan years, the matching contribution was equal to 50% of each participant's first 6% contributed to the Plan.
As of December 31, 2001 and 2000, forfeitures in the amount of $22,083 and $21,931, respectively, will be used to reduce future Company contributions. Forfeitures arise from forfeited balances of terminated participant's nonvested accounts.
Employees with the following titles are not eligible to participate in the matching contribution: Chief Executive Officer, Chief Financial Officer, President, Chief Operating Officer, Senior Vice President, Executive Vice Presidents, and Vice Presidents.
As of October 1, 1999, the Plan was amended to allow employees from Worcester Common Outlets, a retail outlet that the Partnership managed through March 31, 2001, to participate in the Plan. As of April 1, 2001, the employees of Worcester no longer contribute to the Plan.
Participants shall have a vested percentage in the matching contributions as follows:
|
After 1 year of vesting service After 2 years of vesting service After 3 years of vesting service After 4 years of vesting service After 5 years of vesting service |
20% 40% 60% 80% 100% |
While the Partnership hopes and expects to continue the Plan indefinitely, it reserves the right to terminate, amend or modify the Plan at any time subject to the provisions of ERISA. Upon the termination of the Plan, the monies already invested in the Plan are distributed to the participants based on their account values at termination. If money has been deducted from a participant's paycheck but not yet deposited into the Plan, those monies are at risk because they are not yet considered part of the Plan.
Chelsea Property Group 401(k) Savings Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
This is not a complete description of the Plan. For more information on the Plan, see the Summary Plan Description available at the office of the Administrator, CPG Partners, L.P.
3. Net Appreciation (Depreciation) in Fair Value of Investments
During the year ended December 31, 2001, the investments of the
Plan appreciated
(depreciated) in fair value as follows:
|
Vanguard Growth and Income Fund Vanguard Balanced Index Fund Vanguard Intermediate Term Bond Index Fund Vanguard Asset Allocation Fund Vanguard Growth Index Fund Vanguard US Growth Fund Fidelity Advisor Technology Fund Fidelity Advisor Healthcare Fund Vanguard 500 Index Fund Vanguard International Growth Fund Vanguard European Stock Index Chelsea Property Group, Inc. Common Stock |
$ (50,135) (12,635) 4,797 (13,664) (83,326) (95,105) (78,378) (11,536) (45,235) (8,700) (4,298) 59,572 $(338,643) ========= |
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: July 10, 2002 | Chelsea Property Group 401(k) Savings Plan By: CPG Partners, L.P., Administrator By: Chelsea Property Group, Inc., General Partner By: /s/ Michael J. Clarke Michael J. Clarke, Chief Financial Officer |
Supplemental Schedules
EIN 223258100
Plan#: 001
Chelsea Property Group 401(k) Savings Plan
Schedule H, Line 4a--Schedule of Non-Exempt Transactions
Year ended December 31, 2001
Identity of Party Involved |
Relationship to Plan, Employer or Other Party- In-Interest |
Description of Transactions, Including Maturity Date, Rate of Interest, Par or Maturity Value |
Purchase Price |
Selling Price |
Expenses Incurred in Connection with Transaction |
Cost of Asset |
Current Value of Asset at Date of Transaction |
Net Gain (Loss) on Sale |
|
Chelsea Property Group, Inc. |
Plan Sponsor |
During the year the Plan Sponsor failed to remit employee contributions withheld within 15 business days from the month-end. This amount, $62,011, which represents withholding from the month of November, was remitted to the Trust on December 27, 2002. The Plan sponsor has made all corrections in accordance with Administrative Procedures Regarding Self Correction. |
$62,011 |
N/A |
N/A |
N/A |
$62,011 |
N/A |
EIN 223258100
Plan#: 001
Chelsea Property Group 401(k) Savings Plan
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of Issue, Description of Investment, Borrower, Lessor Including Maturity Date, Rate of Interest, Number of Current or Similar Party Par or Maturity Value Shares Value
Trustar Retirement Services Vanguard Growth and Income Fund 14,283.2 $ 402,784 Trustar Retirement Services Vanguard Balanced Index Fund 12,715.5 227,099 Trustar Retirement Services Vanguard Intermediate Term Bond Index Fund 27,435.6 282,037 Trustar Retirement Services Vanguard Asset Allocation Fund 9,579.0 208,917 Trustar Retirement Services Vanguard Growth Index Fund 24,489.5 646,767 Trustar Retirement Services Vanguard US Growth Fund 12,874.8 242,690 Trustar Retirement Services Fidelity Advisor Technology Fund 14,661.7 237,666 Trustar Retirement Services Fidelity Advisor Healthcare Fund 6,460.0 129,005 Trustar Retirement Services Vanguard 500 Index Fund 3,712.8 393,144 Trustar Retirement Services Vanguard International Growth Fund 3,787.1 56,844 Trustar Retirement Services Vanguard European Stock Index 2,331.4 47,210 Trustar Retirement Services Vanguard Federal Money Market Fund 278,515.2 278,515 ----------- 3,152,678 Chelsea Property Group, Inc. Common Stock 5,234.9 257,034 Chelsea Property Group, Inc. Money Market 29,731.8 29,732 Participant loans receivable Interest rates range from 8.0% to 9.75% maturing through 2006 81,129 ----------- Total investments $3,520,573 ===========
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-62207) pertaining to the Chelsea Property Group 401(K) Savings Plan of our report dated June 17, 2002 with respect to the financial statements and schedules of the Chelsea Property Group 401(k) Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2001.
/s/Ernst & Young LLP
New York, New York
July 10, 2002