UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
Annual Report pursuant to Section 15(d) of the Securities Exchange Act of 1934
| [X] | FOR THE YEAR ENDED DECEMBER 31, 2003
OR
| |
| [ ] | Transition Report pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the transition period from . . . . to . . . .
Commission file number 1-7627 | |
FRONTIER RETIREMENT SAVINGS PLAN
(Full title of the plan)
FRONTIER OIL CORPORATION
(Name of issuer of the securities)
10000 Memorial Drive, Suite 600
Houston, Texas 77024-3411
(Address of issuer’s principal executive offices)
FRONTIER RETIREMENT SAVINGS PLAN
ANNUAL REPORT ON FORM 11-K
FOR THE YEAR ENDED DECEMBER 31, 2003
INDEX
| Page
|
Report of Independent Registered Public Accounting Firm
| 1
|
Statements of Net Assets Available for Plan Benefits As of December 31, 2003 and 2002
| 2
|
Statements of Changes in Net Assets Available for Plan Benefits for the Years Ended December 31, 2003 and 2002
| 3
|
Notes to Financial Statements
| 4
|
Supplemental Schedules*:
Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held
at End of Year) As of December 31, 2003 | 9 |
* Other supplemental schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (“ERISA”) have been omitted because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Participants of
the Frontier Retirement Savings Plan
Denver, Colorado
We have audited the accompanying statements of net assets available for plan benefits of the Frontier Retirement Savings Plan (the “Plan”) as of December 31, 2003 and 2002, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 2003 and 2002 and the changes in net assets available for plan benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2003 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This schedule is the responsibility of the Plan’s management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 2003 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.
Deloitte & Touche LLP
Denver, Colorado
June 25, 2004
FRONTIER RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
As of December 31, 2003 and 2002
2003 2002
--------------- ---------------
ASSETS
Cash and Cash Equivalents $ 3,753 $ 40,191
--------------- ---------------
Investments at Fair Value (Note 2):
Mutual Funds 38,715,817 24,063,210
Frontier Oil Corporation Common Stock 1,437,271 888,742
Common/Collective Trust 5,414,333 4,703,070
Participant Loans 1,176,951 831,107
--------------- ---------------
46,744,372 30,486,129
--------------- ---------------
Receivables:
Employer Contributions 1,072,843 996,007
Participant Contributions - 235,740
--------------- ---------------
1,072,843 1,231,747
--------------- ---------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 47,820,968 $ 31,758,067
=============== ===============
The accompanying notes are an integral part of these statements.
FRONTIER RETIRMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Years Ended December 31, 2003 and 2002
2003 2002
--------------- ---------------
Contributions:
Employer $ 4,337,436 $ 4,336,015
Participant 3,917,261 3,793,097
Rollovers 275,310 62,042
Transfers from Frontier Refining & Marketing Inc. and Subsidiaries
Collectively Bargained Employees Retirement Savings Plan 137,903 219,720
--------------- ---------------
Total Contributions 8,667,910 8,410,874
--------------- ---------------
Investment Income (Loss):
Dividends and Interest Income 686,552 566,610
Participant Loan Interest 65,507 55,915
Net Appreciation (Depreciation) in
Fair Value of Investments (Note 2) 7,249,213 (5,155,520)
--------------- --------------
Net Investment Income (Loss) 8,001,272 (4,532,995)
--------------- --------------
Deductions:
Benefits Paid to Participants (598,539) (1,189,290)
Administrative Expenses (7,742) (6,508)
--------------- --------------
Total Deductions (606,281) (1,195,798)
--------------- --------------
Net Increase 16,062,901 2,682,081
Net Assets Available for Plan Benefits:
Beginning of Year 31,758,067 29,075,986
--------------- ---------------
End of Year $ 47,820,968 $ 31,758,067
=============== ===============
The accompanying notes are an integral part of these statements.
FRONTIER RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
1. SUMMARY OF PLAN AND SIGNIFICANT ACCOUNTING POLICIES
| | The following summary of the Frontier Retirement Savings Plan (the “Plan”) provides only general information. The Plan generally covers employees of Frontier Oil Corporation, Frontier Refining & Marketing Inc. and Subsidiaries and other affiliates as applicable (collectively, the “Company”). Participants should refer to the Plan document, available upon request from the Company’s Human Resources Department, for a more complete description of the Plan’s provisions. |
| | The Plan is a defined contribution plan covering any person who is employed by the Company or an affiliate, has completed six months of service, is age 21 or older, is not a non-resident alien or “leased” employee and who is not an employee at the Company’s Cheyenne, Wyoming refinery covered by a collective bargaining agreement between employee representatives and the Company or an affiliate. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). Plan benefits are not guaranteed by the Pension Benefit Guaranty Corporation. Any eligible employee will be considered a “Participant” in the Plan. |
| | All of the Plan’s assets are held by a trustee-administered trust fund (the “Trust”). The trustee for the Plan is Fidelity Management Trust Company (the “Trustee”). A committee appointed by the Company’s Board of Directors (the “Board”) administers the Plan. |
| | Basis of Accounting and Use of Estimates |
| | The financial statements of the Plan are prepared on the accrual basis of accounting. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan’s management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates. |
| | Cash and Cash Equivalents |
| | Cash and cash equivalents include all highly liquid investment instruments. |
| | Investment Valuation and Income Recognition |
| | Investments, except for investments in the Fidelity Managed Income Portfolio, and Participant Loans, are stated at fair values. Quoted market prices are used to value investments. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year-end. The Fidelity Managed Income Portfolio is a common/collective trust that invests in guaranteed investment contracts, bank investment contracts and synthetic guaranteed investment contracts. These contracts are carried in the common/collective trust fund’s audited financial statements at estimated fair value as determined by the Trustee based on the underlying investments, which approximates fair value. The Plan’s investment in the Trust is valued daily at the Plan’s proportionate interest in the fund as of the financial statement date. The average yield for the years ended December 31, 2003 and 2002 was 4.47% and 5.14%, respectively and the crediting interest rate as of December 31, 2003 and 2002 was 4.23% and 4.85%, respectively. Participant Loans are valued at cost, which approximates fair value. Purchases and sales of investments are recorded on a trade-date basis. Interest income is recorded when earned and dividends recorded on the ex-dividend date. |
| | Subject to such limitations as may be imposed by ERISA or other applicable law, all costs and expenses incurred in connection with the general administration of the Plan and the Trust shall be covered by the Company unless paid by the Trust. During the years ended December 31, 2003 and 2002, administrative expenses in the amounts of $5,363 and $17,275, respectively, were paid directly by the Company. Additionally, during the years ended December 31, 2003 and 2002, administrative expenses in the amounts of $7,742 and $6,508, respectively were paid by the Trust, from specific participant accounts. |
| | Each year, the Company’s Board may determine a contribution (“Profit-Sharing Contribution”) to be made on behalf of each Plan Participant who meets the eligibility requirements. Such contribution, if made, shall be equal to such percentage of the Participant’s compensation (as defined in the Plan document) as the Board may determine. For eligible employees at locations other than El Dorado, Kansas, a percentage contribution of 3% of Participants’ compensation up to the Social Security taxable wage base at the beginning of the year and 6% of Participants’ compensation for the year in excess of such Social Security taxable wage base was made by the Company for each of the years ended December 31, 2003 and 2002. For eligible employees at the El Dorado, Kansas, refinery the Company made percentage contributions for the years ended December 31, 2003 and 2002 based on years of vesting service as follows: |
Less than 9 years
| 3% of Participants’ compensation up to the Social Security taxable wage base and 6% of Participants’ compensation in excess of the Social Security taxable wage base.
|
9 years but less than 15
| 5% of Participants’ compensation up to the Social Security taxable wage base and 6% of Participants’ compensation in excess of the Social Security taxable wage base.
|
15 years but less than 20
| 6% of Participants’ compensation.
|
20 years or more
| 8% of Participants’ compensation.
|
| A Participant is eligible to receive a quarterly Profit-Sharing Contribution, currently funded at the end of the said quarter, if he/she is an eligible employee at the end of the said quarter.
Effective April 1, 2002, the Plan was amended to include several changes available as a result of the 2001 Economic Growth and Tax Relief Reconciliation Act (“EGTRRA”). Participants may now elect to contribute (“Employee Contributions”) from 1% to 60% (previously 15%) of their compensation as a before-tax contribution to the Plan, subject to Internal Revenue Service limits. Participants who are age 50 or older can contribute additional amounts to the Plan each year ($2,000 and $1,000 in 2003 and 2002, respectively) as allowed per EGTRRA.
In addition, the Company may, at the discretion of the Board, make a matching cash contribution (“Matching Contribution”) on behalf of each Participant. This Matching Contribution, if any, shall be equal to the amounts contributed by Participants not to exceed a percentage determined by the Board. During 2003 and 2002, Matching Contributions up to 6% of Participants’ compensation were made. Matching Contributions are funded quarterly and a Participant is eligible to receive the Matching Contributions for a quarter if he/she is an eligible employee at the end of the said quarter.
Total annual additions for the total of Participant and employer contributions under the Plan and all other plans sponsored by the Company are limited to the lesser of 100% of eligible compensation or $40,000. |
| Participant Accounts
A separate account (“Account”) is maintained for each Participant and is credited for the contributions made by and on behalf of each Participant. Each Participant has an undivided proportionate interest in the Trust that is measured by the proportion that the market value of their Account bears to the total market value of all Accounts as of the date that such interest is being determined. As of each Valuation Date, as defined in the Plan, the net earnings and gains or losses of each Investment Fund are allocated to each Participant’s Account in the same proportion that the market value of their Account in such Investment Fund bears to the total market value of all Participants’ Accounts in such Investment Fund.
Vesting
Participants are immediately fully vested in all amounts contributed to the Plan.
Payment of Benefits
Upon a Participant’s retirement, death, disability, or termination of employment, the Participant’s Account will be available for distribution as soon as reasonably practical following the termination date. In addition, hardship distributions are permitted if certain criteria are met. The Plan provides that participants may receive in-service distributions of any or all of their account as of the date they attain age 59½. Any amounts subsequently credited to their Account shall be available after each such contribution. Benefits are recorded when paid. As of December 31, 2003 and 2002, $3,168,980 and $2,856,324, respectively, of the net assets available for plan benefits were allocated to Participants who had withdrawn from participation in the Plan.
Participant Loans
Subject to certain limitations, each Participant may borrow amounts from their Account as defined in the Plan. The terms of such loans are determined by the guidelines defined in the Plan, and are in conformance with Internal Revenue Service guidelines. The maximum amount available for borrowing is 50% of the Participant’s vested account balance, not to exceed $50,000. The loans are secured by the balance in the Participants account and bear interest at rates commensurate with the local prevailing rates. Principal and interest is paid ratably through payroll deductions. |
2. INVESTMENTS
| The Plan administrator establishes the available investment alternatives administered under the Trust. Each Plan Participant directs the investment of all contributions to his/her Account in increments of 10% in any one or more of the available investment alternatives. As of December 31, 2003, there are nineteen investment alternatives from which the Participant may choose, including a common/collective trust, mutual funds and Frontier Oil common stock. The Frontier Oil common stock investment alternative is a unitized employer stock fund.
The fair value of individual investments that represent 5% or more of the Plan’s total net assets available for plan benefits as of December 31, 2003 and 2002 are as follows:
|
2003 2002
-------------------------- --------------------------
Shares Shares
or or
Units Amount Units Amount
----------- ------------- ---------- -------------
Fidelity Aggressive Growth Fund 518,005 $ 7,733,818 388,545 $ 4,347,817
Fidelity Independence Fund 360,503 5,789,671 330,474 4,319,294
Fidelity Managed Income Portfolio 5,414,333 5,414,333 4,703,070 4,703,070
Fidelity Low-Priced Stock Fund 125,213 4,379,962 87,448 2,201,064
Fidelity Contrafund 82,926 4,092,393 61,119 2,359,187
Fidelity Puritan Fund 214,241 3,957,034 196,311 3,099,749
Fidelity Growth & Income Fund 105,421 3,756,163 83,793 2,539,751
Fidelity Spartan U.S. Equity Index Fund* 74,643 2,941,677 49,818 1,551,819
| | * This fund did not exceed 5% or more of the Plan’s total net assets as of December 31, 2002; 2002 amounts are reflected for comparative purposes to 2003 only.
During the year ended December 31, 2003, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows: |
Mutual funds $ 7,191,624
Frontier Oil Corporation Common Stock (unitized fund) 57,589
------------
Net appreciation of investments $ 7,249,213
============
| | The gain or loss on the sale of assets represents the difference between the sales proceeds and the fair value of the investment at the beginning of the year, or the acquisition cost if the asset was acquired during the year. Net appreciation or depreciation in the fair value of investments is computed as the difference between the fair value at the end of the year and the beginning of the year, or the acquisition cost if the asset was acquired during the year. |
3. TAX STATUS
| | The Internal Revenue Service has determined and informed the Company by a letter dated April 14, 1997, that the Plan is qualified and the Trust established under the Plan is tax-exempt, under the appropriate sections of the Internal Revenue Code. The Plan has been amended since April 14, 1997, and it is the Plan administrator’s opinion that the Plan is still designed and being operated in compliance with the applicable sections of the Internal Revenue Code. |
4. PLAN AMENDMENT AND TERMINATION
| | Although the Company has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event that the Plan is terminated, participants would become 100 percent vested in their accounts. |
5. PARTY-IN-INTEREST TRANSACTIONS
| | Certain Plan investments are shares of mutual funds and common/collective trusts managed by Fidelity Management Trust Company, the trustee of the Plan and, therefore, these transactions qualify as a party-in-interest. Other Plan investments are shares of Frontier Oil Common Stock, which also qualify as party-in-interest transactions. As of December 31, 2003 and 2002, the Plan held 97,146 and 51,611 units, respectively, of the Frontier Oil Corporation Common Stock Unitized Fund, with a cost basis of $1,249,475 and $768,420, respectively. |
6. RISKS AND UNCERTAINTIES
| | The Plan provides for various investment options in mutual fund and common/collective trusts. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the Statements of Net Assets Available for Plan Benefits and the Statements of Changes in Net Assets Available for Plan Benefits. |
FRONTIER RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD
As of December 31, 2003
Shares
Identity of Issuer Description of Investments or Units Fair Value
- ------------------------------------ -------------------------------------------- ------------- ----------------
Fidelity Management Trust
Company Common/Collective Trust:
*Fidelity Managed Income Portfolio 5,414,333 $ 5,414,333
Managed Funds:
*Fidelity Aggressive Growth Fund 518,005 7,733,818
*Fidelity Independence Fund 360,503 5,789,671
*Fidelity Low-Priced Stock Fund 125,213 4,379,962
*Fidelity Contrafund 82,926 4,092,393
*Fidelity Puritan Fund 214,241 3,957,034
*Fidelity Growth & Income Fund 105,421 3,756,163
*Fidelity Spartan US Equity Index Fund 74,643 2,941,677
*Fidelity Diversified International Fund 84,610 2,040,800
*Fidelity Intermediate Bond Fund 167,550 1,786,080
*Fidelity Value Fund 17,665 1,096,465
*Fidelity Mid-Cap Stock Fund 28,297 610,363
*Fidelity Freedom 2010 Fund 21,667 282,099
*Fidelity Freedom 2020 Fund 12,590 163,921
*Fidelity Freedom 2000 Fund 3,135 36,931
*Fidelity Freedom Income Fund 2,663 29,528
*Fidelity Freedom 2030 Fund 1,211 15,688
*Fidelity Freedom 2040 Fund 426 3,224
Frontier Oil Corporation *Frontier Oil Corporation Common Stock
Unitized Fund 97,146 1,437,271
Plan Participants Participant Loans, maturing between February 26, 2004
and August 10, 2013, 5.00% to 10.50% interest 1,176,951
----------------
Total Investments $ 46,744,372
================
*Represents a party-in-interest (Note 5).
EXHIBIT INDEX
Exhibit
Number
| Description
|
| 23 | Consent of Deloitte & Touche LLP. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Frontier Oil Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | FRONTIER RETIREMENT SAVINGS PLAN
By: /s/ Nancy J. Zupan
––––––––––––––––––––
Nancy J. Zupan
Vice President - Controller
(principal accounting officer) |
Date: June 28, 2004
