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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
(Mark One)
[X] Annual Report pursuant to Section 15(d) of the Securities Exchange Act
of 1934
[No Fee Required]
For the Fiscal Year ended December 31, 2000
Or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Act
of 1934
[No Fee Required]
For the transition period from _____________ to ________________
Commission File No. 1-13726
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below
CHESAPEAKE ENERGY CORPORATION SAVINGS AND INCENTIVE STOCK
BONUS PLAN
6100 NORTH WESTERN AVENUE
OKLAHOMA CITY, OK 73118
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office
CHESAPEAKE ENERGY CORPORATION
6100 NORTH WESTERN AVENUE
OKLAHOMA CITY, OK 73118
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CHESAPEAKE ENERGY
CORPORATION SAVINGS AND
INCENTIVE STOCK BONUS PLAN
REPORT ON AUDIT OF FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
INDEX
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Page
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits
As of December 31, 2000 and 1999 2
Statements of Changes in Net Assets Available for
Benefits for the Years Ended
December 31, 2000 and 1999 3
Notes to Financial Statements 4
Supplemental Schedule:
Schedule of Assets Held for Investment Purposes at
End of Year, Form 5500, Schedule H, Line 4i,
December 31, 2000 8
Schedule of Reportable Transactions, Form 5500,
Schedule H, Line 4j, for the Year Ended
December 31, 2000 9
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and the Members of the Oversight Committee of the
Chesapeake Energy Corporation Savings and Incentive Stock Bonus Plan
In our opinion the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Chesapeake Energy Corporation Savings and Incentive Stock Bonus Plan (the
"Plan") at December 31, 2000 and 1999, and the changes in net assets available
for benefits for the years then ended, 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 financial 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 schedules of Assets Held
For Investment Purposes and Reportable Transactions are presented for the
purpose of additional analysis and are not a required part of these basic
financial statements but are 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 ("ERISA"). These
supplemental schedules are the responsibility of the Plan's management. These
supplemental schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
July 1, 2001
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
December 31,
-------------------------
2000 1999
----------- -----------
ASSETS
Investments (Note 3) $23,481,297 $ 8,143,689
Contributions receivable:
Employer 51,460 -
Participants 50,393 -
Cash 10,746 154,011
----------- -----------
Total assets $23,593,896 $ 8,297,700
=========== ===========
LIABILITIES
Accrued liabilities $ -- $ 1,086
----------- -----------
Net assets available for benefits $23,593,896 $ 8,296,614
=========== ===========
The accompanying notes are an integral part of these financial statements.
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
DECEMBER 31,
-----------------------------
2000 1999
------------- -------------
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 73,753 $ 100,094
Income on participants' loans 16,744 15,668
Net appreciation in fair value of investments 12,510,887 1,933,141
------------- -------------
Total investment income 12,601,384 2,048,903
------------- -------------
Contributions:
Employer 1,383,109 1,162,678
Participants 1,866,900 1,626,821
------------- -------------
Total contributions 3,250,009 2,789,499
------------- -------------
Total additions 15,851,393 4,838,402
------------- -------------
Deductions from net assets attributed to:
Benefits paid to participants 478,499 1,396,360
Administrative expenses 75,612 52,968
------------- -------------
Total deductions 554,111 1,449,328
------------- -------------
Net increase 15,297,282 3,389,074
Net assets at beginning of year 8,296,614 4,907,540
------------- -------------
Net assets at end of year $ 23,593,896 $ 8,296,614
------------- -------------
The accompanying notes are an integral part of these financial statements.
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
FORM 5500, SCHEDULE H, LINE 4i
AT DECEMBER 31, 2000
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1. DESCRIPTION OF THE PLAN
The following is a brief summary of the various provisions of the
Chesapeake Energy Corporation Savings and Incentive Stock Bonus Plan
(the "Plan"). Participants should refer to the Plan agreement for a
complete description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan covering all
employees of Chesapeake Energy Corporation and its subsidiaries (the
"Company") who have completed six consecutive months of employment and
are age twenty-one or older. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
Approximately 524 employees were actively participating in the Plan as
of December 31, 2000.
CONTRIBUTIONS - Each year, participants may contribute up to 15 percent
of pre-tax annual compensation, as defined in the Plan. Participants
may also contribute amounts representing rollover distributions from
other qualified plans. The Company contributes 100 percent of the first
10 percent of base compensation that a participant contributes to the
Plan. Additional amounts may be contributed at the option of the
Company's board of directors. Contributions are subject to certain
limitations. The Company's matching contribution is used to purchase
shares of Chesapeake Energy Corporation Common Stock on the open
market.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contribution and allocations of the Company's
contribution and Plan earnings. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
VESTING - Participants are immediately vested in their contributions
plus actual earnings thereon. Vesting in the Company's matching portion
of their accounts plus actual earnings thereon is based on years of
credited service. A participant is 100 percent vested after seven years
of credited service.
PARTICIPANT NOTES RECEIVABLE - Participants may borrow from their fund
accounts a minimum of $1,000 up to a maximum equal to the lesser of
$50,000 or 50 percent of their vested account balance. Loan terms range
from 1-5 years or up to 10 years for the purchase of a primary
residence. The loans are collateralized by the balance in the
participant's account and bear interest at the Prime Interest Rate.
Principal and interest is paid ratably through semi-monthly payroll
deductions.
PAYMENT OF BENEFITS - Upon termination a participant may elect to
receive either a lump-sum amount equal to the value of the
participant's vested interest in his or her account, annual
installments, annuity payments or have the value rolled over to another
qualified plan or IRA.
AMOUNTS FORFEITED - Forfeited nonvested amounts are used to pay
administrative expenses of the Plan or to restore such amounts to
re-employed Participants. If there are any amounts forfeited remaining,
they will be allocated to other Participants during the last quarter of
the year in the same manner as other Company contributions. Forfeited
nonvested accounts totaled $219,028 and $227,002 at December 31, 2000
and 1999, respectively.
The accompanying notes are an integral part of these financial statements.
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
FORM 5500, SCHEDULE H, LINE 4i
AT DECEMBER 31, 2000
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared
under the accrual method of accounting.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits at the date of the
financial statements and the changes in net assets available for
benefits during the reporting period. Actual results could differ from
those estimates.
INVESTMENTS VALUATION AND INCOME RECOGNITION - The Plan's investments
are stated at fair value as measured by quoted market prices, except
for the guaranteed interest contract which is valued at contract value.
Shares of registered investment companies are valued at quoted market
prices which represent the net asset value of shares held by the Plan
at year-end. Participant loans receivable are valued at cost.
Purchases and sales of securities are recorded on a trade-date basis.
Investment income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
The Plan presents, in the statement of changes in net assets available
for benefits, the net appreciation (depreciation) in the fair value of
investments which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
INVESTMENT CONTRACT WITH INSURANCE COMPANY - In 1999, participants
could invest in a benefit-responsive contract with Mass Mutual. Mass
Mutual maintained the contributions in a pooled separate account. The
account was credited with earnings on the underlying investments and
charged for Plan withdrawals and administrative expenses. The contract
was included in the financial statements at contract value as reported
to the Plan by Mass Mutual. Contract value represented contributions
made under the contract, plus earnings, less participant withdrawals
and administrative expenses. Participants may ordinarily direct the
withdrawal or transfer of all or a portion of their investment at
contract value. In February, 2000, all assets of the Plan held by Mass
Mutual and Smith Barney were transferred to Fidelity Investments.
PAYMENT OF BENEFITS - Benefits are recorded when paid. Benefits related
to participants who elected to withdraw from the Plan prior to December
31, 2000, but received distributions subsequent to period end, totaled
approximately $73,000.
The accompanying notes are an integral part of these financial statements.
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
FORM 5500, SCHEDULE H, LINE 4i
AT DECEMBER 31, 2000
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
RISKS AND UNCERTAINTIES - Investment securities are exposed to various
risks, such as interest rate, market, and credit risk. Due to the level
of risk associated with certain investment securities, it is at least
reasonably possible that changes in value of investment securities will
occur in the near term and that such changes could materially affect
participant's account balances and the amounts reported in the
statement of net assets available for plan benefits and the statement
of changes in net assets available for plan benefits. For example, the
quoted market price of Chesapeake Energy Common Stock included in the
December 31, 2000 financial statements was $10.13 per share.
Subsequently, the quoted market price of the stock decreased to $6.80
per share as of July 1, 2001.
3. INVESTMENTS
The following investments were held by the Plan at December 31, 2000
and 1999:
DECEMBER 31,
------------------------------
2000 1999
------------- -------------
Guaranteed Interest Contract $ -- $ 627,547*
Core Equity Fund Separate Investment Account -- 1,860,947*
Small Cap Fund Separate Investment Account -- 387,615
Intermediate Bond Fund Separate Investment Account -- 830,671*
International Equity Fund Separate Investment Account -- 888,642*
Participant loans 329,077 196,389
Chesapeake Energy Corporation Common Stock 17,295,431* 3,351,878*
Fidelity Equity Inc. 154,533 --
Fidelity Growth Co. 326,367 --
Fidelity OTC Port 171,209 --
Fidelity Low Pr Stk 747,289 --
Fidelity Aggressive Growth 290,209 --
Fidelity Divers Intl 820,280 --
Fidelity Freedom Income 1,307 --
Fidelity Freedom 2000 21,449 --
Fidelity Freedom 2010 142,861 --
Fidelity Freedom 2020 125,177 --
Fidelity Freedom 2030 67,628 --
Fidelity Retire Mmkt 1,237,554* --
Spartan US Gg Index 1,559,308* --
Brokeragelink 146,413 --
Ofen Alger Small Cap RTM 28,693 --
Templeton Foreign A 16,512 --
------------- -------------
$ 23,481,297 $ 8,143,689
============= =============
* Investments which represent 5 percent or more of total net assets
available for benefits.
The accompanying notes are an integral part of these financial statements.
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
FORM 5500, SCHEDULE H, LINE 4i
DECEMBER 31, 2000
--------------------------------------------------------------------------------
3. INVESTMENTS, Continued
The Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
FOR THE YEAR ENDED
DECEMBER 31,
----------------------------
2000 1999
------------ ------------
Mutual funds $ (306,466) $ 216,000
Chesapeake Energy Corporation Common Stock 12,817,353 1,717,141
------------ ------------
$ 12,510,887 $ 1,933,141
------------ ------------
4. NONPARTICIPANT - DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed
investments is as follows:
DECEMBER 31,
----------------------------------
2000 1999
--------------- ---------------
Net assets - Chesapeake Energy
Corporation common stock $ 17,295,431 $ 3,351,878
=============== ===============
FOR THE YEAR ENDED
DECEMBER 31,
----------------------------------
2000 1999
--------------- ---------------
Changes in net assets:
Contributions $ 1,383,109 $ 1,162,678
Net appreciation 12,817,353 1,717,141
Benefits paid to participants (236,770) (269,000)
--------------- ---------------
$ 13,963,692 $ 2,610,819
=============== ===============
5. TAX STATUS
The Plan obtained its latest determination letter on April 22, 1997, in
which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the 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
tax counsel believe 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.
The accompanying notes are an integral part of these financial statements.
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
FORM 5500, SCHEDULE H, LINE 4i
DECEMBER 31, 2000
--------------------------------------------------------------------------------
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE
IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, COLLATERAL, CURRENT
LESSOR, OR SIMILAR PARTY PAR, OR MATURITY VALUE COST VALUE
--------------------------------- ----------------------------------- ----------- -----------
*Chesapeake Energy
Corporation Common Stock $ 4,271,490 $17,295,431
Fidelity Equity Inc. Mutual Funds -- 154,533
Fidelity Growth Co. Mutual Funds -- 326,367
Fidelity OTC Port Mutual Funds -- 171,209
Fidelity Low Pr Stk Mutual Funds -- 747,289
Fidelity Aggressive Growth Mutual Funds -- 290,209
Fidelity Divers Intl Mutual Funds -- 820,280
Fidelity Freedom Income Mutual Funds -- 1,307
Fidelity Freedom 2000 Mutual Funds -- 21,449
Fidelity Freedom 2010 Mutual Funds -- 142,861
Fidelity Freedom 2020 Mutual Funds -- 125,177
Fidelity Freedom 2030 Mutual Funds -- 67,628
Fidelity Retire Mmkt Mutual Funds -- 1,237,554
Spartan US Gg Index Mutual Funds -- 1,559,308
Brokeragelink Mutual Funds -- 146,413
Ofen Alger Small Cap RTM Mutual Funds -- 28,693
Templeton Foreign A Mutual Funds -- 16,512
Participant Loans Interest Rates Ranging
From 7.5% to 9.75% -- 329,077
----------- ------------
$ 4,271,490 $23,481,297
----------- ------------
The accompanying notes are an integral part of these financial statements.
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CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FORM 5500, SCHEDULE H, LINE 4j FOR THE YEAR ENDED
DECEMBER 31, 2000
--------------------------------------------------------------------------------
CURRENT
EXPENSE VALUE OF
IDENTITY INCURRED ASSETS ON NET
OF PARTY DESCRIPTION OF PURCHASE SELLING LEASE WITH COST OF TRANSACTION GAIN OR
INVOLVED ASSET PRICE PRICE RENTAL TRANSACTION ASSET DATE (LOSS)
------------ --------------- ------------ --------- -------- ------------- ---------- ------------ ---------
Fidelity Chesapeake
Investments Energy Common
Stock:
Purchases $ 1,830,124 $ -- $ -- $ -- $1,830,124 $ 1,830,124 $ --
Sales -- 745,802 -- -- 381,472 745,802 364,330
The accompanying notes are an integral part of these financial statements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustee has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHESAPEAKE ENERGY CORPORATION
SAVINGS AND INCENTIVE STOCK BONUS
PLAN
/s/ Mary Whitson
------------------------------------
Mary Whitson, Trustee
Date: July 13, 2001
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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23.1...................................................Consent of PriceWaterhouseCoopers LLP
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