As filed with the Securities and Exchange Commission on June 26, 1998
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, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 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) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive officer:
Pioneer Natural Resources Company
5205 North O'Connor Boulevard
1400 Williams Square West
Irving, Texas 75039
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Financial Statements and Supplemental Schedules
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
To the Participants and Administrator
of Pioneer Natural Resources USA, Inc.
401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of Pioneer Natural Resources USA, Inc. 401(k) Plan (the "Plan") as of December
31, 1997 and 1996, and the related statements of changes in net assets available
for benefits for the years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits of the Plan's financial statements as of and for the years ended
December 31, 1997 and 1996 were made for the purpose of forming an opinion on
the financial statements taken as a whole. The supplemental schedules, Item 27a
- - Schedule of Assets Held for Investment Purposes as of December 31, 1997 and
Item 27d - Schedule of Reportable Transactions for the year ended December 31,
1997 are presented for the purpose of additional analysis and are not a required
part of the basic financial statements, but are 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 Fund
Information in the statements of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the changes
in net assets available for plan benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in the audits of the basic financial statements for the years ended
December 31, 1997 and 1996 and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG Peat Marwick LLP
Midland, Texas
June 12, 1998
3
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Statements of Net Assets Available for Benefits
December 31, 1997 and 1996
1997 1996
----------- -----------
ASSETS
Investments at fair value (Note 3):
Vanguard Money Market Reserves - Prime
Portfolio - 6,920,007 shares in 1997
and 1,676,031 shares in 1996 (cost
approximates fair value) $ 6,920,007 $ 1,676,031
Mutual Funds:
Vanguard Fixed Income Fund - ST Corporate
Portfolio - 512,013 shares in 1997 and
151,446 shares in 1996 (cost $5,516,188
and $1,618,677, respectively) 5,536,114 1,675,599
Vanguard Index Trust 500 Portfolio - 40,837
shares in 1997 and 30,377 shares in 1996
(cost $2,872,952 and $1,940,961,
respectively) 3,680,362 2,176,174
Vanguard Primecap Fund - 156,311 shares in
1997 and 126,396 shares in 1996 (cost
$4,845,166 and $3,602,651, respectively) 6,188,725 3,930,332
Vanguard Windsor II - 254,464 shares in 1997
and 215,791 shares in 1996 (cost
$6,128,990 and $4,899,500, respectively) 7,286,947 5,288,299
Vanguard International Growth Portfolio -
22,235 shares in 1997 and 7,111 shares
in 1996 (cost $380,071 and $117,240,
respectively) 364,755 131,204
Sarofim Equity Fund - 916,548 shares in 1997
(cost $35,277,286) 35,727,154 -
---------- ----------
58,784,057 13,201,608
Pioneer Natural Resources Stable Value Fund
(cost approximates fair value) 3,178,713 3,795,294
Pioneer Natural Resources Stock Fund - 94,711
shares in 1997 and 66,622 shares in 1996
(cost $2,415,438 and $1,457,572,
respectively) 2,740,713 2,463,044
Participants' loans (unpaid principal balance
approximates fair value) 1,538,357 893,759
---------- ----------
Net assets available for benefits $73,161,847 $22,029,736
=========== ===========
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Statement of Changes in Net Assets Available for Benefits (continued)
For the year ended December 31, 1997
Mutual Funds
---------------------------------------------------------------------------
Vanguard
Fixed Income Vanguard Vanguard
VMMR Fund - ST Index Vanguard International Sarofim
Prime Corporate Trust 500 Primecap Vanguard Growth Equity
Portfolio Portfolio Portfolio Fund Windsor II Portfolio Fund
---------- ---------- ---------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income $ 125,057 $ 176,827 $ 84,758 $ 222,360 $ 659,604 $ 15,336 $ 8,005
Employer contributions 101,571 58,668 100,489 153,602 180,227 21,276 -
Employee contributions 451,351 284,119 542,391 635,781 755,218 131,538 241,281
Transfers from other plans 4,728,468 3,528,089 - - - - 35,419,100
Loan payments 81,688 40,610 62,120 128,600 141,128 4,152 750
Net appreciation in fair value
of investments - 11,267 728,875 1,260,371 1,085,522 - 450,231
--------- --------- --------- --------- --------- -------- -----------
Total additions 5,488,135 4,099,580 1,518,633 2,400,714 2,821,699 172,302 36,119,367
--------- --------- --------- --------- --------- -------- -----------
Deductions from net assets
attributed to:
Employee loans 76,577 71,653 103,343 169,886 188,334 7,761 333,687
Distributions to participants 276,375 80,913 104,683 176,923 373,691 13,112 -
Other deductions 860 540 - 40 300 40 -
Net depreciation in fair value
of investments - - - - - 13,464 -
--------- --------- --------- --------- -------- -------- ---------
Total deductions 353,812 153,106 208,026 346,849 562,325 34,377 333,687
--------- --------- --------- --------- -------- -------- ---------
Net increase (decrease)
prior to interfund
transfers 5,134,323 3,946,474 1,310,607 2,053,865 2,259,374 137,925 35,785,680
Interfund transfers 109,653 (85,959) 193,581 204,528 (260,726) 95,626 (58,526)
--------- ---------- --------- --------- -------- -------- ----------
Net increase (decrease) 5,243,976 3,860,515 1,504,188 2,258,393 1,998,648 233,551 35,727,154
Net assets available for
benefits:
Beginning of year 1,676,031 1,675,599 2,176,174 3,930,332 5,288,299 131,204 -
--------- --------- --------- --------- --------- -------- ----------
End of year $6,920,007 $5,536,114 $3,680,362 $6,188,725 $7,286,947 $ 364,755 $35,727,154
========= ========= ========= ========= ========= ========= ==========
See accompanying notes to financial statements.
</TABLE>
5a
<PAGE>
<TABLE>
<CAPTION>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1997
Pioneer Pioneer
Natural Natural
Resources Resources Participant
Stable Stock Loans
Value Fund Fund Receivable Total
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income $ 239,065 $ 8,529 $ 99,402 $ 1,638,943
Employer contributions - 629,404 - 1,245,237
Employee contributions - 22,228 - 3,063,907
Transfers from other plans - - - 43,675,657
Loan payments - 52 (459,100) -
Net appreciation in fair value
of investments - - - 3,536,266
--------- --------- ---------- ----------
Total additions 239,065 660,213 (359,698) 53,160,010
--------- --------- ---------- ----------
Deductions from net assets
attributed to:
Employee loans 88,875 889 (1,041,005) -
Distributions to participants 238,428 108,770 36,709 1,409,604
Other deductions - - - 1,780
Net depreciation in fair value
of investments - 603,051 - 616,515
--------- --------- ---------- ----------
Total deductions 327,303 712,710 (1,004,296) 2,027,899
--------- --------- ---------- ----------
Net increase (decrease)
prior to interfund
transfers (88,238) (52,497) 644,598 51,132,111
Interfund transfers (528,343) 330,166 - -
--------- --------- ---------- ----------
Net increase (decrease) (616,581) 277,669 644,598 51,132,111
Net assets available for
benefits:
Beginning of year 3,795,294 2,463,044 893,759 22,029,736
--------- --------- ---------- ----------
End of year $3,178,713 $2,740,713 $ 1,538,357 $73,161,847
========= ========= ========== ==========
See accompanying notes to financial statements.
5b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1996
Texas Commerce Bank, N.A.
-----------------------------------------------------------------------------------------------------
Mutual Funds
------------------------------------- Participant Cash
Money Stock Balanced Growth Investment Securities Loans and Cash
Market Fund Fund Fund Fund Contracts Fund Receivable Equivalents
----------- ----------- ----------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income (expense) $ 36,179 $ 43,875 $ 83,248 $ 2,335 $ 157,388 $ 3,114 $ 11,388 $ 147
Employer contributions 18,208 109,595 78,103 87,166 52,290 172,737 - -
Employee contributions 45,912 294,149 212,287 234,812 133,846 - - -
Transfers from other plans 7,024 4,628 5,714 4,514 2,789 - (123,012) -
Loan payments 2,332 12,332 10,839 16,463 11,411 - (53,377) -
Net appreciation in fair
value of investments - 204,947 44,219 228,033 - 368,089 - -
---------- ---------- ---------- ---------- ---------- ---------- -------- ----------
Total additions 109,655 669,526 434,410 573,323 357,724 543,940 165,001) 147
---------- ---------- ---------- ---------- ---------- ---------- -------- ----------
Deductions from net assets
attributed to:
Employee loans 9,179 9,979 6,913 - 36,386 - (62,457) -
Distributions to
participants 291,865 715,909 399,305 407,107 900,328 165,830 - 85,595
Net depreciation in fair
value of investments - - - - - 88,726 - -
---------- ---------- ---------- ---------- ---------- ---------- -------- ----------
Total deductions 301,044 725,888 406,218 407,107 936,714 254,556 (62,457) 85,595
---------- ---------- ---------- ---------- ---------- ---------- -------- ----------
Net increase (decrease)
prior to interfund
transfers (191,389) (56,362) 28,192 166,216 (578,990) 289,384 (102,544) (85,448)
Asset transfers between
trustees (1,387,278) (4,821,709) (3,205,516) (3,334,155) (4,209,545) (1,541,179) (259,674) 9,713
Interfund transfers 6,011 131,597 110,568 102,541 680,757 21,566 - (1,053,040)
---------- ---------- ---------- ---------- ---------- ---------- -------- ----------
Net increase (decrease) (1,572,656) (4,746,474) (3,066,756) (3,065,398) (4,107,778) (1,230,229) (362,218) (1,128,775)
Net assets available for
benefits:
Beginning of year 1,572,656 4,746,474 3,066,756 3,065,398 4,107,778 1,230,229 362,218 1,128,775
---------- ---------- ---------- ---------- ---------- ---------- -------- ----------
End of year $ - $ - $ - $ - $ - $ - $ - $ -
========== ========== ========== ========== ========== ========== ======== ==========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
<TABLE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Statement of Changes in Net Assets Available for Benefits (continued)
For the year ended December 31, 1996
Vanguard Fiduciary Trust Company
----------------------------------------------------------------------------
Mutual Funds
----------------------------------------------------------------
Vanguard
Fixed Vanguard Vanguard
VMMR Income Index Vanguard International
Prime Securities Trust 500 Primecap Vanguard Growth
Portfolio Fund Portfolio Fund Windsor II Portfolio
---------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income $ 38,962 $ 51,017 $ 29,998 $ 95,310 $ 320,549 $ 4,522
Employer contributions 187,574 82,447 124,149 216,816 248,536 24,394
Employee contributions 162,222 98,577 139,606 251,351 285,572 32,247
Transfers from other plans 16,970 56,420 118,491 135,315 16,725 -
Loan payments 22,954 9,625 11,166 24,723 27,136 52
Net appreciation in fair value
of investments - 11,307 171,532 207,224 291,706 -
--------- -------- -------- --------- --------- --------
Total additions 428,682 309,393 594,942 930,739 1,190,224 61,215
--------- -------- -------- --------- --------- -------
Deductions from net assets attributed to:
Employee loans 42,056 70,951 76,337 179,115 263,970 399
Distributions to participants 82,541 85,348 91,476 147,794 363,493 507
Net depreciation in fair value of
investments - - - - - 158
--------- -------- -------- --------- --------- --------
Total deductions 124,597 156,299 167,813 326,909 627,463 1,064
--------- -------- -------- --------- --------- --------
Net increase (decrease)
prior to interfund
transfers 304,085 153,094 427,129 603,830 562,761 60,151
Asset transfers between
trustees 1,373,024 1,601,242 1,601,235 3,335,346 4,747,045 -
Interfund transfers (1,078) (78,737) 147,810 (8,844) (21,507) 71,053
--------- -------- -------- --------- --------- --------
Net increase (decrease) 1,676,031 1,675,599 2,176,174 3,930,332 5,288,299 131,204
Net assets available for benefits:
Beginning of year - - - - - -
--------- -------- --------- --------- --------- --------
End of year $1,676,031 $1,675,599 $2,176,174 $3,930,332 $5,288,299 $ 131,204
========= ========= ========= ========= ========= ========
See accompanying notes to financial statements.
7a
</TABLE>
<PAGE>
<TABLE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1996
Vanguard Fiduciary Trust Company
-------------------------------------------------
Investment P&P Participant
Contracts Securities Loans
Fund Fund Receivable Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income $ 170,994 $ 2,928 $ 13,685 $ 1,065,639
Employer contributions (3,557) 370,493 - 1,768,951
Employee contributions - - - 1,890,581
Transfers from other plans - - - 245,578
Loan payments 16 - (95,672) -
Net appreciation in fair value
of investments - 602,119 - 2,129,176
--------- --------- -------- ----------
Total additions 167,453 975,540 (81,987) 7,099,925
--------- --------- -------- ----------
Deductions from net assets attributed to:
Employee loans 130,133 - (762,961) -
Distributions to participants 399,780 94,193 30,518 4,261,589
Net depreciation in fair value of
investments - - - 88,884
--------- --------- -------- ----------
Total deductions 529,913 94,193 (732,443) 4,350,473
--------- --------- -------- ----------
Net increase (decrease)
prior to interfund
transfers (362,460) 881,347 650,456 2,749,452
Asset transfers between
trustees 4,266,451 1,581,697 243,303 -
Interfund transfers (108,697) - - -
--------- --------- -------- ----------
Net increase (decrease) 3,795,294 2,463,044 893,759 2,749,452
Net assets available for benefits:
Beginning of year - - - 19,280,284
--------- --------- -------- ----------
End of year $3,795,294 $2,463,044 $ 893,759 $22,029,736
========= ========= ======== ==========
See accompanying notes to financial statements.
7b
</TABLE>
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 1. Description of Plan
The following brief description of the Pioneer Natural Resources USA,
Inc. 401(k) Plan (the "Plan") provides only general information. Participants
should refer to the booklet entitled "The Pioneer Benefits Package: Imagine the
Peace of Mind" 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) Plan Committee (the "Plan Administrator"). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
General
Parker & Parsley Petroleum Company merged with MESA Inc. ("Mesa") during
August 1997, creating a new company, Pioneer Natural Resources Company
(collectively, the "Company"). As a result of the merger, the Parker & Parsley
Retirement Savings Plan became Pioneer Natural Resources USA, Inc. 401(k) Plan
effective October 1, 1997 and the Mesa Profit Sharing Plan merged into the
Pioneer Natural Resources USA, Inc. 401(k) Plan on October 1, 1997. Net assets
transferred in were recorded at fair value on the date of transfer.
The Plan is a defined contribution plan established under the Internal
Revenue Code Section 401 on January 1, 1990 covering all employees of Pioneer
Natural Resources USA, Inc. ("the Employer"), a wholly-owned subsidiary of the
Company and its successor or successors. Regular full-time employees and
part-time employees are eligible to participate on the first day of the month
following their date of hire. Certain administrative functions such as
maintenance of account balances and allocation of earnings were performed by the
Wyatt Company for the period January 1, 1996 through June 28, 1996 and by the
Vanguard Group for the period June 29, 1996 through December 31, 1997.
Contributions
Prior to October 1, 1997, participants of the Plan contributed an amount
of not less than 2% nor more than 15% of their annual salary. The Company
matched 100% of the first 6% of the Plan participant's compensation through
September 30, 1997. The Company's contributions were made in the form of cash or
in common stock, or in a combination of cash and common stock.
Effective October 1, 1997, participants may contribute an amount of not
less than 2% nor more than 12% of their annual salary. The Employer match is
contributed in cash to the Pioneer Natural Resources USA, Inc. Matching Plan at
an amount equal to 200% of the first 5% of basic compensation contributed by the
Plan participants.
8
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 1. Description of Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's
contributions and an allocation of Plan earnings. Plan earnings are allocated to
each participant's account in proportion to their fund balance relative to the
total fund balance.
Investment Options
During the Plan year ended December 31, 1997, participants were able to
allocate their contributions among the following investment options:
o Vanguard Money Market Reserves - Prime Portfolio - Seeks to provide
high income and a stable share price of $1 by investing in
short-term, high quality money market instruments issued by
financial institutions, nonfinancial corporations, the U.S.
government and federal agencies.
o Vanguard Fixed Income Fund - ST Corporate Portfolio - Seeks to
provide income while maintaining a high degree of stability of
principal by investing in short-term bonds, including high-quality
corporate and U.S. Treasury securities.
o Vanguard Index Trust - 500 Portfolio - Seeks to provide long-term
growth of capital and income from dividends by holding all of the
500 stocks that make up the unmanaged Standard & Poor's 500
Composite Stock Price Index, a widely recognized benchmark of U.S.
stock market performance.
o Vanguard Primecap Fund - Seeks long-term growth of capital by
investing in stocks of companies with above-average prospects for
continued earnings growth, strong industry positions and skilled
management teams.
o Vanguard/Windsor II - Seeks to provide long-term growth of capital
and income from dividends by investing in a diversified group of
out-of-favor stocks of large-capitalization companies. The stocks
generally sell at prices below the overall market average compared
to their dividend income and future return potential.
o Vanguard International Growth Portfolio - Seeks to provide long-term
growth of capital by investing in stocks of high-quality, seasoned
companies based outside the United States. Stocks are selected from
more than 15 countries.
9
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 1. Description of Plan (continued)
o Sarofim Equity Fund - Seeks to provide high growth of capital by
investing in a broadly diversified portfolio of large companies.
Income is a secondary goal.
o Pioneer Natural Resources Stable Value Fund - Seeks to provide a
high level of income and a stable unit value of $1 in most cases.
o Pioneer Natural Resources Stock Fund - The Pioneer Natural
Resources Stock Fund is designed to provide long-term growth of
capital through increases in the value of the common stock and the
dividends paid on the stock. Dividends are reinvested to purchase
more shares.
Vesting
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vesting in the remainder of their accounts is based
upon years of continuous service. A participant is fully vested in the Employer
matching contributions after four years of service. Vesting in the profit
sharing contributions occurs after five years of service.
Payments of Benefits
If the total value of the vested portion of the participant's account is
$3,500 ($5,000 commencing January 1, 1998) or less, payment will be made in one
lump sum as soon as administratively possible. If the total value of the vested
portion of the participant's account exceeds $3,500 ($5,000 commencing January
1, 1998), and the participant has not yet reached age 70-1/2, payment will be in
one lump sum at age 70-1/2 unless the participant consents to an earlier
distribution date by filing a written request to the Plan Administrator within
90 days prior to the date the participant wishes to receive the distribution.
If the total value of the vested portion of the participant's account
exceeds $3,500 ($5,000 commencing January 1, 1998) the participant has the right
to defer payment of their account until age 70- 1/2. A participant's beneficiary
will receive the participant's account balance in the event of a participant's
death.
Amounts due to participants terminating during the year have been accrued
as a liability for purposes of Internal Revenue Service Form 5500. As of
December 31, 1997 and 1996, assets of $237,736 and $46,113, respectively, were
reserved for terminated participants and were distributed subsequent to each
year end.
10
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 1. Description of Plan (continued)
Withdrawal of Benefits
Employees may withdraw their vested interest in the Plan under certain
hardship conditions as defined in the Plan agreement. Terminated participants
may also withdraw their vested interest in the Plan.
Plan Termination
Although it has not expressed any intent to do so, the Employer 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 the
Plan's termination, participants will become fully vested in their accounts.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on the accrual
basis of accounting.
Trust Accounting
The Plan's assets were held with Texas Commerce Bank, a national banking
association from January 1, 1996 through June 28, 1996. On June 29, 1996, the
assets of the Plan were transferred to Vanguard Fiduciary Trust Company (the
"Trustee"). The assets received by the Trustee shall constitute one common fund
and may be commingled with the assets of other Company affiliates that have
adopted and are participating in the Plan.
Investment Valuation
Investments are valued at fair value as determined by the Trustee. Fair
value is determined as follows:
1) Investments in securities traded on national securities exchanges are
valued at the last reported sales price on the last business day of
the year;
2) Securities traded on over-the-counter markets and listed securities
for which no sales were reported on that date; if any, are valued at
the mean between the last reported bid and asked prices; and
11
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 2. Summary of Significant Accounting Policies (continued)
3) Investments in restricted securities and other security investments,
if any, not having an established market are valued at fair value as
determined by the investment manager of the trust.
4) Investments in guaranteed investment contracts with insurance
companies are valued at contract value, which approximates fair
value.
5) Participant 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. Income from other investments is recorded as
earned on an accrual basis.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan Administrator to make estimates
and assumptions that affect the reported amounts of net assets available for
benefits at the date of the financial statements and the reported changes in net
assets available for benefits during the reporting periods. Actual results could
differ from those estimates.
Reclassifications
Certain reclassifications have been made to the 1996 amounts to conform
to the 1997 presentation.
Note 3. Investments
Statement of Position ("SOP") 94-4
In September 1994, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 94-4, "Reporting of Investment Contracts
Held by Health and Welfare Benefit Plans and Defined Contribution Pension
Plans," which provides guidance on how those plans should report investment
contracts issued by insurance companies, banks, thrift institutions and others.
In accordance with SOP 94-4, funds with insurance companies at December 31, 1997
and 1996 are recorded at stated contract value, which approximates fair values,
as reported to the Plan by the insurance companies.
12
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 3. Investments (continued)
Investment contracts issued by insurance companies at December 31 1997,
have contractual interest rates ranging from 5.44% to 8.30% with maturity dates
ranging from June 1998 through December 1999.
The number of units and net asset value per unit for the Pioneer Natural
Resources Stock Fund at December 31, 1997 and 1996 was 262,770 and $10.43 and
185,061 and $13.23, respectively. Investments that represent 5% or more of the
Plan's net assets are separately identified.
<TABLE>
December 31, 1997 December 31, 1996
------------------------- -------------------------
Shares/Units Fair Value Shares/Units Fair Value
------------ ---------- ------------ ----------
Investments
-----------
<S> <C> <C> <C> <C>
Investments at fair value as determined by
quoted market price:
Vanguard Money Market Reserves - Prime
Portfolio 6,920,007 $ 6,920,007 1,676,031 $ 1,676,031
Mutual Funds:
Vanguard Fixed Income Fund-ST
Corporate Portfolio 512,013 5,536,114 151,446 1,675,599
Vanguard Index Trust 500 Portfolio 40,837 3,680,362 30,377 2,176,174
Vanguard Primecap Fund 156,311 6,188,725 126,396 3,930,332
Vanguard Windsor II 254,464 7,286,947 215,791 5,288,299
Sarofim Equity Fund 916,548 35,727,154 - -
Other 364,755 131,204
Pioneer Natural Resources Stock Fund 262,769 2,740,713 185,232 2,463,044
---------- ----------
68,444,777 17,340,683
Participant loans (interest rates ranging
from 7% to 10%) 1,538,357 893,759
Pioneer Natural Resources Stable Value
Fund (investments at contract value -
funds with insurance companies)
(see Note 3). 3,178,713 3,795,294
---------- ----------
$73,161,847 $22,029,736
========== ==========
</TABLE>
Note 4. Administrative Expenses
The Employer may pay all expenses incurred in the establishment and
administration of the Plan, including expenses and fees of the Trustee, but it
shall not be obligated to do so, and any such expenses not paid by the Employer
shall be paid from the Plan earnings. The Employer paid approximately $58,000
and $90,000 of administrative expenses relating to 1997 and 1996, respectively.
13
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 5. Tax Status of the Plan
By letter dated January 17, 1997, the Internal Revenue Service determined
that the Plan, as then designed, was in compliance with the applicable
requirements of the Internal Revenue Code. The Plan has been amended since
receiving the determination letter and application for a new determination
letter was made in June of 1998. No reply has been received; however, the Plan
Administrator and the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, they believe that the Plan was qualified
and the related trust was tax-exempt as of December 31, 1997 and 1996.
Note 6. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Vanguard
Fiduciary Trust Company. Vanguard Fiduciary Trust Company is the Trustee as
defined by the Plan and, therefore, these transactions qualify as
party-in-interest.
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 the Form 5500:
December 31,
-------------------------
1997 1996
----------- -----------
Net assets available for benefits per the
accompanying financial statements $73,161,847 $22,029,736
Amounts allocated to withdrawing participants (237,736) (46,113)
---------- ----------
Net assets available for benefits per the
Form 5500 $72,924,111 $21,983,623
========== ==========
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
For the year ended
December 31,
--------------------------
1997 1996
----------- ------------
Benefits paid to participants per the
accompanying financial statements $ 1,409,604 $ 4,261,589
Add: Amounts allocated to withdrawing
participants at end of year 237,736 46,113
Less: Amounts allocated to withdrawing
participants at beginning of year (46,113) (1,024,061)
---------- -----------
Benefits paid to participants per
the Form 5500 $ 1,601,227 $ 3,283,641
========== ===========
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for payment prior
to December 31, but not yet paid as of that date.
14
<PAGE>
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 8. Merger
As discussed in Note 1, the Mesa Profit Sharing Plan merged into the Plan
on October 1, 1997. As a result, any former Mesa employees hired by Pioneer who
wished to do so were allowed to transfer the balances from their tax deferred
savings plans to the Plan. The fair value of the net assets of the Mesa Profit
Sharing Plan totaled $43,675,657 at date of transfer and were rolled into the
Plan on October 1, 1997 and are included in the December 31, 1997 balances of
the Plan.
15
<PAGE>
<TABLE>
Schedule I
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
(As reported by the Trustee)
December 31, 1997
(a)&(b) Identity of issue, (c) Description of investment (d) Cost (e) Current
borrower, lessor, including maturity date, rate Value
or similar party of interest, collateral, par or
maturity value
<S> <C> <C> <C>
VMMR Prime Portfolio* Money Market Fund $ 6,920,007 $ 6,920,007
Vanguard Fixed Income-ST Corporate
Portfolio* Mutual Fund 5,516,188 5,536,114
Vanguard Index Trust 500 Portfolio* Mutual Fund 2,872,952 3,680,362
Vanguard Primecap Fund* Mutual Fund 4,845,166 6,188,725
Vanguard Windsor II* Mutual Fund 6,128,990 7,286,947
Vanguard International Growth Portfolio* Mutual Fund 380,071 364,755
Sarofim Equity Fund* Mutual Fund 35,277,286 35,727,154
Pioneer Natural Resources Stable
Value Fund* Unallocated Insurance Contract 3,178,713 3,178,713
Pioneer Natural Resources Stock Fund* Common Stock Fund 2,415,438 2,740,713
Participant loans receivable* Interest rates ranging from 7%-10% 1,538,357 1,538,357
---------- ----------
$69,073,168 $73,161,847
========== ==========
</TABLE>
- --------------------
* Party in-interest
See accompanying independent auditors' report.
16
<PAGE>
<TABLE>
Schedule II
PIONEER NATURAL RESOURCES USA, INC.
401(k) PLAN
Item 27d
Schedule of Reportable Transactions
(As reported by the Trustee)
Year ended December 31, 1997
(A) and (B) (C) (D) (E) (F) (G) (H) (I)
Current
Expense value
incurred of asset on
Number of Purchase Selling Lease with Cost of transaction Net
Identity of Party Involved transactions Price Price Rental transaction Assets date gain
- ------------------------------------ ------------ ----------- ----------- ------ ----------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sarofim Equity Fund*
Sarofim 23 $35,761,836 $ $ - $ - $ $35,761,836 $ -
Sarofim 15 485,010 - - 484,551 485,010 459
Vanguard VMMR Prime Portfolio *
VMMR Prime Portfolio 272 6,773,012 - - 6,773,012 -
VMMR Prime Portfolio 197 1,385,152 - - 1,385,152 1,385,152 -
Vanguard Fixed Income Fund - ST
Corporate Portfolio *
Fixed Income Securities 170 4,411,274 - - 4,411,274 -
Fixed Income Securities 153 527,404 - - 525,454 527,404 1,950
Vanguard Index Trust 500
Portfolio *
Index Trust 134 1,414,589 - - 1,414,589 -
Index Trust 162 577,649 - - 494,566 577,649 83,083
Vanguard Primecap Fund *
Primecap 115 1,762,942 - - 1,762,942 -
Primecap 138 640,081 - - 520,427 640,081 119,654
Vanguard Windsor II *
Windsor II 118 2,523,434 - - 2,523,434 -
Windsor II 168 1,468,489 - - 1,294,760 1,468,489 173,729
Pioneer Natural Resources Stable
Value Fund*
Investment Contracts 74 229,599 - - 229,599 -
Investment Contracts 133 869,569 - - 869,569 869,569 -
Pioneer Natural Resources Stock
Fund *
Pioneer 49 1,102,806 - - 1,102,806 -
Pioneer 85 209,694 - - 147,254 209,694 62,440
- --------------------
* Party-in-interest
Expenses incurred with transactions, if any, are added to the purchase price or
deducted from the selling price at the time of the transaction.
See accompanying independent auditors' report.
</TABLE>
17
<PAGE>
PIONEER NATURAL RESOURCES USA, INC. 401(K) PLAN
S I G N A T U R E S
The Plan, pursuant to the requirements of the Securities Exchange Act of 1934,
the trustee has duly caused this annual report to be signed on its behalf by the
undersigned thereto duly authorized.
PIONEER NATURAL RESOURCES USA, INC. 401(k) PLAN
By: Pioneer Natural Resources USA, Inc. 401(k)
Plan Committee
Date: June 26, 1998 By: /s/ Larry N. Paulsen
--------------------------
Larry N. Paulsen
Chairman
Date: June 26, 1998 By: /s/ Warren Garden
--------------------------
Warren Garden
Date: June 26, 1998 By: /s/ Stephan R. Petty
--------------------------
Stephan R. Petty
18
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
23.1 Consent of KPMG Peat Marwick LLP
19
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Pioneer Natural Resources USA, Inc. 401(k) Plan
We consent to incorporation by reference in the registration statement (No.
333-39249) on Form S-8 of Pioneer Natural Resources USA, Inc. 401(k) Plan of our
report dated June 12, 1998, on our audits of the financial statements of Pioneer
Natural Resources USA, Inc. 401(k) Plan as of December 31, 1997 and 1996 and for
the years ended December 31, 1997 and 1996, which report is included in this
annual report on Form 11-K.
KPMG Peat Marwick LLP
Midland Texas
June 25, 1998
20
<PAGE>
