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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to _____________________
Commission file number 1-8246
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Southwestern Energy Company 401(k) Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Southwestern Energy Company
1083 Sain Street
Post Office Box 1408
Fayetteville, Arkansas 72702-1408
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SOUTHWESTERN ENERGY COMPANY
401(k) SAVINGS PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
SOUTHWESTERN ENERGY COMPANY
401(k) SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPORTING SCHEDULE
DECEMBER 31, 1999 AND 1998
FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants 1
Statements of Net Assets Available for Plan Benefits
as of December 31, 1999 and 1998 2
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 1999 3
Notes to Financial Statements 4
SCHEDULE SUPPORTING FINANCIAL STATEMENTS
Schedule of Assets Held for Investment Purposes, Form 5500, Schedule H, Item 4i -
December 31, 1999 8
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Retirement Committee of
Southwestern Energy Company:
We were engaged to audit the accompanying financial statements and
supplemental schedule of the Southwestern Energy Company 401(k) Savings
Plan (the Plan) as of December 31, 1999 and 1998 and for the year ended
December 31, 1999, as listed in the accompanying index. These financial
statements and schedule 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 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 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 and schedule referred to above
present fairly, in all material respects, the net assets available for Plan
benefits as of December 31, 1999 and 1998, and the changes in net assets
available for Plan benefits for the year ended December 31, 1999, in
conformity with accounting principles generally accepted in the United
States.
Tulsa, Oklahoma
May 2, 2000
1
SOUTHWESTERN ENERGY COMPANY
401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1999 AND 1998
1999 1998
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ASSETS:
Investments, at quoted market value (Notes 1 and 4):
Mutual funds $ 12,351,416 $ -
Common collective trusts 8,203,248 17,581,694
Common stock 602,225 285,907
Participant loans 420,255 159,041
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21,577,144 18,026,642
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Other assets:
Contributions receivable 136,342 129,248
Interest receivable - 19,778
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136,342 149,026
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LIABILITIES:
Payable to plan participants 3,364 -
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 21,710,122 $ 18,175,668
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The accompanying notes are an integral
part of these statements.
2
SOUTHWESTERN ENERGY COMPANY
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
beginning of year $ 18,175,668
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CHANGES DURING THE YEAR (Note 1):
Contributions:
Employee 2,466,199
Employer 805,402
Interest and dividend income 925,210
Net appreciation in fair value of investments 756,665
Withdrawals by participants (1,416,297)
Other (2,725)
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Net change during the year 3,534,454
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NET ASSETS AVAILABLE FOR PLAN BENEFITS,
end of year $ 21,710,122
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The accompanying notes are an
integral part of this statement.
3
SOUTHWESTERN ENERGY COMPANY
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. DESCRIPTION OF THE PLAN AND ACCOUNTING POLICIES:
Scope of the Plan
The Southwestern Energy Company 401(k) Savings Plan (the Plan) is a defined
contribution plan that covers all employees of Southwestern Energy Company
(the Company) and its subsidiaries except for:
(a) Employees who have not yet completed thirty (30) days of service.
(b) Employees under the age of twenty-one (21).
(c) Seasonal employees who have one thousand (1,000) or less hours of
service for the applicable computation period.
Participation by eligible employees in the Plan is voluntary.
Administration
The trust under the Plan was operated under a trust agreement with Scudder
Trust Company for the year ended December 31, 1999 and with Bankers Trust
Company for the year ended December 31, 1998. The change in trustee in 1999
also changed the investment options available to employees.
Plan Assets
Mutual funds, common collective trusts, and common stock are valued at
year-end market prices. Interest earned and dividends declared but not yet
received are accrued and included in earnings of the Plan for the
respective periods.
Plan Expenses
Expenses incurred in connection with the Plan are paid by the Company.
During 1999, the Company paid $17,098 in expenses on behalf of the Plan.
Brokerage commissions and transfer taxes incurred in connection with
securities transactions are treated as a part of the purchase cost or a
reduction of sale proceeds.
Contributions and Funding Policy
Participants may contribute from one percent to six percent of their
compensation in Basic Employee Contributions and/or Basic Salary Reduction
Contributions, as defined, and one percent to ten percent of their
compensation in Supplemental Employee Contributions and/or Supplemental
Salary Reduction Contributions, as defined. The Company matches fifty
percent of the first six percent of Basic Employee Contributions and Basic
Salary Reduction Contributions. All contributions to the Plan are invested
under the direction of the participant in eight separate funds as follows:
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o Scudder Stable Value Fund - Invests in guaranteed investment contracts,
alternative investment contracts, money market securities, and treasury
bills. The guaranteed investment contracts and the alternative
investment contracts are fully benefit responsive and are therefore
reported at contract value which approximates fair value.
o INVESCO Selected Income Fund - Invests in primarily bonds and other
debt securities issued by corporations as well as the U.S. Government
and its agencies.
o Scudder Pathway Series - Balanced Portfolio - Invests in a diversified
portfolio with emphasis on growth and current income such as stock
mutual funds, bond funds, and cash.
o Scudder Growth and Income Fund - Invests in primarily common stocks and
convertible securities of established companies.
o Stock Index Fund - Invests in a broad diversification of stocks and
stock funds that generally seek to mirror the S&P 500.
o Baron Asset Fund - Invests primarily in common stocks, equity-like
securities, preferred stock, and warrants of small and medium sized
companies with undervalued assets.
o Scudder International Fund - Invests primarily in foreign stocks.
o Southwestern Energy Company Stock - Invests solely in the stock of
Southwestern Energy Company.
Vesting
Contributions made by participants are fully vested. Participants vest in
the Company's contributions to the Plan as set forth in the following
schedule:
Years of
Vesting Service Percent Vested
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1 0%
2 50%
3 100%
Forfeitures
Forfeited nonvested amounts will be applied to restore matching
contributions of any Plan participants because of a valid repayment.
Remaining forfeitures will be used to reduce Plan expenses. Any forfeiture
amounts which remain following payment of Plan expenses will be used to
reduce employer matching contributions. At December 31, 1999, there were
approximately $17,000 in forfeitures available to be used for the purposes
stated above.
Participants' Accounts
Each participant's account is credited with the participant's contribution
and an allocation of:
(a) The Company's contribution.
(b) The Plan's investment earnings.
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The allocation of the Plan's investment earnings is performed at the end of
each calendar quarter.
The Plan permits current participants to apply for and receive loans that
represent borrowings from a participant's account. The maximum amount of
any loan available under the Plan is limited to the lesser of $50,000 or 50
percent of a participant's vested account balance.
Although withdrawals from active participants' accounts are restricted by
the Plan, various options are available to participants which are based on
the type of contributions made, age of the participant and other factors.
On termination of service due to death or disability, a participant or a
participant's estate may receive the full value of his or her account in a
lump sum. For termination of service due to other reasons, a participant
may receive the value of the vested interest in his or her account as a
lump sum distribution.
Participants may change their contribution percentages, investment
elections, transfer balances between funds, and apply for distributions
24-hours a day either through telephone access on the Pilot System or
Internet Access on the Scudder InterActive Account.
Basis of Accounting
The Plan's financial statements are presented on the accrual basis of
accounting. The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States requires the
Plan's management to use estimates and assumptions that affect the
accompanying financial statements and disclosures. Actual results could
differ from these estimates.
Plan Amendments
There were no plan amendments during 1999.
Reclassifications
The Accounting Standards Committee issued Statement of Position 99-3
Accounting for and Reporting of Certain Defined Contribution Investments
and Other Disclosure Matters (SOP 99-3), which eliminates the requirement
for a defined contribution plan to disclose participant-directed investment
programs. The SOP 99-3 was adopted for the 1999 financial statements and as
such, the 1998 financial statements have been reclassified to eliminate the
participant-directed, fund-investment program disclosures.
2. TERMINATION OF THE PLAN:
The Plan gives the Company 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). In the event of
Plan termination, participants will become 100 percent vested in the
contributions made by the Company.
3. TAX STATUS:
The Internal Revenue Service issued a determination letter dated November
7, 1994, stating that the Plan was designed in accordance with applicable
requirements of the Internal Revenue Code. The Plan has been amended since
receiving the determination letter. However, the Plan administrator and the
Plan's legal counsel believe that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Internal
Revenue Code. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
On January 1, 1999, the Plan adopted the Scudder prototype plan which
received a favorable determination letter on May 9, 1996.
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4. INVESTMENTS:
The following investments represent five percent or more of the net assets
available for benefits at December 31, 1999 and 1998:
Market Value at December 31,
Description of Asset 1999 1998
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Bankers Trust Pyramid Government Securities Cash Fund $ N/A $ 17,581,694
Scudder Trust Company Growth and Income Fund 7,324,630 N/A
Scudder Trust Company Collective Investment Trust Stable Value Fund 4,642,777 N/A
Scudder Trust Company Collective Investment Trust Stock Index Fund 3,560,471 N/A
Scudder Trust Company Pathway Series - Balanced Fund 2,118,333 N/A
INVESCO Funds Group, Inc. Selected Income Fund 1,523,300 N/A
5. BENEFITS PAYABLE:
Amounts allocated for benefits requested by participants before year end
but not paid until after year end were $92,514 and $0 at December 31, 1999
and 1998, respectively.
6. NET APPRECIATION IN FAIR VALUE OF INVESTMENTS:
Net appreciation (depreciation) by investment type for the year ended
December 31, 1999 was as follows:
Mutual funds $ 409,709
Common collective trusts 404,912
Common stock (57,956)
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$ 756,665
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7. SUBSEQUENT EVENT:
Effective May 31, 2000, a significant portion of Associated Natural Gas
Company (ANG), a subsidiary of the Company, will be sold to another
company. As a result approximately two-thirds of ANG's employees will be
transferred to the other company.
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SOUTHWESTERN ENERGY COMPANY
401(k) SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - FORM 5500, SCHEDULE H, ITEM 4i
DECEMBER 31, 1999
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, COLLATERAL, CURRENT
LESSOR, OR SIMILAR PARTY PAR, OR MATURITY VALUE VALUE
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Entergy Corporation 8,316 Common Shares $ 214,124
Southwestern Energy Company* 59,139 Common Shares 388,101
Scudder Trust Company Collective
Investment Trust* Stable Value Fund 4,642,777
Scudder Trust Company Collective
Investment Trust* Stock Index Fund 3,560,471
Scudder Trust Company* Pathway Series - Balanced Fund 2,118,333
Scudder Trust Company* Growth and Income Fund 7,324,630
Scudder Trust Company* International Fund 651,954
Baron Capital Inc. Asset Fund 733,199
INVESCO Funds Group, Inc. Select Income Fund 1,523,300
Various plan participants* Participant loans with interest
rates from 8.75% to 9.75% and
various maturities 420,255
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$21,577,144
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* Parties-in-interest
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrator of the Plan has duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
SOUTHWESTERN ENERGY COMPANY
401(k) SAVINGS PLAN
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Date: June 21, 2000 BY: /s/ GREG D. KERLEY
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Greg D. Kerley
Executive Vice President
And Chief Financial Officer