SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the Year Ended December 31, 1999
Commission File Number 1-3939
Oryx Energy Company Capital Accumulation Plan
(full title of the Plan)
Kerr-McGee Corporation
Kerr-McGee Center
Oklahoma City, Oklahoma 73102
(Name of the issuer of the securities held pursuant to
the Plan and address of its principal executive office)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Kerr-McGee Corporation Benefits Committee:
We have audited the accompanying statement of net assets available for
benefits of the ORYX ENERGY COMPANY CAPITAL ACCUMULATION PLAN (the Plan) as of
December 31, 1999 and 1998, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1999. These financial
statements and the 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 schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits 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 as of
December 31, 1999 and 1998, and the changes in the net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule of
reportable transactions for the year ended 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 audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
(ARTHUR ANDERSEN LLP)
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma,
June 23, 2000
ORYX ENERGY COMPANY CAPITAL ACCUMULATION PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(Thousands of dollars)
December 31,
------------------
1999 1998
---- -------
Assets:
Net assets available for benefits $ - $95,582
==== =======
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(Thousands of dollars)
Year Ended
December 31, 1999
-----------------
Additions:
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value
of investments $32,604
Dividends 2,363
Interest 1,775
-------
36,742
Contributions:
Participant 1,316
Employer 10,307
-------
11,623
Total additions 48,365
-------
Deductions:
Deductions from net assets attributed to:
Distributions to terminating and
withdrawing participants 40,761
Administrative expense 29
Interest expense 7,497
-------
Total deductions 48,287
-------
Net increase 78
Transfer to affiliated plan 95,660
Net assets available for benefits:
Beginning of year 95,582
-------
End of year $ -
=======
The accompanying notes are an integral part of these financial statements.
ORYX ENERGY COMPANY CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF THE PLAN
Due to the merger of Kerr-McGee Corporation (Kerr-McGee) and Oryx
Energy Company (Oryx) on February 26, 1999, in July 1999, the
Kerr-McGee Board of Directors approved the merger of the Oryx Capital
Accumulation Plan (Plan) into the Kerr-McGee Savings Investment Plan
(SIP) and the Kerr-McGee Employee Stock Ownership Plan (ESOP). Future
benefit payments to participants of the Plan will be made from the SIP
and the ESOP. Effective August 2, 1999, net assets of the Plan merged
into the SIP totaled $132,264,000. Effective December 31, 1999, net
liabilities of the Plan merged into the ESOP totaled $36,604,000.
The Plan was a combined stock bonus and employee stock ownership plan
sponsored by Oryx which became effective on November 1, 1988. The Plan
provided an individual account for each participant. Amounts disbursed
to participants or conversions between funds were based solely upon
amounts contributed to each participant's account adjusted to reflect
any withdrawals and distributions, investment earnings attributable to
such fund balances and appreciation or depreciation of the market value
of the fund.
Employee Contributions -
In general, an employee could instruct the employer to contribute to
the Plan up to five percent, in whole percentages, of base pay
(earnings) on either a pre-tax basis or post-tax basis. An employee
could also elect to make additional contributions of up to 10 percent
of earnings. The additional contributions could be on either a pre-tax
basis, post-tax basis or any combination thereof.
Employer Contributions -
The first five percent of employee contributions were matched by Oryx
at 110 percent up to the first $50,000 of employee earnings and at 100
percent thereafter (employer contributions). Following the merger and
effective March 1, 1999, the plan was amended to provide matching
employer contributions equal to employee contributions up to six
percent of employee earnings. From time to time, Oryx also contributed
additional amounts when necessary to meet the loan repayment
requirements on the Oryx ESOP notes.
Vesting Rights -
Participants were immediately 100 percent vested in their account
balances derived from employer contributions, employee contributions
and any amounts rolled over in the Plan from another eligible
retirement plan.
Plan Termination -
Under the Plan the company had the right to discontinue its
contributions at any time and to terminate the Plan subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Participant Investment Programs -
Participants could make investment elections to have their
contributions invested, in increments of one percent, in any
combination of the eight funds listed below. In addition, participants
could convert past investments into any of the eight funds by making
fund transfers.
Participants had the option of investing their contributions in any of
the following funds:
Oryx Stock Fund - Invested in Oryx Energy Company common stock.
Due to the merger of Kerr-McGee and Oryx, all outstanding Oryx
stock was converted to Kerr-McGee stock at a ratio of .369 shares
of Kerr-McGee for each share of Oryx.
Vanguard Balanced Index Fund - invested 60% of its assets in
stocks and 40% of its assets in bonds.
Vanguard Windsor II Fund - investments in a diversified group of
under-valued stocks of large-capitalization companies.
Vanguard U.S. Growth Portfolio - investments in large,
high-quality, seasoned U.S. companies.
Vanguard Explorer Fund - Invested in the stock of companies with a
market value between $75 million and $200 million.
Vanguard International Growth Portfolio - invested in non-U.S.
equity securities selected for long-term capital appreciation
potential.
Stable Value Fund - primarily investments in contracts issued by
insurance companies, investment contracts backed by U.S.
Government obligations and high credit-quality corporate bonds
(including mutual funds that invest in such obligations).
Vanguard Bond Index Fund - seeks to approximate the return of the
Lehman Brothers Aggregate Bond Index.
Investment of Employer Contributions -
Employer contributions were made in the form of shares of Oryx common
stock and were included in the Leveraged Employee Stock Ownership Plan
(LESOP) Fund.
Investment of Fund Earnings -
Generally, earnings from dividends and interest on each of the funds
were retained by the trustee and reinvested in the same fund.
Participants could elect to receive any dividends on certain Oryx
common stock held in the Oryx Stock Fund from employer contributions
made prior to August 1, 1989.
Participant Loans -
Participants could obtain loans from their account balances in any of
the Vanguard Funds and/or the Participant Directed Oryx Stock Fund of
the Plan. The maximum amount of all loans to a participant under the
Plan and any other plans of any employer could not exceed the lesser of
(a) $50,000, reduced by an amount equal to the difference between (i)
the participant's highest loan balance under the Plan during the
one-year period ending on the day before the date on which such loan is
made and (ii) the outstanding loan balance of the participant under the
Plan on the date on which such loan was made or (b) one-half the
current value of the participant's vested interest in their accounts.
Personal loans had a term of up to five years and residential loans up
to 15 years. Both the principal and interest portions of the loan
repayments were reinvested in the participant's accounts in accordance
with his current investment elections. Defaults on loan repayments were
treated as distributions.
(2) SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The Plan utilized the accrual basis of accounting
in accordance with accounting principles generally accepted in the
United States.
Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that
affect the reported amounts of net assets available for benefits and
changes therein. Actual results could differ from those estimates.
Investment Valuations - The valuation of the Plan's investments in all
funds was based on the market value of the assets held in the funds.
The valuation of the Vanguard Funds was based on the closing market
price of the assets which comprise the funds on the last business day
of the plan year. Investments in the Stable Value Fund were carried at
contract value (which equals original cost plus accrued interest less
any distributions). The valuation of common stock in the Oryx Stock
Fund and the LESOP Fund was based on the closing market price as
reported on the New York Stock Exchange on the last business day of the
plan year. Purchases and sales of securities were reflected on the
trade-date basis. Dividend income was recognized on the ex-dividend
date.
Payment of Benefits - Distributions to terminating and withdrawing
participants were recorded when paid.
(3) INVESTMENTS
The following presents investments that represent five percent or more
of the Plan's net assets.
December 31,
---------------------
(Thousands of Dollars) 1999 1998
------ ------
Oryx Energy Company Common Stock Fund $ - $12,603 *
Stable Value Fund - 47,360
Vanguard Windsor II Fund - 35,575
Vanguard U.S. Growth Portfolio - 22,607
Vanguard Balanced Index Fund - 19,663
Vanguard Explorer Fund - 5,191
Vanguard International Growth Fund - 6,939
Oryx Energy Company Leveraged Common
Stock ESOP Fund - 31,980 *
*Nonparticipant-directed
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
appreciated in value by $32,604 as follows:
Common stock $28,730
Mutual funds 3,874
-------
$32,604
=======
(4) NONPARTICIPANT-DIRECTED INVESTMENTS
The Oryx Stock Fund was the only fund consisting of both
participant-directed contributions and nonparticipant-directed employer
matching contributions. Information about the net assets and the
significant components of the changes in net assets relating to the
nonparticipant-directed investments, is as follows:
December 31,
-------------------------
(Thousands of dollars) 1999 1998
-------- -------
Net Assets:
Common stock $ - $11,395
======== =======
Year ended
December 31, 1999
-----------------
Changes in Net Assets:
Dividends $ 306
Net appreciation 3,812
Transfer from other funds 1,227
Transfer to successor trustee (11,926)
Distributions (4,814)
--------
$(11,395)
========
(5) TAX STATUS
The Plan is a qualified plan under provisions of Section 401(a) of the
Code and is exempt from Federal income taxes under Provisions of
Section 501(a) of the Code. The Plan's latest determination letter is
dated November 5, 1999.
(6) ESOP NOTES
On August 1, 1989, Oryx borrowed $110 million by privately placing ESOP
notes. The borrowing consisted of Series A notes, Series B notes and
Series C notes with interest rates ranging from 8.35% to 8.70%.
Scheduled principal payments on the Series A notes continue through
July 2006. Principal payments on the Series B notes begin in August
2005 and continue through July 2008. Principal payments on the Series C
notes begin in August 2008 and continue through July 2011.
Debt consisted of the following at year end (the debt at December 31,
1999, is held by the ESOP):
(Thousands of dollars) 1999 1998
------- -------
Series A notes $35,584 $39,773
Series B notes 19,318 19,520
Series C notes 30,715 31,036
------- -------
$85,617 $90,329
======= =======
Maturities of debt due after December 31, 1999, are $4,257,000 in 2000,
$4,740,000 in 2001, $5,262,000 in 2002, $5,842,000 in 2003, $6,462,000
in 2004 and $59,054,000 thereafter.
LESOP Fund interest and any dividend income were used for debt service.
Interest expense incurred by the Plan on the debt was $7,497,000 in
1999.
<TABLE>
ORYX ENERGY COMPANY CAPITAL ACCUMULATION PLAN
SCHEDULE H, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
(Employer Identification Number 73-0311467)
(Plan Number 016)
FOR THE YEAR ENDED DECEMBER 31, 1999
(Thousands of dollars)
<CAPTION>
(h)
(f) Current
Expense value
(c) (d) (e) incurred (g) of asset on (i)
(a) (b) Purchase Selling Lease with Cost of transaction Net gain
Identity of party involved Description of asset price price rental transaction asset date or loss
-------------------------- -------------------- ----------- -------- ------ ----------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
*Kerr-McGee Corporation Common Stock $79,368 $ - $ - $ - $79,368 $79,368 $ -
*Kerr-McGee Corporation Common Stock - 87,883 - - 87,883 87,883 -
*Includes both participant-directed and nonparticipant-directed portions.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Kerr-McGee Corporation Benefits Committee has duly caused this annual report
to be signed by the undersigned thereunto duly authorized.
ORYX ENERGY COMPANY CAPITAL ACCUMULATION PLAN
By (JOHN M. RAUH)
---------------------------------------
John M. Rauh
Chairman of the Kerr-McGee Corporation
Benefits Committee
Date: June 28, 2000
