As filed with the Securities and Exchange Commission on June 27, 2003
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, 2002
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File No. 333-39249
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive officer:
Pioneer Natural Resources Company
5205 North O'Connor Blvd., Suite 1400
Irving, Texas 75039
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Financial Statements and Supplemental Schedule
As of December 31, 2002 and 2001 and for the year ended December 31, 2002
With Report of Independent Auditor
2
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Table of Contents
Page
Report of Independent Auditor........................................ 4
Statements of Net Assets Available for Benefits as of
December 31, 2002 and 2001........................................ 5
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2002.............................. 6
Notes to Financial Statements........................................ 7
Schedule H; Line 4i - Schedule of Assets (Held At End of
Year) as of December 31, 2002..................................... 12
Signatures........................................................... 13
Index to Exhibits.................................................... 14
3
Report of Independent Auditor
To the Participants and the Plan Administrator
of Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan:
We have audited the accompanying statements of net assets available for benefits
of Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan as of December
31, 2002 and 2001, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2002. 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, 2002 and 2001, and the changes in its net assets available for
benefits for the year ended December 31, 2002, 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, 2002, is presented for the purpose 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. This 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.
Ernst & Young LLP
Fort Worth, Texas
May 31, 2003
4
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Statements of Net Assets Available for Benefits
December 31,
---------------------------
2002 2001
------------ ------------
Investments at fair value:
Vanguard Primecap Fund............................. $ 18,022,434 $ 17,759,069
Vanguard Prime Money Market Fund................... 15,269,243 10,618,942
Vanguard 500 Index Fund............................ 10,677,404 8,538,931
Vanguard Windsor II Fund........................... 9,007,662 7,489,819
Vanguard - ST Corporate Fund....................... 5,235,030 3,482,011
Vanguard Total Bond Market Index Fund.............. 2,937,616 875,098
Vanguard International Growth Fund................. 1,308,748 746,402
Vanguard Asset Allocation Fund..................... 1,189,465 201,309
Vanguard Explorer Fund............................. 730,228 6,653
Sarofim Equity Fund................................ 13,136,875 11,325,152
Pioneer Stock Investment Fund ..................... 4,768,989 4,199,189
----------- -----------
82,283,694 65,242,575
Participant loans receivable......................... 1,531,468 1,359,059
----------- -----------
83,815,162 66,601,634
Participant contributions receivable................. - 112,610
Unallocated administrative expenses.................. (9,869) (9,525)
----------- -----------
Net assets available for benefits.................. $ 83,805,293 $ 66,704,719
=========== ===========
See accompanying notes to financial statements.
5
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 2002
Additions to net assets attributed to:
Interest and dividend income............................... $ 1,245,290
Employer contributions..................................... 4,655,443
Employee contributions..................................... 3,605,428
Rollovers.................................................. 63,097
Asset transfers associated with merger..................... 24,031,142
-----------
Total additions......................................... 33,600,400
-----------
Deductions from net assets attributed to:
Net depreciation in fair value of investments.............. 13,742,681
Distributions to participants.............................. 2,717,494
Fees....................................................... 39,651
-----------
Total deductions........................................ 16,499,826
-----------
Net increase................................................. 17,100,574
Net assets available for benefits:
Beginning of year.......................................... 66,704,719
-----------
End of year................................................ $ 83,805,293
===========
See accompanying notes to financial statements.
6
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
Note 1. Description of Plan
The following description of the Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan (the "Plan") provides only general information.
Participants should refer to the Summary Plan Description for a complete
description of the Plan, a copy of which is available to each participant from
the Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan Committee (the
"Plan Administrator"). The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Effective January 1, 2002, the Pioneer Natural Resources USA, Inc. 401(k)
Trust was amended to allow the merger (the "Merger") of the Pioneer Natural
Resources USA, Inc. Matching Plan (the "Matching Plan") into the Pioneer Natural
Resources USA, Inc. 401(k) Plan (the "401(k) Plan").
General
The Plan is a defined contribution plan established on January 1, 1990
under Section 401 of the Internal Revenue Code of 1986, as amended (the "Code")
covering all employees of Pioneer Natural Resources USA, Inc. (the "Employer"),
a wholly-owned subsidiary of Pioneer Natural Resources Company (the "Company").
Regular full-time employees and part-time employees are eligible to participate
in the Plan on the first day of the month following their date of hire. The Plan
assets are held in a trust and certain administrative functions such as
maintenance of account balances and allocation of earnings are performed by
Vanguard Fiduciary Trust Company, the trustee of the trust (the "Trustee").
Contributions
Participants may elect to contribute to the Plan an amount of not less
than two percent nor more than 30 percent of their pre-tax annual salary and
bonus. Additionally, participants may elect to make after-tax contributions to
the Plan. A participant's combined pre-tax and after-tax contributions to the
Plan (the "Participant Contributions") may not exceed 50 percent of the
participant's annual salary and bonus. Prior to the Merger, matching
contributions were made in cash to the Matching Plan at an amount equal to 200
percent of the first five percent of basic compensation contributed by a
participant to the Plan (the "Matching Contributions"). Subsequent to the
Merger, Matching Contributions are made directly into the Plan. On December 31,
2001, participant contributions amounting to $112,610 were in transit to the
Trustee and were recorded as participant contributions receivable in the
accompanying Statement of Net Assets Available for Benefits as of December 31,
2001.
Participant Accounts
Participants' accounts are credited with the Participant Contributions,
the Matching Contributions and an allocation of Plan earnings and administrative
expenses. Plan earnings and administrative expenses are allocated to each
participant's accounts by fund in proportion to their fund balance relative to
the total fund balance.
Participants may borrow from their accounts a minimum of $1,000 up to a
maximum of $50,000 or 50 percent of their accounts' vested balances, whichever
amount is less. The loans are secured by the balance in the participant's
accounts. Participant loans bear interest at an annual rate equal to the prime
borrowing rate at the inception of the loan plus one percent. Loan principal and
interest is paid ratably through payroll deductions.
7
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
Note 1. Description of Plan (continued)
Investment Options
During the Plan year ended December 31, 2002, participants were able to
allocate their contributions among the following registered investment company
funds and the Pioneer Stock Investment Fund:
Registered Investment Company Funds:
o Vanguard Primecap Fund - Invests in stocks of companies with
above-average prospects for continued earnings growth, strong
industry positions and skilled management teams.
o Vanguard Prime Money Market Fund - Invests in short-term, high
quality money market instruments issued by financial institutions,
non-financial corporations, the United States government and
United States federal agencies.
o Vanguard 500 Index Fund - Invests in all of the 500 stocks that
make up the Standard & Poor's 500 Composite Stock Price Index, a
widely recognized benchmark of United States stock market
performance.
o Vanguard Windsor II Fund - Invests in large or medium size
companies whose stocks are considered by the fund's advisors to be
undervalued or out-of-favor. The stocks generally sell at prices
considered by the fund's advisors to be below the overall market
average compared to their dividend income and future return
potential.
o Vanguard - ST Corporate Fund - Invests in short-term bonds,
including high quality corporate and United States Treasury
securities.
o Vanguard Total Bond Market Index Fund - Invests in a large sample
of securities that match key characteristics of the Lehman
Brothers Aggregate Bond Index.
o Vanguard International Growth Fund - Invests in stocks of
companies based outside the United States. Stocks are selected
from more than 15 countries.
o Vanguard Asset Allocation Fund - Invests in common stocks,
long-term U.S. Treasury bonds and money market instruments.
o Vanguard Explorer Fund - Invests in a diversified group of
small-company stocks with prospects for above-average growth.
o Sarofim Equity Fund - Invests in a broadly diversified portfolio
of large, high-quality, multinational companies with favorable
growth prospects and high incremental returns on investment.
Income is a secondary goal.
Pioneer Stock Investment Fund - The Pioneer Stock Investment Fund is
designed to provide long-term growth of capital through increases in the
value of the common stock of the Company. Dividends, if any, are
reinvested to purchase more shares.
8
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
Note 1. Description of Plan (continued)
Effective January 1, 2003, the Plan was amended to allow participants to
allocate their contributions to the following registered investment company
funds, in addition to the fund options that were available during 2002:
o Vanguard Inflation-Protected Securities Fund - Invests primarily
in inflation-indexed bonds issued by the United States government,
government agencies and corporations. The fund may invest in bonds
of any maturity.
o Vanguard Retirement Savings Trust - Invests in investment
contracts issued by insurance companies, commercial banks and
other fixed-principal investments. The fund attempts to maintain
an average weighted maturity of between two to three years in its
investments.
See Note 3 for additional information regarding investment risks and
uncertainties.
Vesting
As is described in more detail in "Contributions" above, Participant
Contributions, Matching Contributions and Plan earnings are maintained in the
Plan.
Participants are immediately vested in their Participant Contributions
made into the Plan, plus the actual Plan earnings thereon. A participant is
fully vested in the Matching Contributions, plus the actual Plan earnings
thereon, after four years of continuous service. Participant account balances
that were merged into the Plan from predecessor plans retain the vesting
schedules provided for in the predecessor plans' documents.
Payments of Benefits
If the total value of the vested portion of the participant's account
exceeds $5,000, payments will begin at age 70-1/2 unless the participant
terminates, retires or becomes disabled prior to age 70-1/2 and consents to an
earlier distribution date by filing a written request to the Plan Administrator
within 90 days prior to the date the participant wishes to receive a
distribution. Except for participant accounts that have a total vested value of
$5,000 or less, distributions to terminated, retired or disabled participants
will be annuities, but may be installments or lump sum payments if so directed
by the participant, except that vested amounts that are invested in the Pioneer
Stock Investment Fund may, at the election of the participant, be distributed in
the form of the Company's common stock with cash distributed in lieu of
fractional shares of stock. If the total value of the vested portion of the
participant's account is $5,000 or less, payment will be made in one lump sum as
soon as administratively possible, except that vested amounts that are invested
in the Pioneer Stock Investment Fund may, at the election of the participant, be
distributed in the form of the Company's common stock with cash distributed in
lieu of fractional shares of stock. A participant's beneficiary will receive the
participant's account balance in the event of a participant's death.
Withdrawal of Benefits
Current employees of the Employer may withdraw (i) all or a portion (in
multiples of 10 percent of whole dollars amounts) of their account balances
derived from after-tax Participant Contributions or rollover contributions; (ii)
their vested assets in the Plan under certain hardship conditions as defined in
the Plan agreement; or (iii), if the participant has attained the age of 59-1/2,
all or a portion (in multiples of 10 percent or whole dollars amounts) of their
account balances derived from Participant Contributions and Plan earnings
thereon. Terminated participants may withdraw their vested assets in the Plan.
9
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
Note 1. Description of Plan (continued)
Plan Termination
Although it has not expressed any intent to do so, the Employer has the
right under the Plan, subject to the provisions of ERISA to discontinue its
contributions at any time or to terminate the Plan. In the event of the Plan's
termination or the complete discontinuance of Matching Contributions to the
Plan, participants will become fully vested in their accounts.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared under the
accrual basis of accounting in accordance with generally accepted accounting
principles in the United States ("GAAP").
The accompanying Statement of Changes in Net Assets Available for
Benefits for the year ended December 31, 2002 includes additions to net assets
of the Plan of $24,031,142 attributable to assets of the Matching Plan that were
transferred to the Plan as a result of the Merger effective January 1, 2002.
Accordingly, the accompanying Statement of Net Assets Available for Benefits of
the Plan as of December 31, 2001 is that of the 401(k) Plan. Benefit payments
made to participants are recorded upon distribution.
Investment Valuation
Investments are valued at fair value as determined by the Trustee.
Investment fair values are determined as follows:
1. Investments in registered investment company funds are valued using
published market prices which represent the fair value of shares or
units held by the Plan as of December 31.
2. Investments in the Company's common stock are valued at the last
reported sales price on December 31.
3. Participant loans receivable are valued at their unpaid principal
balance, which approximates fair value.
Security Transactions and Investment Income
Security transactions are accounted for on a trade-date basis. Expenses
incurred with transactions, if any, are added to the purchase price or deducted
from the selling price at the time of the transactions. Dividend income is
recorded on the ex-dividend date. Income from other investments is recorded as
earned on an accrual basis.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
the Plan's management to make estimates that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
10
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
Note 3. Investments
The Trustee holds the Plan's investments and executes all investment
transactions. All investment information disclosed in the financial statements
and the accompanying schedule, including investments held at December 31, 2002
and 2001, interest and dividend income, and net depreciation in fair value of
investments for the year ended December 31, 2002, was obtained or derived from
information supplied to the Plan Administrator and certified as complete and
accurate by the Trustee.
During 2002, the total fair value of the Plan's investments (including
investments purchased, sold and held during the year) depreciated as follows:
Depreciation of Registered Investment Company
Funds fair values $ 14,895,161
Appreciation of Pioneer Stock Investment Fund
fair value (1,152,480)
-----------
Net depreciation of fair values $ 13,742,681
============
The fair values of the Plan's investments are subject to a number of
risks and uncertainties. These risks and uncertainties include, among other
things, interest rate risk, credit risk, political risk, general business risks
and overall market volatility risk. As described in Note 1, participants have
investment options to which they may allocate their contributions and account
balances. Those investment options have individual risk profiles that cause them
to respond differently to changes in the risks and uncertainties described
above. Due to the level of risk associated with the Plan's investments, it is
reasonably possible that changes in the fair values of the Plan investments may
occur during the year ended December 31, 2003, and that such changes could cause
the Plan's future net assets available for benefits to differ materially from
those reported as of December 31, 2002.
Note 4. Administrative Expenses
Administrative expenses incurred by the Plan were $39,651 during the year
ended December 31, 2002. The Employer may pay certain expenses incurred in the
establishment and administration of the Plan, including expenses and fees of the
Trustee, but is not obligated to do so. Any Plan expenses not paid by the
Employer are paid from the Plan's earnings or from qualifying account
forfeitures. In addition to administrative expenses paid by the Plan, Plan
administrative expenses of $3,966 were paid by the Employer during 2002. Account
forfeiture balances in the Plan qualifying to be used to defray Plan
administrative expense totaled $15,640 and $28,566 as of December 31, 2002 and
2001, respectively.
Note 5. Tax Status of the Plan
The Plan received a determination letter from the Internal Revenue
Service dated March 19, 2003, stating that the Plan is qualified under Sections
401(a) and 501(a) of the Code and, therefore, the related trust is exempt from
taxation. 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 and the related trust is tax
exempt.
Note 6. Related Party Transactions
Certain Plan investments are in shares or units of registered investment
company funds that are managed by the Trustee and the Pioneer Stock Investment
Fund. Plan transactions in registered investment company funds that are managed
by the Trustee and the Pioneer Stock Investment Fund qualify as
party-in-interest transactions.
11
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Schedule H; Line 4i - Schedule of Assets (Held At End of Year)
EIN: 75-2516853
Plan Number: 001
As of December 31, 2002
(c)
Description of
(b) investment including
Identity of issuer, maturity date, rate of (e)
borrower, lessor, interest, collateral, par Current
(a) or similar party or maturity value Value
----- -------------------------------- -------------------------------------- ------------
* Vanguard Fiduciary Trust Company Vanguard Primecap Fund -
466,178 shares $ 18,022,434
* Vanguard Fiduciary Trust Company Vanguard Prime Money Market Fund -
15,269,243 shares 15,269,243
* Vanguard Fiduciary Trust Company Vanguard 500 Index Fund -
131,576 shares 10,677,404
* Vanguard Fiduciary Trust Company Vanguard Windsor II Fund -
433,061 shares 9,007,662
* Vanguard Fiduciary Trust Company Vanguard - ST Corporate Fund -
485,174 shares 5,235,030
* Vanguard Fiduciary Trust Company Vanguard Total Bond Market Index Fund -
283,007 shares 2,937,616
* Vanguard Fiduciary Trust Company Vanguard International Growth
Fund - 107,627 shares 1,308,748
* Vanguard Fiduciary Trust Company Vanguard Asset Allocation Fund -
65,825 shares 1,189,465
* Vanguard Fiduciary Trust Company Vanguard Explorer Fund - 16,053 shares 730,228
* Fayez Sarofim & Co. Sarofim Equity Fund - 330,072 shares 13,136,875
* Pioneer Natural Resources Company Pioneer Stock Investment Fund -
524,065 units 4,768,989
* Participant loans receivable Interest rates range from 5.75% to 10.5% 1,531,468
-----------
$ 83,815,162
===========
--------------------------
*Party in-interest
Note: Column (d) is not applicable since all investments are participant directed.
12
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned thereto duly authorized.
PIONEER NATURAL RESOURCES USA, INC.
401(k) AND MATCHING PLAN
By: Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 27, 2003 By: /s/ Larry N. Paulsen
----------------------------------------
Larry N. Paulsen
Chairman
Date: June 27, 2003 By: /s/ Richard P. Dealy
----------------------------------------
Richard P. Dealy
Date: June 27, 2003 By: /s/ Kerry D. Scott
----------------------------------------
Kerry D. Scott
Date: June 27, 2003 By: /s/ Kevin Schepel
----------------------------------------
Kevin Schepel
Date: June 27, 2003 By: /s/ David W. Simpson
----------------------------------------
David W. Simpson
Date: June 27, 2003 By: /s/ Susan A. Spratlen
----------------------------------------
Susan A. Spratlen
13
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
INDEX TO EXHIBITS
Exhibit
Number Description Page
------- ----------- ----
23.1 Consent of Independent Auditors 15
99.1 Chief Executive Officer Certification under
Section 906 of Sarbanes-Oxley Act of 2002 16
99.2 Chief Financial Officer Certification under
Section 906 of Sarbanes-Oxley Act of 2002 17
14