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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 16(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
Commission file number 1-12534
NEWFIELD EXPLORATION COMPANY 401(K) PLAN
(Full title of the plan and the address of the plan, if different from
that of the issuer named below)
NEWFIELD EXPLORATION COMPANY
363 NORTH SAM HOUSTON PKWY EAST
SUITE 2020
HOUSTON, TEXAS 77060
(281) 847-6000
(Name of issuer of the securities held pursuant to the Plan of the
address of its principal executive office)
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NEWFIELD EXPLORATION COMPANY
401(k) PLAN
INDEX TO FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2001
Page
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Financial Statements:
Report of Independent Accountants...................................... 1
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.......................................... 4-8
Supplemental Schedule*:
Schedule I - Schedule of Assets (Held at End of Year) .............. 9
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* Other supplemental schedules required by Section 2520-103.1 of the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 ("ERISA") have been omitted
because they are not applicable.
-ii-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Newfield Exploration Company 401(k) 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 Newfield Exploration Company 401(k) 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. This 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.
As discussed in Note 10, effective January 23, 2001, the Plan sponsor acquired
Lariat Petroleum, Inc.
/s/ PRICEWATERHOUSECOOPERS LLP
Hartford, Connecticut
June 13, 2002
-1-
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
-----------------------------
2001 2000
------------ ------------
ASSETS
Investments, at fair value $ 11,090,170 $ 10,006,051
------------ ------------
Net assets available for benefits $ 11,090,170 $ 10,006,051
============ ============
The accompanying notes are an integral part of these financial statements.
-2-
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended
December 31,
--------------------------------------
2001 2000
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Additions to net assets attributed to:
Investment income:
Interest $ 61,624 $ 78,602
Net depreciation in fair value of investments (1,763,972) (670,511)
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(1,702,348) (591,909)
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Contributions:
Employer 1,240,597 715,276
Employee 1,989,936 888,711
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3,230,533 1,603,987
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Total additions 1,528,185 1,012,078
Deductions from net assets attributed to:
Benefit payments 439,889 1,940,817
Administrative charge 2,042 1,043
Participant loans terminated
due to withdrawal of participant 2,135 4,072
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Total deductions 444,066 1,945,932
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Net increase(decrease) 1,084,119 (933,854)
Net assets available for benefits at beginning of year 10,006,051 10,939,905
------------- -------------
Net assets available for benefits at end of year $ 11,090,170 $ 10,006,051
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The accompanying notes are an integral part of these financial statements.
-3-
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of Plan
The following description of the Newfield Exploration Company 401(k) Plan (the
"Plan") contains general information for financial reporting purposes. A
summary plan description is provided to participants explaining general Plan
provisions. The Plan agreement, however, governs the operations of the Plan and
its terms prevail in the event of a conflict with any summary of the Plan.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
General
The Plan is a defined contribution plan established effective January 1, 1989
and most recently amended November 29, 2001. The Plan is subject to the
provisions of ERISA.
Eligible Employees
All employees of Newfield Exploration Company (the "Company") and certain of
its affiliates, other than certain employees covered by collective bargaining
agreements and nonresident aliens, are eligible to participate in the Plan.
Contributions
Effective January 29, 2001, participants may contribute an amount equal to not
less than one percent nor more than 15 percent of their compensation for the
contribution period. Prior to January 29, 2001, participants could contribute
an amount equal to not less than one percent nor more than 17 percent of their
compensation for the contribution period. Participants direct the investment of
their contributions into various investment options offered by the Plan. The
Plan currently offers a fixed income general account, various pooled separate
accounts and Company stock as investment options for participants. Employee
contributions are recorded in semi-monthly contribution periods during which
the Company makes payroll deductions from the participant's earnings.
The Company will make a matching contribution in an amount equal to $1.00 for
each $1.00 contributed by a participant during a contribution period, up to a
maximum of eight percent of the participant's compensation for such
contribution period. Matching Company contributions are recorded in the same
contribution period as employee contributions.
Participant Accounts
Each participant's account is credited with the participant's contributions,
allocations of the Company's matching contributions, and Plan earnings.
Earnings are allocated by investment fund based on the ratio of a participant's
account invested in a particular fund to all participants' investments in that
fund. The amounts credited to a participant's accounts and the vested interest
in those accounts determines the amount of a participant's benefit under the
Plan.
Vesting
Participants are immediately vested in their own contributions plus actual
earnings thereon. Vesting in the Company matching contribution portion of their
accounts is based on years of service. A participant becomes 20 percent vested
after one year of service, 40 percent vested after two years of service, 60
percent vested after three years of service, 80 percent vested after four years
of service, and 100 percent vested after five years of service (active
participants also become 100 percent vested at normal retirement age). In
addition, if an active participant dies or becomes disabled prior to attaining
the Plan's normal retirement age, the participant's matching contribution
account becomes 100 percent vested.
-4-
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Benefit Payments
On termination of service, a participant is entitled to receive the vested
portion of their account. A participant may elect to receive such vested
portion in the form of a lump-sum payment, an annuity, or installment payments.
A participant may also elect to receive distributions in the form of Company
stock, to the extent the participant is invested therein. Distributions are
subject to the applicable provisions of the Plan agreement. Benefit claims are
recorded as expenses when they have been approved for payment and paid by the
Plan.
Participant Loans
A participant may borrow up to a maximum of $50,000 or 50 percent of the vested
portion of their account balance, whichever is less. Loans and repayment of
loans are calculated on a fully amortized basis. A loan is collateralized by
the balance in the participant's accounts and bears interest at a rate
commensurate with market rates for similar loans, as defined (5.50 percent to
5.80 percent and 5.80 percent for the years ended December 31, 2001 and 2000,
respectively).
Cash Equivalents
Contributions received prior to year end awaiting investment in the appropriate
investment option at December 31, 2001 are invested in the CIGNA Guaranteed
Short-Term Account (formerly "CIGNA Charter Guaranteed Short-Term Account"),
which is stated at fair value.
2. Summary of Accounting Policies
Method of Accounting
The Plan's financial statements are prepared on the accrual basis of
accounting. 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 assets and liabilities and changes therein. Actual results could
differ from those estimates. Certain reclassifications have been made to the
2000 amounts to conform with current year presentation.
Investment Valuation
Investments in the fixed income general account are non-fully benefit
responsive and are stated at fair value. The term "non-fully benefit
responsive" generally relates to investments that have or could have possible
conditions, limitations or restrictions on participant initiated transactions.
Investments in pooled separate accounts are stated at fair value, as determined
by the unit value reported by Connecticut General Life Insurance Company ("CG
Life"). Participant loans are stated at fair value. The Company stock is valued
at its quoted market price.
-5-
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
3. Investments
Investments that represent five percent or more of the Plan's net assets are
separately identified below.
December 31,
-------------------------
2001 2000
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CIGNA Guaranteed Income Fund 1 $ 1,565,338 $ 1,268,156
interest rates, 5.20 percent; 5.50 percent
CIGNA Credit Suisse Capital Appreciation Account 2 1,458,878 1,573,218
units, 32,799; 26,539
CIGNA Fidelity Contrafund Fund 740,642 591,340
units, 9,411; 6,523
CIGNA Fidelity Growth & Income Fund 807,273 643,455
units, 14,188; 10,180
CIGNA Janus Fund 570,783 537,138
units, 13,597; 9,399
CIGNA Janus Worldwide Fund 961,014 1,065,572
units, 17,341; 14,740
Newfield Exploration Company Common Stock 1,179,620 980,998
shares, 33,219; 20,679
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1 formerly "CIGNA Charter Guaranteed Income Fund"
2 formerly "CIGNA Warburg Pincus Advisor Capital Appreciation Fund"
Investment Performance
During the year ended December 31, 2001 and 2000, the Plan's investments
(including interest, realized gains and losses on investments bought and sold
and unrealized gains and losses on investments held during the year)
appreciated (depreciated) in value as follows:
Years Ended
December 31,
------------------------------
2001 2000
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General Account:
CIGNA Guaranteed Income Fund $ 55,248 $ 70,623
Pooled Separate Accounts:
CIGNA Actively Managed (Core) Bond Fund 3 19,211 20,910
CIGNA American Century Ultra Fund - Advisor Shares (68,268) (114,877)
CIGNA Credit Suisse Capital Appreciation Account (430,720) (99,387)
CIGNA Credit Suisse Capital International Equity Account 4 (69,537) (158,329)
CIGNA Credit Suisse Emerging Growth Account 5 (124,719) (65,949)
CIGNA Dreyfus Founders Growth Fund (30,449) (40,440)
CIGNA Fidelity Advisor Equity Growth Fund (77,226) (48,775)
CIGNA Fidelity Advisor Growth Opportunities Fund (33,970) (46,860)
CIGNA Fidelity Contrafund Fund (76,414) (41,961)
CIGNA Fidelity Equity Income II Fund (21,135) 10,590
CIGNA Fidelity Growth & Income Fund (65,343) (30,338)
CIGNA Fidelity Magellan Fund (44,896) (28,660)
CIGNA Janus Fund (159,800) (92,456)
CIGNA Janus Worldwide Fund (246,569) (233,211)
CIGNA PBHG Growth Fund (105,958) (157,370)
CIGNA State Street Global Advisors
Intermediate Bond Fund 631 851
CIGNA S&P 500(R)Index Fund 6 (10,489) (8,861)
CIGNA TimesSquare Corporate Bond Fund 7 2,148 913
CIGNA TimesSquare High Yield Bond Fund 8 (760) (7,456)
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(1,544,263) (1,141,666)
Newfield Exploration Company Common Stock (219,709) 471,155
Participant Loans 6,376 7,979
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Net decrease $(1,702,348) $ (591,909)
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3 formerly "CIGNA Actively Managed Core Fixed Income Fund"
4 formerly "CIGNA Warburg Pincus Advisor International Equity Fund"
5 formerly "CIGNA Warburg Pincus Advisor Emerging Growth Fund"
6 formerly "CIGNA Charter Large Company Stock Index Fund"
7 formerly "CIGNA Charter Corporate Bond Fund"
8 formerly "CIGNA Charter High Yield Bond Fund"
-6-
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
4. Investment Contract with Insurance Company
The Plan participates in a contract with CG Life via an investment in the CIGNA
Guaranteed Income Fund. CG Life commingles the assets of the CIGNA Guaranteed
Income Fund with other assets. For the Plan's investment in the CIGNA
Guaranteed Income Fund, the Plan is credited with interest at the interest
rates specified in the contract, which ranged from 5.50 percent to 5.20 percent
and was 5.50 percent for the years ended December 31, 2001 and 2000,
respectively, net of asset charges. CG Life prospectively guaranteed the
interest rates credited for the CIGNA Guaranteed Income Fund for six months. As
discussed in Note 2, the CIGNA Guaranteed Income Fund is included in the
financial statements at fair value which, principally because of the periodic
rate reset process, approximates contract value.
5. Related-Party Transactions
Plan assets are invested in funds managed by CG Life, a wholly owned subsidiary
of CIGNA Corporation. CG Life is the Plan's trustee and, as such, transactions
with CG Life and its affiliates qualify as party-in-interest transactions.
Personnel and facilities of the Company have been used to perform
administrative functions for the Plan at no charge to the Plan. In addition,
the Plan holds shares of common stock of the Company. Because the Company is
the sponsor of the Plan, the Company and its affiliates qualify as
parties-in-interest.
6. 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 will become 100 percent vested in their accounts and the Plan's
assets will be distributed as soon as administratively feasible in accordance
with the terms of the Plan agreement.
7. Tax Status
The Plan is a prototype plan designed to be qualified pursuant to section
401(a) of the Internal Revenue Code ("IRC"). Accordingly, the Company believes
that the net investment income of the trust established to hold the Plan's
assets is exempt from federal income tax pursuant to IRC section 501(a) and, to
the extent there is no unrelated business taxable income, pursuant to IRC
section 511. The Plan received a favorable determination letter dated April 28,
1998, from the Internal Revenue Service. The Company believes that the Plan is
qualified, is operating as designed, and has no unrelated business taxable
income; thus, no provision for federal income taxes is included in the Plan's
financial statements.
8. Reconciliation of Plan Financial Statements to the Form 5500
Certain balances included on Schedule H (Part I and II) of the Annual
Return/Report of Employee Benefit Plan (the "Form 5500") have been reclassified
for purposes of presentation in these financial statements to provide
additional disclosure.
-7-
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
9. Forfeitures
Forfeitures result from Company contributions that remain in the Plan following
the termination of employment of participants who had less than 100 percent
vested interests in their matching contribution accounts. The forfeiture
reserve of $81,609 and $82,125 at December 31, 2001 and 2000, respectively, is
available to offset contributions or pay Plan expenses that otherwise would be
payable by the Company in accordance with the Plan document. In 2001 and 2000,
Company cash contributions were offset by $17,726 and $0 from forfeited
non-vested accounts.
10. Acquisition
Effective January 23, 2001, the Company acquired Lariat Petroleum, Inc. As a
result of the acquisition, employees of Lariat Petroleum, Inc. became eligible
to participate in the Plan subject to the provisions of the Plan agreement.
-8-
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
SCHEDULE H (Line 4i) FORM 5500 - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2001
Supplemental Schedule - Schedule I
(c)
(b) Description of investment including (e)
Identity of issuer, borrower, maturity date, rate of interest, (d) Current
(a) lessor, or similar party collateral, par or maturity value Cost value
--- ----------------------------- ------------------------------------ ------ ------------
* Connecticut General Life CIGNA Guaranteed Income Fund N/A** $ 1,565,338
Insurance Company
* Connecticut General Life CIGNA Actively Managed (Core) N/A** 322,755
Insurance Company Bond Fund
* Connecticut General Life CIGNA American Century Ultra Fund - N/A** 441,319
Insurance Company Advisor Shares
* Connecticut General Life CIGNA Credit Suisse Capital N/A** 1,458,878
Insurance Company Appreciation Account
* Connecticut General Life CIGNA Credit Suisse Capital N/A** 279,145
Insurance Company International Equity Account
* Connecticut General Life CIGNA Credit Suisse Emerging N/A** 439,182
Insurance Company Growth Account
* Connecticut General Life CIGNA Dreyfus Founders Growth Fund N/A** 146,466
Insurance Company
* Connecticut General Life CIGNA Fidelity Advisor Equity N/A** 452,650
Insurance Company Growth Fund
* Connecticut General Life CIGNA Fidelity Advisor Growth N/A** 215,940
Insurance Company Opportunities Fund
* Connecticut General Life CIGNA Fidelity Contrafund Fund N/A** 740,642
Insurance Company
* Connecticut General Life CIGNA Fidelity Equity Income II Fund N/A** 297,529
Insurance Company
* Connecticut General Life CIGNA Fidelity Growth & Income N/A** 807,273
Insurance Company Fund
* Connecticut General Life CIGNA Fidelity Magellan Fund N/A** 405,695
Insurance Company
* Connecticut General Life CIGNA Janus Fund N/A** 570,783
Insurance Company
* Connecticut General Life CIGNA Janus Worldwide Fund N/A** 961,014
Insurance Company
* Connecticut General Life CIGNA PBHG Growth Fund N/A** 250,223
Insurance Company
* Connecticut General Life CIGNA State Street Global Advisors N/A** 62,428
Insurance Company Intermediate Bond Fund
* Connecticut General Life CIGNA S&P 500(R)Index Fund N/A** 178,778
Insurance Company
* Connecticut General Life CIGNA TimesSquare Corporate N/A** 39,544
Insurance Company Bond Fund
* Connecticut General Life CIGNA TimesSquare High Yield N/A** 74,981
Insurance Company Bond Fund
* National Financial Newfield Exploration Company N/A** 1,179,620
Services Corporation Common Stock
* Plan Participants Participant Loans N/A** 136,007
* Connecticut General Life Cash Equivalents (CIGNA Guaranteed N/A** 63,980
Insurance Company Short-Term Account)
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Total $ 11,090,170
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* Indicates an identified person known to be a party-in-interest to the Plan.
** Cost information has been omitted for participant directed investments.
-9-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees of the Plan have duly caused this annual report to be signed on their
behalf by the undersigned thereunto duly authorized.
NEWFIELD EXPLORATION COMPANY
401(k) PLAN
Date: June 27, 2002 By: /s/ MONA LEIGH BROUSSARD
------------------------
Mona Leigh Broussard
Plan Administrator
-10-
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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* 23.1 -- Consent of PricewaterhouseCoopers LLP
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* Filed herewith.