FORM 11-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2005
OR
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-1204
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
(Full title of the Plan)
HESS CORPORATION
1185 AVENUE OF THE AMERICAS, NEW YORK, N. Y. 10036
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS
AND
STOCK BONUS PLAN
FINANCIAL STATEMENTS
2005
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
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December 31, |
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2005 |
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2004 |
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ASSETS |
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Investments, at fair value |
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Fidelity Funds |
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$ |
174,591,636 |
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$ |
141,746,553 |
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Hess Corporation common stock |
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133,677,157 |
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94,383,919 |
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Short-term investment funds |
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901,323 |
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684,160 |
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309,170,116 |
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236,814,632 |
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Loans receivable |
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7,319,386 |
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5,935,682 |
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Interest and dividends receivable |
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318,548 |
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342,802 |
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Employee contributions receivable |
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25,894 |
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Employer contributions receivable |
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1,279,035 |
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3,000 |
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Total assets available for benefits |
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$ |
318,112,979 |
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$ |
243,096,116 |
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See notes to
financial statements.
1
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
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Years Ended December 31, |
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2005 |
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2004 |
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Investment income |
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Net appreciation in fair value of investments |
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$ |
47,518,693 |
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$ |
45,933,071 |
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Distributions from Fidelity funds |
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9,825,685 |
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2,846,420 |
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Dividends |
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1,275,524 |
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1,470,382 |
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Interest |
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331,091 |
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292,864 |
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58,950,993 |
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50,542,737 |
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Employee contributions |
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19,491,777 |
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17,291,155 |
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Employer contributions |
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14,875,637 |
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12,511,063 |
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Rollovers from other plans |
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1,665,413 |
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1,216,841 |
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Administrative fees on employee loans |
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(36,403 |
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(41,549 |
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Transfers from other plans, net |
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29,819 |
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434,324 |
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94,977,236 |
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81,954,571 |
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Less withdrawals |
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19,960,373 |
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19,614,402 |
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Increase in assets |
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75,016,863 |
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62,340,169 |
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Total assets available for benefits at beginning of year |
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243,096,116 |
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180,755,947 |
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Total assets available for benefits at end of year |
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$ |
318,112,979 |
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$ |
243,096,116 |
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See notes to financial statements.
2
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2005 and 2004
SUMMARY OF ACCOUNTING POLICIES:
NOTE 1Name Change. On May 3, 2006, Amerada Hess Corporation changed its name to Hess
Corporation (the Company).
NOTE 2The significant accounting policies of the Amerada Hess Corporation Employees Savings
and Stock Bonus Plan (the Plan) are summarized below.
Valuation of Investments. The Plans investments are stated at fair value. Fidelity fund
values are determined based on net asset values. Hess Corporation common stock values are based
on the closing market prices on the New York Stock Exchange. Short-term investment values are
based on redemption values.
Loans Receivable. Participant loans are valued at their outstanding balances which
approximates fair value.
Interest and Dividend Income. Interest and dividend income is recorded to participant
accounts as earned.
Sale of Investments. Gains or losses on sales of Hess Corporation common stock are based on
actual cost. Gains or losses on sales of Fidelity funds are based on average cost.
Master Trust. The Amerada Hess Corporation Master Trust for Employees Savings Plans (the
Master Trust) was established to combine under one agreement the assets of the Plan and the
assets of the Amerada Hess Corporation Savings and Stock Bonus Plan for Retail Operations
Employees (the Retail Plan). The trustee maintains separate accounts for each participant to
allocate the assets and income of the Master Trust to each of the plans.
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. Actual results could differ from
those estimates.
DESCRIPTION OF PLAN:
The following description of the Plan is provided for general information only. For more
detailed information, participants should refer to the Summary Plan Description or contact their
local Human Resources Department or the Human Resources Service Center.
NOTE 3General. The Plan is a defined contribution plan covering eligible employees of Hess
Corporation and its subsidiaries. Employees are eligible to enroll in the plan upon hire. The Plan
is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
NOTE 4Contributions. At the election of each participating employee, pre-tax amounts
contributed under the Plan (from 1% to 25% of compensation) are invested by Fidelity Management
Trust Company, as Trustee and Custodian of the Plan, in one or more of seventeen Fidelity funds
with varying investment objectives or in the Hess Corporation Common Stock Fund (see Note 5 below).
Compensation taken into account under the Plan was limited by law to $210,000 in 2005 and to
$205,000 in 2004. In 2006 the limit will be $220,000. Before-tax contributions were limited by law
to $14,000 in 2005 and $13,000 in 2004. The limit for 2006 will be $15,000.
Employees who attained age 50 by December 31, were eligible to make a separate before-tax
catch-up contribution of $4,000 during 2005 and $3,000 during 2004. Catch-up contributions are
not eligible for matching company contributions and can be made in addition to regular
contributions. In 2006 catch-up contributions up to $5,000 will be allowed for employees who attain
age 50 by the end of the year.
3
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS(Continued)
For the Years Ended December 31, 2005 and 2004
The Company matches the contributions of participants up to 6% of eligible compensation while
the participants are contributing to the plan. Employer contributions are not made after
participants contributions reach the legal limits ($14,000 and $13,000 in 2005 and 2004,
respectively). Employees may direct 50% of the employers matching contributions to any of the
Plans investment funds. However, those employees age 55 and older may direct 100% of the employer
contributions to any of the Plans investment funds.
NOTE 5Participant Accounts. Each participants account is credited with the participants
contributions and allocations of the Companys contributions and Plan earnings. Contributions are
invested in the Plans funds based on the allocation percentages designated by the participant in
increments of 1% of the amount contributed. A participant may change investment designations for
future contributions or reallocate existing investments to different funds on a daily basis.
The Trustee does not receive compensation from the Plan. Such compensation and other
administrative costs are paid by the Company, except for administrative fees on employee loans,
which are charged to participants accounts with outstanding loans.
The following funds are the investment choices for amounts contributed:
Fidelity Retirement Money Market Portfolio
Fidelity U.S. Bond Index Fund
Fidelity Asset Manager
Fidelity U.S. Equity Index Commingled Pool
Fidelity Growth & Income Portfolio
Fidelity Overseas Fund
Fidelity Aggressive Growth Fund
Fidelity Freedom Funds (New funds effective May 2004) *
Fidelity Low-Priced Stock Fund (Closed to new participants as of July 30, 2004)
Hess Corporation Common Stock Fund
*Nine separate Life Cycle funds based on various retirement years.
Descriptions and information concerning investment objectives and risk on the above funds are
included in the Summary Plan Description or in brochures that were mailed to eligible participants.
Approximately 1% of the Hess Corporation Common Stock Fund is held in short-term investment funds
to facilitate daily transactions.
4
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS(Continued)
For the Years Ended December 31, 2005 and 2004
NOTE 6Vesting. Interest in the Plan attributable to a participants contributions
shall at all times be vested. Interest in the Plan attributable to the employers contributions
vest immediately.
NOTE 7Participant Loans. Participants may borrow up to 50% of their account balance,
including their Company matching account, with a minimum of $500 up to a maximum of $50,000.
Participants may have two concurrent loans. The total of the loans cannot exceed the lesser of
$50,000 or 50% of the participants account balance. The participants account balance serves as
collateral for the loans. Loans are amortized in level payments over a period of not more than five
years, or not more than 30 years if borrowed for the purpose of acquiring a principal residence,
and are repaid with interest at 1% above the prime rate determined at the time the loan is made.
Loan origination fees of $35.00 and annual maintenance fees of $15.00 are currently charged to Plan
accounts of participants who borrow from the Plan.
NOTE 8Rollovers from Other Plans. Employees may deposit an eligible rollover distribution
made by a qualified plan of another employer. They may also rollover a distribution from an
individual retirement account whose assets were derived solely from the rollover from a qualified
plan of another employer. Rollovers are accepted in cash only and are invested according to the
participants current fund election for contributions. An employee who is not contributing to the
Plan must elect investment options at the time of the rollover. The current market values of
amounts rolled over to the Plan can be withdrawn in whole or in part at any time.
NOTE 9Payment of Benefits. Upon a total withdrawal or distribution, an employees
investments in the Fidelity funds are paid in cash. The employees investments in the Hess
Corporation Common Stock Fund are distributed either in whole shares of stock of Hess Corporation
(plus the cash equivalent of any fractional shares) or in cash, depending upon the employees
election.
Voluntary complete withdrawals from before-tax contribution accounts are permitted only after
attainment of age 591/2, except that withdrawals of before-tax accounts are permitted in the case of
hardship. Generally only employee after-tax contributions and employer contributions made prior to
January 1, 2002 are eligible for withdrawal by active employees under age 591/2. Terminated employees
may withdraw their entire balance at any time.
Partial withdrawals are distributed in cash on a pro rata basis as to the employees after-tax
contributions in each of the Fidelity funds and the Hess Corporation Common Stock Fund.
Participants who attain age 591/2 also may withdraw from their before-tax contribution accounts.
These withdrawals also are distributed in cash on a pro rata basis as to the employees before-tax
contributions in each fund.
Employees may elect direct rollovers of the taxable portion of their distributions to an
individual retirement account, individual retirement annuity or a qualified plan of another
employer. Eligible distributions that are not rolled over are subject to federal income tax
withholding at 20% and may be subject to an additional 10% tax.
5
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS(Continued)
For the Years Ended December 31, 2005 and 2004
INVESTMENTS:
NOTE 10The following table presents investments that represent 5 percent or more of the
Plans assets:
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December 31, |
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2005 |
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2004 |
Hess Corporation common stock, 3,162,210(*) and
3,437,142(*) shares, respectively |
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$ |
133,677,157 |
** |
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$ |
94,383,919 |
** |
Fidelity Growth & Income Portfolio, 1,382,157 and 1,104,665
shares, respectively |
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47,546,215 |
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42,209,260 |
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Fidelity Asset Manager, 1,030,975 and 914,272 shares,
respectively |
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16,547,148 |
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14,820,342 |
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Fidelity U.S. Equity Index Commingled Pool, 457,590 and
423,655 shares, respectively |
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17,955,842 |
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15,853,186 |
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Fidelity Retirement Money Market Portfolio, 24,387,496 and
20,338,493 shares, respectively |
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24,387,496 |
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20,338,493 |
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Fidelity Low- Priced Stock Fund, 497,072 and 379,970 shares,
respectively |
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20,300,406 |
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15,293,791 |
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* |
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On May 31, 2006, Hess Corporation common stock was split on a three-for-one basis. The number
of shares reflected are after the split. |
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Includes nonparticipant-directed investments. |
NOTE 11During 2005 and 2004, the value of the Plans investments (including gains and losses
on investments bought and sold, as well as held during the year) appreciated (depreciated) as
follows:
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Years Ended December 31, |
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2005 |
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2004 |
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Hess Corporation common stock |
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$ |
48,906,589 |
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$ |
37,601,637 |
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Fidelity funds |
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(1,387,896 |
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8,331,434 |
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Net appreciation in fair value of investments |
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$ |
47,518,693 |
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$ |
45,933,071 |
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6
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS(Continued)
For the Years Ended December 31, 2005 and 2004
NONPARTICIPANT-DIRECTED INVESTMENTS:
NOTE 12Information about the assets and the components of the changes in assets relating to
the nonparticipant-directed investments (amounts contributed by the employer in the Hess
Corporation Common Stock Fund) is as follows:
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December 31, |
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2005 |
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2004 |
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Assets: |
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Hess Corporation common stock |
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$ |
56,432,079 |
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$ |
35,233,800 |
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Short-term investment funds |
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380,645 |
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255,370 |
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Interest and dividends receivable |
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136,351 |
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127,969 |
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Employer contributions receivable |
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9,070 |
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1,500 |
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$ |
56,958,145 |
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$ |
35,618,639 |
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Years Ended December 31, |
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2005 |
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2004 |
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Changes in Assets: |
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Net appreciation in fair value of assets |
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$ |
18,870,239 |
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$ |
14,036,804 |
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Employer contributions |
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5,554,867 |
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5,093,341 |
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Dividend income |
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532,580 |
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693,338 |
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Interest income on participant loans |
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45,155 |
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49,667 |
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Participant loan withdrawals |
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(650,336 |
) |
Participant loan repayments |
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336,499 |
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343,948 |
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Administrative fees on employee loans |
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(3,079 |
) |
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(6,871 |
) |
Transfers from (to) other plans, net |
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5,339 |
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(6,160 |
) |
Transfers to participant-directed investments |
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(1,596,485 |
) |
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(6,020,639 |
) |
Withdrawals |
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(2,405,609 |
) |
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(2,700,989 |
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Increase in assets |
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$ |
21,339,506 |
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$ |
10,832,103 |
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7
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS(Continued)
For the Years Ended December 31, 2005 and 2004
OTHER ITEMS:
NOTE 13Plan Termination. Although it has not expressed any intention 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.
NOTE 14Tax Status. The Plan has received a determination letter from the Internal Revenue
Service dated September 16, 2003, stating that the Plan is qualified under Section 401(a) of the
Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation.
Subsequent to this determination by the Internal Revenue Service, the Plan was amended. Once
qualified, the Plan is required to operate in conformity with the Code to maintain its
qualification. The plan administrator believes the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan, as amended, is
qualified and the related trust is tax exempt.
NOTE 15Transfers to and from Other Plans. During 2005 and 2004 certain employee account
balances were transferred from or to the Retail Plan and the HOVENSA Employees Savings Plan due to
job changes and job transfers.
NOTE 16Class Action Complaint. On October 27, 2003, a class action complaint was filed in
the United States District Court for the District of New Jersey against Hess Corporation (Plan
Sponsor) and members of the Employee Benefit Plans Committee of the Plan Sponsor, as administrator
of the Plan, alleging breach of fiduciary duties under ERISA by the defendants that resulted in
losses to participants in the Plan relating to the value of the Plan Sponsors Common Stock in the
Plan since February 9, 2001.
On October 31, 2005, an Agreement of Settlement received court approval. The defendants
agreed to (a) a cash settlement to be paid by the Company and (b) a structural change in the Plan
which allows participants to direct the investment of their Company Matching Contribution Account
in the same manner and among the same investment alternatives as are available for the investment
of employee contributions. At December 31, 2005, the Plan
recorded as employer contributions receivable its portion of the net
settlement in the amount of $1,260,894. The net settlement was distributed to the Plan on May 4,
2006 and was equally distributed to the affected participant accounts on May 5, 2006. The
structural change in the Plan is scheduled for October 2006.
8
AMERADA HESS CORPORATION
EMPLOYEES SAVINGS AND STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS(Continued)
For the Years Ended December 31, 2005 and 2004
INVESTMENTS IN MASTER TRUST:
NOTE 17The Master Trust covers the Plan and the Retail Plan. At December 31, 2005 and 2004,
the Plans interest in the assets of the Master Trust was 97.5%. The changes in the assets of the
Master Trust are based on the combined changes in the assets of the Plan and the Retail Plan.
The following table represents the fair value of investments held in the Master Trust:
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December 31, |
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2005 |
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2004 |
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Master Trust investments: |
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Investments, at fair value |
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Fidelity Funds |
|
$ |
178,522,150 |
|
|
$ |
145,463,761 |
|
Hess Corporation common stock |
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|
137,341,367 |
|
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|
96,828,546 |
|
Short-term investment funds |
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|
926,022 |
|
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|
701,861 |
|
Loans receivable |
|
|
7,543,892 |
|
|
|
6,106,094 |
|
Interest and dividends receivable |
|
|
327,280 |
|
|
|
351,681 |
|
Employee contributions receivable |
|
|
36,373 |
|
|
|
|
|
Employer contributions receivable |
|
|
1,629,526 |
|
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|
3,000 |
|
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|
|
|
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Total assets available for benefits |
|
$ |
326,326,610 |
|
|
$ |
249,454,943 |
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|
The changes in the assets of the Master Trust are as follows:
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|
Years Ended December 31, |
|
|
|
2005 |
|
|
2004 |
|
Investment income |
|
$ |
11,642,413 |
|
|
$ |
4,720,200 |
|
Net appreciation in fair value of investments |
|
|
48,815,467 |
|
|
|
47,030,072 |
|
Employee contributions |
|
|
19,997,976 |
|
|
|
17,759,364 |
|
Employer contributions |
|
|
15,543,065 |
|
|
|
12,815,828 |
|
Rollovers from other plans |
|
|
1,683,305 |
|
|
|
1,216,841 |
|
Administrative fees on employee loans |
|
|
(40,308 |
) |
|
|
(46,281 |
) |
Transfers from other plans, net |
|
|
47,396 |
|
|
|
276,482 |
|
Withdrawals |
|
|
(20,817,647 |
) |
|
|
(20,756,386 |
) |
|
|
|
|
|
|
|
Net increase |
|
|
76,871,667 |
|
|
|
63,016,120 |
|
Total assets available for benefits at beginning of year |
|
|
249,454,943 |
|
|
|
186,438,823 |
|
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|
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|
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|
Total assets available for benefits at end of year |
|
$ |
326,326,610 |
|
|
$ |
249,454,943 |
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9
Report of Independent Registered Public Accounting Firm
HESS CORPORATION EMPLOYEE BENEFIT
PLANS COMMITTEE AND PARTICIPANTS IN THE
AMERADA HESS CORPORATION EMPLOYEES SAVINGS
AND STOCK BONUS PLAN:
We have audited the accompanying statement of assets available for benefits of the Amerada Hess
Corporation Employees Savings and Stock Bonus Plan as of December 31, 2005 and 2004, and the
related statement of changes in assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plans 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. We
were not engaged to perform an audit of the Plans internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the plans internal control over financial reporting.
Accordingly, we express no such opinion. An audit also 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.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the assets available for benefits of the Plan at December 31, 2005 and 2004, and the
changes in its assets available for benefits for the years then ended, in conformity with U.S.
generally accepted accounting principles.
New York, New York
/s/ Ernst
& Young LLP
June 26, 2006
10
TABLE OF CONTENTS
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Hess
Corporation Employee Benefit Plans Committee has duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
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AMERADA HESS CORPORATION
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EMPLOYEES SAVINGS AND STOCK
BONUS PLAN |
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/s/ K. B. Wilcox |
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By: K. B. Wilcox |
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Vice President and Member of the |
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Hess Corporation |
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Employee Benefit Plans Committee |
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June 29, 2006