UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
Annual Report
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One):
[X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934 (No fee required, effective October 7, 1996)
For the fiscal year ended December 31, 2003
Or
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No fee required)
For the transition period from to
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Commission file number 33-63817
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Apache Corporation 401(k) Savings Plan
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Apache Corporation 401(k) Savings Plan
December 31, 2003 and 2002 and year ended December 31, 2003
Apache Corporation 401(k) Savings Plan
Financial Statements and Supplemental Schedule
December 31, 2003 and 2002 and year ended December 31, 2003
CONTENTS
Report of Independent Registered Public Accounting Firm................ 1
Audited Financial Statements
Statements of Net Assets Available for Benefits........................ 2
Statement of Changes in Net Assets Available for
Benefits ............................................................ 3
Notes to Financial Statements.......................................... 4
Supplemental Schedule
Apache Corporation 401(k) Savings Plan
Schedule H, Line 4(i) - Schedule of Assets (Held At End of Year)....... 8
Report of Independent Registered Public Accounting Firm
Retirement Plan Advisory Committee
Apache Corporation 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Apache Corporation 401(k) Savings Plan as of December 31, 2003 and 2002,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 2003. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 at
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the year ended December 31, 2003, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2003, is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Houston, Texas
June 18, 2004
1
Apache Corporation 401(k) Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2003 2002
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ASSETS
Receivables:
Securities sold $ 75,546 $ -
Investments 168,781,076 127,348,334
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Total assets 168,856,622 127,348,334
LIABILITIES
Accrued expenses - 20,040
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Net assets available for benefits $ 168,856,622 $ 127,328,294
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See accompanying notes.
2
Apache Corporation 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2003
Additions:
Participant contributions $ 7,279,411
Employer contributions 5,273,361
Rollover contributions 963,073
Investment income 2,534,481
Net appreciation in fair value of investments 37,857,884
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Total additions 53,908,210
Deductions:
Administrative fees 88,755
Benefits paid to participants 12,291,127
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Total deductions 12,379,882
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Net increase 41,528,328
Net assets available for benefits at:
Beginning of year 127,328,294
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End of year $168,856,622
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See accompanying notes.
3
Apache Corporation 401(k) Savings Plan
Notes to Financial Statements
December 31, 2003
1. DESCRIPTION OF PLAN
The following brief description of the Apache Corporation 401(k) Savings Plan
(the "Plan") is provided for general information purposes only. Participants
should refer to the Summary Plan Description for more complete information, a
copy of which is available from Apache Corporation (the "Company").
The Plan is a defined contribution plan established on January 1, 1989, open to
all eligible employees and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
CONTRIBUTIONS
Participants may contribute up to 25% of their eligible compensation. The
Company makes a basic contribution equal to 100% of the first 6% of each
participant's contributions. Participants direct the investment of all
contributions to their accounts into various fund options offered by the Plan.
Only participant contributions are eligible to be invested in the self directed
brokerage account.
VESTING
Participants are immediately 100% vested in their contributions and all related
earnings. Vesting in the employer contribution portion of their accounts and
related earnings is based on years of credited service. A participant becomes
20% vested after the completion of one year of service and continues to vest 20%
per year becoming fully vested after the completion of five years of credited
service. Forfeitures of unvested accounts may be used to reduce future employer
contributions to the Plan or pay the administrative expenses of the Plan.
PARTICIPANT LOANS
Participants may borrow from their own contributions a minimum of $500, up to
the lesser of $50,000 less the participant's highest outstanding loan balance
during the preceding 12 months or 50% of their vested account balance. Loans are
charged at a rate of interest equal to the current prime lending rate plus 1%.
Loans must generally be repaid through payroll deductions within four years.
4
Apache Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
BENEFIT PAYMENTS
Participants are eligible to receive lump-sum benefits equal to the vested value
of their account upon retirement, disability, death, or termination of
employment.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company 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 Plan termination,
participants will become 100% vested in their accounts.
ADMINISTRATIVE EXPENSES
Certain administrative expenses of the Plan are paid by the Company.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements of the Plan have been prepared on the
accrual basis of accounting in accordance with U.S. generally accepted
accounting principles. Benefit payments are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes and
schedule. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Fidelity Management Trust Company serves as the Plan's trustee and holds
all investments of the Plan, except for the self-directed brokerage
account which is held by Fidelity Brokerage Services. Investments in
mutual funds and common stock are stated at fair value based on quotations
obtained from national securities exchanges. The
5
Apache Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
investment in the common collective trust fund is stated at fair value as
determined by the issuer, based on the quoted market value of the underlying
investments. The money market fund and participant loans are stated at cost,
which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
RISKS AND UNCERTAINTIES
The Plan provides for investments in various investment securities which, in
general, are exposed to various risks, such as interest rate, credit, and
overall market volatility risks. Due to the level of risk associated with
certain investments securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the statements of net
assets available for benefits and participant account balances.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current year
presentation.
3. INVESTMENTS
Individual investments that represent 5% or more of the Plan's net assets are as
follows:
DECEMBER 31
2003 2002
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Apache Corporation common stock $71,092,288 $55,579,646
Fidelity Blue Chip Growth Fund 9,609,072 6,387,757
Fidelity Magellan Fund 20,214,961 16,303,454
Fidelity Intermediate Bond Fund 7,377,236 6,462,634
Fidelity Managed Income Portfolio 14,072,304 11,667,123
Fidelity Retirement Money Market Portfolio 8,591,870 8,493,343
Fidelity Equity Income Fund 9,547,067 7,118,043
Fidelity Low-Priced Stock Fund 8,989,694 4,768,585
6
Apache Corporation 401(k) Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
During 2003, the Plan's investments (including investments bought, sold, and
held during the year) appreciated (depreciated) in value as follows:
YEAR ENDED
DECEMBER 31
2003
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Mutual funds $12,524,942
Common stocks 25,332,942
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$37,857,884
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4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
("IRS") dated July 22, 2002, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related
trust is exempt from taxation. Subsequent to this determination by the IRS, the
Plan was amended and restated. Once qualified, the Plan is required to operate
in conformity with the IRC to maintain its qualification. The plan administrator
believes the Plan is being operated in compliance with the applicable
requirements of the IRC and, therefore, believes that the Plan, as amended and
restated, is qualified and the related trust is tax exempt.
7
Supplemental Schedule
Apache Corporation 401(k) Savings Plan
Schedule H, Line 4(i) - Schedule of Assets (Held At End of Year)
EIN: 41-0747868 PN: 002
December 31, 2003
IDENTITY OF ISSUE,
BORROWER,
LESSOR, OR SIMILAR PARTY DESCRIPTION OF INVESTMENT CURRENT VALUE
-------------------------- ------------------------------ -------------
* Apache Corporation 876,600 shares of common stock $ 71,092,288
* Fidelity Investments Fidelity Puritan Fund 3,377,300
* Fidelity Investments Fidelity Equity Income Fund 9,547,067
* Fidelity Investments Fidelity Intermediate Bond
Fund 7,377,236
* Fidelity Investments Fidelity Blue Chip Growth Fund 9,609,072
* Fidelity Investments Fidelity Magellan Fund 20,214,961
* Fidelity Investments Fidelity Growth Company Fund 3,873,709
* Fidelity Investments Fidelity Retirement Money
Market Portfolio 8,591,870
Morgan Stanley Morgan Stanley Institutional
Fund, Inc. - Intermediate
Equity Portfolio 2,437,669
* Fidelity Investments Fidelity Managed Income
Portfolio 14,072,304
* Fidelity Investments Spartan U. S. Equity Index
Fund 3,213,078
* Fidelity Investments Fidelity Low-Priced Stock Fund 8,989,694
* Fidelity Investments Ariel Appreciation 1,309,587
* Fidelity Investments FID Freedom Income 34,449
* Fidelity Investments FID Freedom 2000 3,293
* Fidelity Investments FID Freedom 2010 893,081
* Fidelity Investments FID Freedom 2020 761,946
* Fidelity Investments FID Freedom 2030 127,953
* Fidelity Investments FID Freedom 2040 77,143
Brokerage link Self-directed brokerage
account 1,133,526
* Participant loans Varying maturity dates and
interest rates ranging from
5.00% to 10.50% 2,043,850
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$168,781,076
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* Party-in-interest
8
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Apache Corporation
401(k) Savings Plan
(Name of Plan)
Date: June 28, 2004 /s/ Jeffrey M. Bender
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Jeffrey M. Bender, Chairman
Retirement Plan Advisory Committee
INDEX TO EXHIBITS
Exhibit No. Description
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23.1 Consent of Ernst & Young LLP