-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MtYdRr/gpM28bO87AMRsVo9/RkRkPKO7XkoYTX+m2g/5wuQdv7tgMtThUuRBP+dW Gx0fNOxKMNI0U6bHusuveg== 0000078214-96-000017.txt : 19960627 0000078214-96-000017.hdr.sgml : 19960627 ACCESSION NUMBER: 0000078214-96-000017 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960626 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: 96586087 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, 1995 ---------------------------------------- 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.* (ii) Bylaws of Phillips Petroleum Company, as amended effective February 13, 1995 (incorporated by reference to Exhibit 3(ii) to Quarterly Report on Form 10-Q for the three months ended September 30, 1995). 4(a) Indenture dated as of September 15, 1990, between Phillips Petroleum Company and First Trust National Association (formerly Bank of America Illinois), 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 First Trust National Association (formerly Bank of America Illinois), 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).* (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). 2 PHILLIPS PETROLEUM COMPANY INDEX TO EXHIBITS (Continued) Exhibit Number Description - ------- ----------- The company incurred during 1995 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 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. Material Contracts 10(a) Agreement dated December 23, 1984, among Mesa Partners and related entities and Phillips Petroleum Company and the schedules, annexes and exhibit thereto.* (b) Letter Agreement dated December 23, 1984, among Mesa Partners and related entities and Phillips Petroleum Company.* (c) Trust Agreement dated December 12, 1995, between Phillips Petroleum Company and Vanguard Fiduciary Trust Company, as Trustee of the Phillips Petroleum Company Compensation and Benefits Arrangements Stock Trust.* Management Contracts and Compensatory Plans or Arrangements (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.* (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 (incorporated by reference to Exhibit 10(g) to Annual Report on Form 10-K for the year ended December 31, 1994). 3 PHILLIPS PETROLEUM COMPANY INDEX TO EXHIBITS (Continued) Exhibit Number Description - ------- ----------- 10(h) Principal Corporate Officers Supplemental Retirement Plan of Phillips Petroleum Company.* (i) Phillips Petroleum Company Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10(i) to Annual Report on Form 10-K for the year ended December 31, 1993). (j) Key Employee Deferred Compensation Plan of Phillips Petroleum Company (incorporated by reference to Exhibit 10(j) to Annual Report on Form 10-K for the year ended December 31, 1994). (k) Non-Employee Director Retirement Plan of Phillips Petroleum Company.* (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). (m) Deferred Compensation Plan for Non-Employee Directors of Phillips Petroleum Company.* 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, 1995. (b) Form 11-K, Annual Report, of the Long-Term Stock Savings Plan of Phillips Petroleum Company for the fiscal year ended December 31, 1995. 4 PHILLIPS PETROLEUM COMPANY INDEX TO EXHIBITS (Continued) Exhibit Number Description - ------- ----------- 99(c) Form 11-K, Annual Report, of the Retirement Savings Plan of Phillips Petroleum Company for the fiscal year ended December 31, 1995. *Filed with the original Annual Report on Form 10-K for year ended December 31, 1995. 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 5 SIGNATURES 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 June 24, 1996 6 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, 1995 ------------------------------------ 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 24, 1996 1 - ----------------------------------------------------------------- Index To Financial Statements Thrift Plan Of Phillips And Schedules Petroleum Company Page Report of Independent Auditors .............................. 3 Financial Statements Statements of Net Assets Available for Benefits at December 31, 1995 and 1994 Total Plan ............................................. 4 Fund A ................................................. 6 Combined Funds B and C ................................. 8 Fund D--Deposit Administration Account ................. 10 Fund D--Deferred Settlement Account .................... 12 Fund E ................................................. 14 Fund F ................................................. 16 Loan Fund .............................................. 18 Temporary Investment Fund .............................. 20 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1995, 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 Notes to Financial Statements ............................. 22 Supplemental Schedules Schedule of Assets Held for Investment Purposes at December 31, 1995 .................................... 31 Schedule of Reportable Transactions for the Year Ended December 31, 1995 ............................ 32 2 - ----------------------------------------------------------------- Report Of Independent Auditors The Thrift Plan Committee Thrift Plan of Phillips Petroleum Company We have audited the accompanying statement of net assets available for benefits of the Thrift Plan of Phillips Petroleum Company (Plan) as of December 31, 1995 and 1994, and the related statement of changes in net assets available for benefits for each of the three years in the period ended December 31, 1995. 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 referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1995 and 1994, and the changes in its net assets available for benefits for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Our audits were performed 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, 1995, and reportable transactions for the year ended December 31, 1995, 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 fund information presented on pages 6 through 21 listed in the accompanying index to financial statements and schedules is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Ernst & Young LLP Tulsa Oklahoma ERNST & YOUNG LLP June 24, 1996 3 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company Thousands of Dollars ------------------------ At December 31 1995 1994 ------------------------ Assets Investments Phillips Petroleum Company common stock $ 704,705 676,075 Insurance contracts 285,462 332,814 BT Pyramid Government Securities Cash Fund 9,356 18,369 BT Pyramid Large Capitalization Equity Index Fund 71,911 51,486 BZW Barclays Global Investors Government/Corporate Bond Index Fund E* 74,816 70,712 BT Pyramid Discretionary Cash Fund 66,264 59,748 Loans to Plan participants 18,868 17,837 - ----------------------------------------------------------------- 1,231,382 1,227,041 Cash 1 - Contributions Receivable 568 578 Employee Deposits Receivable 204 182 Loan Repayments Receivable 73 49 Interest Receivable 1,446 1,589 Securities Sold 1,241 - - ----------------------------------------------------------------- Total Assets 1,234,915 1,229,439 - ----------------------------------------------------------------- Liabilities Securities Purchased - 1,493 Other Liabilities - 3 - ----------------------------------------------------------------- Total Liabilities - 1,496 - ----------------------------------------------------------------- Net Assets Available for Benefits $1,234,915 1,227,943 ================================================================= See Notes to Financial Statements. *Formerly Wells Fargo 4 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company Thousands of Dollars ------------------------------------ Years Ended December 31 1995 1994 1993 ------------------------------------ Additions Contributions and Deposits Company contributions Matching $ 5,742 5,854 5,986 Before-tax deposits 17,601 17,313 16,518 Employee deposits 15,865 16,429 17,913 Transfer from Other Plans - - 34 - ----------------------------------------------------------------- 39,208 39,596 40,451 - ----------------------------------------------------------------- Investment Income Dividends 24,471 24,213 26,091 Interest Participant loans 1,179 919 - Other 30,530 33,492 35,642 Net appreciation 60,994 82,085 109,944 - ----------------------------------------------------------------- 117,174 140,709 171,677 - ----------------------------------------------------------------- Total Additions 156,382 180,305 212,128 - ----------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Cash 109,754 123,967 96,790 Phillips Petroleum Company common stock 39,221 45,868 36,256 Forfeitures 12 2 9 Administrative Expense 404 452 425 Interest Expense 19 43 23 - ----------------------------------------------------------------- Total Deductions 149,410 170,332 133,503 - ----------------------------------------------------------------- Net Increase 6,972 9,973 78,625 Net Assets Available for Benefits Beginning of Year 1,227,943 1,217,970 1,139,345 - ----------------------------------------------------------------- End of Year $1,234,915 1,227,943 1,217,970 ================================================================= See Notes to Financial Statements. 5 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND A Thousands of Dollars ------------------------ At December 31 1995 1994 ------------------------ Assets Investments BZW Barclays Global Investors Government/Corporate Bond Index Fund E* $74,816 70,712 - ----------------------------------------------------------------- 74,816 70,712 Due from Temporary Investment Fund 107 123 Cash 1 - - ----------------------------------------------------------------- Total Assets 74,924 70,835 - ----------------------------------------------------------------- Liabilities Other Liabilities - 1 - ----------------------------------------------------------------- Total Liabilities - 1 - ----------------------------------------------------------------- Net Assets Available for Benefits $74,924 70,834 ================================================================= Number of Units 6,156,676 6,939,191 Unit Value $12.1696 10.2079 - ----------------------------------------------------------------- See Notes to Financial Statements. *Formerly Wells Fargo 6 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company FUND A Thousands of Dollars --------------------------------- Years Ended December 31 1995 1994 1993 --------------------------------- Additions Investment Income Interest $ 2 2 300 Net appreciation (depreciation) 12,772 (3,127) 7,894 - ----------------------------------------------------------------- 12,774 (3,125) 8,194 Allocation of Deposits and Earnings from Temporary Investment Fund 1,117 1,333 1,347 - ----------------------------------------------------------------- Total Additions 13,891 (1,792) 9,541 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 7,591 9,561 12,745 Administrative Expense 68 124 92 - ----------------------------------------------------------------- Total Deductions 7,659 9,685 12,837 - ----------------------------------------------------------------- Interfund Transfers (2,142) (8,410) 17,681 - ----------------------------------------------------------------- Net Increase (Decrease) 4,090 (19,887) 14,385 Net Assets Available for Benefits Beginning of Year 70,834 90,721 76,336 - ----------------------------------------------------------------- End of Year $74,924 70,834 90,721 ================================================================= See Notes to Financial Statements. 7 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company COMBINED FUNDS B AND C Thousands of Dollars ------------------------ At December 31 1995 1994 ------------------------ Assets Investments Phillips Petroleum Company common stock $704,705 676,075 BT Pyramid Government Securities Cash Fund 6,020 15,019 - ----------------------------------------------------------------- 710,725 691,094 Due from Temporary Investment Fund --Fund B 2,523 2,591 Contributions Receivable--Fund C 452 487 Interest Receivable 54 60 Securities Sold 1,241 - - ----------------------------------------------------------------- Total Assets 714,995 694,232 - ----------------------------------------------------------------- Liabilities Securities Purchased - 1,493 - ----------------------------------------------------------------- Total Liabilities - 1,493 - ----------------------------------------------------------------- Net Assets Available for Benefits $714,995 692,739 ================================================================= Net Assets Available for Benefits Fund B $472,537 451,491 Fund C 242,458 241,248 - ----------------------------------------------------------------- $714,995 692,739 ================================================================= Number of Units Fund B 6,285,468 6,248,165 Fund C 3,225,073 3,338,624 - ----------------------------------------------------------------- 9,510,541 9,586,789 - ----------------------------------------------------------------- Unit Value $75.1793 72.2598 - ----------------------------------------------------------------- See Notes to Financial Statements. 8 - ----------------------------------------------------------------- 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 1995 1994 1993 ---------------------------------- Additions Investment Income Dividends $ 24,471 24,213 26,091 Interest 702 434 396 Net appreciation 29,404 84,226 99,550 - ----------------------------------------------------------------- 54,577 108,873 126,037 Matching Company Contributions--Fund C 5,742 5,854 5,986 Allocation of Deposits and Earnings from Temporary Investment Fund--Fund B 26,050 25,932 26,322 - ----------------------------------------------------------------- Total Additions 86,369 140,659 158,345 - ----------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Cash--Fund B 19,781 29,130 28,438 Cash--Fund C 10,295 13,557 12,036 Phillips Petroleum Company common stock--Fund B 26,953 33,655 26,297 Phillips Petroleum Company common stock--Fund C 12,268 12,213 9,959 Forfeitures--Fund C 12 2 9 Administrative Expense 122 119 229 Interest Expense 19 43 23 - ----------------------------------------------------------------- Total Deductions 69,450 88,719 76,991 - ----------------------------------------------------------------- Interfund Transfers 5,337 (11,161) (84,113) - ----------------------------------------------------------------- Net Increase (Decrease) 22,256 40,779 (2,759) Net Assets Available for Benefits Beginning of Year 692,739 651,960 654,719 - ----------------------------------------------------------------- End of Year $714,995 692,739 651,960 ================================================================= Net Assets Available for Benefits Fund B $472,537 451,491 451,092 Fund C 242,458 241,248 200,868 - ----------------------------------------------------------------- $714,995 692,739 651,960 ================================================================= See Notes to Financial Statements. 9 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND D--DEPOSIT ADMINISTRATION ACCOUNT Thousands of Dollars ---------------------- At December 31 1995 1994 ---------------------- Assets Investments Insurance contracts Travelers Insurance Company, Group Annuity Contract GR-15505 $127,316 158,442 The Prudential Insurance Company of America, Group Annuity Contract GA-5991 - 19,932 Continental Assurance Company, Group Annuity, Contract GP-12692 67,946 65,837 Group Annuity, Contract GP-12787 23,537 23,312 Provident National Assurance, Group Annuity, Contract GC-05048 66,060 64,447 BT Pyramid Government Securities Cash Fund - 14 - ----------------------------------------------------------------- 284,859 331,984 Interest Receivable 1,041 1,219 - ----------------------------------------------------------------- Total Assets 285,900 333,203 - ----------------------------------------------------------------- Net Assets Available for Benefits $285,900 333,203 ================================================================= Number of Units (A) (A) Unit Values (A) (A) - ----------------------------------------------------------------- (A) See Note 5. See Notes to Financial Statements. 10 - ----------------------------------------------------------------- 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 1995 1994 1993 ---------------------------------- Additions Investment Income Interest $ 25,576 30,956 34,444 Allocation of Deposits and Earnings from Temporary Investment Fund - - 2,124 - ----------------------------------------------------------------- Total Additions 25,576 30,956 36,568 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 52,263 51,376 38,509 Administrative Expense 75 97 55 - ----------------------------------------------------------------- Total Deductions 52,338 51,473 38,564 - ----------------------------------------------------------------- Interfund Transfers (20,541) (48,168) (2,654) - ----------------------------------------------------------------- Net Decrease (47,303) (68,685) (4,650) Net Assets Available for Benefits Beginning of Year 333,203 401,888 406,538 - ----------------------------------------------------------------- End of Year $285,900 333,203 401,888 ================================================================= See Notes to Financial Statements. 11 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND D--DEFERRED SETTLEMENT ACCOUNT Thousands of Dollars ---------------------- At December 31 1995 1994 ---------------------- Assets Investments Insurance contract $603 844 - ----------------------------------------------------------------- Total Assets 603 844 - ----------------------------------------------------------------- Net Assets Available for Benefits $603 844 ================================================================= See Notes to Financial Statements. 12 - ----------------------------------------------------------------- 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 1995 1994 1993 -------------------------------- Additions Investment Income Interest $ 66 118 89 - ----------------------------------------------------------------- Total Additions 66 118 89 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 307 507 608 - ----------------------------------------------------------------- Total Deductions 307 507 608 - ----------------------------------------------------------------- Net Decrease (241) (389) (519) Net Assets Available for Benefits Beginning of Year 844 1,233 1,752 - ----------------------------------------------------------------- End of Year $ 603 844 1,233 ================================================================= See Notes to Financial Statements. 13 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND E Thousands of Dollars ---------------------- At December 31 1995 1994 ---------------------- Assets Investments BT Pyramid Large Capitalization Equity Index Fund $71,911 51,486 Due From Temporary Investment Fund 358 375 - ----------------------------------------------------------------- Total Assets 72,269 51,861 - ----------------------------------------------------------------- Net Assets Available for Benefits $72,269 51,861 ================================================================= Number of Units 46,684,257 46,125,102 Unit Value 1.5480 1.1243 - ----------------------------------------------------------------- See Notes to Financial Statements. 14 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company FUND E Thousands of Dollars --------------------------------- Years Ended December 31 1995 1994 1993 --------------------------------- Additions Investment Income Net appreciation $18,818 986 2,500 - ----------------------------------------------------------------- Allocation of Deposits and Earnings from Temporary Investment Fund 3,698 3,818 3,026 - ----------------------------------------------------------------- Total Additions 22,516 4,804 5,526 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 5,377 3,928 1,950 Administrative Expense 23 73 42 - ----------------------------------------------------------------- Total Deductions 5,400 4,001 1,992 - ----------------------------------------------------------------- Interfund Transfers 3,292 13,118 34,406 - ----------------------------------------------------------------- Net Increase 20,408 13,921 37,940 Net Assets Available for Benefits Beginning of Year 51,861 37,940 - - ----------------------------------------------------------------- End of Year $ 72,269 51,861 37,940 ================================================================= See Notes to Financial Statements. 15 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company FUND F Thousands of Dollars ---------------------- At December 31 1995 1994 ---------------------- Assets Investments BT Pyramid Discretionary Cash Fund $66,264 59,748 Due from Temporary Investment Fund 259 278 Interest Receivable 337 297 - ----------------------------------------------------------------- Total Assets 66,860 60,323 - ----------------------------------------------------------------- Liabilities Other Liabilities - 2 - ----------------------------------------------------------------- Total Liabilities - 2 - ----------------------------------------------------------------- Net Assets Available for Benefits $66,860 60,321 ================================================================= Number of Units 59,671,680 57,120,734 Unit Value 1.1205 $1.056 - ----------------------------------------------------------------- See Notes to Financial Statements. 16 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company FUND F Thousands of Dollars --------------------------------- Years Ended December 31 1995 1994 1993 --------------------------------- Additions Investment Income Interest $ 4,015 1,867 228 Allocation of Deposits and Earnings from Temporary Investment Fund 2,770 2,773 1,682 Transfer from Other Plans - - 34 - ----------------------------------------------------------------- Total Additions 6,785 4,640 1,944 - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 13,420 15,426 2,491 Administrative Expense 116 39 7 - ----------------------------------------------------------------- Total Deductions 13,536 15,465 2,498 - ----------------------------------------------------------------- Interfund Transfers 13,290 51,075 20,625 - ----------------------------------------------------------------- Net Increase 6,539 40,250 20,071 Net Assets Available for Benefits Beginning of Year 60,321 20,071 - - ----------------------------------------------------------------- End of Year $66,860 60,321 20,071 ================================================================= See Notes to Financial Statements. 17 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company LOAN FUND Thousands of Dollars ---------------------- At December 31 1995 1994 ---------------------- Assets Investments Loans to participants $18,868 17,837 Due from Temporary Investment Fund 496 304 - ----------------------------------------------------------------- Total Assets 19,364 18,141 - ----------------------------------------------------------------- Net Assets Available for Benefits $19,364 18,141 ================================================================= See Notes to Financial Statements. 18 - ----------------------------------------------------------------- Statement Of Changes In Net Thrift Plan Of Phillips Assets Available For Benefits Petroleum Company LOAN FUND Thousands of Dollars --------------------------------- Years Ended December 31 1995 1994 1993 --------------------------------- Additions Interest--Participant Loans $ 1,179 919 - - ----------------------------------------------------------------- Deductions Cash Distributions to Participants or Their Beneficiaries 720 482 13 Loan Repayments from Plan Participants 7,867 5,934 523 - ----------------------------------------------------------------- Total Deductions 8,587 6,416 536 - ----------------------------------------------------------------- Interfund Transfers 8,631 9,481 14,693 - ----------------------------------------------------------------- Net Increase 1,223 3,984 14,157 Net Assets Available for Benefits Beginning of Year 18,141 14,157 - - ----------------------------------------------------------------- End of Year $19,364 18,141 14,157 ================================================================= See Notes to Financial Statements. 19 - ----------------------------------------------------------------- Statement Of Net Assets Thrift Plan Of Phillips Available For Benefits Petroleum Company TEMPORARY INVESTMENT FUND Thousands of Dollars ---------------------- At December 31 1995 1994 ---------------------- Assets Investments BT Pyramid Government Securities Cash Fund $3,336 3,336 Contributions Receivable 116 91 Employee Deposits Receivable 204 182 Loan Repayments Receivable 73 49 Interest Receivable 14 13 - ----------------------------------------------------------------- Total Assets 3,743 3,671 - ----------------------------------------------------------------- Liabilities Due to Fund A 107 123 Due to Fund B 2,523 2,591 Due to Fund E 358 375 Due to Fund F 259 278 Due to Loan Fund 496 304 - ----------------------------------------------------------------- Total Liabilities 3,743 3,671 - ----------------------------------------------------------------- Net Assets Available for Benefits $ - - ================================================================= See Notes to Financial Statements. 20 - ----------------------------------------------------------------- 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 1995 1994 1993 ---------------------------------- Additions Contributions and Deposits Company contributions-- before-tax deposits $17,601 17,313 16,518 Employee deposits 15,865 16,429 17,913 Loan repayments from Plan participants 7,867 5,934 523 - ----------------------------------------------------------------- 41,333 39,676 34,954 Investment Income Interest 169 115 185 - ----------------------------------------------------------------- Total Additions 41,502 39,791 35,139 - ----------------------------------------------------------------- Deductions Allocation of Deposits and Earnings 33,635 33,856 34,501 - ----------------------------------------------------------------- Interfund Transfers (7,867) (5,935) (638) Net Increase - - - Net Assets Available for Benefits Beginning of Year - - - - ----------------------------------------------------------------- End of Year $ - - - ================================================================= See Notes to Financial Statements. 21 - ----------------------------------------------------------------- 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 BZW Barclays Global Investors, N.A. (formerly Wells Fargo Institutional Trust Company) managing Fund A assets invested in the BZW Barclays Global Investors Government/Corporate Bond Index Fund E. Effective at the close of business on December 31, 1995, the Trustee for Funds B and C was changed to Vanguard Fiduciary Trust Company (Vanguard), and during 1996, Vanguard is scheduled to become Trustee for all other funds except Fund D. (See Note 11.) 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. 22 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 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 earnings are paid into Funds A, B, E or F as directed by the participant, and invested as follows: Fund A (commingled BZW Barclays Global Investors Government/Corporate Bond Index Fund E managed by BZW Barclays Global Investors, N.A., Fund B (common stock of Phillips Petroleum Company), Fund E (commingled 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 accepted 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 transfers were not allowed out of Fund D after January 15, 1993. A participant is vested at all times with respect to his deposits. Through June 30, 1995, a participant was generally vested with respect to his interest in Company contributions (a) if he made, or 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. Effective July 1, 1995, a participant is vested at all times with respect to his interest in Company contributions. Prior to January 1, 1996, generally a participant could, as of any valuation date, withdraw any portion of his vested interest in his after-tax account. Effective January 1, 1996, Company contributions made after December 31, 1995, may not be withdrawn until 24 months after they are contributed unless the participant has been in the Plan for at least five years. 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. Upon death of a participant, the beneficiary may withdraw the participant's before-tax account balance. 23 Through June 30, 1995, forfeitures arising from non-vested withdrawals were used to reduce future Company contributions. Forfeitures could be restored under certain circumstances if the participant later repaid 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 the first valuation date of 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 first valuation date of the second month preceding the month in 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: (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, 24 the Phillips Petroleum Company positions of Treasurer 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. 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 -------------------- 1995 1994 -------------------- Receivable from the Company for matching contributions $452 487 Before-tax deposits 116 91 - ----------------------------------------------------------------- $568 578 ================================================================= 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. 25 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 ------------------------------------ 1995 - ---- 1992 $ 23,622 10,995,307 2.1484 1991 134,496 49,438,453 2.7205 1990 127,782 36,686,402 3.4831 - ----------------------------------------------------------------- $285,900 ================================================================= 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 ================================================================= 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: 26 Thousands of Dollars --------------------------------------------- Fund A B C D E F Total --------------------------------------------- Period ended December 31, 1995 - ----------------- Loans Outstanding at December 31, 1994 $17,837 Participant Loans $549 5,588 963 513 350 480 8,443 Principal Repaid 95 5,917 231 - 181 268 6,692 Distributions to Participants 720 - ----------------------------------------------------------------- Loans Outstanding at December 31, 1995 $18,868 ================================================================= 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 ================================================================= 27 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: Thousands of Dollars -------------------------------------- Fund A Fund B Fund D Fund E Fund F -------------------------------------- December 31, 1995 - ----------------- Employee deposits $ 610 11,770 - 1,755 1,730 Before-tax contributions 504 14,268 - 1,864 965 Interest 3 12 - 79 75 - ----------------------------------------------------------------- $1,117 26,050 - 3,698 2,770 ================================================================= December 31, 1994 - ----------------- Employee deposits $ 746 11,983 - 1,926 1,774 Before-tax contributions 584 13,932 - 1,841 956 Interest 3 18 - 51 43 - ----------------------------------------------------------------- $1,333 25,933 - 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 ================================================================= 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 transfers 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 July 12, 1995, the credit facility was renewed for another year, but at December 31, 1995, no portion of this credit facility was outstanding. In 1995, the Department of Labor issued the Company a Prohibited Transaction Exemption allowing the Plan to replace its existing bank credit facility with a new $25 million credit agreement between Phillips Petroleum Company and the Thrift Plan of Phillips Petroleum Company and Trust, effective March 15, 1996. 28 The agreement will be used for the same purposes as the bank credit facility, which was cancelled. The agreement requires no commitment fee. Borrowings are non-interest bearing, without recourse, and must be repaid within 31 days. Note 9--Transactions with Parties-in-Interest During 1995, 1994 and 1993, the Plan received $24,471,000, $24,213,000 and $26,079,000, 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. Note 10--Tax Status The Internal Revenue Service (IRS) determined on November 30, 1995, that the Plan, as amended through June 23, 1994, 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. The Committee is not aware of any activity that would affect the qualified status of the Plan. Note 11--Subsequent Events Effective at the close of business on December 31, 1995, the Trustee for Funds B and C was changed from Bankers Trust Company (Bankers) to Vanguard Fiduciary Trust Company (Vanguard), although Bankers continued to serve as custodian for those funds. Effective July 1, 1996, Vanguard is scheduled to become Trustee for all other funds except Fund D. Effective June 1, 1996, Phillips Petroleum Company became contractholder for all Fund D insurance contracts, thus excluding Fund D from the Trust. This change in contractholder does not affect participant benefits. Funds A, E, F and the Temporary Investment Fund were transferred to Vanguard for investment management effective May 1, 1996. As designated by amendment to the Plan, Vanguard will invest for Funds A, E and F in mutual funds managed by The Vanguard Group, Inc., which are similar to the commingled funds managed by Bankers Trust Company, and BZW Barclays Global Investors, N.A. Recordkeeping for all funds is scheduled to transfer to Vanguard effective July 1, 1996. 29 The Company designated a transition period which began June 18, 1996, and is scheduled to end August 26, 1996. During the transition period, voluntary transfers between investment funds, Plan distributions, withdrawals and loans are prohibited, while loan repayments and contributions will continue uninterrupted. 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, 1995 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 - --------------------- -------------------------------- --------- --------- Phillips Petroleum Common stock, $1.25 par value, Company* 20,686,981 shares $342,980 704,705 - ----------------------------------------------------------------------------- Bankers Trust 52,040.90 units, BT Pyramid Company* Large Capitalization Equity Index Fund 52,898 71,911 9,355,755.01 units, BT Pyramid Government Securities Cash Fund 9,356 9,356 66,264,170.71 units, BT Pyramid Discretionary Cash Fund 66,264 66,264 - ----------------------------------------------------------------------------- 128,518 147,531 - ----------------------------------------------------------------------------- BZW Barclays Global 6,068,264.85 units, Wells Fargo Investors, N.A.*+ Government/Corporate Bond Index Fund E 58,813 74,816 - ----------------------------------------------------------------------------- Thrift Plan of Loans to Plan participants at Phillips Petroleum 6% - 9% Company 18,868 18,868 - ----------------------------------------------------------------------------- Travelers Insurance Group Annuity Contract GR-15505, Company* deposit administration account 127,316 127,316 Group Annuity Contract GR-1966A, deferred settlement account 603 603 Continental Assurance Group Annuity Contract GP-12692, Company* deposit administration account 67,946 67,946 Group Annuity Contract GP-12787, deposit administration account 23,537 23,537 Provident National Group Annuity Contract Assurance* GC-027-05048, deposit administration account 66,060 66,060 - ----------------------------------------------------------------------------- 285,462 285,462 - ----------------------------------------------------------------------------- $834,641 1,231,382 ============================================================================= *Party-in-interest +Formerly Wells Fargo 31 - ------------------------------------------------------------------------------ Schedule of Reportable Transactions Thrift Plan of Phillips Item 27d Petroleum Company EIN 73-0400345, Plan 022 Year Ended December 31, 1995 Total Total number of number of Gain or Identity of party purchases sales (loss) as a involved and during the during the Value of Value result of description of asset plan year plan year purchases* of Sales* transactions - -------------------- ---------- ---------- --------- -------- ------------ Bankers Trust Company, BT Pyramid Government Securities Cash Fund 225 211 $147,689 156,702 - Phillips Petroleum Company, Common Stock 105 22 53,668 15,222 8,717 Bankers Trust Company, BT Pyramid Discretionary Cash Fund 51 35 36,020 29,504 - - ------------------------------------------------------------------------------- *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 24, 1996, 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, 1995. /s/ Ernst & Young LLP ERNST & YOUNG LLP Tulsa, Oklahoma June 24, 1996 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, 1995 ------------------------------------ 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/ Rand C. Berney ----------------------------- Rand C. Berney Member Long-Term Stock Savings Plan Committee June 24, 1996 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, 1995 and 1994 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, 1995, 1994 and 1993 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, 1995 ...................................... 18 Schedule of Reportable Transactions for the Year Ended December 31, 1995 ...................................... 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 accompanying statement of net assets available for benefits of the Long-Term Stock Savings Plan of Phillips Petroleum Company (Plan) as of December 31, 1995 and 1994, and the related statement of changes in net assets available for benefits for each of the three years in the period ended December 31, 1995. 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 referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1995 and 1994, and the changes in its net assets available for benefits for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Our audits were performed 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, 1995, and reportable transactions for the year ended December 31, 1995, 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 fund information presented on pages 6 through 13 listed in the accompanying index to financial statements and schedules is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Ernst & Young LLP Tulsa, Oklahoma ERNST & YOUNG LLP June 24, 1996 3 - ----------------------------------------------------------------- Statement Of Net Assets Long-Term Stock Savings Plan Available For Benefits Of Phillips Petroleum Company Thousands of Dollars ------------------------ At December 31 1995 1994 ------------------------ Assets Investments Common stock $1,095,085 1,079,269 Commingled fund 5,139 4,751 - ----------------------------------------------------------------- 1,100,224 1,084,020 Company Contributions Receivable Funds for debt service 172 249 Before-tax deposits 34 35 Interest Receivable 43 41 - ----------------------------------------------------------------- Total Assets 1,100,473 1,084,345 - ----------------------------------------------------------------- Liabilities Securities Acquisition Loans 476,450 502,250 Interest Payable 2,371 2,515 Securities Purchased 245 250 Administrative Expenses Payable 97 100 - ----------------------------------------------------------------- Total Liabilities 479,163 505,115 - ----------------------------------------------------------------- Net Assets Available for Benefits $ 621,310 579,230 ================================================================= 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 1995 1994 1993 ---------------------------------- Additions Company Contributions Funds for debt service $ 20,828 11,797 6,605 Basic allocation requirements - 56 286 Before-tax deposits 5,832 5,988 6,449 - ------------------------------------------------------------------- 26,660 17,841 13,340 - ------------------------------------------------------------------- Investment Income Dividends 38,854 37,527 38,514 Interest 437 337 321 Net appreciation 44,821 126,928 134,935 - ------------------------------------------------------------------- 84,112 164,792 173,770 - ------------------------------------------------------------------- Total Additions 110,772 182,633 187,110 - ------------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Common stock 37,819 41,698 31,869 Cash 26 27 20 - ------------------------------------------------------------------- 37,845 41,725 31,889 Interest Expense 30,754 23,965 19,496 Administrative Expense 93 100 100 - ------------------------------------------------------------------- Total Deductions 68,692 65,790 51,485 - ------------------------------------------------------------------- Net Increase 42,080 116,843 135,625 Net Assets Available for Benefits Beginning of Year 579,230 462,387 326,762 - ------------------------------------------------------------------- End of Year $621,310 579,230 462,387 =================================================================== 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 1995 1994 ------------------------ Assets Investments Common stock $180,975 183,106 Commingled fund 9 12 - ----------------------------------------------------------------- 180,984 183,118 Interest Receivable 3 1 - ----------------------------------------------------------------- Total Assets 180,987 183,119 - ----------------------------------------------------------------- Liabilities Administrative Expenses Payable 97 100 - ----------------------------------------------------------------- Total Liabilities 97 100 - ----------------------------------------------------------------- Net Assets Available for Benefits $180,890 183,019 ================================================================= Number of Units 30,014,306 31,621,315 Unit Value $6.0268 5.7878 - ----------------------------------------------------------------- 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 1995 1994 1993 ---------------------------------- Additions Investment Income Dividends $ 6,480 6,465 6,734 Interest 7 3 2 Net appreciation 7,528 22,230 24,082 - ------------------------------------------------------------------- Total Additions 14,015 28,698 30,818 - ------------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Common stock 16,047 16,234 15,407 Cash 4 10 16 - ------------------------------------------------------------------- 16,051 16,244 15,423 Administrative Expense 93 100 100 - ------------------------------------------------------------------- Total Deductions 16,144 16,344 15,523 - ------------------------------------------------------------------- Net Increase (Decrease) (2,129) 12,354 15,295 Net Assets Available for Benefits Beginning of Year 183,019 170,665 155,370 - ------------------------------------------------------------------- End of Year $180,890 183,019 170,665 =================================================================== 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 1995 1994 ------------------------ Assets Investments Common stock $46,526 40,260 Commingled fund 430 311 - ----------------------------------------------------------------- 46,956 40,571 Due from Temporary Fund 493 536 Interest Receivable 3 2 - ----------------------------------------------------------------- Total Assets 47,452 41,109 - ----------------------------------------------------------------- Liabilities Securities Purchased 245 250 - ----------------------------------------------------------------- Total Liabilities 245 250 - ----------------------------------------------------------------- Net Assets Available for Benefits $47,207 40,859 ================================================================= Number of Units 32,392,783 29,183,701 Unit Value $1.4573 1.4000 - ----------------------------------------------------------------- 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 1995 1994 1993 --------------------------------- Additions Allocation of Deposits and Earnings from Temporary Fund $ 5,856 6,005 6,463 - ------------------------------------------------------------------- Investment Income Dividends 1,534 1,295 1,134 Interest 22 16 12 Net appreciation 1,703 4,280 3,463 - ------------------------------------------------------------------- 3,259 5,591 4,609 - ------------------------------------------------------------------- Total Additions 9,115 11,596 11,072 - ------------------------------------------------------------------- Deductions Distributions to (refunds from) Participants or Their Beneficiaries Common stock 2,765 3,451 2,278 Cash 2 1 (1) - ------------------------------------------------------------------- Total Deductions 2,767 3,452 2,277 - ------------------------------------------------------------------- Net Increase 6,348 8,144 8,795 Net Assets Available for Benefits Beginning of Year 40,859 32,715 23,920 - ------------------------------------------------------------------- End of Year $47,207 40,859 32,715 =================================================================== 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 1995 1994 --------------------------- Assets Investments Common stock $867,584 855,903 Commingled fund 4,243 3,929 - ----------------------------------------------------------------- 871,827 859,832 Company Contributions Receivable Funds for debt service 172 249 Interest Receivable 35 36 - ----------------------------------------------------------------- Total Assets* 872,034 860,117 - ----------------------------------------------------------------- Liabilities Securities Acquisition Loans 476,450 502,250 Interest Payable 2,371 2,515 - ----------------------------------------------------------------- Total Liabilities 478,821 504,765 - ----------------------------------------------------------------- Net Assets Available for Benefits $393,213 355,352 ================================================================= Number of Units 157,715,845 137,476,120 Unit Value** $1.9514 1.8728 - ----------------------------------------------------------------- See Notes to Financial Statements. *The amount of total assets that was not allocated to participants at December 31, 1995 and 1994 was $564,275 thousand and $602,655 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 1995 1994 1993 ---------------------------------- Additions Company Contributions Funds for debt service $ 20,828 11,797 6,605 Basic allocation requirements - 56 286 - ------------------------------------------------------------------- 20,828 11,853 6,891 - ------------------------------------------------------------------- Investment Income Dividends 30,840 29,767 30,646 Interest 384 301 293 Net appreciation 35,590 100,418 107,390 - ------------------------------------------------------------------- 66,814 130,486 138,329 - ------------------------------------------------------------------- Total Additions 87,642 142,339 145,220 - ------------------------------------------------------------------- Deductions Distributions to Participants or Their Beneficiaries Common stock 19,007 22,013 14,184 Cash 20 16 5 - ------------------------------------------------------------------- 19,027 22,029 14,189 Interest Expense 30,754 23,965 19,496 - ------------------------------------------------------------------- Total Deductions 49,781 45,994 33,685 - ------------------------------------------------------------------- Net Increase 37,861 96,345 111,535 Net Assets Available for Benefits Beginning of Year 355,352 259,007 147,472 - ------------------------------------------------------------------- End of Year $393,213 355,352 259,007 =================================================================== 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 1995 1994 -------------------- Assets Investments Commingled fund $457 499 Company Contributions Receivable Before-tax deposits 34 35 Interest Receivable 2 2 - ----------------------------------------------------------------- Total Assets 493 536 - ----------------------------------------------------------------- Liabilities Due to Fund K 493 536 - ----------------------------------------------------------------- Total Liabilities 493 536 - ----------------------------------------------------------------- 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 1995 1994 1993 -------------------------------- Additions Company Contributions Before-tax deposits $5,832 5,988 6,449 Investment Income Interest 24 17 14 - ------------------------------------------------------------------- Total Additions 5,856 6,005 6,463 - ------------------------------------------------------------------- Deductions Allocation of Deposits and Earnings to Fund K 5,856 6,005 6,463 - ------------------------------------------------------------------- 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. Prior to December 31, 1995, the Company had a trust agreement with Bankers Trust Company, 280 Park Avenue, New York, New York 10017 (Trustee). Effective at the close of business on December 31, 1995, the Trustee was changed to Vanguard Fiduciary Trust Company. 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 certain 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 2005, the number of shares to be allocated semiannually will be 477,876. In December 1995, the Company extended the LTSSP to the year 2015. Without the extension, allocations of stock to employees would have been completed in 2005 or before. The new extension will require additional shares to be delivered to the LTSSP. The LTSSP will be eligible to receive shares from the Company's Compensation and Benefits Trust, also established in December 1995. After 2005 and through the allocation date following the date the second loan is repaid, the number of shares to be allocated semiannually on each basic allocation date will be 3,877 shares for each 100 employees employed at the beginning of each year. 14 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. 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 $14.5 million, $12.7 million and $11.8 million in dividends from participants' Fund L and Fund EP accounts and allocated 431,613 shares, 399,586 shares and 400,290 shares in dividend replacement allocations in 1995, 1994 and 1993, 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. The Company makes contributions to the Plan which, when aggregated with the Plan's dividends from Fund L, certain dividends from Fund EP and certain 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 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, unless a request for withdrawal is made as of any earlier date, distribution will be deferred to a date not later than February of the year after the year age 70 1/2 is 15 attained. If the participant dies, distribution to a surviving spouse beneficiary will be deferred to the first valuation date of the second month preceding the month in 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 by the Trustee from assets of the Plan to the extent allowable by law, unless paid by the Company. In 1995, 1994 and 1993, the Trustee made cash payments of $95,844, $100,000 and $100,000, respectively, for administrative expense to Phillips from Fund EP. Plan administrative expenses of approximately $400,000, $402,000 and $437,000 were paid by Phillips to the Trustee in 1995, 1994 and 1993, respectively. Note 2--Securities Acquisition Loans The Plan borrowed $250 million (Loan 1) and $400 million (Loan 2) 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, 1995 and 1994, the market value of unallocated shares was $560 million and $598 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 dividends. Loan 1 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 16 1998, matching the maturities of the refinanced notes, but at a reduced cost. Principal payments totaling $26 million were made on Loan 1 in both 1994 and 1995. The outstanding balance of Loan 1 at December 31, 1995, was $79.6 million. Loan 1 provides for variable interest rates. The rates were 4.88 percent and 5.35 percent at December 31, 1995 and 1994, respectively. Loan 2 Loan 2 was amended late in 1995 to extend its term from 15 to 25 years. Loan 2 is a bank loan, requiring repayment in annual installments beginning in 2005, through the year 2015. 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. The outstanding balance of Loan 2 at December 31, 1995 was $396.9 million. Loan 2 provides for variable interest rates. The rates were 6.20 percent and 6.38 percent at December 31, 1995 and 1994, 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 January 16, 1996, that the Plan 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. 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, 1995 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 32,090,408 shares of common Company* Stock, $1.25 par value $683,319 1,095,085 Bankers Trust 5,138,644 units of participation Company* in BT Pyramid Government Securities Cash Fund 5,139 5,139 - ------------------------------------------------------------------------------ $688,458 1,100,224 ============================================================================== *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, 1995 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 200 263 $59,495 59,107 - - ------------------------------------------------------------------------------ *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 24, 1996, 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, 1995. /s/ Ernst & Young LLP ERNST & YOUNG LLP Tulsa, Oklahoma June 24, 1996 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, 1995 ------------------------------------ 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 24, 1996 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, 1995 ................................... 4 Statement of Net Assets Available for Benefits at December 31, 1994 ................................... 5 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1995 ................... 6 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1994 ................... 7 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1993 ................... 8 Notes to Financial Statements ............................ 9 Supplemental Schedule Schedule of Assets Held for Investment Purposes at December 31, 1995 ...................................... 13 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, 1995 and 1994, and the changes in its net assets available for benefits for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Our audits were performed 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, 1995, 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 fund information in the statement of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedule and fund information have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Ernst & Young LLP ERNST & YOUNG LLP Tulsa, Oklahoma June 24, 1996 3 - -------------------------------------------------------------------- Statement Of Net Assets Retirement Savings Plan Of Available For Benefits Phillips Petroleum Company At December 31, 1995 Fixed Temporary Investment Stock Investment Total Fund Fund Fund -------------------------------------------- Assets Investments Insurance contract $ 9,850,414 9,850,414 - - Common stock 624,146 - 624,146 - Money market fund 19,619 - 8,615 11,004 - -------------------------------------------------------------------- 10,494,179 9,850,414 632,761 11,004 Interest Receivable 86 - 38 48 Employee Deposits Receivable 10,290 - - 10,290 Employer Contributions Receivable 28,011 28,011 - - Interfund Receivable (Payable) - 20,168 1,174 (21,342) - -------------------------------------------------------------------- Total Assets 10,532,566 9,898,593 633,973 - - -------------------------------------------------------------------- Liabilities Cash Distributions Payable 36,470 36,470 - - - -------------------------------------------------------------------- Total Liabilities 36,470 36,470 - - - -------------------------------------------------------------------- Net Assets Available for Benefits $10,496,096 9,862,123 633,973 - ==================================================================== Number of Units 2,479,731 135,882 Unit Values $3.9771 4.6656 - -------------------------------------------------------------------- See Notes to Financial Statements. 4 - -------------------------------------------------------------------- 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 - - - -------------------------------------------------------------------- Total Liabilities 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. 5 - ---------------------------------------------------------------------- Statement Of Changes In Net Retirement Savings Plan Of Assets Available For Benefits Phillips Petroleum Company Year Ended December 31, 1995 Fixed Temporary Investment Stock Investment Total Fund Fund Fund -------------------------------------------- Additions Contributions and Deposits Participating Employer contributions $ 316,258 316,258 - - Employee deposits 128,135 - - 128,135 - ---------------------------------------------------------------------- 444,393 316,258 - 128,135 - ---------------------------------------------------------------------- Investment Income Interest 639,370 638,561 379 430 Dividends 21,759 - 21,759 - Net appreciation of common stock 28,022 - 28,022 - - ---------------------------------------------------------------------- 689,151 638,561 50,160 430 - ---------------------------------------------------------------------- Total Additions 1,133,544 954,819 50,160 128,565 - ---------------------------------------------------------------------- Deductions Cash Withdrawals and Distributions 1,309,461 1,309,461 - - Forfeitures 6,820 6,820 - - - ---------------------------------------------------------------------- Total Deductions 1,316,281 1,316,281 - - - ---------------------------------------------------------------------- Allocation of Deposits and Earnings - 122,754 5,811 (128,565) - ---------------------------------------------------------------------- Interfund Transfers - 23,633 (23,633) - - ---------------------------------------------------------------------- Net Increase (Decrease) (182,737) (215,075) 32,338 - Net Assets Available for Benefits Beginning of Year 10,678,833 10,077,198 601,635 - - ---------------------------------------------------------------------- End of Year $10,496,096 9,862,123 633,973 - ====================================================================== 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, 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 of common stock 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. 7 - ---------------------------------------------------------------------- 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 of common stock 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. 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 domestic 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, 1995, Phillips Driscopipe (with respect to hourly employees only), a division of the Company, 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 after-tax 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. Effective January 1, 1996, participants are no longer permitted to make deposits into the Plan. Instead, at the same date the participants became eligible to participate in the Company's Thrift Plan. The Participating Employer or Company contributions to the Plan did not change. Deposits and contributions are placed in a Trust fund which was administered by WestStar Bank, Bartlesville, Oklahoma (Trustee) prior to the close of business on February 28, 1996, when the Trustee was changed to Vanguard Fiduciary Trust Company. Prior to the Trustee change, the Trust fund consisted of the Stock Fund, the Fixed Investment Fund and the Temporary Investment Fund. Investments for each fund are as follows: Stock Fund 9 (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). Effective with the change in Trustee, the Company became contractholder of the insurance contract with Travelers for the Fixed Fund, thus excluding the Fixed Fund from the Trust. This change in contractholder does not affect participant benefits. 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. 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 the two funds 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 in Participating Employer contributions 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 10 attributable to those Participating Employer contributions is not vested. Forfeitures are used to reduce employer contributions. A participant who retires may postpone distribution until 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. 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 December 26, 1995, that the Plan 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. The Committee is not aware of any activity that would affect the qualified status of the Plan. 11 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. 12 - ------------------------------------------------------------------------------ Schedule Of Assets Held Retirement Savings Plan Of For Investment Purposes Phillips Petroleum Company Item 27a EIN 73-0400345, Plan 010 At December 31, 1995 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 $ 9,850,414 9,850,414 Phillips Petroleum 18,290 shares of common stock, Company* $1.25 par value 310,765 624,146 WestStar Bank* 19,619 units of participation in the Shearson Treasury Trust Fund, a money market fund 19,619 19,619 - ------------------------------------------------------------------------------ $10,180,798 10,494,179 ============================================================================== *Party-in-interest 13 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 24, 1996, 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, 1995. /s/ Ernst & Young LLP ERNST & YOUNG LLP Tulsa, Oklahoma June 24, 1996 -----END PRIVACY-ENHANCED MESSAGE-----