UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Commission File Number: 0-30176
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
Full Title of Plan:
PENNZENERGY COMPANY SAVINGS AND INVESTMENT PLAN
Name of the issuer of the securities held pursuant to
the plan and the address of its principal office:
Devon Energy Corporation
20 North Broadway, Suite 1500
Oklahoma City, Oklahoma 73102-8260
Page 1 of 17
(Exhibit Index is found at page 15)
<PAGE>
PENNZENERGY COMPANY SAVINGS
AND INVESTMENT PLAN
Index to Financial Statements and Schedule
Page
Independent Auditors' Reports 3
Statements of Net Assets Available for Plan Benefits,
December 31, 1999 and 1998 5
Statement of Changes in Net Assets Available for Plan
Benefits for the Year Ended December 31, 1999 6
Notes to Financial Statements 7
Schedule 1 - Schedule of Assets Held for Investment Purposes
at End of Year December 31, 1999 13
<PAGE>
Independent Auditors' Report
The Plan Sponsor and Participants
PennzEnergy Company Savings and Investment Plan:
We have audited the accompanying statement of net assets available
for plan benefits of the PennzEnergy Company Savings and
Investment Plan (the Plan) as of December 31, 1999, and the
related statement of changes in net assets available for plan
benefits for the year ended December 31, 1999. These financial
statements and the supplemental schedule referred to below are the
responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and the
supplemental schedule based on our audit.
We conducted our audit 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 misstatements. 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 the Plan's 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 financial statements referred to above present
fairly, in all material respects, the net assets available for
plan benefits of the Plan as of December 31, 1999, and the changes
in its net assets available for plan benefits for the year ended
December 31, 1999, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedule of assets held for investment purposes at end of year
December 31, 1999 is presented for purposes 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. The
supplemental schedule has been subjected to the auditing
procedures applied in the audit 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.
KPMG LLP
Oklahoma City, Oklahoma
June 30, 2000
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee,
PennzEnergy Company
Savings and Investment Plan:
We have audited the accompanying statement of net assets available
for plan benefits of the PennzEnergy Company Savings and Investment
Plan (the Plan) as of December 31, 1998. This financial statement
is the responsibility of the Plan's administrative committee. Our
responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates
made by the Plan's administrative committee, 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 financial statement referred to above presents
fairly, in all material respects, the net assets available for plan
benefits of the Plan as of December 31, 1998, in conformity with
accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Houston, Texas
June 28, 1999
<PAGE>
<TABLE>
<CAPTION>
PENNZENERGY COMPANY SAVINGS
AND INVESTMENT PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
1999 1998
Assets:
<S> <C> <C>
Investments at fair value $ 65,400,539 174,463,079
Receivables:
Employee contributions 164,415 888,966
Employer contributions 101,977 688,427
Interest and dividends 55,801 46,803
322,193 1,624,196
Net assets available for plan
benefits $ 65,722,732 176,087,275
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PENNZENERGY COMPANY SAVINGS
AND INVESTMENT PLAN
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1999
Additions:
Contributions:
<S> <C>
Employee $ 4,749,653
Employer 3,624,533
8,374,186
Net investment income:
Interest 285,422
Dividends 1,796,908
Net realized and unrealized appreciation in
fair value of investments 5,993,315
Total additions 16,449,831
Deductions:
Benefits paid to participants 7,751,868
Net transfers to other plans 119,059,586
Administrative expenses 2,920
Total deductions 126,814,374
Decrease in net assets available
for plan benefits (110,364,543)
Net assets available for plan benefits:
Beginning of year 176,087,275
End of year $ 65,722,732
See accompanying notes to financial statements.
</TABLE>
<PAGE>
(1) Spin-Off of Pennzoil-Quaker State Company From Pennzoil
Company
On December 30, 1998, Pennzoil Company (Pennzoil) distributed
to its shareholders 47.8 million shares of common stock of its
wholly owned subsidiary Pennzoil-Quaker State Company
(Pennzoil-Quaker State) representing all of the shares of
Pennzoil-Quaker State owned by Pennzoil.
As part of the spin-off transaction, effective December 31,
1998, the Pennzoil Company Savings and Investment Plan (the
Plan) was renamed the PennzEnergy Company Savings and
Investment Plan. As of January 1, 1999, the Plan covered the
employees of PennzEnergy Company and participating
subsidiaries and affiliated companies (PennzEnergy). Net
assets available for benefits of $119.9 million related to
Pennzoil-Quaker State employees were transferred to the
Pennzoil-Quaker State Company Savings and Investment Plan in
1999.
In connection with the spin-off, Pennzoil distributed one
share of Pennzoil-Quaker State common stock for every share of
Pennzoil common stock. As a result, the Plan's Stock Fund
held both PennzEnergy and Pennzoil-Quaker State common stock
at December 31, 1998.
On August 17, 1999, Devon Energy Corporation (Devon) and
PennzEnergy closed their merger of the two companies. As a
result, PennzEnergy shareholders, including the Plan, received
.4475 shares of Devon common stock for each share of
PennzEnergy common stock owned. The Plan name has remained
intact; however, all active participants of the Plan are now
employed by Devon (the Plan Sponsor).
(2) Description of the Plan
The following description of the Plan provides only general
information. Participants should refer to the Plan agreement
for a more complete description of the Plan's provisions.
(a) General
The Plan is a defined contribution plan covering only former
employees of PennzEnergy. As of August 17, 1999, upon
closing of the merger between Devon and PennzEnergy, there
have been no participants added to the Plan. The Plan is
subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended (ERISA). The Plan
is administered by the seven senior executive officers of
Devon. Merrill Lynch Group Employee Services is the
Trustee of the Plan.
(b) Contributions
Participants may contribute up to 12 percent of annual
compensation, as defined in the Plan. Employee
contributions may be made "after-tax" or, under a Section
401(k) option, on a "before-tax" basis. Devon matches an
employee's contribution dollar-for-dollar up to six
percent of base compensation. The Plan was amended,
effective January 1, 2000, to allow participants to
contribute up to 15 percent of annual compensation.
(c) Investment Options
Participants may direct their contributions to the
investment options listed below. Effective August 17,
1999, the Plan was amended to allow participants to direct
employer contributions to the investment options offered
by the Plan. Prior to August 17, 1999, employer
contributions were not directed by participants and at the
prior plan sponsor's option were made in either cash or in
common stock. All employer contributions from January 1,
1999, through August 17, 1999, were made in common stock.
Employer contributions subsequent to August 17,1999, were
made in cash.
Prior to December 1, 1999, participants attaining age 55
were able to direct the investment of their existing non-
participant directed employer contribution accounts among
the various investment options. Effective December 1,
1999, the Plan was amended to allow all participants to
direct the investment of their existing non-participant
directed employer contribution accounts among the various
investment options.
<TABLE>
<CAPTION>
Investment Option Type of Investment(s)
<S> <C>
Merrill Lynch Retirement Invests primarily in
Preservation Trust guaranteed investment
contracts (generally with
insurance companies or
banks which agree to return
principal and a stated rate
of return over a specified
period of time) and U.S.
Government and U.S.
Government Agency
securities.
J.P. Morgan Institutional Normally, at least 65% of
Bond Fund the fund's assets will be
represented by investment
in securities rated "A" or
better by a major ratings
agency. The fund's
duration (a measure of
average maturity) ranges
between 3 1/2 and 5 1/2 years.
Fidelity Advisor Balanced Invests in a diversified
Fund portfolio of equity and
fixed-income securities
with income, growth of
income and capital
appreciation potential.
Merrill Lynch Equity Consists of common stocks
Index Trust that, to the extent
possible, duplicate the
composition of Standard &
Poor's Index of 500 stocks.
Davis New York Venture Invests primarily in common
Fund stock and securities
convertible into common
stock. The fund ordinarily
invests in securities which
the fund management
believes have above-average
appreciation potential.
Stock Fund Common Stock of Pennzoil
prior to December 30, 1998,
PennzEnergy from December
30, 1998, to August 16,
1999, and Devon as of
August 17, 1999.
</TABLE>
(d) Participant Loans
Participants may borrow a minimum of $1,000 up to the
lessor of 50% of their vested account or $50,000. Loan
terms may range from six months to five years (up to 20
years for the purchase of a primary residence). The loans
are secured by the balance in the participants' accounts
and bear interest at the prime rate plus one percent, on
the dates the loans are made.
(e) Vesting and Disposition of Forfeitures
Participants are vested immediately in their contributions
plus actual earnings thereon. Participants vest in
employer contributions at a rate of 25 percent per year
beginning at the end of two years of service, becoming
fully vested after five years of service or attainment of
age 55. Any nonvested portion of employer contributions
shall be forfeited upon termination. Forfeitures shall be
allocated as follows: first, to reinstate any employer
contribution amounts of participants who return to service
and second, to restore any amounts previously forfeited as
unclaimed benefits. Any remaining amounts are applied to
reduce future employer contributions.
(f) Participant Accounts
Separate accounts are maintained in the name of each
participant. Each participant's account is credited with
the participant's contributions and allocation of (i) the
employer's contributions, (ii) Plan earnings, and (iii)
forfeited balances of terminated participants' nonvested
employer contribution accounts.
(g) Withdrawals
Withdrawals may be made from either of an employee's
previous pretax or after-tax contributions, net of
previous withdrawals, upon written notice to the Plan
Sponsor. After-tax withdrawals cause the participants to
forfeit the right to participate in the Plan for 180 days,
while pretax withdrawals are allowed only when the
participant is age 59 1/2 or older, unless a financial
hardship exists. Hardship withdrawals will cause the
participants to be suspended from making contributions for
365 days. Withdrawals may be made from employer
contributions only if the participant is fully vested and
only after withdrawing all amounts from any prior plan
accounts and any rollover amounts, and not being in a
suspended status.
(h) Payment of Benefits
Upon death, disability, or termination of service, a
participant may elect to receive benefit payments, as
prescribed by the Plan, equal to the value of the
participant's vested interest in his or her accounts.
(i) Administrative Costs
All administrative expenses are borne by the Plan Sponsor
with the exception of fees for investment management and
loan processing fees for participant loans.
(j) Plan Termination
Although no formal amendment has been approved, the Plan
Sponsor expects to terminate the Plan and transfer its net
assets to the Devon Energy Corporation Incentive Savings
Plan (Devon Plan). All former employees of PennzEnergy
are subject to a severance plan until August 17, 2001.
Under the terms of the severance plan, any such employees
severed by Devon will, upon termination, be fully vested
in their participant accounts. Outside of the severance
plan, all participants will continue to vest in accordance
with the terms of the Plan. Upon termination of the Plan,
all amounts credited to participants' accounts will be
transferred and participants will become eligible to
participate under the agreement and amendments of the
Devon Plan.
(3) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements of the Plan have
been prepared in conformity with generally accepted
accounting principles and practices permitted by the
Department of Labor's Rules and Regulations for Reporting
and Disclosure under ERISA.
In September 1999, the American Institute of Certified
Public Accountants issued Statement of Position 99-3,
Accounting for and Reporting of Certain Defined
Contribution Plan Investments and Other Disclosure Matters
(SOP 99-3). SOP 99-3 simplifies the disclosure for
certain investments and is effective for plan years ending
after December 15, 1999. The Plan adopted SOP 99-3 during
the Plan year ending December 31, 1999. Accordingly,
information previously required to be disclosed about
participant-directed fund investment programs is not
presented in the Plan's 1999 financial statements. The
Plan's 1998 financial statements have been reclassified to
conform with 1999's presentation.
(b) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires the
Plan's management to use estimates and assumptions that
affect the accompanying financial statements and
disclosures. Actual results could differ from those
estimates.
(c) Investments
The Plan's investments are reflected in the accompanying
financial statements at fair value. For the Stock Fund,
mutual funds, and the Merrill Lynch Equity Index Trust,
fair value was determined by using the closing price of
the securities or funds as listed on the applicable
stock exchange on the last trading day of the Plan year.
The Merrill Lynch Retirement Preservation Trust
is a common/collective trust fund investing primarily
in guaranteed investment contracts and U.S.
Government securities. The guaranteed investment
contracts are fully benefit responsive and are recorded at
contract value, which approximates fair value. Effective
yields approximated 6.5% and 6.6% at December 31, 1999 and
1998, respectively. Contract value for the Merrill Lynch
Retirement Preservation Trust was determined based on
contributions made under the investment contract plus
interest earned at the contract's rate less funds used to
pay investment fees charged by the insurance companies.
Loans to participants are stated at the outstanding
principal balance of the loans which approximate fair
value. Investment transactions are recognized as of the
trade date.
(4) Investments and Non-Participant Directed Net Assets
The following investments at fair value represent 5% or more
of the net assets of the Plan at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
Pennzoil-Quaker State Company
<FN>
<S> <C> <C>
common stock (a) $ 5,291,181 26,289,914
Devon Energy Corporation
common stock 12,558,629 --
PennzEnergy Company common
<FN>
stock (b) -- 29,073,975
Merrill Lynch Retirement
Preservation Trust 11,835,128 24,754,684
Merrill Lynch Equity Index Trust 18,756,188 49,058,800
Davis New York Venture Fund 11,255,353 26,811,130
<FN>
(a) At December 31, 1998, $18,557,477 of the investment
balance was non-participant directed.
<FN>
(b) At December 31, 1998, $20,522,682 of the investment
balance was non-participant directed.
</TABLE>
During 1999, the Plan's investments appreciated (depreciated)
in value as follows:
<TABLE>
<S> <C>
Common stocks $23,586,850
Common/collective trusts (14,029,847)
Mutual funds (3,563,688)
Net appreciation $ 5,993,315
</TABLE>
As of December 31, 1999, there were no non-participant
directed net assets in the Plan. Information about such net
assets as of December 31, 1998, and the components of the
changes in such net assets during 1999 is as follows:
<TABLE>
Net assets:
<S> <C>
Common stocks $39,111,451
Cash and cash equivalents 788,345
Contribution and investment income
receivables 735,230
$40,635,026
</TABLE>
<TABLE>
<CAPTION>
Year ended
December 31,
1999
Changes in net assets due to:
<S> <C>
Contributions $3,218,185
Interest and dividends 330,479
Net realized and unrealized
appreciation in fair value of
investments 17,997,670
Benefits paid to participants (1,231,549)
Transfers to other plans (47,526,249)
Transfers to participant directed
investments (13,423,562)
Net decrease in non-
participant directed net
assets $(40,635,026)
</TABLE>
(5) Federal Income Taxes
The Plan received its latest determination letter on October
26, 1994, in which the Internal Revenue Service stated that
the Plan, as then designed, was in compliance with the
Provisions of Sections 401(a) and 401(k) of the Internal
Revenue Code. The Plan has since been amended and the Plan
Sponsor believes the Plan is currently designed and being
operated in compliance with applicable requirements of the
Internal Revenue Code. Therefore, the Plan Sponsor believes
that the Plan is qualified and the related trust is exempt
from federal income taxes.
<PAGE>
<TABLE>
<CAPTION>
PENNZENERGY COMPANY SAVINGS
AND INVESTMENT PLAN
Schedule of Assets Held for Investment Purposes At End of Year
December 31, 1999
Party-in-
interest Identity of Issue, Borrower, Description of Fair
Identification Lessor or Similar Party Investment Cost Value
<S> <C> <C>
Pennzoil-Quaker State Company Common stock $ 13,501,224 5,291,181
Battlemountain Gold Company Common stock 17,664 7,538
<FN>
* Devon Energy Corporation Common stock 19,088,854 12,558,629
32,607,742 17,857,348
<FN>
* Merrill Lynch Retirement Common and 11,835,144 11,835,128
Preservation Trust collective trust
<FN>
* Merrill Lynch Equity Index Common and 9,003,563 18,756,188
Trust collective trust
J.P. Morgan Institutional Bond Mutual fund 792,230 754,548
Fund
Fidelity Advisory Balance Fund Mutual fund 2,518,867 2,610,940
Davis New York Venture Fund Mutual fund 7,960,514 11,255,353
32,110,318 45,212,157
<FN>
* Participant Loans 8.75% to 10.00%
loans to participants,
maturing December 2000
to October 2016 -- 2,314,987
Cash and cash equivalents Cash and cash
equivalents 16,047 16,047
$ 64,734,107 65,400,539
<FN>
* Denotes assets held for investment purposes with party-in-interest.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PENNZENERGY COMPANY SAVINGS AND
INVESTMENT PLAN
By: Devon Energy Corporation
Date: July 13, 2000 /s/ Danny J. Heatly
Danny J. Heatly
Vice President - Accounting
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
23 Consent of KPMG LLP 16
23.1 Consent of Arthur Andersen LLP 17
<PAGE>
