UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
(X) Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 2002
Or
( ) Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 for the transition period from ________ to __________
Commission file number 1-9971
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Burlington Resources Inc. Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Burlington Resources Inc., 5051 Westheimer, Suite 1400, Houston, Texas 77056
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BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
REPORT ON AUDITS OF FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
AS OF DECEMBER 31, 2002 AND 2001 AND
FOR THE YEAR ENDED DECEMBER 31, 2002
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BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
CONTENTS
DECEMBER 31, 2002
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PAGE
REPORT OF INDEPENDENT AUDITORS ............................................. 1
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
*Schedule H, Item 4i - Schedule of Assets Held for Investment Purposes ..... 9
* Other schedules required by Section 29 CFR 2520.103-10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable.
Exhibits
23 Consent of Independent Auditors
99.1 Certification accompanying Annual Report pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 executed by Steven J. Shapiro, on
behalf of Burlington Resources Inc. Benefits Committee, the
Administrator of the Plan, the CEO/CFO equivalent for the Plan
REPORT OF INDEPENDENT AUDITORS
To the Participants and Administrator of
Burlington Resources Inc. Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Burlington Resources Inc. Retirement Savings Plan (the "Plan") at December
31, 2002 and 2001, and the changes in its net assets available for benefits for
the year ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America 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 our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
accompanying table of contents is presented for the purpose 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. This supplemental schedule is the responsibility of the
Plan's management. 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.
PricewaterhouseCoopers LLP
Houston, Texas
June 26, 2003
1
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
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2002 2001
------------ ------------
INVESTMENTS
At fair value
Burlington Resources Inc. common stock $ 35,252,470 $ 49,504,267
Registered investment companies 86,785,378 107,857,682
Participants' notes receivable 5,228,238 5,284,896
Cash and cash equivalents 2,806,164 2,624,189
At contract value
Unallocated investment contracts 8,149,147 9,440,787
Synthetic investment contracts 75,947,699 53,270,544
------------ ------------
Total investments 214,169,096 227,982,365
------------ ------------
CONTRIBUTIONS RECEIVABLE
Company 249,394 257,831
Participant 364,739 356,829
------------ ------------
Net assets available for benefits $214,783,229 $228,597,025
============ ============
The accompanying notes are an integral part of these financial statements.
2
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2002
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INVESTMENT INCOME/(LOSS)
Interest income $ 395,699
Dividend income 1,298,728
Net depreciation in the fair value of investments (15,279,006)
-------------
Net investment (loss) (13,584,579)
-------------
CONTRIBUTIONS
Company 7,941,148
Participant 11,399,636
-------------
Total contributions 19,340,784
-------------
Total additions 5,756,205
-------------
Participant withdrawals and distributions (19,463,736)
Administrative expenses (106,265)
-------------
Total deductions (19,570,001)
-------------
Net decrease (13,813,796)
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 228,597,025
-------------
End of year $ 214,783,229
=============
The accompanying notes are an integral part of these financial statements.
3
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
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1. PLAN DESCRIPTION
The following description of the Burlington Resources Inc. ("BR" or the
"Company") Retirement Savings Plan (the "Plan") provides only general
information. Participants should refer to the Plan Document for a more
complete description of the Plan's provisions.
GENERAL
The Plan is a trusteed, defined contribution plan, administered by a
committee of BR executives, for participants of the employer companies
BR and Burlington Resources Oil & Gas Company LP (formerly known as
Burlington Resources Oil & Gas Company), which is a wholly-owned
subsidiary of BR. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"), as amended. The
Plan's assets are held by Charles Schwab Trust Company and individual
participant accounts are maintained by Charles Schwab Retirement Plan
Services.
INVESTMENTS
A participant may direct his or her contributions and account balances
among the following investment funds.
Company Stock Fund
Invested in common stock of BR.
S&P 500 Institutional Index Fund
Invested in a portfolio of common stock and other equity securities.
This fund is managed to achieve results similar to those of the overall
stock market as measured by the Standard & Poor's 500 Index.
International Equity Fund
Invested primarily in the equity securities of companies based outside
the United States of America.
Balanced Fund
Invested in equity securities, which attempt to mirror the Willshire
5000 Equity Index and in high-quality bonds, which attempt to mirror
the Lehman Brothers Aggregate Bond Index.
Small-Cap Equity Fund
Invested in common stocks, or other equity securities including
preferred stocks, rights and warrants of the second 1,000 largest U.S.
corporations.
Growth Equity Fund
Invested primarily in common stocks of corporations that the trust
advisor believes are undervalued and capable of generating strong
earnings growth in the near term.
Large Capital Value Fund
Invested primarily in common stocks and other instruments convertible
into common stock issued by large corporations.
4
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
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Global Equity Fund
Invested primarily in equity instruments issued by corporations from
the U.S. and abroad.
Stable Value Fund
Invested primarily in a diversified portfolio of investment contracts
offered by major insurance companies and financial institutions.
Small Cap Growth Fund
Invested primarily in common stocks of U.S. and foreign companies
within the range of capitalizations of companies included in the
Lipper, Inc. Small Cap category.
ELIGIBILITY
All employees are eligible to participate in the Plan beginning the
first day of the month following full time employment, or upon
completion of 1,000 hours of service.
PARTICIPANT ACCOUNTS
A separate account is maintained for each participant that reflects the
participant's contributions and the participant's share of Company
contributions and Plan investment income net of withdrawals. Each
participant can authorize the transfer of account balances among funds
or change investment options for future contributions.
Appreciation (depreciation) is allocated to participants based upon
their proportionate share of assets in each investment fund.
PARTICIPANTS' NOTES RECEIVABLE
The Plan may make loans to actively employed participants of up to 50
percent of their account balance (excluding any remaining Individual
Retirement Account balance that was entered into prior to 1998),
subject to a minimum loan of $1,000 and a maximum loan of $50,000. The
$50,000 limit is reduced by the participant's highest outstanding loan
balance during the prior one-year period. Loans are secured by the
balance in a participant's account. Interest on loans accrues at 1
percent above the Wall Street Journal published prime rate, which is
determined at the time the loan is taken, and remains fixed for the
term of the loan. Interest rates ranged from 5.25 percent to 10.50
percent for the year ended December 31, 2002. The repayment period may
be from 12-60 months. Repayments are made through payroll deductions
and are reinvested in Plan funds according to the borrowing
participant's current investment elections. Loan balances due from
terminated participants are deemed distributed to the participants
during the quarter following the quarter in which the last loan payment
was made. During 2002, $397,251 of such distributions are included in
participant withdrawals and distributions in the accompanying financial
statements.
There were no loans in default as of December 31, 2002 and 2001.
CONTRIBUTIONS
A participant may elect to make regular semi-monthly pre-tax and/or
after-tax contributions from 1 percent to 13 percent of his or her
total eligible compensation via regular payroll deduction. Pre-tax
contributions are subject to an Internal Revenue Service (IRS)
limitation of $11,000 for the 2002 plan year. The Company matches 100
percent of employee contributions up to 6 percent of total eligible
compensation for a participant with less than 10 years of service and
up
5
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
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to 8 percent of total eligible compensation for a participant with 10
or more years of service. In addition, a participant may make an
approved rollover contribution from another qualified employee benefit
plan, subject to IRS rules. All regular Company and participant
contributions are paid to the Plan's trustee semi-monthly, and
allocated among the investment options consistent with participant
investment elections.
VESTING
Participant accounts are 100 percent vested and nonforfeitable at all
times.
PARTICIPANT WITHDRAWALS AND DISTRIBUTIONS
The Plan provides for in-service withdrawals by participants from
certain funds depending on their source. Upon separation from service,
a participant's account balance is either distributed as a lump sum or
deferred until 70-1/2, at which time funds are to be distributed in a
lump sum. A participant whose account balance exceeds $5,000 may elect
to defer distribution until 70-1/2 but no later.
TERMINATION OF THE PLAN
While the Board of Directors of BR has not expressed any intention to
do so, it may at any time terminate the Plan. Upon termination, the
Plan's assets will be distributed to the participants on the basis of
their account balances existing at the date of termination.
INCOME TAXES
The Plan received a determination letter dated October 25, 2002, from
the IRS advising that the Plan constitutes a qualified plan under
Section 401(a) of the Internal Revenue Code, and is therefore, exempt
from income taxes.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
In accordance with generally accepted accounting principles ("GAAP"),
the accounting records of the Plan are maintained on the accrual basis,
except for participant withdrawals and distributions, which are
reported when paid. Amounts for benefit claims that have been processed
and approved for payment prior to December 31, but not paid as of that
date, are reported on Form 5500 as withdrawals. No such unpaid claims
exist at December 31, 2002 or 2001.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with
GAAP requires certain estimates and assumptions by Plan management.
Actual results could differ from estimates.
RISKS AND UNCERTAINTIES
Due to the level of risk associated with certain investment securities
and the level of uncertainty related to changes in their value, it is
at least reasonably possible that changes in the near term could
materially affect the amounts reported in the Statement of Net Assets
Available for Benefits.
6
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
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VALUATION OF INVESTMENTS
The Plan's investments, except for its investment contracts, are stated
at fair value. Investment contracts, which are fully benefit
responsive, are stated at contract value. Fair values for investments
other than participants' notes receivable and cash are determined by
quoted market prices. Participants' notes receivable are carried at
original loan principal balance, less principal repayments, which
approximates fair value. Cash is stated at account value. Investment
transactions are recorded on a settlement date basis.
CASH AND CASH EQUIVALENTS
All short-term investments purchased with an original maturity of three
months or less are considered cash equivalents. Cash equivalents are
stated at fair value.
DIVIDEND AND INTEREST INCOME
Dividend and interest income from investments are recorded as earned
and allocated to participants based upon their proportionate share of
assets in each investment fund.
ADMINISTRATIVE EXPENSES
Certain administrative expenses and professional fees incurred by the
Plan are paid by BR. BR paid approximately $242,000 and $212,000 for
the years ended December 31, 2002 and 2001, respectively.
3. NET DEPRECIATION IN THE FAIR VALUE OF INVESTMENTS
Following is a summary of the components of the net depreciation in the
fair value of investments for the year ended December 31, 2002.
BR common stock $ 7,151,589
Registered investment companies (22,430,595)
--------------
Total net depreciation $ (15,279,006)
==============
4. INVESTMENTS
Investments that comprised 5 percent or more of the net assets
available for benefits follow for the years ended December 31, 2002 and
2001.
2002 2001
BR common stock $ 35,252,470 $ 49,504,267
Janus Worldwide Fund 12,057,556 18,365,059
Vanguard Institutional Index Fund 32,624,803 43,591,919
Schwab Small-Cap Index Fund* 9,889,954 16,822,336
* Item does not meet 5 percent threshold as of December 31, 2002.
5. INVESTMENT CONTRACTS
The fair value of investment contracts as of December 31, 2002 and
2001, was approximately $88,700,000 and $64,500,000, respectively. Fair
value was determined using a discounted cash flow analysis assuming
market rates for similar contracts. The average yield for these
investment contracts during 2002 and 2001 was 5.22 percent and 5.82
percent, respectively. The crediting interest rates ranged from 1.43
percent to 7.65 percent and 2.44 percent to 8.75 percent at December
31, 2002 and 2001, respectively. There are no minimum crediting
interest rates applicable to the investment contracts as of December
31, 2002.
7
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
Schedule H, Item 4i - Schedule of Assets Held for Investment Purposes
December 31, 2002
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CURRENT
VALUE/
FAIR VALUE
Unallocated Investment Contracts
BMA
#1335, 5.75%, matures November 17, 2003 $ 1,888,599
Monumental Life Ins. Co.
#00214FR, 6.98%, matures October 30, 2003 1,736,496
Prudential - Cap MAC Insd
#10041-212, 5.97%, matures January 18, 2005 1,232,908
Sun America Life Ins. Co.
#4887, 7.49%, matures January 2, 2004 518,783
GE Life & Annuity Asr Co.
#3528, 5.50%, matures March 29, 2004 1,100,040
Metropolitan Life Insurance
#25811, 6.02%, matures February 17, 2004 1,672,321
-------------
Total unallocated investment contracts 8,149,147
-------------
Synthetic Investment Contracts
Monumental Life Ins. Co. #00085TR
Citibank Credit Card MT 1,109,665
Federal Home Loan Mortgage Co., 5.75%, matures April 2008 2,496,206
Federal Home Loan Mortgage Co., 5.50%, matures July 2006 1,687,104
United States Treasury, 5.625%, matures May 2008 1,712,754
United States Treasury, 4.625%, matures May 2006 1,626,473
United States Dollars (7,661)
Monumental Life Ins. Co. Wrapper (840,439)
Chase Manhattan Bank, #401725-T
Fannie Mae Whole Loan, 7.00%, matures July 2005 1,153,528
Fannie Mae Whole Loan, 6.625%, matures September 2009 596,316
COMM 923,094
United States Dollars 19,901
Chase Manhattan Bank Wrapper (304,864)
UBS AG, #5040
United States Treasury, 5.75%, matures November 2005 4,450,476
Federal Home Loan Mtg. Co., 5.25%, matures January 2006 2,220,916
Federal Home Loan Mtg. Co. 740,693
Fannie Mae Whole Loan 736,140
United States Dollars 90,915
UBS AG Wrapper (466,084)
John Hancock Mutual Life Insurance Company
#7474, 7.65%, no maturity date 4,710,723
Continental Assurance Company
#630-05573 5.77%, matures December 17, 2012 1,048,955
J.P. Morgan Chase Bank
#401725-G, 5.61%, no maturity date 4,046,990
9
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
Schedule H, Item 4i - Schedule of Assets Held for Investment Purposes
December 31, 2002
--------------------------------------------------------------------------------
CURRENT
VALUE/
FAIR VALUE
Bank of America NT &SA
#99-043, 5.04%, no maturity date 8,446,096
#02-037, 6.01%, no maturity date 4,348,312
State Street Bank & Trust
#99007, 6.14%, matures December 25, 2020 1,798,052
UBS AG
#5002, 2.44%, no maturity date 2,793,082
ING Life Insurance and Annuity Co.
#14680, 5.16%, matures December 25, 2012 4,136,996
#60022, 3.57%, no maturity date 2,215,941
Caisse des Depots (CDC)
#1810-01, 4.24%, no maturity date 4,800,694
#28538, 4.20%, no maturity date 12,430,825
Rabobank Nederland
#BRS 100201, 2.44%, no maturity date 7,225,900
-------------
Total synthetic investment contracts 75,947,699
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Total investment contracts 84,096,846
-------------
Registered investment companies
Janus Worldwide Fund 12,057,556
MFS Massachusetts Investors A Trust 1,189,866
Vanguard Balanced Index Fund 9,707,185
Waddell & Reed Small Cap Growth Fund 2,570,041
ABN/AMRO/Montag and Caldwell Growth Fund 6,710,707
* Schwab Small-Cap Index Fund 9,889,954
Vanguard Institutional Index Fund 32,624,803
Vanguard International Growth Adm 6,489,878
Rice, Hall, James Micro Cap 2,373,630
Dodge & Cox Stock 3,171,758
-------------
Total investment companies 86,785,378
Cash and cash equivalents 2,806,164
* Burlington Resources Inc. common stock 35,252,470
* Participants' notes receivable, 5.25% to 10.50% 5,228,238
-------------
Total investments $ 214,169,096
=============
* Denotes investment issued by a party-in-interest to the Plan.
10
Pursuant to the requirements of the Securities Exchange Act of 1934,
the person who administers the employee benefit plan has duly caused
this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Retirement Savings Plan
-----------------------------------------------
Date June 27, 2003 /S/ STEVEN J. SHAPIRO
------------------- -----------------------------------------------
Steven J. Shapiro
On Behalf of Burlington Resources Inc. Benefits
Committee, the Administrator of the Plan
11
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
23 Consent of Independent Auditors
99.1 Certification accompanying Annual Report pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 executed by Steven J. Shapiro, on
behalf of Burlington Resources Inc. Benefits Committee, the
Administrator of the Plan, the CEO/CFO equivalent for the Plan