UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
Annual Report
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One):
[X] Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (No fee required, effective October 7, 1996)
For the fiscal year ended December 31, 2004
Or
[ ] Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No fee required)
For the transition period from to
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Commission file number 33-63817
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A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
Apache Corporation 401(k) Savings Plan
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Apache Corporation 401(k) Savings Plan
December 31, 2004 and 2003 and year ended December 31, 2004
Apache Corporation 401(k) Savings Plan
Financial Statements and Supplemental Schedule
December 31, 2004 and 2003 and year ended December 31, 2004
CONTENTS
Report of Independent Registered Public Accounting Firm..................................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits..........................................................3
Statement of Changes in Net Assets Available for Benefits................................................4
Notes to Financial Statements............................................................................5
Supplemental Schedule
Schedule H, Line 4(i) - Schedule of Assets (Held At End of Year)........................................10
Report of Independent Registered Public Accounting Firm
Retirement Plan Advisory Committee
Apache Corporation 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Apache Corporation 401(k) Savings Plan as of December 31, 2004 and 2003,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 2004. 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. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also 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.
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, 2004 and 2003, and the changes in its net assets available for
benefits for the year ended December 31, 2004, 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, 2004, is presented for purposes 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
1
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.
/s/ Ernst & Young LLP
June 20, 2005
2
Apache Corporation 401(k) Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2004 2003
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ASSETS
Receivables:
Securities sold $ 36,588 $ 75,546
Investments 206,392,999 168,781,076
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Net assets available for benefits $ 206,429,587 $ 168,856,622
=============== ===============
See accompanying notes.
3
Apache Corporation 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2004
Additions:
Participant contributions $ 8,578,504
Employer contributions 6,075,750
Rollover contributions 2,378,298
Investment income 3,941,584
Net appreciation in fair value of investments 24,138,542
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Total additions 45,112,678
Deductions:
Administrative fees 51,383
Benefits paid to participants 7,488,330
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Total deductions 7,539,713
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Net increase 37,572,965
Net assets available for benefits at:
Beginning of year 168,856,622
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End of year $ 206,429,587
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See accompanying notes.
4
Apache Corporation 401(k) Savings Plan
Notes to Financial Statements
December 31, 2004
1. DESCRIPTION OF PLAN
The following brief description of the Apache Corporation 401(k) Savings Plan
(the "Plan") is provided only for general information purposes. Participants
should refer to the Summary Plan Description for more complete information, a
copy of which is available from Apache Corporation (the "Company") or is
accessible through the Company's internet site.
The Plan is a defined contribution plan established on January 1, 1989, open to
all eligible employees and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
CONTRIBUTIONS
Participants may contribute up to 25% of their eligible compensation. The
Company makes a basic contribution equal to 100% of the first 6% of each
participant's contributions. Participants direct the investment of all
contributions to their accounts into various fund options offered by the Plan.
Only participant contributions are eligible to be invested in the self directed
brokerage account.
VESTING
Participants are fully vested in their contributions and all related earnings.
Vesting in the employer contribution portion of their accounts and related
earnings is based on years of credited service. A participant becomes 20% vested
after completion of one year of service and continues to vest 20% per year,
becoming fully vested after completion of five years of credited service.
Forfeitures of unvested accounts may be used by the Company to reduce future
employer contributions to the Plan or pay administrative expenses of the Plan.
PARTICIPANT LOANS
Participants may borrow from their own contributions a minimum of $500, up to
the lesser of $50,000 less the participant's highest outstanding loan balance
during the preceding 12 months or 50% of their vested account balance. Loans are
charged at a rate of interest equal to the current prime lending rate plus 1%.
Loans must generally be repaid through payroll deductions within four years.
5
Apache Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
BENEFIT PAYMENTS
Participants are eligible to receive lump-sum benefits equal to the vested value
of their account in the event of retirement, disability, death, or termination
of employment.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants become fully vested.
ADMINISTRATIVE EXPENSES
Certain administrative expenses of the Plan are paid by the Company.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements of the Plan have been prepared on the
accrual basis of accounting in accordance with U.S. generally accepted
accounting principles. Benefit payments are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates that affect
the reported amounts in the financial statements, accompanying notes and
supplemental schedule. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Fidelity Management Trust Company serves as the Plan's trustee and holds all
investments of the Plan, except for the self-directed brokerage account which is
held by Fidelity Brokerage Services. Investments in mutual funds and common
stock are stated at fair value based on quotations obtained from national
securities exchanges. The
6
Apache Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION AND INCOME RECOGNITION (CONTINUED)
investment in the common collective trust fund is stated at fair value as
determined by the issuer, based on quoted market values of the underlying
investments. The money market fund and participant loans are stated at cost,
which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
RISKS AND UNCERTAINTIES
The Plan provides for investments in various investment securities which, in
general, are exposed to various risks, such as interest rate, credit, and
overall market volatility. Due to the level of risk associated with certain
investments securities, it is 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 statements of net assets available
for benefits and participant account balances.
3. INVESTMENTS
Individual investments that represent 5% or more of the Plan's net assets are as
follows:
DECEMBER 31
2004 2003
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Apache Corporation common stock $ 89,509,075 $ 71,092,288
Fidelity Blue Chip Growth Fund 9,795,186 9,609,072
Fidelity Magellan Fund 20,794,027 20,214,961
Fidelity Managed Income Portfolio 16,426,244 14,072,304
Fidelity Retirement Money Market Portfolio 8,822,802 8,591,870
Fidelity Equity-Income Fund 11,979,213 9,547,067
Fidelity Low-Priced Stock Fund 13,327,374 8,989,694
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Apache Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
During 2004, the Plan's investments (including investments bought, sold, and
held during the year) appreciated in value as follows:
YEAR ENDED
DECEMBER 31
2004
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Mutual funds $ 5,445,596
Common stocks 18,692,946
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$ 24,138,542
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4. INCOME TAX STATUS
The Plan received a determination letter from the Internal Revenue Service
("IRS") dated July 22, 2002, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related
trust is exempt from taxation. Subsequent to this determination by the IRS, the
Plan was amended and restated. Once qualified, the Plan is required to operate
in conformity with the IRC to maintain its Section 401(a) qualification. The
plan administrator believes the Plan is being operated in compliance with the
applicable requirements of the IRC and, therefore, believes that the Plan, as
amended and restated, is qualified and the related trust is tax exempt.
8
Supplemental Schedule
Apache Corporation 401(k) Savings Plan
Schedule H, Line 4(i) - Schedule of Assets (Held At End of Year)
EIN: 41-0747868 PN: 002
December 31, 2004
IDENTITY OF ISSUE, BORROWER,
LESSOR, OR SIMILAR PARTY DESCRIPTION OF INVESTMENT CURRENT VALUE
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* Apache Corporation 1,770,003 shares of common stock $ 89,509,075
* Fidelity Investments Fidelity Puritan Fund 4,620,310
* Fidelity Investments Fidelity Equity-Income Fund 11,979,213
* Fidelity Investments Fidelity Intermediate Bond Fund 7,369,927
* Fidelity Investments Fidelity Blue Chip Growth Fund 9,795,186
* Fidelity Investments Fidelity Magellan Fund 20,794,027
* Fidelity Investments Fidelity Growth Company Fund 4,622,419
* Fidelity Investments Fidelity Retirement Money Market Portfolio 8,822,802
Morgan Stanley Morgan Stanley Institutional Fund, Inc. -
Intermediate Equity Portfolio 4,532,382
* Fidelity Investments Fidelity Managed Income Portfolio 16,426,244
* Fidelity Investments Spartan U. S. Equity Index Fund 4,668,888
* Fidelity Investments Fidelity Low-Priced Stock Fund 13,327,374
Ariel Mutual Funds Ariel Appreciation Fund 2,855,952
* Fidelity Investments Fidelity Freedom Income 126,656
* Fidelity Investments Fidelity Freedom 2000 11,176
* Fidelity Investments Fidelity Freedom 2010 1,562,342
* Fidelity Investments Fidelity Freedom 2020 1,314,533
* Fidelity Investments Fidelity Freedom 2030 225,467
* Fidelity Investments Fidelity Freedom 2040 339,433
Brokerage link Self-directed brokerage account 1,562,180
* Participant loans Varying maturity dates and interest rates
ranging from 5.0% to 10.5% 1,927,413
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$ 206,392,999
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* Party-in-interest
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Apache Corporation
401(k) Savings Plan
(Name of Plan)
Date: June 27, 2005 /s/ Jeffrey M. Bender
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Jeffrey M. Bender, Chairman
Retirement Plan Advisory Committee
INDEX TO EXHIBITS
Exhibit No. Description
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23.1 Consent of Ernst & Young LLP