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, 2004
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, 2004 and 2003 and for the year ended December 31, 2004
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, 2004 and 2003.......................................... 5
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2004................................ 6
Notes to Financial Statements.......................................... 7
Schedule H; Line 4i - Schedule of Assets (Held At End of Year)
as of December 31, 2004............................................. 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, 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 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
Dallas, Texas
May 17, 2005
4
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
Statements of Net Assets Available for Benefits
December 31,
-----------------------------
2004 2003
------------ -------------
Investments at fair value:
Vanguard PRIMECAP Fund.............................. $ 33,937,417 $ 27,137,082
Vanguard Windsor II Fund............................ 18,051,885 12,748,739
Vanguard 500 Index Fund............................. 17,473,864 15,278,207
Vanguard Prime Money Market Fund.................... 9,872,070 12,564,723
Vanguard Short-Term Investment-Grade Fund........... 6,154,323 4,976,563
Vanguard Retirement Savings Trust................... 4,745,263 2,598,710
Vanguard Explorer Fund.............................. 4,664,506 3,325,419
Vanguard International Growth Fund.................. 3,743,138 2,081,153
Vanguard Total Bond Market Index Fund............... 3,694,790 2,853,005
Vanguard Asset Allocation Fund...................... 3,537,314 2,244,572
Vanguard Inflation-Protected Securities Fund........ 2,693,544 942,171
Sarofim Equity Fund................................. 12,558,831 14,842,386
Pioneer Stock Fund ................................. 5,652,423 4,964,217
----------- -----------
126,779,368 106,556,947
Participants loans receivable......................... 2,420,298 2,150,262
----------- -----------
129,199,666 108,707,209
Contributions receivable.............................. 9,789 25,328
Unallocated accrued administrative expenses........... (12,620) -
----------- -----------
Net assets available for benefits................... $129,196,835 $108,732,537
=========== ===========
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, 2004
Additions to net assets available for benefits:
Interest and dividend income................................ $ 1,859,619
Employer contributions...................................... 6,039,928
Participants contributions.................................. 5,034,827
Net appreciation in fair value of investments............... 10,864,519
Rollovers................................................... 391,772
-----------
24,190,665
Deductions from net assets available for benefits:
Distributions to participants............................... 3,695,734
Administrative expenses..................................... 30,633
-----------
3,726,367
Net increase in net assets available for benefits............. 20,464,298
Net assets available for benefits, beginning of year.......... 108,732,537
-----------
Net assets available for benefits, end of year................ $129,196,835
===========
See accompanying notes to financial statements.
6
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
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").
On September 28, 2004, the Company completed a merger with Evergreen
Resources, Inc. ("Evergreen"). The Plan was amended to allow all employees of
Evergreen who joined the Company, to participate in the Plan, as well as
maintain their years of credited service.
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, 2004, participants were able to
allocate their contributions among the following registered investment company
funds, common/collective trusts and Pioneer Stock Fund:
7
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
Note 1. Description of Plan (continued)
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 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 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 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 Short-Term Investment-Grade Fund - Invests in short-term bonds,
including investment-grade corporate and United States Treasury securities.
o Vanguard Explorer Fund - Invests in a diversified group of small-company
stocks with prospects for above-average growth.
o Vanguard International Growth Fund - Invests in stocks of seasoned
companies located outside the United States with above-average growth
potential.
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 Asset Allocation Fund - Invests in common stocks, long-term United
States Treasury bonds and money market instruments.
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.
8
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
Note 1. Description of Plan (continued)
See Note 3 for additional information regarding investment risks and
uncertainties.
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
for each full year of completed service 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, 2004 and 2003
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").
Payment of Benefits
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, 2004 and 2003, 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 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, 2004 and 2003
Note 3. Investments
The Trustee holds the Plan's investments and executes all investment
transactions.
During the year ended December 31, 2004, the fair value of the Plan's
investments (including investments purchased, sold and held) appreciated as
follows:
Registered investment company funds.................... $ 9,625,680
Common/collective trusts............................... 698,746
Pioneer Stock Fund..................................... 540,093
----------
Net appreciation in fair value of investments...... $10,864,519
==========
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 near term, and that such changes could cause the Plan's net
assets available for benefits and the participants' account balances to differ
materially from those reported as of December 31, 2004.
Note 4. Administrative Expenses
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. Administrative
expenses paid by the Plan were $30,633 for activity related to the year ended
December 31, 2004, of which $25,613 was paid via qualifying account forfeiture
balances and $5,020 was paid via Plan earnings for participant loan transaction
fees. Of the amounts paid via qualifying account forfeiture balances, $12,620
was accrued at December 31, 2004. In addition to administrative expenses paid by
the Plan, Plan administrative expenses paid by the Employer were $22,736 for
activity related to the year ended December 31, 2004.
Account forfeiture balances in the Plan qualifying to be used to defray
future Plan administrative expenses totaled $52,190 as of December 31, 2004.
Note 5. Tax Status of the Plan
The Plan has received a determination letter from the Internal Revenue
Service ("IRS") dated March 19, 2003, stating that the Plan is qualified under
Section 401(a) of the Code and, therefore, the related trust is exempt from
taxation. Subsequent to this determination by the IRS, the Plan was amended.
Once qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The Plan Administrator has indicated that it will
take the necessary steps, if any, to maintain the Plan's qualified status.
11
PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
Note 6. Related Party Transactions
Certain Plan investments are in shares or units of registered investment
company funds and common /collective trusts that are managed by the Trustee or
for which the Trustee provides services. These funds 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:
December 31,
----------------------------
2004 2003
------------ ------------
Net assets available for benefits per the accompanying
financial statements.................................... $129,196,835 $108,732,537
Amounts due to withdrawing participants..................... - (139,599)
----------- -----------
Net assets available for benefits per Form 5500......... $129,196,835 $108,592,938
=========== ===========
The following is a reconciliation of distributions to participants during
the year ended December 31, 2004, per the financial statements to Form 5500:
Distributions to participants per the accompanying
financial statements.................................... $ 3,695,734
Less: Amounts due to withdrawing participants at
December 31, 2003....................................... (139,599)
-----------
Distributions to participants per Form 5500............. $ 3,556,135
===========
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, 2004
(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 -
544,742 shares $ 33,937,417
* Vanguard Fiduciary Trust Company Vanguard Windsor II Fund -
587,435 shares 18,051,885
* Vanguard Fiduciary Trust Company Vanguard 500 Index Fund -
156,520 shares 17,473,864
* Vanguard Fiduciary Trust Company Vanguard Prime Money Market Fund -
9,872,070 shares 9,872,070
* Vanguard Fiduciary Trust Company Vanguard Short-Term Investment-Grade
Fund - 577,329 shares 6,154,323
* Vanguard Fiduciary Trust Company Vanguard Retirement Savings Trust -
4,745,263 shares 4,745,263
* Vanguard Fiduciary Trust Company Vanguard Explorer Fund -
62,552 shares 4,664,506
* Vanguard Fiduciary Trust Company Vanguard International Growth Fund -
198,470 shares 3,743,138
* Vanguard Fiduciary Trust Company Vanguard Total Bond Market Index Fund -
359,765 shares 3,694,790
* Vanguard Fiduciary Trust Company Vanguard Asset Allocation Fund -
144,027 shares 3,537,314
* Vanguard Fiduciary Trust Company Vanguard Inflation-Protected Securities
Fund - 214,284 shares 2,693,544
* Fayez Sarofim & Co. Sarofim Equity Fund -
247,027 shares 12,558,831
* Pioneer Natural Resources Company Pioneer Stock Fund - 448,249 units 5,652,423
* Participants loans receivable Interest rates range from 5.0% to 10.5% 2,420,298
-----------
$129,199,666
===========
--------------------------
*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 28, 2005 By: /s/ Larry N. Paulsen
-----------------------------------------------
Larry N. Paulsen
Chairman of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 28, 2005 By: /s/ Richard P. Dealy
-----------------------------------------------
Richard P. Dealy
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 28, 2005 By: /s/ Kerry D. Scott
-----------------------------------------------
Kerry D. Scott
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 28, 2005 By: /s/ Kevin Schepel
-----------------------------------------------
Kevin Schepel
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 28, 2005 By: /s/ David W. Simpson
-----------------------------------------------
David W. Simpson
Member of Pioneer Natural Resources USA, Inc.
401(k) and Matching Plan Committee
Date: June 28, 2005 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