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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[ 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
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COMMISSION FILE NO. 33-79826
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 PARKWAY EAST
SUITE 2020
HOUSTON, TEXAS 77060
(281) 847-6000
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
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Item 4. Financial statements and schedules are prepared in accordance with the
financial reporting requirements of ERISA.
Newfield Exploration Company 401(k) Plan
Financial Statements and Supplemental Schedule
INDEX TO FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2002
REPORT OF INDEPENDENT AUDITORS............................................... 1
REPORT OF INDEPENDENT ACCOUNTANTS............................................ 2
FINANCIAL STATEMENTS:
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002 AND 2001.................................... 3
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002................................ 4
NOTES TO FINANCIAL STATEMENTS........................................... 5
SUPPLEMENTAL SCHEDULE:
SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)........ 10
ii
REPORT OF INDEPENDENT AUDITORS
Participants and Plan Administrator
Newfield Exploration Company 401(k) Plan
Houston, Texas
We have audited the accompanying statement of net assets available for benefits
of the Newfield Exploration Company 401(k) Plan (the "Plan") as of December 31,
2002 and the related statement of changes in net assets available for benefits
for the year then ended. 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.
In our opinion, the 2002 financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan as
of December 31, 2002 and the changes in net assets available for benefits for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic 2002
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 2002 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. The supplemental schedule has been subjected to the auditing procedures
applied in the audit of the basic 2002 financial statements and, in our opinion,
is fairly stated in all material respects in relation to the basic 2002
financial statements taken as a whole.
/s/ Crowe Chizek and Company LLC
Oak Brook, Illinois
June 10, 2003
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Newfield Exploration Company 401(k) Plan
In our opinion, the accompanying statement of net assets available for benefits
presents 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 in conformity with accounting principles generally accepted in the United
States of America. This financial statement is the responsibility of the Plan's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this financial statement
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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Hartford, Connecticut
June 13, 2002
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2002 and 2001
2002 2001
---- ----
ASSETS
Investments, at fair value (Note 3) $ 11,744,856 $ 11,090,170
Cash 50,296 -
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11,795,152 11,090,170
LIABILITIES
Pending trades 14,314 -
Accrued expenses 184 -
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14,498 -
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NET ASSETS AVAILABLE FOR BENEFITS $ 11,780,654 $ 11,090,170
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See accompanying notes to financial statements.
3
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2002
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income
Net depreciation in fair value of
investments (Note 3) $ (2,065,243)
Interest and dividends 104,003
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(1,961,240)
Contributions
Company 1,438,103
Participant 1,773,473
Rollovers 271,943
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3,483,519
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Total additions 1,522,279
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments 830,037
Administrative charges 1,758
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Total deductions 831,795
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INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 690,484
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 11,090,170
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End of year $ 11,780,654
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See accompanying notes to financial statements.
4
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
NOTE 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 operation 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 effective January 1, 1989. 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. The
Plan is subject to the requirements of the Employee Retirement Income Security
Act of 1974 ("ERISA").
Contributions: Participants may contribute up to 30% (15% prior to January 1,
2002) of their eligible compensation (as defined by the Plan) on a semi-monthly
basis. The Company will make a matching contribution in an amount equal to $1.00
for each $1.00 contributed by a participant as described in the preceding
sentence, up to a maximum of 8% of the participant's compensation for the
applicable semi-monthly contribution period. Effective January 1, 2002, the Plan
allows certain eligible participants to make catch-up contributions in
accordance with Internal Revenue Service regulations. The foregoing participant
and Company contributions are subject to certain limitations.
Participants may also contribute amounts representing distributions from other
qualified plans. Participants may direct the amounts contributed to their
accounts into any of the investment options available under the Plan. Certain
administrative fees of the Plan have been paid by the Company.
Participant Accounts: Each participant has accounts that are 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 benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested accounts.
Vesting: Participants are immediately vested in their own contributions plus
actual earnings thereon. Vesting in Company matching contribution accounts is
based on years of service. A participant becomes 20% vested for each year of
service and is fully vested after five years of service. An active participant
is entitled to 100% of his or her account balances upon retirement, death or
disability.
5
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2002 and 2001
NOTE 1 - DESCRIPTION OF PLAN (Continued)
Benefit Payments: On termination of service, a participant is entitled to
receive the vested portion of his or her accounts. 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 common stock, to the extent the participant is invested
therein. Distributions are subject to the applicable provisions of the Plan
agreement.
Participant Loans: A participant may borrow up to the lesser of $50,000 or 50%
of his or her vested account balances. The loan will bear interest at a rate
commensurate with market rates for similar loans.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting: The Plan's financial statements are prepared on the accrual
basis of accounting.
Estimates: The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the Plan
Administrator of the Plan (the "Plan Administrator") to make estimates and
assumptions that affect certain reported amounts and disclosures, and actual
results may differ from these estimates.
Risks and Uncertainties: The Plan provides for various investment options. The
underlying investment securities are exposed to various risks, such as interest
rate, market and credit risks. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in the values of investment securities will occur in the near term and that such
changes could materially affect participants' account balances and the amounts
reported in the statement of net assets available for benefits and the statement
of changes in net assets available for benefits.
Payment of Benefits: Benefits are recorded when paid.
Investment Valuation and Income Recognition: The Plan's investments are stated
at fair value at year end. Quoted market prices are used to value investments in
mutual funds and common stock. Shares or units of common collective trusts and
pooled separate accounts are valued at the net asset value of shares or units
held by the Plan.
The CIGNA Guaranteed Income Fund was valued at fair value as estimated by
Connecticut General Life Insurance Company ("CG Life") at December 31, 2001.
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.
6
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2002 and 2001
NOTE 3 - INVESTMENTS
Investments representing 5% or more of the Plan's net assets at December 31 are
as follows:
2002 2001
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Newfield Exploration Company Common Stock
(35,804 and 33,219 shares in 2002 and 2001,
respectively) $ 1,290,738 $ 1,179,620
Diversified Stable Pooled Fund 2,504,405 -
Diversified Stock Index Fund 1,659,920 -
Diversified Equity Growth Fund 1,577,777 -
Diversified Mid-Cap Growth Fund 1,392,348 -
Diversified Value & Income Fund 1,101,506 -
Diversified International Equity Fund 1,055,464 -
Diversified Core Bond Fund 642,231 -
CIGNA Guaranteed Income Fund - 1,565,338
CIGNA Credit Suisse Capital Appreciation Account - 1,458,878
CIGNA Fidelity Contrafund Fund - 740,642
CIGNA Fidelity Growth & Income Fund - 807,273
CIGNA Janus Fund - 570,783
CIGNA Janus Worldwide Fund - 961,014
During 2002, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value as follows:
Mutual funds $ 250,224
Common/collective fund 25,195
Common stock 17,491
Money market fund (84)
Pooled separate accounts (2,358,069)
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$(2,065,243)
NOTE 4 - INVESTMENT CONTRACT WITH INSURANCE COMPANY
The Plan participated in a contract with CG Life via an investment in the CIGNA
Guaranteed Income Fund at December 31, 2001 and for the period from January 1,
2002 through September 30, 2002. CG Life commingles the assets of the CIGNA
Guaranteed Income Fund with other assets. 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 interest rate reset process,
approximates contract value. The Plan was credited with interest at the interest
rates specified in the contract, which ranged from 4.2% to 4.4% for the period
from January 1, 2002 through September 30, 2002.
7
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2002 and 2001
NOTE 5 - RELATED-PARTY TRANSACTIONS
Parties-in-interest are defined under Department of Labor regulations as any
fiduciary of the Plan, any party rendering service to the Plan, the Company, and
certain others. Some Plan investments are in mutual funds or common collective
funds offered by Diversified Investment Advisors. As Investors Bank and Trust
Company ("IBTC") is the trustee of the Plan and IBTC is affiliated with
Diversified Investment Advisors, these investments qualify as party-in-interest
investments. The Plan held the following party-in-interest investments with the
trustee and the Company at December 31, 2002:
Diversified Stable Pooled Fund $ 2,504,405
Diversified Stock Index Fund 1,659,920
Diversified Equity Growth Fund 1,577,777
Diversified Mid-Cap Growth Fund 1,392,348
Newfield Exploration Company Common Stock 1,290,738
Diversified Value & Income Fund 1,101,506
Diversified International Equity Fund 1,055,464
Diversified Core Bond Fund 642,231
Participant Loans 184,158
Diversified Money Market Fund 104,542
Diversified Mid-Cap Value Fund 52,331
Diversified Small Cap Growth Fund 50,933
Diversified Small Cap Value Fund 34,512
Diversified Intermediate/Long Term Strategic Allocation Fund 20,035
Diversified High Quality Bond Fund 19,719
Diversified Intermediate Horizon Fund 2,782
Diversified Short Term/ Intermediate Horizon Fund 1,988
At December 31, 2001, and for the period from January 1, 2002 through September
30, 2002, all investments were held in a combination of pooled separate accounts
and a group annuity contract of CG Life (the Plan trustee during this time),
Company stock and participant loans.
NOTE 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 in accordance with the terms of the Plan agreement.
8
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2002 and 2001
NOTE 7 - TAX STATUS
The Internal Revenue Service has determined by a letter dated April 28, 1998
that the Plan, which is a prototype plan, is designed in accordance with
applicable sections of the Internal Revenue Code ("IRC") and, therefore, the
related trust is exempt from taxation. Once qualified, the Plan is required to
operate in conformity with the IRC to maintain its qualification. The Plan has
been amended since receiving the determination letter. However, the Plan
Administrator believes the Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC. Thus, no provision for
federal income taxes is included in the Plan's financial statements.
NOTE 8 - 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. At December 31, 2002
and 2001, forfeitures of $9,315 and $81,609, respectively, were available to
offset Company contributions or pay Plan expenses that otherwise would be
payable by the Company in accordance with the Plan agreement. In 2002, Company
cash contributions were offset by $58,159 from forfeited non-vested accounts.
NOTE 9 - TERMINATED PARTICIPANTS
Included in net assets available for benefits are amounts allocated to
individuals who have elected to withdraw from the Plan but have not been paid.
As of December 31, 2002 and 2001, amounts allocated to these individuals totaled
$44,146 and $0, respectively.
9
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2002
Plan Sponsor: Newfield Exploration Company
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Employer Identification Number: 72-1133047
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Plan Number: 001
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(c)
Description of Investment,
(b) Including Maturity Date, (e)
Identity of Issuer, Borrower, Rate of Interest, (d) Current
(a) Lessor, or Similar Party Par, or Maturity Value Cost Value
--- ------------------------ ---------------------- ---- -----
* Diversified High Quality Bond Fund Mutual Fund # $ 19,719
1,664 units
* Diversified Core Bond Fund Mutual Fund # 642,231
50,930 units
* Diversified Short Term/ Mutual Fund # 1,988
Intermediate Horizon Fund 225 units
* Diversified Intermediate Horizon Fund Mutual Fund # 2,782
286 units
* Diversified Value & Income Fund Mutual Fund # 1,101,506
61,127 units
* Diversified Stock Index Fund Mutual Fund # 1,659,920
242,324 units
* Diversified Intermediate/Long Mutual Fund # 20,035
Term Strategic Allocation Fund 2,134 units
* Diversified Mid-Cap Growth Fund Mutual Fund # 1,392,348
184,907 units
* Diversified Equity Growth Fund Mutual Fund # 1,577,777
111,111 units
* Diversified Mid-Cap Value Fund Mutual Fund # 52,331
5,726 units
* Diversified International Equity Fund Mutual Fund # 1,055,464
103,680 units
* Diversified Small Cap Value Fund Mutual Fund # 34,512
4,032 units
* - Denotes party in interest
# - Investments are participant-directed, therefore, cost information is not
required.
10
NEWFIELD EXPLORATION COMPANY 401(k) PLAN
SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)--(Continued)
December 31, 2002
Plan Sponsor: Newfield Exploration Company
------------------------------------------
Employer Identification Number: 72-1133047
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Plan Number: 001
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(c)
Description of Investment,
(b) Including Maturity Date, (e)
Identity of Issuer, Borrower, Rate of Interest, (d) Current
(a) Lessor, or Similar Party Par, or Maturity Value Cost Value
--- ------------------------ ---------------------- ---- -----
* Diversified Small Cap Growth Fund Mutual Fund # $ 50,933
4,940 units
* Newfield Exploration Company Common Stock # 1,290,738
35,804 shares
* Diversified Stable Pooled Fund Collective Trust # 2,504,405
182,790 units
* Diversified Money Market Fund Money Market # 104,542
9,843 units
Personal Choice Account Self directed accounts # 49,467
* Participant Loans Interest rates ranging
from 5.25% to 5.96% 184,158
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$ 11,744,856
* - Denotes party in interest
# - Investments are participant-directed, therefore, cost information is not
required.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator of the Plan has duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
NEWFIELD EXPLORATION COMPANY
401(K) PLAN
Date: July 10, 2003 By: /s/ MONA LEIGH BROUSSARD
------------------------------------
Mona Leigh Broussard
Plan Administrator
12
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
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23.1 Consent of Independent Auditors - Crowe Chizek and Company LLC
23.2 Consent of Independent Accountants - PricewaterhouseCoopers LLP
99.1 Certification of Plan Administrator of the Newfield Exploration
Company 401(k) Plan pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002