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 FISCAL YEAR ENDED DECEMBER 31, 1996
------------------------
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
------------------------
SANTA FE ENERGY RESOURCES, INC.
1616 SOUTH VOSS ROAD
HOUSTON, TEXAS 77057
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<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
PAGE
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Report of Independent Accountants .................................. 4-5
Statement of Net Assets Available for Plan Benefits,
with Fund Information at December 31, 1996 ....................... 6
Statement of Net Assets Available for Plan Benefits,
with Fund Information at December 31, 1995 ....................... 7
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information For the Year Ended December 31, 1996 ....... 8
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information For the Year Ended December 31, 1995 ....... 9
Notes to Financial Statements ...................................... 10-17
(b) Additional Information*:
Item 27a - Schedule of Assets Held For Investment Purposes at
December 31, 1996 ................................................ 19
Item 27d - Schedule of Reportable Transactions For
the Year Ended December 31, 1996 ................................. 20
* All other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable or the required information is
shown in the financial statements or the notes thereto.
(c) Exhibits:
No. 23 - Consent of Independent Accountants 22
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, persons who
administer the Plan have duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
SANTA FE ENERGY RESOURCES
SAVINGS INVESTMENT PLAN
By: /s/ MARK A. OLDER
Mark A. Older
Member - Employee Benefits Committee
Date: June 30, 1997
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Employee Benefits Committee of
Santa Fe Energy Resources Savings Investment Plan
In our opinion, the accompanying statements of net assets available for plan
benefits, with fund information, and the related statements of changes in net
assets available for plan benefits, with fund information, present fairly, in
all material respects, the net assets available for plan benefits of the Santa
Fe Energy Resources Savings Investment Plan at December 31, 1996 and 1995, and
the changes in net assets available for plan benefits for the years then ended,
in conformity with generally accepted accounting principles. 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 of these statements in accordance with generally accepted
auditing standards which 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, 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 the opinion expressed above.
Our audits were performed 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 December 31, 1996 and supplemental schedule of
reportable transactions for the year ended December 31, 1996 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
statement of net assets available for plan benefits, with fund information, and
the statement of changes in net assets available for plan benefits, with fund
information, is presented for purposes of additional analysis rather than to
present the statement of net assets available for plan benefits and the
statement of changes in net assets
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<PAGE>
To the Participants and Employee Benefits Committee
Page 2
available for plan benefits of each fund. The supplemental schedules and the
Fund Information have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
Houston, Texas
June 6, 1997
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<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
FUND INFORMATION
----------------------------------------------------------------
PUTNAM
COMPANY STABLE GROWTH TOTAL S&P
STOCK VALUE & INCOME RETURN INDEX
FUND FUND FUND FUND FUND
---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Investments, at fair value:
Mutual funds ............ $8,480,736 $10,608,556 $1,869,183 $2,768,940 $5,111,351
Loans to participants ... -- -- -- -- --
---------- ----------- ---------- ---------- ----------
Total investments .. 8,480,736 10,608,556 1,869,183 2,768,940 5,111,351
Receivables:
Employer contribution ... 542,623 -- -- -- --
---------- ----------- ---------- ---------- ----------
Total receivables .. 542,623 -- -- -- --
---------- ----------- ---------- ---------- ----------
Net assets available
for plan benefits ....... $9,023,359 $10,608,556 $1,869,183 $2,768,940 $5,111,351
========== =========== ========== ========== ==========
<CAPTION>
FUND INFORMATION
--------------------------------------------------
OVERSEAS NEW
VOYAGER GROWTH OPPORTUNITIES LOAN
FUND FUND FUND FUND TOTAL
---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Investments, at fair value:
Mutual funds ............ $3,993,220 $1,366,681 $3,957,474 -- $38,156,141
Loans to participants ... -- -- -- $ 1,767,837 1,767,837
---------- ---------- ---------- ----------- -----------
Total investments .. 3,993,220 1,366,681 3,957,474 1,767,837 39,923,978
Receivables:
Employer contribution ... -- -- -- -- 542,623
---------- ---------- ---------- ----------- -----------
Total receivables .. -- -- -- -- 542,623
---------- ---------- ---------- ----------- -----------
Net assets available
for plan benefits ....... $3,993,220 $1,366,681 $3,957,474 $ 1,767,837 $40,466,601
========== ========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
FUND INFORMATION
-----------------------------------------------------
FIXED S&P GROWTH
INTEREST INDEX WELLINGTON EQUITY
FUND FUND FUND FUND
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
------
Investments, at fair value:
TCB - Short-term investment ........ $ 887,481 $ 78,795 $ 50,775 $ 49,809
Santa Fe Energy Resources, Inc.
common stock ..................... -- -- -- --
Mutual funds ....................... -- -- 2,006,197 1,619,496
Commingled trust funds ............. 3,215,248 4,567,388 -- --
Loans to participants .............. -- -- -- --
----------- ---------- ----------- -----------
4,102,729 4,646,183 2,056,972 1,669,305
Investments, at contract value:
Prudential Investment Contract ..... 7,330,862 -- -- --
Travelers Investment Contract ...... 3,602,166 -- -- --
----------- ---------- ----------- -----------
Total investments ............. 15,035,757 4,646,183 2,056,972 1,669,305
Receivables:
Employer contribution .............. -- 16,223 -- --
Employee contribution .............. -- -- 11,250 11,067
Accrued interest and dividends ..... 315,341 525 204 190
Other .............................. -- -- -- --
----------- ---------- ----------- -----------
Total receivables ............. 315,341 16,748 11,454 11,257
----------- ---------- ----------- -----------
Total assets .................. 15,351,098 4,662,931 2,068,426 1,680,562
Liabilities:
Miscellaneous payables .............. -- -- (51,983) (65,624)
----------- ---------- ----------- -----------
Total liabilities ............. -- -- (51,983) (65,624)
----------- ---------- ----------- -----------
Net assets available for plan benefits $15,351,098 $4,662,931 $ 2,016,443 $ 1,614,938
=========== ========== =========== ===========
</TABLE>
FUND INFORMATION
------------------------
COMPANY
STOCK LOAN
FUND FUND TOTAL
---------- ----------- ------------
ASSETS
------
Investments, at fair value:
TCB - Short-term investment ........ $ 164,978 -- $ 1,231,838
Santa Fe Energy Resources, Inc.
common stock ..................... 6,590,526 -- 6,590,526
Mutual funds ....................... -- -- 3,625,693
Commingled trust funds ............. -- -- 7,782,636
Loans to participants .............. -- $ 1,428,646 1,428,646
---------- ----------- ------------
6,755,504 1,428,646 20,659,339
Investments, at contract value:
Prudential Investment Contract ..... -- -- 7,330,862
Travelers Investment Contract ...... -- -- 3,602,166
---------- ----------- ------------
Total investments ............. 6,755,504 1,428,646 31,592,367
Receivables:
Employer contribution .............. 461,857 -- 478,080
Employee contribution .............. 6,239 -- 28,556
Accrued interest and dividends ..... 683 -- 316,943
Other .............................. 10,551 -- 10,551
---------- ----------- ------------
Total receivables ............. 479,330 -- 834,130
---------- ----------- ------------
Total assets .................. 7,234,834 1,428,646 32,426,497
Liabilities:
Miscellaneous payables .............. -- -- (117,607)
---------- ----------- ------------
Total liabilities ............. -- -- (117,607)
---------- ----------- ------------
Net assets available for plan benefits $7,234,834 $ 1,428,646 $ 32,308,890
========== =========== ============
The accompanying notes are an integral part of this statement.
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<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
FUND INFORMATION
-------------------------------------------------------------------------------------------------------
FIXED S&P GROWTH COMPANY STABLE GROWTH &
INTEREST INDEX WELLINGTON EQUITY STOCK VALUE INCOME
FUND FUND FUND FUND FUND FUND FUND
------------ ----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:-
Investment income:
Interest and
dividends ......... $ 249,876 $ 8,129 $ 75,822 $ 72,026 $ 1,124 $ 275,426 $ 143,748
Net unrealized
appreciation
(depreciation)
in value of
investments ....... -- -- -- -- 2,094,088 -- 30,930
Net realized gain
(loss) on sale
of assets ........ -- 282,683 67,272 121,004 862,814 -- (938)
Contributions:
Employer ............ -- -- -- -- 1,631,631 -- --
Employees ........... 199,811 95,691 64,172 66,914 210,663 392,118 158,196
Transfers from
other plans ....... -- -- -- -- -- -- --
Transfers from
previous trustee .. -- -- -- -- -- 14,193,812 --
------------ ----------- ----------- ----------- ----------- ------------ -----------
Total additions ... 449,687 386,503 207,266 259,944 4,800,320 14,861,356 331,936
Deductions to net assets
attributed to:
Trustee fees ......... (28,147) -- -- -- (196) (171) (37)
Loan defaults ........ -- -- -- -- -- -- --
Net distributions
to participants .... (355,425) (73,796) (15,394) (22,541) (115,135) (479,646) (896)
Interfund transfers .. (1,229,327) 462,294 436,828 453,147 (2,896,464) (3,772,983) 1,538,180
Transfers to
successor trustee .. (14,187,886) (5,437,932) (2,645,143) (2,305,488) -- -- --
------------ ----------- ----------- ----------- ----------- ------------ -----------
Total deductions .. (15,800,785) (5,049,434) (2,223,709) (1,874,882) (3,011,795) (4,252,800) 1,537,247
Net increase (decrease) (15,351,098) (4,662,931) (2,016,443) (1,614,938) 1,788,525 10,608,556 1,869,183
Net assets available for
plan benefits:
Beginning of period .. 15,351,098 4,662,931 2,016,443 1,614,938 7,234,834 0 0
------------ ----------- ----------- ----------- ----------- ------------ -----------
End of period ........ $ 0 $ 0 $ 0 $ 0 $ 9,023,359 $ 10,608,556 $ 1,869,183
============ =========== =========== =========== =========== ============ ===========
FUND INFORMATION
---------------------------------------------------------------------------------------
TOTAL PUTNAM OVERSEAS NEW
RETURN S&P INDEX VOYAGER GROWTH OPPORTUNITIES LOAN
FUND FUND FUND FUND FUND FUND TOTAL
----------- ----------- ----------- ----------- ----------- ------------ ------------
Additions to net assets
attributed to:-
Investment income:
Interest and
dividends ......... $ 76,147 $ 806 $ 251,637 $ 18,578 $ 30,161 $ 133,180 $ 1,336,660
Net unrealized
appreciation
(depreciation)
in value of
investments ....... 138,536 667,353 (199,778) 79,004 (333,524) -- 2,476,609
Net realized gain
(loss) on sale
of assets ........ 16,446 113,332 38,322 2,494 (35,396) -- 1,468,033
Contributions:
Employer ............ -- -- -- -- -- -- 1,631,631
Employees ........... 152,475 157,544 401,590 149,230 511,088 -- 2,559,492
Transfers from
other plans ....... -- -- -- -- -- -- --
Transfers from
previous trustee .. 2,634,461 5,449,274 2,298,902 -- -- -- 24,576,449
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total additions ... 3,018,065 6,388,309 2,790,673 249,306 172,329 133,180 34,048,874
Deductions to net assets
attributed to:
Trustee fees ......... (152) (125) (173) (22) (198) -- (29,221)
Loan defaults ........ -- -- -- -- -- (6,758) (6,758)
Net distributions
to participants .... (28,136) (140,538) (36,945) (6,070) (4,213) -- (1,278,735)
Interfund transfers .. (220,837) (1,136,295) 1,239,665 1,123,467 3,789,556 212,769 0
Transfers to
successor trustee .. -- -- -- -- -- -- (24,576,449)
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total deductions .. (249,125) (1,276,958) 1,202,547 1,117,375 3,785,145 206,011 (25,891,163)
Net increase (decrease) 2,768,940 5,111,351 3,993,220 1,366,681 3,957,474 339,191 8,157,711
Net assets available for
plan benefits:
Beginning of period .. 0 0 0 0 0 1,428,646 32,308,890
----------- ----------- ----------- ----------- ----------- ------------ ------------
End of period ........ $ 2,768,940 $ 5,111,351 $ 3,993,220 $ 1,366,681 $ 3,957,474 $ 1,767,837 $ 40,466,601
=========== =========== =========== =========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
- 8 -
<PAGE>
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
FUND INFORMATION
---------------------------------------------------------
FIXED S&P GROWTH
INTEREST INDEX WELLINGTON EQUITY
FUND FUND FUND FUND
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:-
Investment income:
Interest and dividends ............ $ 954,769 $ 5,249 $ 42,770 $ 3,038
Net unrealized appreciation
in value of investments ......... -- 1,083,976 327,082 239,786
Net realized gain on sale of assets -- 16,293 11,854 554
Contributions:
Employer .......................... -- -- -- --
Employees ......................... 840,613 324,916 208,153 172,696
Transfers from other plans ........ 66,096 184,139 3,682 4,141
------------ ----------- ----------- -----------
Total additions ................. 1,861,478 1,614,573 593,541 420,215
------------ ----------- ----------- -----------
Deductions to net assets attributed to:
Loan defaults ....................... -- -- -- --
Net distributions to participants ... (1,261,221) (218,487) (60,230) (99,766)
Interfund transfers ................. (806,588) 323,519 191,630 603,521
------------ ----------- ----------- -----------
Total deductions ................ (2,067,809) 105,032 131,400 503,755
------------ ----------- ----------- -----------
Net increase (decrease) ............... (206,331) 1,719,605 724,941 923,970
Net assets available for plan benefits:
Beginning of period ................. 15,557,429 2,943,326 1,291,502 690,968
------------ ----------- ----------- -----------
End of period ....................... $ 15,351,098 $ 4,662,931 $ 2,016,443 $ 1,614,938
============ =========== =========== ===========
<CAPTION>
FUND INFORMATION
-------------------------
COMPANY
STOCK LOAN
FUND FUND TOTAL
---------- ----------- ------------
<S> <C> <C> <C>
Additions to net assets attributed to:-
Investment income:
Interest and dividends ............ $ 8,253 $ 104,196 $ 1,118,275
Net unrealized appreciation
in value of investments ......... 958,943 -- 2,609,787
Net realized gain on sale of assets 115,972 -- 144,673
Contributions:
Employer .......................... 1,294,377 -- 1,294,377
Employees ......................... 151,741 -- 1,698,119
Transfers from other plans ........ 50,619 -- 308,677
---------- ----------- ------------
Total additions ................. 2,579,905 104,196 7,173,908
---------- ----------- ------------
Deductions to net assets attributed to:
Loan defaults ....................... -- (89,702) (89,702)
Net distributions to participants ... (406,450) -- (2,046,154)
Interfund transfers ................. (331,803) 19,721 0
---------- ----------- ------------
Total deductions ................ (738,253) (69,981) (2,135,856)
---------- ----------- ------------
Net increase (decrease) ............... 1,841,652 34,215 5,038,052
Net assets available for plan benefits:
Beginning of period ................. 5,393,182 1,394,431 27,270,838
---------- ----------- ------------
End of period ....................... $7,234,834 $ 1,428,646 $ 32,308,890
========== =========== ============
</TABLE>
The accompanying notes are an integral part of this statement.
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SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN:
The following description of the Santa Fe Energy Resources Savings Investment
Plan (the Plan) is provided for general information purposes only. Participants
should refer to the plan document for a more complete description of the Plan's
provisions, as the document is controlling at all times.
GENERAL
The Plan is a defined contribution plan which became operative, effective
November 1, 1990, with the spin-off of Santa Fe Energy Resources, Inc. (SFER or
the Company) from its parent company, Santa Fe Pacific Corporation (SFP). The
Company has assumed the duties and responsibilities of administering the Plan.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Employee Benefits Committee appointed by the
Board of Directors of the Company and is subject to the provisions of the
Employee Retirement Security Act of 1974 (ERISA). Texas Commerce Bank acted as
trustee on behalf of the Plan and Hewitt Associates provided recordkeeping
services to the Plan for the year ended December 31, 1995 and for the period
January 1 to March 31, 1996. Effective April 1, 1996, Putnam Fiduciary Trust
Company was appointed trustee and recordkeeper of the Plan, and all plan assets
were transferred to the new trustee's custody.
ELIGIBILITY
Substantially all salaried full-time employees of the Company are eligible to
participate in the Plan on the first day of the month following their date of
hire. Eligible employees may become participants in the Plan by authorizing
regular payroll deductions and designating investment allocations for such
deductions. At December 31, 1996 there were 544 participants in the Plan.
CONTRIBUTIONS
Participants may elect to contribute from 1% to 12% of their annual base pay.
Tax-deferred contributions to the Plan by individual employees were limited to
$9,500 and $9,240 in 1996 and 1995, respectively. This limitation is adjusted
annually to reflect cost-of-living adjustments. Further, the Internal Revenue
Code (the Code) limits the total amount of contributions and forfeitures to the
Plan (and all other defined contribution plans of the Company) to the lesser of
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<PAGE>
25% of total annual compensation or $30,000 per participant. The Plan is also
subject to the "top-heavy" rules of the Code and regulations promulgated
thereunder. These rules generally provide that for any Plan year in which the
Plan is "top-heavy", certain additional restrictions apply to contributions made
on behalf of key employees. There were no such restrictions on the Plan due to
"top-heavy" provisions during 1996 or 1995.
The Company matches employee contributions for an amount up to 4% of each
participant's base salary (the Regular Matching Contribution). In addition, if
at the end of each fiscal year the Company's financial performance for such year
has met or exceeded certain predetermined criteria, each participant will
receive an additional matching contribution (the Performance Matching
Contribution) up to 50% of the Regular Matching Contribution. For the years
ended December 31, 1996 and 1995, the Company made Performance Matching
Contributions of $542,623 and $377,870, respectively. The Performance Matching
Contribution amounts for 1996 and 1995 are accrued as a receivable from employer
in the statement of net assets available for plan benefits at December 31, 1996
and 1995, respectively. Both the Regular and Performance Matching Contributions
are entirely in the form of Company stock and are held in the Company Stock
Fund.
A participant who receives a qualifying distribution from a former employer's
retirement or savings plan may contribute the distribution to the Plan, provided
that such contribution qualifies as a "rollover" contribution in accordance with
Section 402 of the Code or is made by a direct trust-to-trust transfer.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution and
an allocation of (a) the Company's contribution, (b) Plan earnings of each fund
in which the participant has invested, and (c) forfeitures of terminated
participants' nonvested accounts. Allocations are based on participant earnings
or account balances, as defined.
VESTING
Participants are 100% vested at all times with respect to their contributions
and rollover accounts. Participants' employer contributions accounts vest at a
rate of 20% per year for each full year of service and become 100% vested after
five full years of service, or in the case of death, total disability,
attainment of normal retirement age or in certain other circumstances.
INVESTMENTS
Participants can direct all contributions made on their behalf into one or all
of the Plan's investment funds. The Plan's investment options changed effective
April 1, 1996 in connection with the appointment of Putnam Fiduciary Trust
Company as the Plan's trustee and recordkeeper. Contribution rates may be
changed at any time.
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<PAGE>
For the year ended December 31, 1995 and for the period January 1 to March 31,
1996, the five investment funds of the Plan were as follows:
o FUND 1 - the "Fixed Interest Fund" invested on a fixed income basis,
primarily in investment contracts issued by insurance companies and a bank
company collective trust fund that invested primarily in money market
instruments. Such investments generally provided for a guarantee of the
principal amount of the fund and a guaranteed fixed interest rate, which
rate was subject to modification from time to time.
o FUND 2 - the "S&P Index Fund" invested in an undivided interest in the Wells
Fargo Equity Index Fund managed by Wells Fargo Institutional Trust Company.
This bank collective trust fund consisted of investments that attempted to
mirror the performance of the Standard & Poors 500 Stock Composite Index.
o FUND 3 - The "Wellington Fund" invested in the Vanguard Wellington Fund
which invested in a diversified and balanced mix of bonds and common stocks,
with the objectives of principal preservation and achievement of reasonable
income and capital appreciation without significant risk. This fund was
managed by the Vanguard Group of Investment Companies (Vanguard).
o FUND 4 - The "Growth Equity Fund" invested in the Vanguard World Fund -
Growth Portfolio which invested primarily in common stocks with the
objective of long-term capital appreciation. This fund was managed by
Vanguard.
o FUND 5 - the "Company Stock Fund" invested in the common stock of the
Company. Dividends and other distributions or amounts received in respect of
Company stock were reinvested in additional shares, and each participant's
account was credited with a proportionate number of the incremental shares.
Notwithstanding the foregoing, the trustee could invest a portion of any of the
above funds in cash or short-term cash equivalents, subject to liquidity needs.
Effective April 1, 1996 and continuing through December 31, 1996, the eight
investment mutual funds of the Plan were as follows:
o FUND 1 - the "Stable Value Fund" invests primarily in a collective
investment trust consisting of high-quality annuity investment contracts
issued by insurance companies or banks to preserve capital and maintain a
consistent yield of current income. As of December 31, 1996, the fund also
maintains investments in two previously negotiated guaranteed investment
contracts issued by an insurance company that were transferred to the fund
from the Plan's previous trustee. For liquidity purposes, a portion of the
fund's assets are invested in high-quality money market instruments. The
fund is managed by Putnam Investments, Inc.
o FUND 2 - the "Growth and Income Fund" invests primarily in the stock of
large, well-established corporations in a variety of industries with an
above-average history of dividend payments, with the goal of obtaining
long-term capital appreciation while also providing current income. The fund
is managed by Putnam Investments, Inc.
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<PAGE>
o FUND 3 - the "Total Return Fund" invests in a combination of (a) large
corporation stocks that are historically strong performers and (b)
high-quality fixed income securities, with the objective of achieving a high
total return, long-term capital appreciation, and current income. The fund
is managed by Invesco Funds Group, Inc.
o FUND 4 - the "Putnam S&P Index Fund" invests in the common stock of the 500
industrial, utility, financial and transportation companies that comprise
Standard & Poors 500 Stock Composite Index in an attempt to mirror the
performance of such index.
o FUND 5 - the "Voyager Fund" invests primarily in the common stock of
smaller, growth-oriented companies and larger, well-established corporations
that the fund manager believes offer above-average growth potential. The
fund's investment objective is rapid capital appreciation. The fund is
managed by Putnam Investments, Inc.
o FUND 6 - the "Overseas Growth Fund" invests in stock of companies located
outside of North America that offer above-average growth potential, with an
overall objective of long-term capital appreciation. The fund is managed by
Putnam Investments, Inc.
o FUND 7 - the "New Opportunities Fund" invests primarily in the common stock
of companies within certain emerging industry groups as identified by the
fund manager as having above-average potential for growth with an overall
objective of achieving long-term capital appreciation. The fund is managed
by Putnam Investments, Inc.
o FUND 8 - the "Company Stock Fund" invests in the common stock of the
Company. Dividends and other distributions or amounts received in respect of
Company stock are reinvested in additional shares, and each participant's
account is credited with a proportionate number of the incremental shares.
LOANS
Loans may be made pursuant to the Plan. With respect to Plan loans, the
provisions of the Plan (1) provide for the securing of loans by, among other
things, the value of the participant's vested account balance, (2) provide a
reasonable rate of interest, (3) set forth the maximum loan term, (4) establish
any minimum and maximum loan amounts, and (5) provide a fixed repayment
schedule. Two loans per employee may be outstanding at one time, and a third
loan will not be permitted until one of the prior loans has been paid in full.
During 1996, $960,870 of new loans were issued to participants and $614,921 of
principal payments were received from participants. At December 31, 1996, the
interest rate charged on loans from the Plan ranged from 6.5% to 12.5% depending
upon the length and terms of the loan.
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<PAGE>
WITHDRAWALS, TRANSFERS AND FORFEITURES
In the event of a participant's death, 100% of the participant's account balance
is paid to designated beneficiaries. In the event of termination of employment,
participants receive a distribution equal to the vested value of their account
as of the valuation date on or following their termination of employment or
normal retirement date. As allowed by the Code, the Plan also provides for
hardship withdrawals under certain circumstances. Distributions may be made in a
lump-sum payment or through monthly instalments for a specified period, or in
the case of accounts invested in the Company Stock Fund, may be paid all in
stock or part in stock and part in cash.
Forfeitures of unvested employer contributions are applied against future
employer contributions. Such forfeitures were $12,880 and $24,988 for the years
ended December 31, 1996 and 1995, respectively.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may, at any time, amend, discontinue
contributions or terminate the Plan subject to the provisions of ERISA. In the
event of Plan termination, participants become fully vested in their accounts.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
METHOD OF ACCOUNTING
Financial statements of the Plan are prepared on the accrual basis of accounting
and include all adjustments necessary to present fairly the financial statements
of the Plan in accordance with generally accepted accounting principles.
VALUATION OF INVESTMENTS
Investments in the Fixed Interest Fund are valued at contract or fair market
value. Valuation of investments in common stock and shares in registered
investment company funds is based upon published quotations for the last
business day of the Plan year. The valuation of the investment in the S&P Index
Fund is based upon its closing sales price reported for the last business day of
the year. Loans are valued at cost which approximates fair market value.
CONTRIBUTIONS
Employee contributions are recorded in the period during which the Company makes
payroll deductions from the Plan participants' earnings. Matching Company
contributions are recorded in the comparable period.
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<PAGE>
INCOME RECOGNITION
Investment income for dividends and interest is recorded on the accrual basis,
with dividends accrued on the ex-dividend date.
BENEFITS
Benefit claims are accrued when they have been processed and approved for
payment by the Plan. Claims processed and approved, but unpaid as of the Plan's
fiscal year end, are not shown as liabilities on the statement of net assets
available for plan benefits but are reflected as liabilities on the Plan's 5500.
EXPENSES
Plan administrative expenses are borne by the Company, except for loan
origination and maintenance fees related to Plan loans which are paid by the
participant.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities and the periods in which certain
items of revenue and expense are included. Actual results may differ from such
estimates.
NOTE 3 - TAX STATUS OF THE PLAN:
The Internal Revenue Service has issued a favorable letter of determination with
respect to the tax status of the Plan dated March 29, 1995. Although the Plan
has been subsequently amended, management believes that such amendments do not
require an updated determination letter, as the Plan design and operations are
in compliance with the applicable requirements of the Internal Revenue Code
(Code). Therefore, the related trust is exempt from federal income tax under
Code Section 501(a).
NOTE 4 - NET REALIZED GAIN (LOSS) ON INVESTMENTS:
The net realized gain (loss) on the Plan's fund investments represents sales of
fund shares, or SFER and SFP common stock, the proceeds of which have been
distributed to participants or transferred to other funds. In accordance with
ERISA guidelines, realized gains (losses) are calculated as sales proceeds less
current value at the beginning of the year or acquisition cost if acquired
during the year. Under certain circumstances, the cost basis of the common stock
for tax purposes may differ from the cost basis for financial reporting
purposes.
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<PAGE>
Net realized gains (losses) for the year ended December 31, 1996 were as
follows:
ERISA
ERISA REALIZED
PROCEEDS COST GAIN (LOSS)
----------- ----------- ----------
S&P Index Fund $10,376,187 $10,093,504 $ 282,683
Wellington Fund 5,650,414 5,583,142 67,272
Growth Equity Fund 5,936,188 5,815,184 121,004
Company Stock Fund 4,108,895 3,246,081 862,814
Total Return Fund 1,344,935 1,328,489 16,446
Growth & Income Fund 109,561 110,499 (938)
Voyager Fund 839,784 801,462 38,322
New Opportunities Fund 445,448 480,844 (35,396)
Overseas Growth Fund 92,307 89,813 2,494
Putnam S&P Index Fund 2,275,162 2,161,830 113,332
------------ ----------- ----------
$31,178,881 $29,710,848 $1,468,033
============ =========== ==========
Net realized gains for the year ended December 31, 1995 were as follows:
ERISA
ERISA REALIZED
PROCEEDS COST GAIN
--------- --------- --------
S&P Index Fund $ 154,347 $ 138,054 $ 16,293
Wellington Fund 164,519 152,665 11,854
Growth Equity Fund 4,465 3,911 554
Company Stock Fund 924,540 808,568 115,972
--------- --------- --------
$1,247,871 $1,103,198 $144,673
========== ========== ========
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<PAGE>
NOTE 5- DISTRIBUTIONS DUE TO PARTICIPANTS:
Benefit payments requested but not yet paid to participants who have withdrawn
from the Plan were as follows at December 31, 1995:
Fixed Interest Fund $127,773
S&P Index Fund 60,177
Wellington Fund 6,133
Growth Equity Fund 19,011
Company Stock Fund 11,377
--------
$224,471
========
These amounts are reflected as liabilities in the Plan's 5500. No comparable
obligation existed at December 31, 1996.
NOTE 6 - PLAN AMENDMENTS:
Effective April 1, 1996, the Plan was amended to change the available investment
fund options as outlined in Note 1 and to provide for daily valuation.
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<PAGE>
ADDITIONAL INFORMATION
- 18 -
<PAGE>
SCHEDULE 1
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
(a) (c) (e)
PARTY (b) DESCRIPTION NUMBER (d) CURRENT
IN INTEREST ISSUER OF INVESTMENT OF SHARES COST VALUE
- -----------
<S> <C> <C> <C> <C> <C>
* Putnam Investments, Inc. Company Stock Fund 611,224 $ 2,613,956 $ 8,480,736
Invesco Funds Group, Inc. Total Return Fund 113,948 2,613,958 2,768,940
* Putnam Investments, Inc. Growth & Income Fund 103,728 1,839,192 1,869,183
* Putnam Investments, Inc. Voyager Fund 247,718 4,154,676 3,993,220
* Putnam Investments, Inc. Stable Value Fund 10,608,353 10,608,353 10,608,556
* Putnam Investments, Inc. New Opportunities Fund 97,403 4,326,394 3,957,474
* Putnam Investments, Inc. Overseas Growth Fund 90,930 1,285,183 1,366,681
* Putnam Investments, Inc. S&P Index Fund 300,491 4,330,665 5,111,351
Participant loans Range of maturities -
June 30, 1997 through
March 31, 2010 1,767,837 1,767,837
----------- -----------
$33,540,214 $39,923,978
=========== ===========
</TABLE>
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<PAGE>
SCHEDULE 2
SANTA FE ENERGY RESOURCES SAVINGS INVESTMENT PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
(c) (d)
(b) NUMBER OF PURCHASE PRICE SELLING PRICE
(a) DESCRIPTION ---------------- (CURRENT VALUE AT (CURRENT VALUE AT
PARTY OF ASSETS PURCHASES SALES TRANSACTION DATE) TRANSACTION DATE)
----- --------- --------- ----- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Texas Commerce Bank ......... Short-Term Investment Co.- -- 43 -- $ 23,973,067
Prime Series 73 -- $22,741,229 --
Prudential Investments ...... Group Annuity 6607 -- 1 -- 7,543,831
5 -- 184,821 --
LaSalle National Trust ...... Income Plus Fund -- 3 -- 3,302,611
5 -- 87,364 --
Wells Fargo Institutional -- 1 -- 4,850,071
Trust Company .............. S&P Index Fund 0 -- 0 --
The Vanguard Group .......... Wellington Fund -- 1 -- 2,379,053
1 -- 305,583 --
The Vanguard Group .......... World Fund - United States -- 2 -- 2,318,714
Growth Portfolio 1 -- 578,214 --
Putnam Investments, Inc. .... SFER Company Stock Fund -- 105 -- 3,955,490
38 -- 1,308,026 --
Invesco Funds Group, Inc. ... Total Return Fund -- 56 -- 1,344,935
63 -- 1,325,718 --
Putnam Investments, Inc. .... Growth & Income A Fund -- 29 -- 109,561
72 -- 1,948,752 --
Putnam Investments, Inc. .... Voyager Fund -- 81 -- 839,784
80 -- 2,698,089 --
Putnam Investments, Inc. .... Stable Value Fund -- 84 -- 6,214,116
111 -- 2,860,653 --
Putnam Investments, Inc. .... New Opportunities Fund -- 78 -- 445,448
96 -- 4,771,841 --
Putnam Investments, Inc. .... S&P 500 Index Fund -- 80 -- 2,275,162
58 -- 1,189,845 --
</TABLE>
(h)
CURRENT
VALUE ON (i)
(a) (g) TRANSACTION NET REALIZED
PARTY COST DATE GAIN/(LOSS)
----- ----------- ----------- -----------
Texas Commerce Bank ......... $23,973,067 -- $ 0
-- $22,741,229 0
Prudential Investments ...... 7,543,831 -- 0
-- 184,821 0
LaSalle National Trust ...... 3,302,611 -- 0
-- 87,364 0
Wells Fargo Institutional 2,971,304 -- 1,878,767
Trust Company .............. -- 0 0
The Vanguard Group .......... 2,004,936 -- 374,117
-- 305,583 0
The Vanguard Group .......... 1,941,897 -- 376,817
-- 578,214 0
Putnam Investments, Inc. .... 3,241,362 -- 754,128
-- 1,308,026 0
Invesco Funds Group, Inc. ... 1,328,489 -- 16,446
-- 1,325,718 0
Putnam Investments, Inc. .... 110,499 -- (938)
-- 1,948,752 0
Putnam Investments, Inc. .... 801,462 -- 38,322
-- 2,698,089 0
Putnam Investments, Inc. .... 6,214,116 -- 0
-- 2,860,653 0
Putnam Investments, Inc. .... 480,844 -- (35,396)
-- 4,771,841 0
Putnam Investments, Inc. .... 2,161,830 -- 113,332
-- 1,189,845 0
Columns (e) and (f) have been omitted because they are not applicable.
- 20 -
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. PAGE
23. Consent of Independent Accountants 22
- 21 -
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-37175, 33-44541, 33-44542, 33-58613, 33-59255
and 333-07949) of Santa Fe Energy Resources, Inc. of our report dated June 6,
1997 appearing on pages 4 and 5 of the Santa Fe Energy Resources Savings
Investment Plan on Form 11-K for the year ended December 31, 1996.
Houston, Texas
June 6, 1997
- 22 -
