Exhibit 99(b)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Year Ended December 31, 1999
Commission File No. 1-8968
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ANADARKO EMPLOYEE SAVINGS PLAN
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ANADARKO PETROLEUM CORPORATION
17001 Northchase Drive
Houston, Texas 77060-2141
(281) 875-1101
ANADARKO EMPLOYEE SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS
Page
Statements of Net Assets Available for Benefits,
December 31, 1999 and 1998 1
Statement of Changes in Net Assets Available for Benefits,
Year Ended December 31, 1999 2
Notes to Financial Statements 3
Independent Auditors' Report 9
SCHEDULE
Schedule I - Schedule of Assets Held for
Investment Purposes, December 31, 1999 S-1
All other schedules are omitted because they are not applicable, not
required or the information is included in the Financial Statements or
Notes thereto.
ANADARKO EMPLOYEE SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31 1999 1998
thousands
Assets
Investments, at fair value Note 4
Anadarko Petroleum Corporation - common stock $101,218 $ 91,199
Mutual funds 38,169 26,183
Money market investments 16,803 13,541
Participant loans receivable 4,229 4,134
160,419 135,057
Receivables
Employer contributions --- 558
Participant contributions --- 821
Accrued interest and dividends 11 682
Other --- 636
11 2,697
Total assets 160,430 137,754
Liabilities --- 1,200
Net Assets Available For Benefits $160,430 $136,554
See accompanying notes to financial statements.
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ANADARKO EMPLOYEE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31 1999
thousands
Additions
Investment income
Net realized gain on investments Note 4 $ 4,877
Net unrealized appreciation
in fair value of investments Note 4 13,179
Dividends 1,381
Interest earned 1,098
Interest income on participant loans 376
Total investment income 20,911
Contributions
Employer - Anadarko Petroleum Corporation
common stock (167,194 shares) 4,919
Participant 7,805
Total contributions 12,724
Total additions 33,635
Deductions
Distributions to participants 9,671
Administrative expenses (fees and commissions) 88
Total deductions 9,759
Net increase in net assets during the year 23,876
Net assets at beginning of year 136,554
Net assets at end of year $160,430
See accompanying notes to financial statements.
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ANADARKO EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation The accounts of the Anadarko Employee Savings
Plan (Plan) are maintained on an accrual basis.
Use of Estimates The financial statements have been prepared in
conformity with generally accepted accounting principles. In preparing
financial statements, management makes informed judgements and estimates
that affect the reported amounts of assets and liabilities as of the date
of the financial statements and affect the additions and deductions to
net assets available for Plan benefits. Actual results may differ from
these estimates.
Expenses All trustee fees, brokerage fees and other expenses incident
to the administration of the Plan may be paid by Anadarko Petroleum
Corporation (Anadarko, the Company or the Employer) and, if not paid by
the Company, shall be paid by the Plan. In 1999, the Company elected to
pay the trustee fees for the Plan and presently intends to continue to do
so although the Company can, at its discretion, discontinue this
practice. Effective October 1999, the brokerage fee charged to
participants for each share of Anadarko stock transferred out of the
Company Stock Fund was discontinued. Also effective October 1999, a
setup fee and an annual maintenance fee for new loans, as well as a
processing fee for withdrawals is deducted from participants' accounts.
Investments On each valuation date, as defined, securities held by the
Plan are valued at fair value and the increase or decrease in the value
of securities held, plus any net income or loss of the Plan, is allocated
to the participants' accounts. Fair value is based on the closing market
price of the securities at December 31. Security transactions are
recorded on a trade-date basis.
Realized gains and losses are based on the difference between fair values
of the withdrawn securities at the trade date and the fair value at
January 1. If no shares existed at the beginning of the period, realized
gains and losses reported on withdrawals of securities were based on the
difference between market values of the withdrawn securities at the trade
date and the average cost to the Plan.
Participant loans receivable are valued at amortized cost, which
approximates fair value.
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position 99-3, Accounting for and Reporting on Certain
Defined Contribution Plan Investments and Other Disclosure Matters (SOP 99-3).
SOP 99-3 simplifies the disclosure for certain investments. The Plan adopted
SOP 99-3 during the Plan year ending December 31, 1999. Accordingly,
information previously required to be disclosed about participant-directed
fund investment programs is not presented in the Plan's 1999 financial
statements. The Plan's 1998 financial statements have been reformatted to
conform with the 1999 presentation.
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ANADARKO EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Description of the Plan
The Plan was adopted by the Company's Board of Directors and approved by
its sole stockholder on August 27, 1986. The Plan has been subsequently
restated and amended. An amendment was executed May 13, 1999 which related to
administrative changes. Effective October 1, 1999, the trustee and
custodian of the Plan was changed from Bankers Trust Company and Hewitt
Associates LLC, respectively to Fidelity Retirement Services Company
(Fidelity). The participant balances were transferred and distributed
into various funds offered by Fidelity based on participant's elections.
The financial statements and accompanying notes relate to the Plan as in
effect on December 31, 1999.
The purpose of the Plan is to encourage and assist employees in
accumulating retirement savings, to provide a means for employees to have
an ownership interest in common stock of the Company (Company Stock) and
to encourage employees to remain in the employ of the Company, its
subsidiaries and affiliates. The Plan has been adopted exclusively to
provide benefits for employees participating in the Plan (Members) and
their beneficiaries, and no part of the corpus or income of the trust
fund (Trust) established pursuant to the Plan to hold contributions of
Members and the Company may be used for any purpose other than to provide
such benefits and defray reasonable expenses of administering the Plan.
The Plan is a defined contribution plan that is qualified under Section
401 of the Internal Revenue Code of 1986, as amended (Code). See Note 6.
All regular employees of the Company are eligible to participate in the
Plan upon employ-ment. Participation is voluntary. Directors and
officers who are also employees of the Company may participate on the
same basis as all other employees. Members may contribute to the Plan up
to 12% of their compensation, which includes base salary or wages, as
well as overtime and incentive bonuses (excluding override payments,
front-end bonuses and other special payments). The Company will match
100% of a Member's contributions up to a maximum of 6% of such Member's
compensation. Subject to provisions of the Plan and applicable
provisions of the Code and Treasury Regulations, an Eligible Employee may
make a Qualified Rollover Contribution to the Plan.
Contributions by a Member are always the Member's property and not
subject to vesting. A Member has a 100% vested right to Employer
matching contributions after three years of service or upon death,
retirement, disability or a change of control of the Company. Subject to
certain restrictions, Members may elect to have amounts distributed from
the Plan to them prior to termination of employment through withdrawals
or loans from the Plan. Contributions to the Plan are subject to certain
limitations under the Code. Generally, employee contributions are
withheld on the 25th of the month and sent to the Trustee by the first of
the following month.
The Employer contribution account of an employee who terminates
employment prior to the time that he or she is vested will be forfeited
by the employee. For 1999, employee forfeitures were $51,000.
Forfeitures do not affect net assets of the Plan but merely reduce future
Employer contributions.
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ANADARKO EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Description of the Plan (Continued)
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.
3. Investment Programs
Employer Contributions The Employer contribution accounts of Members
are initially invested in Company Stock.
Investment Options for Tax-Deferred, After-Tax and Rollover Contributions
Each Member may designate the manner in which the amounts allocated to
their tax-deferred savings account, their after-tax savings account and
their rollover account shall be invested. In addition to Company Stock,
the Plan currently offers a money market and five mutual funds as
investment options for Members.
A Member may designate one of such options for all of the contributions
to their tax-deferred savings account, their after-tax savings account
and their rollover account or a Member may designate a percentage of such
contributions to be invested pursuant to each option. Invested funds of
Members, including Employer contributions, can be transferred between
funds at the election of the Member, subject to certain restrictions as
defined in the Plan.
Member Loans Receivable The amount of a Member's loan may not be more
than the lesser of (1) 50% of the Member's vested account balance, or (2)
$50,000 less the highest outstanding loan balance in the previous 12
months. Loan terms range from six months to five years. The loans are
secured by the balance in the Member's account and bear interest at a
rate fixed for the life of the loan. The interest rate is determined to
be the prime interest rate plus 1% as reported in the Wall Street Journal
on the first business day of the quarter preceding the date the loan was
requested. Interest rates for current outstanding loans range from 6% to
10%. Principal and interest are paid ratably through monthly or semi-
monthly payroll deductions.
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ANADARKO EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Investments
The following table sets forth investments as of December 31, 1999 and
1998, respectively. Invested funds of all Members, including employer
contributions, are participant directed, subject to vesting and certain
other restrictions as defined by the Plan. Investments that represent 5%
or more of the Plan's net assets are separately identified.
December 31,
thousands except number of shares 1999 1998
Anadarko Petroleum Corporation common stock -
2,966,105 and 2,953,831 shares, respectively $101,218 $ 91,199
Fidelity Blue Chip Mutual Fund -
169,598 and 0 units, respectively 10,195 ---
Scudder Growth and Income Mutual Fund -
0 and 322,939 units, respectively --- 8,497
George Putnam Mutual Fund -
0 and 493,269 units, respectively --- 8,899
Spartan US Equity Index Mutual Fund -
181,902 and 0 units, respectively 9,475 ---
Money market investments 16,803 13,541
Other 22,728 12,921
$160,419 $135,057
The net realized gain on investments for the year ended December 31, 1999
was computed as follows:
thousands Total
Total proceeds $73,926
Total costs 69,049
Net realized gain $ 4,877
The following table sets forth the net unrealized appreciation in fair
value of investments by type for the year ended December 31, 1999.
thousands Total
Anadarko Petroleum Corporation - common stock $ 7,081
Mutual Funds 6,098
Net unrealized appreciation $13,179
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ANADARKO EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
5. Related-Party Transactions
Certain Plan investments are in mutual funds managed by Fidelity.
Fidelity is the trustee of the Plan and, therefore, these transactions
qualify as party-in interest.
6. Federal Income Taxes
The Company has received a favorable determination letter from the
Internal Revenue Service that (i) the Plan as amended, executed May 13,
1999, met the requirements of section 401(a) of the Code and the Trust
established thereunder is exempt from federal income tax under section
501(a) of the Code and (ii) the provisions of the Plan as amended,
executed May 13, 1999, regarding tax-deferred contributions constituted a
qualified cash or deferred arrangement within the meaning of section
401(k) of the Code.
The Company is entitled to deduct for federal income tax purposes the
amount of tax-deferred contributions and Employer matching contributions
made to the Plan. In general, neither such contributions to the Plan nor
the income of the Trust earned thereon and earned on Members' after-tax
contributions to the Plan will be taxable to Members as income prior to
the time such Members receive a distribution from the Plan. A Member's
after-tax contributions to the Plan are not deductible from their taxable
income. A Member's tax-deferred contributions are excluded from their
taxable income for the year contributions are made, except for any
amounts which exceed limitations under the Code.
Certain tax consequences apply upon withdrawal and distribution of
amounts in a Member's accounts, therefore a Member should seek tax advice
prior to requesting a withdrawal or distribution.
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ANADARKO EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
December 31 1999 1998
thousands
Net assets available for benefits per
the financial statements $160,430 $136,554
Amounts allocated to withdrawing
participants (342) (1,796)
Net assets available for benefits per
the Form 5500 $160,088 $134,758
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
Year Ended
thousands December 31, 1999
Benefits paid to participants per
the financial statements $9,671
Add: Amounts allocated to withdrawing
participants at December 31, 1999 342
Less: Amounts allocated to withdrawing
participants at December 31, 1998 (1,796)
Benefits paid to participants per
the Form 5500 $8,217
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for payment
prior to December 31 but not yet paid as of that date.
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INDEPENDENT AUDITORS' REPORT
The Administrative Committee
Anadarko Employee Savings Plan:
We have audited the accompanying statements of net assets available
for benefits of the Anadarko Employee Savings Plan (the Plan), as of
December 31, 1999 and 1998 and the related statement of changes in
net assets available for benefits for the year ended December 31,
1999. These financial statements 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 generally accepted
auditing standards. 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 as of December 31, 1999 and 1998 and the changes
in net assets available for benefits for the year ended December 31,
1999, in conformity with generally accepted accounting principles.
Our audits were made 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 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,
as amended. 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.
[KPMG LLP]
Houston, Texas
June 22, 2000
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Schedule I
ANADARKO EMPLOYEE SAVINGS PLAN
Schedule of Assets Held for Investment Purposes
December 31, 1999
Shares/Par Fair
Description Value Cost Value
thousands except number of shares
Common Stock
Anadarko Petroleum Corporation* 2,966,105 $ 94,138 $101,218
Mutual Funds
Fidelity Blue Chip* 169,598 8,614 10,195
Fidelity Puritan* 394,678 7,324 7,511
Franklin Small Cap Growth 82,787 2,590 3,653
Janus Worldwide 95,968 5,013 7,335
Spartan US Equity Index* 181,902 8,363 9,475
31,904 38,169
Money Market* 16,802,545 16,803 16,803
Member Loans* (interest rates
range from 6% to 10%) --- 4,229 4,229
$147,074 $160,419
*Party-in-interest
See accompanying Independent Auditors' Report.
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