-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, IwKIszhOf7PQLNIjNwT4z/ezEzAOO4g88fKI6NcBGrJmIvJpR/Y3rvlZV7Xf//P5 o95GjVoLW4HPCudlE6psfw== 0000078214-95-000023.txt : 199506300000078214-95-000023.hdr.sgml : 19950630 ACCESSION NUMBER: 0000078214-95-000023 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950629 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHILLIPS PETROLEUM CO CENTRAL INDEX KEY: 0000078214 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 730400345 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-00720 FILM NUMBER: 95550444 BUSINESS ADDRESS: STREET 1: PHILLIPS BUILDING STREET 2: 800 PLAZA OFFICE BUILDING CITY: BARTLESVILLE STATE: OK ZIP: 74004 BUSINESS PHONE: 9186616600 10-K405/A 1 FORM 10-K/A Amendment No. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1994 ---------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to --------------- ---------------- Commission file number 1-720 ------------------------------------------- Phillips Petroleum Company (Exact name of registrant as specified in its charter) Delaware 73-0400345 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Phillips Building, Bartlesville, Oklahoma 74004 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 918-661-6600 - ----------------------------------------------------------------- Filing Additional Exhibits Item 14 - Exhibits - ------------------ The registrant is filing with this Amendment No. 1 Annual Reports on Form 11-K for the Thrift Plan of Phillips Petroleum Company, the Long-Term Stock Savings Plan of Phillips Petroleum Company and the Retirement Savings Plan of Phillips Petroleum Company. 1 PHILLIPS PETROLEUM COMPANY INDEX TO EXHIBITS Exhibit Number Description - ------- ----------- 3(I) Restated Certificate of Incorporation, as filed with the State of Delaware July 17, 1989 (incorporated by reference to Exhibit 4(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1989). (ii) Bylaws of Phillips Petroleum Company, as amended effective February 13, 1995.* 4(a) Indenture dated as of September 15, 1990, between Phillips Petroleum Company and Bank of America Illinois (formerly Continental Bank, National Association), relating to the 9 1/2% Notes due 1997 and the 9 3/8% Notes due 2011 (incorporated by reference to Exhibit 4(c) to Annual Report on Form 10-K for the year ended December 31, 1990). (b) Indenture dated as of September 15, 1990, as supplemented by Supplemental Indenture No. 1 dated May 23, 1991, between Phillips Petroleum Company and Bank of America Illinois (formerly Continental Bank, National Association), relating to the 9.18% Notes due September 15, 2021, the 9% Notes due 2001, the 8.86% Notes due May 15, 2022, the 8.49% Notes due January 1, 2023, the 7.92% Notes due April 15, 2023, the 7.20% Notes due November 1, 2023 and the 6.65% Notes due March 1, 2003 (incorporated by reference to Exhibit 4(d) to Annual Report on Form 10-K for the year ended December 31, 1991). (c) Preferred Share Purchase Rights as described in the Rights Agreement dated as of July 10, 1989, between Phillips Petroleum Company and Chemical Bank (formerly Manufacturers Hanover Trust Company) (incorporated by reference to Exhibit 1 to Current Report on Form 8-K dated July 10, 1989). (d) Amendment dated May 16, 1990, to the Rights Agreement dated July 10, 1989, between Phillips Petroleum Company and Chemical Bank (formerly Manufacturers Hanover Trust Company) (incorporated by reference to Exhibit 1 to Current Report on Form 8-K dated May 16, 1990). The company incurred during 1994 certain long-term debt not registered pursuant to the Securities Exchange Act of 1934. No instrument with respect to such debt is being filed since the total amount of the securities authorized under any such instrument 2 PHILLIPS PETROLEUM COMPANY INDEX TO EXHIBITS (Continued) Exhibit Number Description - ------- ----------- did not exceed 10 percent of the total assets of the company on a consolidated basis. The company hereby agrees to furnish to the Securities and Exchange Commission upon its request a copy of such instrument defining the rights of the holders of such debt. 10(a) Agreement dated December 23, 1984, among Mesa Partners and related entities and Phillips Petroleum Company and the schedules, annexes and exhibit thereto (incorporated by reference to Exhibit 10(a) to Annual Report on Form 10-K for the year ended December 31, 1989). (b) Letter Agreement dated December 23, 1984, among Mesa Partners and related entities and Phillips Petroleum Company (incorporated by reference to Exhibit 10(b) to Annual Report on Form 10-K for the year ended December 31, 1989). (c) Deferred Compensation Plan for Non-Employee Directors of Phillips Petroleum Company (incorporated by reference to Exhibit 10(d) to Annual Report on Form 10-K for the year ended December 31, 1990). (d) 1986 Stock Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10(d) to Annual Report on Form 10-K for the year ended December 31, 1992). (e) 1990 Stock Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10(f) to Annual Report on Form 10-K for the year ended December 31, 1989). (f) Annual Incentive Compensation Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10(f) to Annual Report on Form 10-K for the year ended December 31, 1992). (g) Incentive Compensation Plan of Phillips Petroleum Company.* (h) Principal Corporate Officers Supplemental Retirement Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10(h) to Annual Report on Form 10-K for the year ended December 31, 1989). 3 PHILLIPS PETROLEUM COMPANY INDEX TO EXHIBITS (Continued) Exhibit Number Description - ------- ----------- 10(i) Phillips Petroleum Company Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10(i) to Annual Report on Form 10-K for year ended December 31, 1993). (j) Key Employee Deferred Compensation Plan of Phillips Petroleum Company.* (k) Non-Employee Director Retirement Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10(k) to Annual Report on Form 10-K for the year ended December 31, 1992). (l) Omnibus Securities Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10 to Quarterly Report on Form 10-Q for the quarter ended June 30, 1993). 12 Computation of Ratio of Earnings to Fixed Charges.* 21 List of Subsidiaries of Phillips Petroleum Company.* 23 Consent of Independent Auditors.* 27 Financial Data Schedule.* 99(a) Form 11-K, Annual Report, of the Thrift Plan of Phillips Petroleum Company for the fiscal year ended December 31, 1994. (b) Form 11-K, Annual Report, of the Long-Term Stock Savings Plan of Phillips Petroleum Company for the fiscal year ended December 31, 1994. (c) Form 11-K, Annual Report, of the Retirement Savings Plan of Phillips Petroleum Company for the fiscal year ended December 31, 1994. *Filed with the original Annual Report on Form 10-K for year ended December 31, 1994. Copies of the exhibits listed in this Index to Exhibits are available upon request for a fee of $3.00 per document. Such request should be addressed to: Secretary Phillips Petroleum Company 1234 Adams Building Bartlesville, OK 74004 4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. PHILLIPS PETROLEUM COMPANY /s/ L. F. Francis ---------------------------------- L. F. Francis Controller and General Tax Officer June 27, 1995 5 EX-99 2 Exhibit 99(a) FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the year ended December 31, 1994 ------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to ----------- --------- Commission file number 33-50134 -------------------------------- THRIFT PLAN OF PHILLIPS PETROLEUM COMPANY (Full title of the Plan) PHILLIPS PETROLEUM COMPANY (Name of issuer of securities) Bartlesville, Oklahoma 74004 (Address of principal executive office) (Zip code) FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements -------------------- Financial statements of the Thrift Plan of Phillips Petroleum Company, filed as a part of this annual report, are listed in the accompanying index. (b) Exhibits -------- Exhibit 1 Consent of Ernst & Young LLP SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Thrift Plan Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. THRIFT PLAN OF PHILLIPS PETROLEUM COMPANY /s/ L. F. Francis --------------------------------- L. F. Francis Member Thrift Plan Committee June 27, 1995 1 - ----------------------------------------------------------------- Index To Financial Statements Thrift Plan Of Phillips And Schedules Petroleum Company Page Report of Independent Auditors .............................. 4 Financial Statements Statements of Net Assets Available for Benefits at December 31, 1994 and 1993 Total Plan ............................................. 5 Fund A ................................................. 7 Combined Funds B and C ................................. 9 Fund D--Deposit Administration Account ................. 11 Fund D--Deferred Settlement Account .................... 13 Fund E ................................................. 15 Fund F ................................................. 17 Loan Fund .............................................. 19 Temporary Investment Fund .............................. 21 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1994, 1993 and 1992 Total Plan ............................................. 6 Fund A ................................................. 8 Combined Funds B and C ................................. 10 Fund D--Deposit Administration Account ................. 12 Fund D--Deferred Settlement Account .................... 14 Fund E ................................................. 16 Temporary Investment Fund............................... 22 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1994 and 1993 Fund F ................................................. 18 Loan Fund .............................................. 20 Notes to Financial Statements ............................. 23 2 - ----------------------------------------------------------------- Index To Financial Statements Thrift Plan Of Phillips And Schedules Petroleum Company Page Supplemental Schedules Schedule of Assets Held for Investment Purposes at December 31, 1994 .................................... 30 Schedule of Reportable Transactions for the Year Ended December 31, 1994 ............................ 32 3 - ----------------------------------------------------------------- Report Of Independent Auditors The Thrift Plan Committee Thrift Plan of Phillips Petroleum Company We have audited the financial statements of the Thrift Plan of Phillips Petroleum Company (Plan) listed in the accompanying index to financial statements and schedules. These financial statements are the responsibility of the Thrift Plan Committee (Committee). 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 the Committee, 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 listed in the accompanying index to financial statements and schedules present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1994 and 1993, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1994, 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 accompanying supplemental schedules of assets held for investment purposes as of December 31, 1994, and reportable transactions for the year ended December 31, 1994, are presented for the purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1994 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1994 basic financial statements taken as a whole. /s/ ERNST & YOUNG LLP ----------------- ERNST & YOUNG LLP Tulsa, Oklahoma June 27, 1995 4 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company Thousands of Dollars ------------------------ At December 31 1994 1993 ------------------------ Assets Investments Phillips Petroleum Company common stock $ 676,075 634,567 Insurance contracts 332,814 403,121 BT Pyramid Government Securities Cash Fund 18,369 19,106 BT Pyramid Large Capitalization Equity Index Fund 51,486 37,590 Wells Fargo Government/Corporate Bond Index Fund E 70,712 90,558 BT Pyramid Discretionary Cash Fund 59,748 19,665 Loans to Plan participants 17,837 14,157 - ----------------------------------------------------------------- 1,227,041 1,218,764 Cash - 1 Contributions Receivable 578 629 Employee Deposits Receivable 182 238 Loan Repayments Receivable 49 33 Interest Receivable 1,589 105 - ----------------------------------------------------------------- Total Assets 1,229,439 1,219,770 - ----------------------------------------------------------------- Liabilities Securities Purchased 1,493 1,786 Other Liabilities 3 14 - ----------------------------------------------------------------- Total Liabilities 1,496 1,800 - ----------------------------------------------------------------- Net Assets Available for Benefits $1,227,943 1,217,970 ================================================================= See Notes to Financial Statements. 5 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company Thousands of Dollars ------------------------------------ Years Ended December 31 1994 1993 1992 ------------------------------------ Additions Contributions and Deposits Company contributions Matching $ 5,854 5,986 5,952 Before-tax deposits 17,313 16,518 15,388 Employee deposits 16,429 17,913 17,533 - ----------------------------------------------------------------- 39,596 40,417 38,873 - ----------------------------------------------------------------- Investment Income Dividends 24,213 26,091 30,231 Interest Participant loans 919 - - Other 33,492 35,642 40,991 Net appreciation 82,085 109,944 34,307 - ----------------------------------------------------------------- 140,709 171,677 105,529 - ----------------------------------------------------------------- Total Additions 180,305 212,094 144,402 - ----------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Cash 123,967 96,790 127,974 Phillips Petroleum Company common stock 45,868 36,256 59,735 Forfeitures 2 9 6 Administrative Expense 452 425 - Interest Expense 43 23 - Transfer to Other Plans - (34) - - ----------------------------------------------------------------- Total Deductions 170,332 133,469 187,715 - ----------------------------------------------------------------- Net Increase (Decrease) 9,973 78,625 (43,313) Net Assets Available for Benefits Beginning of Year 1,217,970 1,139,345 1,182,658 - ----------------------------------------------------------------- End of Year $1,227,943 1,217,970 1,139,345 ================================================================= See Notes to Financial Statements. 6 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND A Thousands of Dollars ------------------------ At December 31 1994 1993 ------------------------ Assets Investments Wells Fargo Government/Corporate Bond Index Fund E $70,712 90,558 BT Pyramid Government Securities Cash Fund - 22 - ----------------------------------------------------------------- 70,712 90,580 Due from Temporary Investment Fund 123 140 Cash - 1 - ----------------------------------------------------------------- Total Assets 70,835 90,721 - ----------------------------------------------------------------- Liabilities Other Liabilities 1 - - ----------------------------------------------------------------- Net Assets Available for Benefits $70,834 90,721 ================================================================= Number of Units 6,939,191 8,552,717 Unit Value $10.2079 10.6073 - ----------------------------------------------------------------- See Notes to Financial Statements. 7 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company FUND A Thousands of Dollars --------------------------------- Years Ended December 31 1994 1993 1992 --------------------------------- Additions Investment Income Interest $ 2 300 5,239 Net appreciation (depreciation) (3,127) 7,894 (986) - ----------------------------------------------------------------- (3,125) 8,194 4,253 Allocation of Deposits and Earnings from Temporary Investment Fund 1,333 1,347 887 - ----------------------------------------------------------------- Total Additions (1,792) 9,541 5,140 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 9,561 12,745 16,214 Administrative Expense 124 92 - - ----------------------------------------------------------------- Total Deductions 9,685 12,837 16,214 - ----------------------------------------------------------------- Interfund Transfers (8,410) 17,681 10,903 - ----------------------------------------------------------------- Net Increase (Decrease) (19,887) 14,385 (171) Net Assets Available for Benefits Beginning of Year 90,721 76,336 76,507 - ----------------------------------------------------------------- End of Year $70,834 90,721 76,336 ================================================================= See Notes to Financial Statements. 8 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company COMBINED FUNDS B AND C Thousands of Dollars ------------------------ At December 31 1994 1993 ------------------------ Assets Investments Phillips Petroleum Company common stock $676,075 634,567 BT Pyramid Government Securities Cash Fund 15,019 15,989 - ----------------------------------------------------------------- 691,094 650,556 Due from Temporary Investment Fund --Fund B 2,591 2,655 Contributions Receivable--Fund C 487 507 Interest Receivable 60 42 - ----------------------------------------------------------------- Total Assets 694,232 653,760 - ----------------------------------------------------------------- Liabilities Securities Purchased 1,493 1,786 Other Liabilities - 14 - ----------------------------------------------------------------- Total Liabilities 1,493 1,800 - ----------------------------------------------------------------- Net Assets Available for Benefits $692,739 651,960 ================================================================= Net Assets Available for Benefits Fund B $451,491 451,092 Fund C 241,248 200,868 - ----------------------------------------------------------------- $692,739 651,960 ================================================================= Number of Units Fund B 6,248,165 6,682,406 Fund C 3,338,624 3,489,916 - ----------------------------------------------------------------- 9,586,789 10,172,322 - ----------------------------------------------------------------- Unit Value $72.2598 64.0916 - ----------------------------------------------------------------- See Notes to Financial Statements. 9 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company COMBINED FUNDS B AND C Thousands of Dollars ---------------------------------- Years Ended December 31 1994 1993 1992 ---------------------------------- Additions Investment Income Dividends $ 24,213 26,091 30,231 Interest 434 396 347 Net appreciation 84,226 99,550 35,583 - ----------------------------------------------------------------- 108,873 126,037 66,161 Matching Company Contributions--Fund C 5,854 5,986 5,952 Allocation of Deposits and Earnings from Temporary Investment Fund--Fund B 25,932 26,322 26,105 - ----------------------------------------------------------------- Total Additions 140,659 158,345 98,218 - ----------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Cash--Fund B 29,130 28,438 35,046 Cash--Fund C 13,557 12,036 17,408 Phillips Petroleum Company common stock--Fund B 33,655 26,297 45,971 Phillips Petroleum Company common stock--Fund C 12,213 9,959 13,764 Forfeitures--Fund C 2 9 6 Administrative Expense 119 229 - Interest Expense 43 23 - - ----------------------------------------------------------------- Total Deductions 88,719 76,991 112,195 - ----------------------------------------------------------------- Interfund Transfers (11,161) (84,113) (12,882) - ----------------------------------------------------------------- Net Increase (Decrease) 40,779 (2,759) (26,859) Net Assets Available for Benefits Beginning of Year 651,960 654,719 681,578 - ----------------------------------------------------------------- End of Year $692,739 651,960 654,719 ================================================================= Net Assets Available for Benefits Fund B 451,491 451,092 454,731 Fund C 241,248 200,868 199,988 - ----------------------------------------------------------------- 692,739 651,960 654,719 ================================================================= See Notes to Financial Statements. 10 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND D--DEPOSIT ADMINISTRATION ACCOUNT Thousands of Dollars ---------------------- At December 31 1994 1993 ---------------------- Assets Investments Insurance contracts Travelers Insurance Company, Group Annuity Contract GR-15505 $158,442 178,356 The Prudential Insurance Company of America, Group Annuity Contract GA-5991 19,932 71,323 Continental Assurance Company, Group Annuity, Contract GP-12692 65,837 63,945 Group Annuity, Contract GP-12787 23,312 25,270 Provident National Assurance, Group Annuity, Contract GC-05048 64,447 62,994 BT Pyramid Government Securities Cash Fund 14 - - ----------------------------------------------------------------- 331,984 401,888 Interest Receivable 1,219 - - ----------------------------------------------------------------- Total Assets 333,203 401,888 - ----------------------------------------------------------------- Net Assets Available for Benefits $333,203 401,888 ================================================================= Number of Units (A) Unit Values (A) - ----------------------------------------------------------------- (A) See Note 5. See Notes to Financial Statements. 11 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company FUND D--DEPOSIT ADMINISTRATION ACCOUNT Thousands of Dollars ---------------------------------- Years Ended December 31 1994 1993 1992 ---------------------------------- Additions Investment Income Interest $ 30,956 34,444 34,726 Allocation of Deposits and Earnings from Temporary Investment Fund - 2,124 6,017 - ----------------------------------------------------------------- Total Additions 30,956 36,568 40,743 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 51,376 38,509 58,360 Administrative Expense 97 55 - - ----------------------------------------------------------------- Total Deductions 51,473 38,564 58,360 - ----------------------------------------------------------------- Interfund Transfers (48,168) (2,654) 19,265 - ----------------------------------------------------------------- Net Increase (Decrease) (68,685) (4,650) 1,648 Net Assets Available for Benefits Beginning of Year 401,888 406,538 404,890 - ----------------------------------------------------------------- End of Year $333,203 401,888 406,538 ================================================================= See Notes to Financial Statements. 12 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND D--DEFERRED SETTLEMENT ACCOUNT Thousands of Dollars ---------------------- At December 31 1994 1993 ---------------------- Assets Investments Insurance contract $844 1,233 - ----------------------------------------------------------------- Total Assets 844 1,233 - ----------------------------------------------------------------- Net Assets Available for Benefits $844 1,233 ================================================================= See Notes to Financial Statements. 13 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company FUND D--DEFERRED SETTLEMENT ACCOUNT Thousands of Dollars -------------------------------- Years Ended December 31 1994 1993 1992 -------------------------------- Additions Investment Income Interest $ 118 89 137 - ----------------------------------------------------------------- Total Additions 118 89 137 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 507 608 837 - ----------------------------------------------------------------- Total Deductions 507 608 837 - ----------------------------------------------------------------- Net Decrease (389) (519) (700) Net Assets Available for Benefits Beginning of Year 1,233 1,752 2,452 - ----------------------------------------------------------------- End of Year $ 844 1,233 1,752 ================================================================= See Notes to Financial Statements. 14 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND E Thousands of Dollars ---------------------- At December 31 1994 1993 ---------------------- Assets Investments BT Pyramid Large Capitalization Equity Index Fund $51,486 37,590 Due From Temporary Investment Fund 375 350 - ---------------------------------------------------------------- Total Assets 51,861 37,940 - ---------------------------------------------------------------- Net Assets Available for Benefits $51,861 37,940 ================================================================ Number of Units 46,125,102 34,189,510 Unit Value $1.1243 1.1097 - ---------------------------------------------------------------- See Notes to Financial Statements. 15 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company FUND E Thousands of Dollars --------------------------------- Years Ended December 31 1994 1993 1992 --------------------------------- Additions Investment Income Interest Debt securities of Phillips Petroleum Company $ - - 452 Other - - 2 Net appreciation (depreciation) 986 2,500 (290) - ----------------------------------------------------------------- 986 2,500 164 Allocation of Deposits and Earnings from Temporary Investment Fund 3,818 3,026 - - ----------------------------------------------------------------- Total Additions 4,804 5,526 164 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 3,928 1,950 109 Administrative Expense 73 42 - - ----------------------------------------------------------------- Total Deductions 4,001 1,992 109 - ----------------------------------------------------------------- Interfund Transfers 13,118 34,406 (17,286) - ----------------------------------------------------------------- Net Increase (Decrease) 13,921 37,940 (17,231) Net Assets Available for Benefits Beginning of Year 37,940 - 17,231 - ----------------------------------------------------------------- End of Year $51,861 37,940 - ================================================================= See Notes to Financial Statements. 16 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND F Thousands of Dollars ---------------------- At December 31 1994 1993 ---------------------- Assets Investments BT Pyramid Discretionary Cash Fund $59,748 19,665 Due from Temporary Investment Fund 278 350 Interest Receivable 297 56 - ----------------------------------------------------------------- Total Assets 60,323 20,071 - ----------------------------------------------------------------- Liabilities Other Liabilities 2 - - ----------------------------------------------------------------- Net Assets Available for Benefits $60,321 20,071 ================================================================= Number of Units 57,120,734 19,802,851 Unit Value $1.056 $1.0135 - ----------------------------------------------------------------- See Notes to Financial Statements. 17 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company FUND F Thousands of Dollars ---------------------- Year Ended December 31 1994 1993 ---------------------- Additions Investment Income Interest $ 1,867 228 Allocation of Deposits and Earnings from Temporary Investment Fund 2,773 1,682 - ----------------------------------------------------------------- Total Additions 4,640 1,910 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 15,426 2,491 Transfer from Other Plans - (34) Administrative Expense 39 7 - ----------------------------------------------------------------- Total Deductions 15,465 2,464 - ----------------------------------------------------------------- Interfund Transfers 51,075 20,625 - ----------------------------------------------------------------- Net Increase 40,250 20,071 Net Assets Available for Benefits Beginning of Year 20,071 - - ----------------------------------------------------------------- End of Year 60,321 $20,071 ================================================================= See Notes to Financial Statements. 18 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company LOAN FUND Thousands of Dollars ---------------------- At December 31 1994 1993 ---------------------- Assets Investments Loans to participants $17,837 14,157 Due from Temporary Investment Fund 304 - - ----------------------------------------------------------------- Total Assets 18,141 14,157 - ----------------------------------------------------------------- Net Assets Available for Benefits $18,141 14,157 ================================================================= See Notes to Financial Statements. 19 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company LOAN FUND Thousands of Dollars ---------------------- Year Ended December 31 1994 1993 ---------------------- Additions Interest--Participant Loans $ 919 - - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 482 13 Loan Repayments from Plan Participants 5,934 523 - ----------------------------------------------------------------- Total Deductions 6,416 536 - ----------------------------------------------------------------- Interfund Transfers 9,481 14,693 - ----------------------------------------------------------------- Net Increase 3,984 14,157 Net Assets Available for Benefits Beginning of Year 14,157 - - ----------------------------------------------------------------- End of Year $18,141 14,157 ================================================================= See Notes to Financial Statements. 20 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company TEMPORARY INVESTMENT FUND Thousands of Dollars ---------------------- At December 31 1994 1993 ---------------------- Assets Investments BT Pyramid Government Securities Cash Fund $3,336 3,095 Contributions Receivable 91 122 Employee Deposits Receivable 182 238 Loan Repayments Receivable 49 33 Interest Receivable 13 7 - ----------------------------------------------------------------- Total Assets 3,671 3,495 - ----------------------------------------------------------------- Liabilities Due to Fund A 123 140 Due to Fund B 2,591 2,655 Due to Fund E 375 350 Due to Fund F 278 350 Due to Loan Fund 304 - - ----------------------------------------------------------------- Total Liabilities 3,671 3,495 - ----------------------------------------------------------------- Net Assets Available for Benefits $ - - ================================================================= See Notes to Financial Statements. 21 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company TEMPORARY INVESTMENT FUND Thousands of Dollars ---------------------------------- Years Ended December 31 1994 1993 1992 ---------------------------------- Additions Contributions and Deposits Company contributions-- before-tax deposits $17,313 16,518 15,388 Employee deposits 16,429 17,913 17,533 Loan repayments from Plan participants 5,934 523 - - ----------------------------------------------------------------- 39,676 34,954 32,921 Investment Income Interest 115 185 88 - ----------------------------------------------------------------- Total Additions 39,791 35,139 33,009 - ----------------------------------------------------------------- Deductions Allocation of Deposits and Earnings 33,856 34,501 33,009 - ----------------------------------------------------------------- Interfund Transfers (5,935) (638) - Net Increase - - - Net Assets Available for Benefits Beginning of Year - - - - ----------------------------------------------------------------- End of Year $ - - - ================================================================= See Notes to Financial Statements. 22 - ----------------------------------------------------------------- Notes To Financial Statements Thrift Plan Of Phillips Petroleum Company Note 1--Plan Description The following description of the Thrift Plan of Phillips Petroleum Company (Plan) is subject to and qualified by the more complete information appearing in the Plan document. The Plan is a defined contribution plan available to certain employees of Phillips Petroleum Company and participating subsidiaries (Company). Generally, any regular employee on the direct dollar payroll of the Company is eligible to participate. Non-managerial retail outlet marketing employees are not eligible. Effective August 23, 1993, assets and liabilities associated with accounts from the Salary Reduction Thrift Plan for Employees of Incinatrol, Inc. were transferred to the Plan. The Company has a trust agreement with Bankers Trust Company, New York, New York (Trustee). Plan investments are held by the Trustee. Fund A is managed by the Trustee, with Wells Fargo Institutional Trust Company managing Fund A assets invested in the Wells Fargo Government/Corporate Bond Index Fund E. Participants may have up to 15 percent of their pay deposited in the Plan each month. The first 5 percent is designated as regular deposits with any excess being designated as supplemental deposits. Deposits may be further designated by a participant as before-tax or after-tax deposits. Before-tax deposits are made by the Company on behalf of a participant who has elected the before-tax feature of the Plan. Total deposit amounts and allocation of deposits between after-tax and before-tax accounts are subject to limitations imposed by the Internal Revenue Code. Participants may change their investment direction and deposit rate semiannually during designated enrollment periods. Employee deposits may be suspended in certain circumstances. The Company contributes an amount equal to 25 percent of an employee's regular deposits made to Fund B and 15 percent of regular deposits made to any other investment fund. Employee and before-tax deposits and loan repayments are first placed in the Temporary Investment Fund and invested in certain specified short-term securities for up to 45 days after receipt by the Trustee. Loan repayments and any earnings thereon are transferred to the Loan Fund and then allocated to Funds A, B, E or F based on a participant's regular deposits. Employee deposits and the earnings thereon are paid into Funds A, B, E or F as directed by the participant, and invested as follows: Fund A (commingled Wells Fargo Government/Corporate Bond Index Fund E managed by Wells Fargo Institutional Trust Company), Fund B (common stock of Phillips Petroleum Company), Fund E (commingled 23 BT Pyramid Large Capitalization Equity Index Fund managed by Bankers Trust Company) and Fund F (effective July 1, 1993, in the BT Pyramid Discretionary Cash Fund, a commingled money market fund managed by Bankers Trust Company). After June 30, 1993, Fund D (investment contracts which guarantee repayment of principal invested and a fixed rate of interest) no longer accepts deposits. Company matching contributions are invested in Fund C (common stock of Phillips Petroleum Company). The Loan Fund is used to record transactions resulting from loans made to active employees against their accounts. Except for the Temporary Investment Fund and the Loan Fund, the interest of participants in each fund is represented by units allocated to them. The Plan provides for monthly transfers among funds; however, plan participants may not direct transfers to Fund C, the Loan Fund, or the Temporary Investment Fund. Transfers to Fund D were permitted only in certain circumstances until June 15, 1993, but due to restrictions required by the insurance companies, transfers were not allowed out of Fund D after January 15, 1993. A participant is vested at all times with respect to his deposits. Generally, a participant is vested with respect to his interest in Company contributions (a) if he has made, or has had made on his behalf, regular deposits for 12 months; (b) upon retirement pursuant to a Company retirement plan; (c) upon death; (d) upon becoming totally and permanently disabled; (e) upon reaching age 65; (f) upon being laid off; or (g) upon completion of five years of vesting service. Generally a participant may, as of any valuation date, withdraw any portion of his vested interest in his after-tax account. A participant may not withdraw his interest in his before-tax account unless he is at least age 59 1/2, experiences a specified financial hardship, becomes totally and permanently disabled, or separates from service. Forfeitures arising from nonvested withdrawals are used to reduce future Company contributions. Forfeitures may be restored under certain circumstances if the participant later repays the amount withdrawn. Distributions occur upon separation from service, but may be deferred. For a participant who retires or becomes totally disabled, distribution will be deferred to a date not later than February of the year after the year age 70 1/2 is attained. If the participant dies, distribution to a surviving spouse beneficiary will be deferred to the second valuation date prior to the date on which the participant would have attained age 70 1/2. This deferral is revocable by the participant or the surviving spouse. Distributions to non-spouse beneficiaries may be deferred approximately five years. Distributions are based on the valuation of the participant's interest in the trust fund. Available forms of distribution are: 24 (a) from Funds A, D, E or F in cash (distributions from Fund F were not available until 1993); (b) from Funds B and C in whole shares of common stock and/or cash; (c) with respect to a participant who retires under a Company retirement plan or a beneficiary spouse of a participant in the event of an active employee participant's death, in the form of an irrevocable nontransferable monthly annuity purchased with a specified dollar amount of the participant's interest in the Plan; and (d) with respect to a participant who retired before July 1, 1992, under a Company retirement plan, monthly, quarterly or annual payments irrevocably elected from his interest in Fund D commencing at retirement with, at the participant's direction, a designated life interest beneficiary to receive any unpaid scheduled payments following the participant's death. A participant may elect a direct rollover of the taxable portion of most distributions to an Individual Retirement Account or another tax-qualified plan. The taxable portion of any such distribution that is not rolled over directly will be subject to 20 percent federal withholding. The Plan is administered by a Thrift Plan Committee, the members of which are appointed by the Board of Directors of Phillips Petroleum Company. The Plan Financial Administrator and Plan Benefits Administrator are the persons who occupy, respectively, the Phillips Petroleum Company positions of Risk Management and Investment Manager, and Compensation and Benefits Manager. Members of the Committee and the Plan Administrators serve without compensation, but are reimbursed by the Company for necessary expenditures incurred in the discharge of their duties. The Plan pays all reasonable expenses necessary for the operation of the Plan unless such expenses are paid by the Company. The Company pays only the Trustee's recordkeeping and accounting fees and the class year contract administration fees of .15 percent of the funds invested in the insured contracts in Fund D. The Company intends to continue the Plan indefinitely, but reserves the right to amend or terminate it at any time. In the event of termination of the Plan, each participant will become fully vested. 25 Note 2--Investments All securities are valued at their quoted market price or, with respect to units of participation in commingled funds, redemption value. Insurance contracts are valued pursuant to their terms; the value represents fund deposits plus interest credited less distributions. Participant loans are valued at cost, which approximates fair value. Note 3--Contributions Receivable Contributions receivable at December 31 included the following: Thousands of Dollars -------------------- 1994 1993 -------------------- Receivable from the Company for matching contributions $487 507 Before-tax deposits 91 122 - ----------------------------------------------------------------- $578 629 ================================================================= Note 4--Funds B and C Because Funds B and C have the same investment objectives, hold assets in common (primarily Phillips Petroleum Company common stock) and maintain a common unit value, the financial statements of these two funds have been presented on a combined basis. Note 5--Class Year Accounts A breakdown of Fund D--Deposit Administration Account by Class Year at December 31 follows: Thousands of Dollars ------------ Net Assets Available Number Unit for Benefits of Units Values ------------------------------------ 1994 - ---- 1992 $ 23,398 11,695,202 2.0007 1991 130,768 52,038,039 2.5129 1990 159,031 49,817,416 3.1923 1989 20,006 6,284,080 3.1836 - ----------------------------------------------------------------- $333,203 ================================================================= 1993 - ---- 1992 $ 25,270 13,387,160 1.8876 1991 126,939 54,885,147 2.3128 1990 178,356 60,899,767 2.9287 1989 19,925 6,837,204 2.9141 1988 51,398 8,904,618 5.7721 - ----------------------------------------------------------------- $401,888 ================================================================= 26 Note 6--Loan Fund Since July 1, 1993, the Plan has allowed loans to active employees or parties in interest from their accounts. The minimum loan is $1,000, and generally the maximum is the lesser of $50,000 or half a participant's vested account. The loans may extend for up to 60 months (180 months for a home loan) with a rate of interest equal to the national prime lending rate, as determined on the regular valuation date prior to the date of a loan application. No more than one home loan and two regular loans may be outstanding at any given time. Loan payments and interest are repaid to the borrowing participant's accounts through the Loan Fund, which records the outstanding loans and related transactions. Repayments are allocated to Funds A, B, E or F based on a participant's regular deposits. For the periods ended December 31, the total of loans made by fund of origin, principal repaid, and aggregate outstanding loan balances were: Thousands of Dollars --------------------------------------------- Fund A B C D E F Total --------------------------------------------- Period ended December 31, 1994 - ----------------- Loans Outstanding at December 31, 1993 $14,157 Participant Loans $ 623 6,889 62 826 455 322 9,177 Principal Repaid 106 4,293 221 - 138 257 5,015 Distributions to Participants 482 - ----------------------------------------------------------------- Loans Outstanding at December 31, 1994 $17,837 ================================================================= Period ended December 31, 1993 - ----------------- Participant Loans $1,500 10,428 62 1,724 834 132 14,680 Principal Repaid 12 418 35 - 37 21 523 - ----------------------------------------------------------------- Loans Outstanding at December 31, 1993 $14,157 ================================================================= Note 7--Allocation of Deposits and Earnings from Temporary Investment Fund Allocation of deposits and earnings from the Temporary Investment Fund represents the allocation of employee deposits and before-tax contributions made to the Temporary Investment Fund and related earnings thereon. A breakdown of the allocation for each of the periods follows: 27 Thousands of Dollars -------------------------------------- Fund A Fund B Fund D Fund E Fund F -------------------------------------- December 31, 1994 - ----------------- Employee deposits $ 746 11,982 - 1,926 1,774 Before-tax contributions 584 13,932 - 1,841 956 Interest 3 18 - 51 43 - ----------------------------------------------------------------- $1,333 25,932 - 3,818 2,773 ================================================================= December 31, 1993 - ----------------- Employee deposits $ 769 12,957 1,388 1,645 1,149 Before-tax contributions 575 13,308 730 1,375 530 Interest 3 57 6 6 3 - ----------------------------------------------------------------- $1,347 26,322 2,124 3,026 1,682 ================================================================= December 31, 1992 - ----------------- Employee deposits $ 480 13,183 3,871 - - Before-tax contributions 405 12,853 2,130 - - Interest 2 69 16 - - - ----------------------------------------------------------------- $ 887 26,105 6,017 - - ================================================================= Note 8--Credit Facility Effective July 14, 1993, the Plan established a 364-day $50 million revolving credit facility with NationsBank of Texas, N.A., for the purpose of financing net Fund B and Fund C distributions, participant loans from the Plan, or transfer of participants' interests to other funds of the Plan. The interest rate may not exceed the Eurodollar interbank offered rate plus 0.25 percent. Effective June 17, 1994, this credit facility was reduced to $25 million. The Plan Trustee requested that the credit facility be renewed for this reduced amount for an additional year. On December 31, 1994, no portion of this credit facility was outstanding. Phillips Petroleum Company has made application to the Department of Labor to obtain certain exemptions from the Employee Retirement Income Security Act of 1974 and/or the Internal Revenue Code of 1986. If granted, these exemptions would permit the Company to make interest-free loans to the Plan, pursuant to the terms of a credit facility arrangement, and the repayment of such loans by the Plan to the Company. This arrangement would be used for the same purposes as the $25 million credit facility with NationsBank of Texas, N.A., which would be closed. Note 9--Transactions with Parties-in-Interest During 1994, 1993 and 1992, the Plan received $24,213,000, $26,079,000 and $30,231,000, respectively, in common stock dividends from the Company. Fees paid for legal, accounting, and other services rendered by parties-in-interest were based on customary and reasonable rates for such services. 28 Note 10--Tax Status The Internal Revenue Service (IRS) determined on September 27, 1991, that the Plan, as amended through December 5, 1990, is qualified under Section 401(a) of the Internal Revenue Code of 1986 and the Trust is exempt from federal income tax under Section 501(a). Subsequent amendments have been adopted, but are not expected to affect the qualified status of the Plan. A determination letter application was filed with the IRS in 1994, with an updated determination letter expected in 1995. The Committee is not aware of any activity that would affect the qualified status of the Plan. 29 - ----------------------------------------------------------------------------- Schedule Of Assets Held Thrift Plan Of Phillips For Investment Purposes Petroleum Company Item 27a EIN 73-0400345, Plan No. 002 At December 31, 1994 Description of investment Thousands of Dollars Identity of issue, including maturity date, --------------------- borrower, lessor, rate of interest, collateral, Historical Current or similar party par or maturity value Cost Value - -------------------- -------------------------------- ---------- --------- Phillips Petroleum Common stock, $1.25 par value, Company* 20,643,500 shares $316,895 676,075 - ----------------------------------------------------------------------------- Bankers Trust 51,291.51 units, BT Pyramid Company* Large Capitalization Equity Index Fund 50,499 51,486 18,369,320.87 units, BT Pyramid Government Securities Cash Fund 18,369 18,369 59,748,034.03 units, BT Pyramid Discretionary Cash Fund 59,748 59,748 - ----------------------------------------------------------------------------- 128,616 129,603 - ----------------------------------------------------------------------------- Wells Fargo 6,779,401.69 units, Wells Fargo Institutional Government/Corporate Bond Trust Company* Index Fund E 65,012 70,712 - ----------------------------------------------------------------------------- Thrift Plan of Loans to Plan participants at Phillips Petroleum 6% - 8 1/2% Company 17,837 17,837 - ----------------------------------------------------------------------------- Travelers Insurance Group Annuity Contract GR-15505, Company* deposit administration account 158,442 158,442 Group Annuity Contract GR-1966A, deferred settlement account 844 844 Prudential Insurance Group Annuity Contract GA-5991, Company of America* deposit administration account 19,932 19,932 30 - ----------------------------------------------------------------------------- Schedule Of Assets Held Thrift Plan Of Phillips For Investment Purposes Petroleum Company Item 27a EIN 73-0400345, Plan No. 002 At December 31, 1994 Description of investment Thousands of Dollars Identity of issue, including maturity date, --------------------- borrower, lessor, rate of interest, collateral, Historical Current or similar party par or maturity value Cost Value - -------------------- -------------------------------- ---------- --------- Continental Group Annuity Contract GP-12692, Assurance Company* deposit administration account 65,837 65,837 Group Annuity Contract GP-12787, deposit administration account 23,312 23,312 Provident National Group Annuity Contract Assurance* GC-027-05048, deposit administration account 64,447 64,447 - ----------------------------------------------------------------------------- 332,814 332,814 - ----------------------------------------------------------------------------- $861,174 1,227,041 ============================================================================= *Party-in-interest 31 - ------------------------------------------------------------------------------ Schedule of Reportable Transactions Thrift Plan of Phillips Item 27d Petroleum Company EIN 73-0400345, Plan 002 Year Ended December 31, 1994 Thousands of Dollars Total Total -------------------------------- number of number of Gain or Identity of party purchases sales Value (loss) as a involved and during the during the Value of of result of description of asset plan year plan year purchases* sales* transactions - -------------------- ---------- ---------- ---------- ------ ------------ Bankers Trust Company, BT Pyramid Government Securities Cash Fund 228 178 $124,049 124,785 - Bankers Trust Company, BT Pyramid Discretionary Cash Fund 42 34 53,717 13,634 - - ----------------------------------------------------------------------------- *This is also the current value at time of transaction. 32 Exhibit 1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8, File No. 33-50134) pertaining to the Thrift Plan of Phillips Petroleum Company and in the related Prospectus of our report dated June 27, 1995, with respect to the financial statements and schedules of the Thrift Plan of Phillips Petroleum Company included in this Annual Report (Form 11-K) for the year ended December 31, 1994. /s/ ERNST & YOUNG LLP ----------------- ERNST & YOUNG LLP Tulsa, Oklahoma June 27, 1995 EX-99 3 Exhibit 99(b) FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the year ended December 31, 1994 ------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to ----------- --------- Commission file number 33-50283 -------------------------------- LONG-TERM STOCK SAVINGS PLAN OF PHILLIPS PETROLEUM COMPANY (Full title of the Plan) PHILLIPS PETROLEUM COMPANY (Name of issuer of securities) Bartlesville, Oklahoma 74004 (Address of principal executive office) (Zip code) FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements -------------------- Financial statements of the Long-Term Stock Savings Plan of Phillips Petroleum Company, filed as part of this annual report, are listed in the accompanying index. (b) Exhibits -------- Exhibit 1 Consent of Ernst & Young LLP. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Long-Term Stock Savings Plan Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. LONG-TERM STOCK SAVINGS PLAN OF PHILLIPS PETROLEUM COMPANY /s/ D. R. Divelbiss ----------------------------- D. R. Divelbiss Member Long-Term Stock Savings Plan Committee June 27, 1995 1 - ----------------------------------------------------------------- Index To Financial Statements Long-Term Stock Savings Plan And Schedules Of Phillips Petroleum Company Page Report of Independent Auditors ............................. 3 Financial Statements Statements of Net Assets Available for Benefits at December 31, 1994 and 1993 Total Plan ........................................... 4 Fund EP .............................................. 6 Fund K ............................................... 8 Fund L ............................................... 10 Temporary Fund ....................................... 12 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1994, 1993 and 1992 Total Plan ........................................... 5 Fund EP .............................................. 7 Fund K ............................................... 9 Fund L ............................................... 11 Temporary Fund ....................................... 13 Notes to Financial Statements ............................ 14 Supplemental Schedules Schedule of Assets Held for Investment Purposes at December 31, 1994 ...................................... 18 Schedule of Reportable Transactions for the Year Ended December 31, 1994 ...................................... 19 2 - ----------------------------------------------------------------- Report Of Independent Auditors The Long-Term Stock Savings Plan Committee Long-Term Stock Savings Plan of Phillips Petroleum Company We have audited the financial statements of the Long-Term Stock Savings Plan of Phillips Petroleum Company (Plan) listed in the accompanying index to financial statements and schedules. These financial statements are the responsibility of the Long-Term Stock Savings Plan Committee (Committee). 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 the Committee, 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 listed in the accompanying index to financial statements and schedules present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1994 and 1993, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1994, 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 accompanying supplemental schedules of assets held for investment purposes as of December 31, 1994, and reportable transactions for the year ended December 31, 1994, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1994 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1994 basic financial statements taken as a whole. /s/ ERNST & YOUNG LLP ----------------- ERNST & YOUNG LLP Tulsa, Oklahoma June 27, 1995 3 - ----------------------------------------------------------------- Statement Of Net Assets Long-Term Stock Savings Plan Available For Benefits Of Phillips Petroleum Company Thousands of Dollars ------------------------ At December 31 1994 1993 ------------------------ Assets Investments Common stock $1,079,269 984,885 Commingled fund 4,751 7,073 - ----------------------------------------------------------------- 1,084,020 991,958 Company Contributions Receivable Funds for debt service 249 - Before-tax deposits 35 79 Interest Receivable 41 27 - ----------------------------------------------------------------- Total Assets 1,084,345 992,064 - ----------------------------------------------------------------- Liabilities Securities Acquisition Loans 502,250 527,850 Interest Payable 2,515 1,553 Stock Distributions Payable - 26 Securities Purchased 250 148 Administrative Expenses Payable 100 100 - ----------------------------------------------------------------- Total Liabilities 505,115 529,677 - ----------------------------------------------------------------- Net Assets Available for Benefits $ 579,230 462,387 ================================================================= See Notes to Financial Statements. 4 - ------------------------------------------------------------------- Statement Of Changes In Net Long-Term Stock Savings Plan Assets Available For Benefits Of Phillips Petroleum Company Thousands of Dollars ---------------------------------- Years Ended December 31 1994 1993 1992 ---------------------------------- Additions Company Contributions Funds for debt service $ 11,797 6,605 13,216 Basic allocation requirements 56 286 188 Before-tax deposits 5,988 6,449 6,501 - ------------------------------------------------------------------- 17,841 13,340 19,905 - ------------------------------------------------------------------- Investment Income Dividends 37,527 38,514 39,445 Interest 337 321 363 Net appreciation 126,928 134,935 40,582 - ------------------------------------------------------------------- 164,792 173,770 80,390 - ------------------------------------------------------------------- Other - - 20 - ------------------------------------------------------------------- Total Additions 182,633 187,110 100,315 - ------------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Common stock 41,698 31,869 32,598 Cash 27 20 29 - ------------------------------------------------------------------- 41,725 31,889 32,627 Interest Expense 23,965 19,496 24,015 Administrative Expense 100 100 100 - ------------------------------------------------------------------- Total Deductions 65,790 51,485 56,742 - ------------------------------------------------------------------- Net Increase 116,843 135,625 43,573 Net Assets Available for Benefits Beginning of Year 462,387 326,762 283,189 - ------------------------------------------------------------------- End of Year $579,230 462,387 326,762 =================================================================== See Notes to Financial Statements. 5 - ----------------------------------------------------------------- Statement Of Net Assets Long-Term Stock Savings Plan Available For Benefits Of Phillips Petroleum Company FUND EP Thousands of Dollars ------------------------ At December 31 1994 1993 ------------------------ Assets Investments Common stock $183,106 170,772 Commingled fund 12 10 - ----------------------------------------------------------------- 183,118 170,782 Interest Receivable 1 1 - ----------------------------------------------------------------- Total Assets 183,119 170,783 - ----------------------------------------------------------------- Liabilities Stock Distributions Payable - 18 Administrative Expenses Payable 100 100 - ----------------------------------------------------------------- Total Liabilities 100 118 - ----------------------------------------------------------------- Net Assets Available for Benefits $183,019 170,665 ================================================================= Number of Units 31,621,315 33,285,802 Unit Value $5.7878 5.1272 - ----------------------------------------------------------------- See Notes to Financial Statements. 6 - ------------------------------------------------------------------- Statement Of Changes In Net Long-Term Stock Savings Plan Assets Available For Benefits Of Phillips Petroleum Company FUND EP Thousands of Dollars ---------------------------------- Years Ended December 31 1994 1993 1992 ---------------------------------- Additions Investment Income Dividends $ 6,465 6,734 7,185 Interest 3 2 4 Net appreciation 22,230 24,082 7,800 - ------------------------------------------------------------------- 28,698 30,818 14,989 Other - - 20 - ------------------------------------------------------------------- Total Additions 28,698 30,818 15,009 - ------------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Common stock 16,234 15,407 19,100 Cash 10 16 14 - ------------------------------------------------------------------- 16,244 15,423 19,114 Administrative Expense 100 100 100 - ------------------------------------------------------------------- Total Deductions 16,344 15,523 19,214 - ------------------------------------------------------------------- Net Increase (Decrease) 12,354 15,295 (4,205) Net Assets Available for Benefits Beginning of Year 170,665 155,370 159,575 - ------------------------------------------------------------------- End of Year $183,019 170,665 155,370 =================================================================== See Notes to Financial Statements. 7 - ----------------------------------------------------------------- Statement Of Net Assets Long-Term Stock Savings Plan Available For Benefits Of Phillips Petroleum Company FUND K Thousands of Dollars ------------------------ At December 31 1994 1993 ------------------------ Assets Investments Common stock $40,260 31,758 Commingled fund 311 503 - ----------------------------------------------------------------- 40,571 32,261 Due from Temporary Fund 536 602 Interest Receivable 2 1 - ----------------------------------------------------------------- Total Assets 41,109 32,864 - ----------------------------------------------------------------- Liabilities Securities Purchased 250 148 Stock Distributions Payable - 1 - ----------------------------------------------------------------- Total Liabilities 250 149 - ----------------------------------------------------------------- Net Assets Available for Benefits $40,859 32,715 ================================================================= Number of Units 29,183,701 26,428,925 Unit Value $1.4000 1.2379 - ----------------------------------------------------------------- See Notes to Financial Statements. 8 - ------------------------------------------------------------------- Statement Of Changes In Net Long-Term Stock Savings Plan Assets Available For Benefits Of Phillips Petroleum Company FUND K Thousands of Dollars --------------------------------- Years Ended December 31 1994 1993 1992 --------------------------------- Additions Allocation of Deposits and Earnings from Temporary Fund $ 6,005 6,463 6,518 - ------------------------------------------------------------------- Investment Income Dividends 1,295 1,134 904 Interest 16 12 13 Net appreciation 4,280 3,463 830 - ------------------------------------------------------------------- 5,591 4,609 1,747 - ------------------------------------------------------------------- Total Additions 11,596 11,072 8,265 - ------------------------------------------------------------------- Deductions Distributions to (refunds from) Participants or Their Beneficiaries Common stock 3,451 2,278 1,883 Cash 1 (1) - - ------------------------------------------------------------------- Total Deductions 3,452 2,277 1,883 - ------------------------------------------------------------------- Net Increase 8,144 8,795 6,382 Net Assets Available for Benefits Beginning of Year 32,715 23,920 17,538 - ------------------------------------------------------------------- End of Year $40,859 32,715 23,920 =================================================================== See Notes to Financial Statements. 9 - ----------------------------------------------------------------- Statement Of Net Assets Long-Term Stock Savings Plan Available For Benefits Of Phillips Petroleum Company FUND L Thousands of Dollars ------------------------ At December 31 1994 1993 ------------------------ Assets Investments Common stock $855,903 782,355 Commingled fund 3,929 6,038 - ----------------------------------------------------------------- 859,832 788,393 Company Contributions Receivable Funds for debt service 249 - Interest Receivable 36 24 - ----------------------------------------------------------------- Total Assets* 860,117 788,417 - ----------------------------------------------------------------- Liabilities Securities Acquisition Loans 502,250 527,850 Interest Payable 2,515 1,553 Stock Distributions Payable - 7 - ----------------------------------------------------------------- Total Liabilities 504,765 529,410 - ----------------------------------------------------------------- Net Assets Available for Benefits $355,352 259,007 ================================================================= Number of Units 137,476,120 120,191,086 Unit Value** $1.8728 1.6583 - ----------------------------------------------------------------- See Notes to Financial Statements. *The amount of total assets that was not allocated to participants at December 31, 1994 and 1993 was $602,655 thousand and $589,098 thousand, respectively. **Unit value calculated on assets allocated to participants only. 10 - ------------------------------------------------------------------- Statement Of Changes In Net Long-Term Stock Savings Plan Assets Available For Benefits Of Phillips Petroleum Company FUND L Thousands of Dollars ---------------------------------- Years Ended December 31 1994 1993 1992 ---------------------------------- Additions Company Contributions Funds for debt service $ 11,797 6,605 13,216 Basic allocation requirements 56 286 188 - ------------------------------------------------------------------- 11,853 6,891 13,404 - ------------------------------------------------------------------- Investment Income Dividends 29,767 30,646 31,356 Interest 301 293 329 Net appreciation 100,418 107,390 31,952 - ------------------------------------------------------------------- 130,486 138,329 63,637 - ------------------------------------------------------------------- Total Additions 142,339 145,220 77,041 - ------------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Common stock 22,013 14,184 11,615 Cash 16 5 15 - ------------------------------------------------------------------- 22,029 14,189 11,630 Interest Expense 23,965 19,496 24,015 - ------------------------------------------------------------------- Total Deductions 45,994 33,685 35,645 - ------------------------------------------------------------------- Net Increase 96,345 111,535 41,396 Net Assets Available for Benefits Beginning of Year 259,007 147,472 106,076 - ------------------------------------------------------------------- End of Year $355,352 259,007 147,472 =================================================================== See Notes to Financial Statements. 11 - ----------------------------------------------------------------- Statement Of Net Assets Long-Term Stock Savings Plan Available For Benefits Of Phillips Petroleum Company TEMPORARY FUND Thousands of Dollars -------------------- At December 31 1994 1993 -------------------- Assets Investments Commingled fund $499 522 Company Contributions Receivable Before-tax deposits 35 79 Interest Receivable 2 1 - ----------------------------------------------------------------- Total Assets 536 602 Liabilities Due to Fund K 536 602 - ----------------------------------------------------------------- Net Assets Available for Benefits $ - - ================================================================= See Notes to Financial Statements. 12 - ------------------------------------------------------------------- Statement Of Changes In Net Long-Term Stock Savings Plan Assets Available For Benefits Of Phillips Petroleum Company TEMPORARY FUND Thousands of Dollars -------------------------------- Years Ended December 31 1994 1993 1992 -------------------------------- Additions Company Contributions Before-tax deposits $5,988 6,449 6,501 Investment Income Interest 17 14 17 - ------------------------------------------------------------------- Total Additions 6,005 6,463 6,518 - ------------------------------------------------------------------- Deductions Allocation of Deposits and Earnings to Fund K 6,005 6,463 6,518 - ------------------------------------------------------------------- Net Increase - - - Net Assets Available for Benefits Beginning of Year - - - - ------------------------------------------------------------------- End of Year $ - - - =================================================================== See Notes to Financial Statements. 13 - ----------------------------------------------------------------- Notes To Financial Statements Long-Term Stock Savings Plan Of Phillips Petroleum Company Note 1--Plan Description The following description of the Plan is subject to and qualified by the more complete information appearing in the Plan document. The Plan became effective July 1, 1988, and is a defined contribution plan available to certain employees of Phillips Petroleum Company and participating subsidiaries (Company). Generally, any regular employee on the direct dollar payroll of the Company is eligible to participate, except non-managerial retail marketing outlet employees. The Company has a trust agreement with Bankers Trust Company, 280 Park Avenue, New York, New York 10017 (Trustee). Plan investments are held by the Trustee in the Temporary Fund, Fund K, Fund L and Fund EP. Temporary Fund investments consist of specified short-term securities. Funds K, L and EP are invested primarily in common stock of Phillips Petroleum Company (Phillips Stock). Fund L consists of Phillips Stock purchased with the proceeds of the loans described in Note 2 or with Company contributions. The Phillips Stock will be allocated to Fund L accounts of eligible participants. The Plan provides for three types of stock allocations: semiannual basic allocations, dividend replacement allocations and supplemental allocations. A basic allocation is made as of June 30 and December 31 of each year. Prior to 1999, 716,846 shares of stock will be divided among or "allocated to" the Fund L accounts of eligible participants as of each June 30 and December 31. After 1998 and through the later of 2003 or the allocation date following the date the second loan is repaid, the number of shares to be allocated semiannually will be 477,876. A participant's semiannual basic allocation is based on the ratio of the participant's Fund K before-tax deposits to all eligible participants' before-tax deposits for the allocation period (both net of Fund K withdrawals during the period). If the Company does not elect to make a special contribution and if eligible dividends from participants' Fund L or Fund EP accounts are used to make loan payments, participants will receive a dividend replacement allocation. The Plan used $12.7 million, $11.8 million and $10.8 million in dividends from participants' Fund L and Fund EP accounts and allocated 399,586 shares, 400,290 shares and 434,518 shares in dividend replacement allocations in 1994, 1993 and 1992, respectively. A supplemental allocation will be made each year-end if all shares released for allocation, based on loan payment provisions, have not been allocated. 14 The Company makes contributions to the Plan which, when aggregated with the Plan's dividends from Funds L and EP and interest earnings from Fund L, equal the amount necessary to enable the Plan to make its regularly scheduled payments of principal and interest due on its loans. The Company may also elect to make dividend replacement contributions to the Plan, as an alternative to utilizing the dividends from shares in Fund EP or allocated shares in Fund L. Finally, the Company may make contributions to the Plan in the amount necessary to bring the number of shares of stock released for allocation up to the level required to complete the basic allocation. Eligible employees may elect to have their salaries reduced and before-tax deposits made by the Company on their behalf equal to one percent of pay. These deposits are held in the Temporary Fund up to 45 days, and then, with the earnings thereon, are transferred into the employee's Fund K account. The interest of participants in each fund is represented by units allocated to them. Assets of the Employee Stock Ownership Plan of Phillips Petroleum Company (ESOP) and the Payroll Stock Ownership Plan of Phillips Petroleum Company (PAYSOP), which were merged into the Plan on July 1, 1988, are held in Fund EP. Participants are always vested in their deposits and amounts credited to their accounts. Total withdrawals from Funds K, L and EP may be made upon the occurrence of specified events, including attainment of age 59 1/2 (after December 31, 1998, for Funds EP and L) or separation from service. Partial withdrawals are permitted in cases of specified financial hardship and certain other cases. For a participant who retires or becomes totally disabled, distribution will be deferred to a date not later than February of the year after the year age 70 1/2 is attained. If the participant dies, distribution to a surviving spouse beneficiary will be deferred to the second valuation date prior to the date on which the participant would have attained age 70 1/2. This deferral is revocable by the participant or the surviving spouse. Distributions to non-spouse beneficiaries may be deferred approximately five years. A participant may elect a direct rollover of the taxable portion of most distributions to an Individual Retirement Account or another tax-qualified plan. The taxable portion of any such distribution that is not rolled over directly will be subject to 20 percent federal withholding. The Plan is administered by the Long-Term Stock Savings Plan Committee, the members of which are appointed by the Board of Directors of Phillips Petroleum Company. Members of the Committee serve without compensation, but are reimbursed by the Company for necessary expenditures incurred in the discharge of their duties. Administrative expenses of the Plan will be paid 15 by the Trustee from assets of the Plan to the extent allowable by law, unless paid by the Company. In 1994, 1993 and 1992, the Trustee made cash payments of $100,000 for administrative expense to Phillips from Fund EP. Plan administrative expenses of approximately $402,000, $437,000 and $406,000 were paid by Phillips to the Trustee in 1994, 1993 and 1992, respectively. Note 2--Securities Acquisition Loans The Plan borrowed $250 million and $400 million (Loans) in 1988 and 1990, respectively, and purchased 14,336,918 and 14,159,292 shares of common stock from Phillips Petroleum Company (Phillips), respectively. The shares are held in a Fund L suspense account until allocated to eligible participants based on the provisions of the Plan. At December 31, 1994 and 1993, the market value of unallocated shares was $598 million and $583 million, respectively. The Loans are guaranteed by Phillips. They are being repaid through contributions made by the Company, dividends on unallocated and allocated shares and earnings on the short-term investment of contributions and dividends. Annual installments of $26 million and $25 million were paid on the 1988 borrowing in 1994 and 1993, respectively. The $400 million loan is a fifteen-year-term bank loan. Any participating bank in the syndicate of lenders may cease to participate on November 30, 2001, by giving not less than 180 days prior notice to the Plan and Phillips. Also, each bank participating in the loan has the optional right, if the current directors of Phillips or their approved successors cease to be a majority of the Board, and upon not less than 90 days' notice, to cease to participate in the loan. Under the above conditions, such banks' rights and obligations under the loan agreement must be purchased by Phillips if not transferred to another bank of Phillips' choice. Repayment of the loan is scheduled to begin in 1999 with a $30 million installment, increasing each year through the date of maturity. An early payment of $900 thousand was made on the loan in 1993. In 1994, the Plan signed an agreement amending the 15-year-term loan under which $397 million is outstanding. The amended term loan requires repayment in annual installments beginning in 1999 and has the same maturity as the original term loan agreement entered into in 1990, but provides a lower rate of interest. During 1994, the Plan signed a $131 million term loan agreement that was used to refinance the outstanding notes payable issued in 1988. The notes were redeemed on May 16, 1994. The new term loan requires repayment in annual installments through the year 1998, matching the maturities of the refinanced notes, but at a reduced cost. The outstanding balance was $105 million at December 31, 1994. 16 The Loans provide for variable interest rates. At December 31, 1994 and 1993, the rates were 5.35 percent and 2.91 percent, respectively, for the $250 million loan. The rates for the $400 million loan at December 31, 1994 and 1993, were 6.38 percent and 3.63 percent, respectively. Note 3--Investments Phillips Stock is valued at the New York Stock Exchange closing quoted market price. For commingled funds, cost and market value are the same. Note 4--Tax Status The Internal Revenue Service (IRS) determined on September 27, 1991, that the Plan, as amended through November 9, 1990, is qualified under Section 401(a) of the Internal Revenue Code of 1986 and the Trust is exempt from federal income tax under Section 501(a). Subsequent amendments have been adopted, but are not expected to affect the qualified status of the Plan. A determination letter application was filed with the IRS in 1994, with an updated IRS determination letter expected in 1995. The Committee is not aware of any activity that would affect the qualified status of the Plan. 17 - ------------------------------------------------------------------------------ Schedule Of Assets Held For Long-Term Stock Savings Plan Of Investment Purposes Phillips Petroleum Company Item 27a EIN 73-0400345, Plan 022 At December 31, 1994 Description of investment Thousands of Dollars Identity of issue, including maturity date, ---------------------- borrower, lessor, rate of interest, collateral, Historical Current or similar party par or maturity value Cost Value - ------------------ -------------------------------- ---------- --------- Phillips Petroleum 32,954,825 shares of common Company* stock, $1.25 par value $692,158 1,079,269 Bankers Trust 4,750,734 units of participation Company* in BT Pyramid Government Securities Cash Fund 4,751 4,751 - ------------------------------------------------------------------------------ $696,909 1,084,020 ============================================================================== *Party-in-interest 18 - ------------------------------------------------------------------------------ Schedule Of Reportable Transactions Long-Term Stock Savings Plan Of Item 27d Phillips Petroleum Company EIN 73-0400345, Plan 022 Year Ended December 31, 1994 Thousands of Dollars Total Total -------------------------------- number of number of Gain or Identity of party purchases sales Value (loss) as a involved and during the during the Value of of result of description of asset plan year plan year purchases* sales* transactions - -------------------- ---------- ---------- ---------- ------ ------------ Bankers Trust Company General Employee Benefit Trust, BT Pyramid Government Securities Cash Fund 194 301 $61,685 64,007 - - ------------------------------------------------------------------------------ *This is also the current value at time of transaction. 19 Exhibit 1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8, File No. 33-50283) pertaining to the Long- Term Stock Savings Plan of Phillips Petroleum Company and in the related Prospectus of our report dated June 27, 1995, with respect to the financial statements and schedules of the Long-Term Stock Savings Plan of Phillips Petroleum Company included in this Annual Report (Form 11-K) for the year ended December 31, 1994. /s/ ERNST & YOUNG LLP ----------------- ERNST & YOUNG LLP Tulsa, Oklahoma June 27, 1995 EX-99 4 Exhibit 99(c) FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the year ended December 31, 1994 ------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to ----------- --------- Commission file number 33-28669 --------------------------------- RETIREMENT SAVINGS PLAN OF PHILLIPS PETROLEUM COMPANY (Full title of the Plan) PHILLIPS PETROLEUM COMPANY (Name of issuer of securities) Bartlesville, Oklahoma 74004 (Address of principal executive office) (Zip code) FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements -------------------- Financial statements of the Retirement Savings Plan of Phillips Petroleum Company, filed as a part of this annual report, are listed in the accompanying index. (b) Exhibits -------- Exhibit 1 Consent of Ernst & Young LLP. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Retirement Savings Plan Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. RETIREMENT SAVINGS PLAN OF PHILLIPS PETROLEUM COMPANY /s/ L. F. Francis --------------------------------- L. F. Francis Member Retirement Savings Plan Committee June 27, 1995 1 - ----------------------------------------------------------------- Index To Financial Statements Retirement Savings Plan Of And Schedule Phillips Petroleum Company Page Report of Independent Auditors ............................. 3 Financial Statements Statement of Net Assets Available for Benefits at December 31, 1994 ................................... 4 Statement of Net Assets Available for Benefits at December 31, 1993 ................................... 5 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1994 ................... 6 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1993 ................... 7 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1992 ................... 8 Notes to Financial Statements ............................ 9 Supplemental Schedule Schedule of Assets Held for Investment Purposes at December 31, 1994 ...................................... 12 2 - ------------------------------------------------------------------ Report Of Independent Auditors The Retirement Savings Plan Committee Retirement Savings Plan of Phillips Petroleum Company We have audited the financial statements of the Retirement Savings Plan of Phillips Petroleum Company (Plan) listed in the accompanying index to financial statements and schedule. These financial statements are the responsibility of the Retirement Savings Plan Committee (Committee). 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 the Committee, 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 listed in the accompanying index to financial statements and schedule present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1994 and 1993, and the changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1994, 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 accompanying supplemental schedule of assets held for investment purposes as of December 31, 1994, is presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and is not a required part of the basic financial statements. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the 1994 financial statements and, in our opinion, is fairly stated in all material respects in relation to the 1994 basic financial statements taken as a whole. /s/ ERNST & YOUNG LLP ----------------- ERNST & YOUNG LLP Tulsa, Oklahoma June 27, 1995 3 - -------------------------------------------------------------------- Statement Of Net Assets Retirement Savings Plan Of Available For Benefits Phillips Petroleum Company At December 31, 1994 Fixed Temporary Investment Stock Investment Total Fund Fund Fund -------------------------------------------- Assets Investments Insurance contract $10,120,816 10,120,816 - - Common stock 592,185 - 592,185 - Money market fund 18,332 - 8,653 9,679 - -------------------------------------------------------------------- 10,731,333 10,120,816 600,838 9,679 Cash 201 - 101 100 Interest Receivable 66 - 38 28 Employee Deposits Receivable 10,123 - - 10,123 Employer Contributions Receivable 22,971 22,971 - - Interfund Receivable (Payable) - 19,272 658 (19,930) - -------------------------------------------------------------------- Total Assets 10,764,694 10,163,059 601,635 - Liabilities Cash Distributions Payable 85,861 85,861 - - - -------------------------------------------------------------------- Net Assets Available for Benefits $10,678,833 10,077,198 601,635 - ==================================================================== Number of Units 2,685,477 139,758 Unit Values $3.7525 4.3048 - -------------------------------------------------------------------- See Notes to Financial Statements. 4 - -------------------------------------------------------------------- Statement Of Net Assets Retirement Savings Plan Of Available For Benefits Phillips Petroleum Company At December 31, 1993 Fixed Temporary Investment Stock Investment Total Fund Fund Fund -------------------------------------------- Assets Investments Insurance contract $11,502,213 11,502,213 - - Common stock 538,994 - 538,994 - Money market fund 15,186 - 6,185 9,001 - -------------------------------------------------------------------- 12,056,393 11,502,213 545,179 9,001 Cash 201 - 100 101 Interest Receivable 32 - 15 17 Employee Deposits Receivable 9,229 - - 9,229 Employer Contributions Receivable 22,809 22,809 - - Interfund Receivable (Payable) - 17,467 881 (18,348) - -------------------------------------------------------------------- Total Assets 12,088,664 11,542,489 546,175 - Liabilities Cash Distributions Payable 202,891 202,891 - - - -------------------------------------------------------------------- Net Assets Available for Benefits $11,885,773 11,339,598 546,175 - ==================================================================== Number of Units 3,296,259 148,835 Unit Values $3.4401 3.6697 - -------------------------------------------------------------------- See Notes to Financial Statements. 5 - ---------------------------------------------------------------------- Statement Of Changes In Net Retirement Savings Plan Of Assets Available For Benefits Phillips Petroleum Company Year Ended December 31, 1994 Fixed Temporary Investment Stock Investment Total Fund Fund Fund -------------------------------------------- Additions Contributions and Deposits Participating Employer contributions $ 283,224 283,224 - - Employee deposits 118,472 - - 118,472 - ---------------------------------------------------------------------- 401,696 283,224 - 118,472 - ---------------------------------------------------------------------- Investment Income Interest 683,550 683,081 186 283 Dividends 20,727 - 20,727 - Net appreciation 70,999 - 70,999 - - ---------------------------------------------------------------------- 775,276 683,081 91,912 283 - ---------------------------------------------------------------------- Total Additions 1,176,972 966,305 91,912 118,755 - ---------------------------------------------------------------------- Deductions Cash Withdrawals and Distributions 2,380,787 2,380,787 - - Forfeitures 3,125 3,125 - - - ---------------------------------------------------------------------- Total Deductions 2,383,912 2,383,912 - - - ---------------------------------------------------------------------- Allocation of Deposits and Earnings - 113,788 4,967 (118,755) - ---------------------------------------------------------------------- Interfund Transfers - 41,419 (41,419) - ---------------------------------------------------------------------- Net Increase (Decrease) (1,206,940) (1,262,400) 55,460 - Net Assets Available for Benefits Beginning of Year 11,885,773 11,339,598 546,175 - - ---------------------------------------------------------------------- End of Year $10,678,833 10,077,198 601,635 - ====================================================================== See Notes to Financial Statements. 6 - ---------------------------------------------------------------------- Statement Of Changes In Net Retirement Savings Plan Of Assets Available For Benefits Phillips Petroleum Company Year Ended December 31, 1993 Fixed Temporary Investment Stock Investment Total Fund Fund Fund -------------------------------------------- Additions Contributions and Deposits Participating Employer contributions $ 529,518 529,518 - - Employee deposits 109,001 - - 109,001 - ---------------------------------------------------------------------- 638,519 529,518 - 109,001 - ---------------------------------------------------------------------- Investment Income Interest 814,891 814,493 211 187 Dividends 20,364 - 20,364 - Net appreciation 66,240 - 66,240 - - ---------------------------------------------------------------------- 901,495 814,493 86,815 187 - ---------------------------------------------------------------------- Total Additions 1,540,014 1,344,011 86,815 109,188 - ---------------------------------------------------------------------- Deductions Cash Withdrawals and Distributions 927,850 927,850 - - Forfeitures 5,600 5,600 - - - ---------------------------------------------------------------------- Total Deductions 933,450 933,450 - - - ---------------------------------------------------------------------- Allocation of Deposits and Earnings - 105,952 3,236 (109,188) - ---------------------------------------------------------------------- Net Increase 606,564 516,513 90,051 - Net Assets Available for Benefits Beginning of Year 11,279,209 10,823,085 456,124 - - ---------------------------------------------------------------------- End of Year $11,885,773 11,339,598 546,175 - ====================================================================== See Notes to Financial Statements. 7 - ---------------------------------------------------------------------- Statement Of Changes In Net Retirement Savings Plan Of Assets Available For Benefits Phillips Petroleum Company Year Ended December 31, 1992 Fixed Temporary Investment Stock Investment Total Fund Fund Fund -------------------------------------------- Additions Contributions and Deposits Participating Employer contributions $ 250,828 250,828 - - Employee deposits 110,645 - - 110,645 - ---------------------------------------------------------------------- 361,473 250,828 - 110,645 - ---------------------------------------------------------------------- Investment Income Interest 842,893 842,385 265 243 Dividends 19,609 - 19,609 - Net appreciation 18,935 - 18,935 - - ---------------------------------------------------------------------- 881,437 842,385 38,809 243 - ---------------------------------------------------------------------- Total Additions 1,242,910 1,093,213 38,809 110,888 - ---------------------------------------------------------------------- Deductions Cash Withdrawals and Distributions 402,225 402,225 - - Forfeitures 9,560 9,560 - - - ---------------------------------------------------------------------- Total Deductions 411,785 411,785 - - - ---------------------------------------------------------------------- Allocation of Deposits and Earnings - 107,125 3,763 (110,888) - ---------------------------------------------------------------------- Interfund Transfers - 5,773 (5,773) - - ---------------------------------------------------------------------- Net Increase 831,125 794,326 36,799 - Net Assets Available for Benefits Beginning of Year 10,448,084 10,028,759 419,325 - - ---------------------------------------------------------------------- End of Year $11,279,209 10,823,085 456,124 - ====================================================================== See Notes to Financial Statements. 8 - ----------------------------------------------------------------- Notes To Financial Statements Retirement Savings Plan Of Phillips Petroleum Company Note 1--Plan Description The following description of the Retirement Savings Plan of Phillips Petroleum Company (Plan) is subject to and qualified by the more complete information appearing in the Plan document. The Plan was known as the Retirement Savings Plan of Phillips Petroleum Company Subsidiaries until December 7, 1994. The Plan is a defined contribution plan sponsored by Phillips Petroleum Company (Company) for any subsidiary or division which the Company approves for participation in the Plan and which has adopted and become a party to the Plan for the current participation of their active employees (Participating Employer). For the three-year period ending December 31, 1994, Phillips Driscopipe, Inc. (with respect to hourly employees only) was the only Participating Employer. Other subsidiaries or divisions having present or former employees holding interests in the Plan are Catalyst Resources, Inc. (sold March 30, 1994), Drilling Specialties Company, Phillips Coal Company, and Phillips Uranium Corporation (now liquidated). Generally, an employee of a Participating Employer becomes a participant after completing a six-month period of service of 500 or more hours. Participation in the Plan by each eligible employee is mandatory. Although not required to do so, a participant may make deposits, in whole percentages, ranging from 1 to 10 percent of his regular monthly earnings. A participant may elect to change his deposit rate once each six months. The Participating Employer or the Company contributes an amount equal to 5 percent of a participant's regular monthly earnings. Deposits and contributions are placed in a Trust fund which is administered by WestStar Bank, Bartlesville, Oklahoma (Trustee). The Trust fund consists of the Stock Fund, the Fixed Investment Fund and the Temporary Investment Fund. Investments for each fund are as follows: Stock Fund (common stock of the Company); Fixed Investment Fund (an insurance contract with The Travelers Insurance Company under which Travelers guarantees repayment of the principal paid to it and a minimum effective rate of interest thereon) and Temporary Investment Fund (specified short-term securities). The interest of participants in each fund is represented by units allocated to them. Unit values reflected in the accompanying statements are based on aggregate fund values and aggregate units. 9 Participant deposits are placed first in the Temporary Investment Fund for about 30 days. Deposits and earnings thereon are then paid into the Stock Fund or the Fixed Investment Fund as directed by the participant. Participants may direct that their deposits be invested entirely in either the Stock Fund or Fixed Investment Fund or allocated between them in multiples of 10 percent. No investment directions may be made with respect to Participating Employer contributions, all of which are invested only in the Fixed Investment Fund. Investment directions may be changed once each year. The Plan allows limited transfers between the Stock Fund and the Fixed Investment Fund. A participant's interest in his own deposits is vested at all times. His interest in Participating Employer contributions becomes fully vested on the earliest of the following dates: (a) upon attainment of age 65 or upon his normal retirement; (b) upon completing five years of vesting service; (c) upon his death; (d) upon becoming totally disabled; (e) upon being laid off for lack of work; (f) upon termination or partial termination of the Plan or discontinuance of Participating Employer contributions; or (g) upon certain other events. Partial vesting takes place in one year increments, with complete vesting after five years of vesting service. A participant who has made deposits may withdraw any amount attributable to those deposits. Withdrawals of deposits may be made only once each six months. Suspensions of three and six months apply for partial and complete withdrawals, respectively. A participant's interest in the contributions of a Participating Employer becomes available for distribution upon specified events, including separation from service or retirement. Termination of employment will result in forfeiture of Participating Employer contributions if a participant's interest attributable to those Participating Employer contributions is not vested. A participant who retires may elect a special deferral to a date no later than the February valuation date following the year of attainment of age 70 1/2. Distributions from the Fixed Investment Fund are in cash while those from the Stock Fund are in whole shares of the Company's common stock plus cash for fractional shares unless the participant directs that the distribution be wholly or partially in cash. Distribution in the form of an annuity is also available, as set forth in the Plan. In the event of termination of the Plan, participants and beneficiaries of deceased participants will be vested with respect to, and will receive, within a reasonable time, any funds in their accounts as of the date of the termination. 10 The Plan is administered by the Retirement Savings Plan Committee, a Plan Financial Administrator and a Plan Benefits Administrator. The members of the Committee are appointed by the Board of Directors of the Company. The Committee has power to interpret the Plan and the Plan Benefits Administrator has the authority to determine eligibility for benefits. Brokerage fees, commissions, stock transfer taxes and other charges and expenses incurred in connection with the purchase or sale of securities are paid by the Plan. The cost of administering the Plan is shared by the Participating Employers on a mutually agreeable basis. Note 2--Investments Common stock of the Company is valued at the closing quoted market price on the valuation date. The value of the insurance contract represents contributions plus interest credited less distributions. The money market fund is valued at the current redemption price determined by the Trustee. Note 3--Tax Status The Internal Revenue Service (IRS) determined on August 15, 1986, that the Plan, as amended through October 28, 1985, is qualified under Section 401(a) of the Internal Revenue Code of 1986 and the Trust is exempt from federal income tax under Section 501(a). Subsequent amendments have been adopted, but are not expected to affect the qualified status of the Plan. A determination letter application was filed with the IRS in 1994, with an updated IRS determination expected in 1995. The Committee is not aware of any activity that would affect the qualified status of the Plan. Note 4--Additional Company Contributions In accordance with the Plan document and Treasury regulations, the Company made additional contributions totaling $258,745 to the Plan in 1993 related to Plan years 1987, 1988 and 1989. These contributions were required by retroactive application of new requirements under Internal Revenue Code Section 414(s), which provides rules for nondiscrimination in the definition of plan compensation. The change in the definition of compensation resulted in additional benefits and additional required contributions. 11 - -------------------------------------------------------------------------------- Schedule Of Assets Held Retirement Savings Plan Of For Investment Purposes Phillips Petroleum Company Item 27a EIN 73-0400345, Plan 010 At December 31, 1994 Description of investment Identity of issue, including maturity date, borrower, lessor, rate of interest, collateral, Historical Current or similar party par or maturity value Cost Value - -------------------- ------------------------------ ----------- ---------- The Travelers Group Annuity Contract Insurance Company* GR-10462, deposit administration fund $10,120,816 10,120,816 Phillips Petroleum 18,082 shares of common stock, Company* $1.25 par value 297,997 592,185 WestStar Bank* 18,332 units of participation in the Shearson Treasury Trust Fund, a money market fund 18,332 18,332 - ------------------------------------------------------------------------------ $10,437,145 10,731,333 ============================================================================== *Party-in-interest 12 Exhibit 1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8, File No. 33-28669) pertaining to the Retirement Savings Plan of Phillips Petroleum Company and in the related Prospectus of our report dated June 27, 1995, with respect to the financial statements and schedule of the Retirement Savings Plan of Phillips Petroleum Company included in this Annual Report (Form 11-K) for the year ended December 31, 1994. /s/ ERNST & YOUNG LLP ----------------- ERNST & YOUNG LLP Tulsa, Oklahoma June 27, 1995 -----END PRIVACY-ENHANCED MESSAGE-----