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, 2003
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 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 office:
Pioneer Natural Resources Company
5205 North O'Connor Blvd., Suite 900
Irving, Texas 75039
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Financial Statements and Supplemental Schedule
As of December 31, 2003 and 2002 and for the year ended December 31, 2003
With Report of Independent Registered Public Accounting Firm
2
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Table of Contents
Page
Report of Independent Registered Public Accounting Firm ........... 4
Statements of Net Assets Available for Benefits as of
December 31, 2003 and 2002...................................... 5
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2003............................ 6
Notes to Financial Statements...................................... 7
Schedule H; Line 4i - Schedule of Assets (Held At End of Year)
as of December 31, 2003......................................... 13
Signatures......................................................... 14
Index to Exhibits.................................................. 15
3
Report of Independent Registered Public Accounting Firm
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, 2003 and 2002, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2003. 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 the standards of the Public Company
Accounting Oversight Board (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, 2003 and 2002, and the changes in its net assets available for
benefits for the year ended December 31, 2003, in conformity with U.S. generally
accepted accounting principles.
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, 2003, 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
June 7, 2004
4
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Statements of Net Assets Available for Benefits
December 31,
-------------------------------
2003 2002
------------ ------------
Investments at fair value:
Vanguard PRIMECAP Fund............................... $ 27,137,082 $ 18,022,434
Vanguard Prime Money Market Fund..................... 12,564,723 15,269,243
Vanguard 500 Index Fund.............................. 15,278,207 10,677,404
Vanguard Windsor II Fund............................. 12,748,739 9,007,662
Vanguard Short-Term Corporate Fund................... 4,976,563 5,235,030
Vanguard Total Bond Market Index Fund................ 2,853,005 2,937,616
Vanguard International Growth Fund................... 2,081,153 1,308,748
Vanguard Asset Allocation Fund....................... 2,244,572 1,189,465
Vanguard Explorer Fund............................... 3,325,419 730,228
Vanguard Retirement Savings Trust.................... 2,598,710 -
Vanguard Inflation-Protected Securities Fund......... 942,171 -
Sarofim Equity Fund.................................. 14,842,386 13,136,875
Pioneer Stock Investment Fund ....................... 4,964,217 4,768,989
----------- -----------
106,556,947 82,283,694
Participants loans receivable.......................... 2,150,262 1,531,468
----------- -----------
108,707,209 83,815,162
Contributions receivable............................... 25,328 -
Unallocated administrative expenses.................... - (9,869)
----------- -----------
Net assets available for benefits.................... $108,732,537 $ 83,805,293
=========== ===========
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, 2003
Additions to net assets available for benefits:
Interest and dividend income............................. $ 1,294,681
Employer contributions................................... 5,120,543
Participants contributions............................... 4,075,674
Net appreciation in fair value of investments............ 17,812,101
Rollovers................................................ 399,963
-----------
28,702,962
-----------
Deductions from net assets available for benefits:
Distributions to participants............................ 3,761,411
Administrative expenses.................................. 14,307
-----------
3,775,718
-----------
Net increase in net assets available for benefits.......... 24,927,244
Net assets available for benefits, beginning of year....... 83,805,293
-----------
Net assets available for benefits, end of year............. $108,732,537
===========
See accompanying notes to financial statements.
6
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
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, as amended ("ERISA").
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").
The Plan was established for the benefit of the employees of Pioneer Natural
Resources USA, Inc. (the "Employer"), a wholly-owned subsidiary of Pioneer
Natural Resources Company (the "Company"). All regular full-time and part-time
employees of the Employer are eligible to participate in the Plan on the first
day of the month following their date of hire. The Plan's assets are held in a
trust and certain administrative functions 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. Matching contributions are made in cash to the Plan at
an amount equal to 200 percent of the first five percent of pre-tax annual
salary contributed by a participant to the Plan (the "Matching Contributions").
Participants Accounts
Participant's 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. Participants 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.
Investment Options
During the Plan year ended December 31, 2003, participants were able to
allocate their contributions among the following registered investment company
funds, common/collective trusts and Pioneer Stock Investment Fund (the "Pioneer
Stock 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.
7
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 1. Description of Plan (continued)
o Vanguard Prime Money Market Fund - Invests in high-quality, short-term
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 a diversified group of large-
capitalization 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 their overall
market average compared to their dividend income and future return
potential.
o Vanguard Short-Term Corporate Fund - Invests in short-term bonds,
including investment-grade 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 seasoned
companies located outside the United States with above-average growth
potential.
o Vanguard Asset Allocation Fund - Invests in common stocks, long-term
United States 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 Vanguard Inflation-Protected Securities Fund - Invests in inflation-
indexed bonds issued by the United States government, its agencies and
instrumentalities, and corporations.
Common/Collective Trusts:
o Vanguard Retirement Savings Trust - Invests in high-quality fixed-
income securities with financial backing from insurance companies and
banks.
o Sarofim Equity Fund - Invests in a diversified group of large, high-
quality, multinational companies with favorable growth prospects and
high incremental returns on investment.
Pioneer Stock Fund - The Pioneer Stock Fund is designed to provide long-
term growth of capital through increases in the value of the common stock
of the Company. Dividends are reinvested to purchase more shares.
See Note 3 for additional information regarding investment risks and
uncertainties.
8
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 1. Description of Plan (continued)
Vesting
Participants are immediately vested in their Participant Contributions made
into the Plan, plus the actual Plan earnings thereon. Participants vest in the
Matching Contributions, plus the actual Plan earnings thereon, proportionately
over a four-year period that begins with the Participant's date of hire.
Participant's 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
Vested balances > $5,000. 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. Distributions to terminated, retired or disabled participants
will be annuities, but may be installments or lump-sum payments if so directed
by the participant.
Vested balances < $5,000. If the total value of the vested portion of the
participant's accounts is $5,000 or less, payment will be made in one lump sum
as soon as administratively possible.
In either case, vested amounts that are invested in the Pioneer Stock 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. Under the Plan, a participant's beneficiary will receive the
participant's account balances in the event of a participant's death.
Withdrawal of Benefits
Current employees of the Employer may withdraw (i) all or a portion 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 of their account
balances derived from Participant Contributions and Plan earnings thereon.
Terminated participants may withdraw their vested assets in the Plan.
Forfeitures
Upon termination of employment, the unvested portion of a participant's
Matching Contributions is forfeited to the Plan. Forfeitures are used to pay for
administrative expenses incurred by the Plan or used on an annual basis to
reduce the total amount of Matching Contributions made to the Plan by the
Employer.
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 immediately become fully vested in their accounts.
9
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
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 United States generally accepted
accounting principles ("GAAP").
Benefit payments made to participants are recorded when paid.
Investment Valuation
The Plan's investments are stated at fair value in the Statements of Net
Assets Available for Benefits as of December 31, 2003 and 2002, 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 net asset value of shares
or units held by the Plan as of December 31.
2. Investments in common/collective trusts are valued based upon the fair
values of the underlying net assets of the trusts, as determined by the
Trustee.
3. Investments in the Company's common stock are valued at the last
reported sales price on December 31.
4. Participants 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. Interest income is recorded as earned on an
accrual basis.
Use of Estimates
The preparation of the accompanying financial statements and related notes
in conformity with GAAP requires the Plan's management to make estimates that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of additions to and deductions
from net assets available for benefits during the reporting period. Actual
results could differ from those estimates.
10
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 3. Investments
The Trustee holds the Plan's investments and executes all investment
transactions.
During 2003, the fair value of the Plan's investments (including
investments purchased, sold and held during the year) appreciated as follows:
Net realized gains:
Registered investment company funds....................... $ 588,526
Common/collective trusts.................................. 157,797
Pioneer Stock Fund........................................ 169,452
----------
Total net realized gains.............................. 915,775
----------
Net unrealized gains:
Registered investment company funds....................... 13,334,330
Common/collective trusts.................................. 2,547,664
Pioneer Stock Fund........................................ 1,014,332
----------
Total net unrealized gains............................ 16,896,326
----------
Net appreciation in fair value of investments......... $17,812,101
==========
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 future, and that such changes could cause the Plan's net assets
available for benefits to differ materially from those reported as of December
31, 2003.
Note 4. Administrative Expenses
Administrative expenses incurred by the Plan were $14,307 during the year
ended December 31, 2003. 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 $21,104 were paid by the Employer during 2003 and
administrative expenses of $10,111 related to 2003 activity were paid by the
Employer subsequent to December 31, 2003. Account forfeiture balances in the
Plan qualifying to be used to defray Plan administrative expenses totaled $7,849
as of December 31, 2003.
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.
11
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 6. Related Party Transactions
Certain Plan investments are in shares or units of registered investment
company funds and a common/collective trust that are managed by the Trustee and
the Pioneer Stock Fund. Plan transactions in registered investment company funds
and a common/collective trust that are managed by the Trustee and the Pioneer
Stock Fund qualify as party-in- interest transactions.
Note 7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to Form 5500 as of December 31, 2003:
Net assets available for benefits per the accompanying
financial statements....................................... $108,732,537
Amounts due to withdrawing participants........................ (139,599)
-----------
Net assets available for benefits per Form 5500............ $108,592,938
===========
The following is a reconciliation of distributions to participants during
the year ended December 31, 2003, per the financial statements to Form 5500:
Distributions to participants per the accompanying
financial statements....................................... $ 3,761,411
Amounts due to withdrawing participants at December 31, 2003... 139,599
-----------
Distributions to participants per Form 5500................ $ 3,901,010
===========
Amounts due to withdrawing participants are recorded on Form 5500 for
distributions to participants that have been processed and approved for payment
prior to December 31, but remained unpaid as of that date.
12
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, 2003
(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 -
511,634 shares $ 27,137,082
* Vanguard Fiduciary Trust Company Vanguard Prime Money Market Fund -
12,564,723 shares 12,564,723
* Vanguard Fiduciary Trust Company Vanguard 500 Index Fund -
148,809 shares 15,278,207
* Vanguard Fiduciary Trust Company Vanguard Windsor II Fund -
481,266 shares 12,748,739
* Vanguard Fiduciary Trust Company Vanguard Short-Term Corporate Fund -
460,793 shares 4,976,563
* Vanguard Fiduciary Trust Company Vanguard Total Bond Market Index Fund -
276,722 shares 2,853,005
* Vanguard Fiduciary Trust Company Vanguard International Growth Fund -
129,024 shares 2,081,153
* Vanguard Fiduciary Trust Company Vanguard Asset Allocation Fund -
99,493 shares 2,244,572
* Vanguard Fiduciary Trust Company Vanguard Explorer Fund -
50,677 shares 3,325,419
* Vanguard Fiduciary Trust Company Vanguard Retirement Savings Trust -
2,598,710 shares 2,598,710
* Vanguard Fiduciary Trust Company Vanguard Inflation-Protected Securities
Fund - 77,164 shares 942,171
Fayez Sarofim & Co. Sarofim Equity Fund -
307,614 shares 14,842,386
* Pioneer Natural Resources Company Pioneer Stock Investment Fund -
432,423 units 4,964,217
* Participants loans receivable Interest rates range from 5.0% to 10.5% 2,150,262
-----------
$108,707,209
===========
--------------------------
*Party-in-interest
Note: Column (d) is not applicable since all investments are participant directed.
13
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 hereunto duly authorized.
PIONEER NATURAL RESOURCES USA, INC.
401(k) AND MATCHING PLAN
Date: June 25, 2004 By: /s/ Larry N. Paulsen
-----------------------------------------------
Larry N. Paulsen
Chairman of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 25, 2004 By: /s/ Richard P. Dealy
-----------------------------------------------
Richard P. Dealy
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 25, 2004 By: /s/ Kerry D. Scott
-----------------------------------------------
Kerry D. Scott
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 25, 2004 By: /s/ Kevin Schepel
-----------------------------------------------
Kevin Schepel
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 25, 2004 By: /s/ David W. Simpson
-----------------------------------------------
David W. Simpson
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 25, 2004 By: /s/ Susan A. Spratlen
-----------------------------------------------
Susan A. Spratlen
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
14
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
INDEX TO EXHIBITS
Exhibit
Number Description Page
------- ----------- ----
23.1 (a) Consent of Independent Registered Public Accounting Firm 16
--------------
(a) Filed herewith
15