Exhibit 99(d)
FORM 11-K
UNITED STATES
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
For the fiscal year ended December 31, 2001
-----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-7910
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TOSCO CORPORATION CAPITAL ACCUMULATION PLAN
(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 Tosco Corporation Capital
Accumulation Plan, filed as a part of this annual report, are
listed in the accompanying index.
(b) Exhibits
--------
Exhibit 1 Consent of Ernst & Young LLP.
Exhibit 2 Consent of PricewaterhouseCoopers LLP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Tosco Corporation Capital Accumulation Plan Committee
has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
TOSCO CORPORATION
CAPITAL ACCUMULATION PLAN
/s/Rand C. Berney
----------------------------------
Rand C. Berney
Member
Tosco Corporation
Capital Accumulation Plan
Committee
June 19, 2002
1
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Index To Financial Statements Tosco Corporation
And Schedule Capital Accumulation Plan
Page
Report of Ernst & Young LLP ................................. 3
Report of PricewaterhouseCoopers LLP ........................ 4
Financial Statements
Statement of Net Assets Available for Benefits
at December 31, 2001 and 2000 ........................... 5
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2001 .................... 6
Notes to Financial Statements ............................. 7
Supplemental Schedule
Schedule of Assets (Held at End of Year)
as of December 31, 2001, Schedule H, Line 4i............. 14
2
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Report Of Independent Auditors
The Capital Accumulation Plan Committee
Tosco Corporation Capital Accumulation Plan
We have audited the accompanying statement of net assets available
for benefits of the Tosco Corporation Capital Accumulation Plan
(Plan) as of December 31, 2001, and the related statement of changes
in net assets for the year then ended. These financial statements
are the responsibility of the Capital Accumulation Plan Committee
(Committee). Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the 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 the Committee, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2001 financial statements referred to above
present fairly, in all material respects, the net assets available
for benefits of the Plan at December 31, 2001, and the changes in its
net assets available for benefits for the year then ended, in
conformity with accounting principles generally accepted in the
United States.
Our audit was performed for the purpose of forming an opinion on the
2001 financial statements taken as a whole. The accompanying
supplemental schedule of assets (held at end of year) as of
December 31, 2001 is presented for purposes of additional analysis
and is not a required part of the 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 supplemental schedule
is the responsibility of the Committee. The supplemental schedule
has been subjected to the auditing procedures applied in our audit of
the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a
whole.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 19, 2002
3
Report of Independent Accountants
To the Participants and Plan Administrator
Tosco Corporation Capital Accumulation Plan
In our opinion, the accompanying statement of net assets available
for benefits presents fairly, in all material respects, the net
assets available for benefits of the Tosco Corporation Capital
Accumulation Plan (the "Plan") at December 31, 2000 in conformity
with accounting principles generally accepted in the United States of
America. This financial statement is the responsibility of the
Plan's management; our responsibility is to express an opinion on
this financial statement based on our audit. We conducted our audit
of this statement in accordance with auditing standards generally
accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether
the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
June 19, 2002
4
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Statement Of Net Assets Tosco Corporation
Available For Benefits Capital Accumulation Plan
Thousands of Dollars
--------------------
2001 2000
At December 31 --------------------
Assets
Investments
Vanguard PRIMECAP Fund $116,204 132,180
Vanguard Wellington Fund 52,503 45,226
Vanguard Federal Money Market Fund 27,441 22,578
Vanguard 500 Index Fund 71,023 71,877
Vanguard Long-Term Treasury Fund 12,211 8,997
Vanguard International Growth Fund 11,697 12,954
Vanguard Explorer Fund 1,784 -
Vanguard Total Bond Market
Index Fund 2,929 -
Vanguard Extended Market Index Fund 805 -
American Express Income Fund 43,037 39,889
Credit Suisse Warburg Pincus
Value II 7,024 5,715
Phillips Petroleum Company
common stock 104,347 2,820
Tosco Corporation common stock - 62,432
Loans to Plan participants 7,583 7,443
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458,588 412,111
Contributions receivable 10 24
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Total Assets 458,598 412,135
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Net Assets Available for Benefits $458,598 412,135
=================================================================
See Notes to Financial Statements.
5
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Statement Of Changes In Net Tosco Corporation
Assets Available For Benefits Capital Accumulation Plan
Thousands
of Dollars
Year Ended December 31, 2001 ----------
Additions
Contributions
Company $ 27,827
Participants 33,535
Rollovers 1,368
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62,730
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Investment Income
Interest and dividend income 11,790
Interest on participant loans 637
Net depreciation in fair value
of investments (5,723)
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6,704
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Total 69,434
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Deductions
Distributions to
Participants or Their
Beneficiaries 22,953
Other, net 18
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Total 22,971
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Net Change 46,463
Net Assets Available for Benefits
Beginning of Year 412,135
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End of Year $458,598
=================================================================
See Notes to Financial Statements.
6
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Notes To Financial Statements Tosco Corporation
Capital Accumulation Plan
Note 1--Plan Description
The following describes the Tosco Corporation Capital
Accumulation Plan (the Plan) at December 31, 2001, subject to and
qualified by the more complete information appearing in the Plan
document as of that date.
General
The Plan, established in 1976, and amended and restated at
various times, is a defined contribution, 401(k) profit sharing
plan, covering eligible, full-time employees of Tosco Corporation
(Tosco) and subsidiaries (Sponsor). On September 14, 2001, Tosco
was merged with a subsidiary of Phillips Petroleum Company
(Phillips), as a result of which Tosco became a wholly owned
subsidiary of Phillips. The outstanding common stock of Tosco
was converted into 0.8 shares of Phillips common stock. Highly
compensated employees (employees who made more than $85,000 in
2001) can enroll in and contribute to the Plan after one
continuous year of employment with the Sponsor. All other
eligible employees can enroll in and contribute to the Plan in
the month following their date of hire, but must complete one
continuous year of service to receive company contributions. The
Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA) and the Internal Revenue
Code, as amended by the Tax Reform Act of 1986 and subsequent
legislation.
The Sponsor has a trust agreement with the Vanguard Fiduciary
Trust Company (Vanguard). Vanguard is also maintaining the
individual participant account records and serving as custodian
for the Plan's investments. Additionally, the Sponsor has an
auxiliary trust agreement with the American Express Trust Company
(American Express), which appoints them trustee of the American
Express Income Fund. The Plan is administered by the Capital
Accumulation Plan Committee, the members of which are appointed
by the Board of Directors of Phillips. The Plan Benefits
Administrator is appointed by the Tosco Board of Directors and
the Plan Financial Administrator is the person who occupies the
position of Treasurer of Phillips. Members of the Committee and
the Plan Administrators serve without compensation, but are
reimbursed by the Sponsor for necessary expenditures incurred in
the discharge of their duties.
7
Contributions
Participants may contribute between 2 and 15 percent of their
eligible compensation (up to $170,000 in 2001) to the Plan on a
pretax basis, after-tax basis, or a combination of both, in
1 percent increments. Pretax contributions could not exceed
$10,500 in 2001. After a participant has completed one year of
continuous service, the Sponsor contributes an amount equal to
the first 6 percent of compensation contributed by a participant
during each pay period (Matching Contribution). The Matching
Contribution level is reduced from 100 percent to 75 percent if
an employee has participated in the Plan for less than five
years, unless certain conditions are met.
Also after the completion of one year of continuous service, the
Sponsor makes additional non-matching contributions of 5 percent
(Pension Contribution) and 2 percent (Profit Sharing
Contribution) of eligible compensation (up to $170,000 in 2001)
to certain participants. The Pension Contribution is made to
certain eligible employees who do not participate in the Tosco
Pension Plan, a defined benefit pension plan. The Profit Sharing
Contribution is made to certain eligible employees, as defined by
the Plan. The Pension Contribution and Profit Sharing
Contribution are available for withdrawal when a participant
retires or ceases employment with the Sponsor. Effective
January 1, 1998, the Plan was amended so that the Profit Sharing
Contribution will not be offered to employees who were not
receiving the contribution as of December 31, 1997. The Plan was
amended effective January 1, 2002, to discontinue the Profit
Sharing Contribution.
Participant investment choice dictates the allocation of the
Sponsor's contributions. Earnings on investments held by the
Plan in the name of a participant are automatically invested in
the respective fund from which the earnings were derived.
Participant Accounts
Separate accounts are maintained for each participant. Each
participant's account is directly credited with the participant's
contribution, the Sponsor's matching contribution, and the
Sponsor's pension and profit sharing contributions, if
applicable. Net earnings from investments in investment funds,
which include appreciation (depreciation) in fair value, are
allocated to each participant's account based on the ratio of
that participant's account balance by investment fund to the
total of the investment fund portion of all participants' account
balances. The benefit to which a participant is entitled is
solely that which can be provided from the participant's account.
8
Vesting
Employees are immediately vested in their individual and in the
Matching and Profit Sharing Contributions, including earnings
thereon. Employees hired prior to January 1, 2000, are
100 percent vested in any Pension Contributions. Employees hired
on or after January 1, 2000, become vested in Pension
Contributions based on their years of service as follows:
Years of Service Percent Vested
- ---------------- --------------
Fewer than 2 -%
2 25
3 50
4 75
5 or more 100
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Loans to Participants
The Plan, with certain limitations, may make loans to
participants with an interest rate approximately equal to the
prime interest rate on the original date, plus 1 percent. A loan
from the Plan will be made for up to the lesser of 100 percent of
the participant's pretax contributions or 50 percent of the
participant's total account balance, with a maximum of $50,000
and a minimum of $1,000. The maturity on these loans cannot
exceed five years. Participants are required to pay all loan
origination and administrative fees. All interest payments made
under the terms of the loan will be credited to the participant's
account and not considered general earnings of the Plan.
Participants' loans are repaid through payroll deductions and are
collateralized by the participants' vested account balances.
Loans outstanding are included in loans to Plan participants in
the accompanying financial statements.
Payment of Benefits
Benefits of the Plan are payable upon reaching normal retirement,
early retirement, termination, or in the event of death or
disability. Benefits may be provided through the purchase of a
50 percent joint and survivor annuity (in the case of a married
participant) or a life annuity (in the case of a single
participant). Participants may also elect to receive benefits in
a lump sum, another form of annuity or any other form approved by
the Committee of the Plan. Married participants may not elect
such other forms without the consent of their spouse. Any whole
shares of stock in a participant's stock fund account may be
distributed in the form of shares of stock at the participant's
discretion. All other amounts, including fractional shares of
stock, will be distributed to the participant in cash.
9
Administration Fees
All Plan investment management fees are paid from the investment
earnings of the individual investment funds and all other
administration fees are paid by the Sponsor and are not reflected
in the Plan's financial statements.
Note 2--Significant Accounting Policies
Basis of Presentation
The Plan's financial statements are presented on the accrual
basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes and
schedule. Actual results could differ from those estimates and
assumptions.
Reclassification
Certain amounts in the 2000 financial statements have been
reclassified to conform with the 2001 presentation.
Note 3--Investments
Participants may designate, in 5 percent increments, the portion
of his or her contribution to be placed in various investment
funds. Loan repayments are allocated to these funds based on the
participant's current contribution designation.
Valuation
The Plan's investments are stated at fair value. Common stock
and mutual fund securities are valued at their quoted market
price. Common collective trust fund holdings are valued at
contract value, plus accrued income, which approximates fair
value. Participant loans are valued at cost, which approximates
fair value. Purchases and sales of investments are recorded on a
trade date basis.
10
Appreciation (Depreciation)
During 2001, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated (depreciated) in value as follows:
Thousands
of Dollars
----------
Vanguard PRIMECAP Fund $(19,213)
Vanguard Wellington Fund (1,702)
Vanguard 500 Index Fund (9,587)
Vanguard Long-term Treasury Fund (190)
Vanguard International Growth Fund (2,654)
Vanguard Explorer Fund 27
Vanguard Total Bond Market Index Fund (16)
Vanguard Extended Market Index Fund (42)
Credit Suisse Warburg Pincus Value II (121)
Phillips Petroleum Company common stock 5,218
Tosco Corporation common stock 22,557
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$ (5,723)
=================================================================
Note 4--Tax Status
The Internal Revenue Service (IRS) determined on September 21,
1995, that the Plan, as amended through December 19, 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 5--Plan Termination
Although it has not expressed any intent to do so, the Sponsor
has the right, under the Plan, to discontinue its contributions at
any time and to terminate the Plan subject to the provisions of
ERISA. Upon termination, the Plan's assets would be distributed
to the participants, as soon as possible and legally permitted,
on the basis of their account balances existing on the date of
termination, as adjusted for investment gains and losses.
11
Note 6--Party-In-Interest Transactions
Certain investments of the Plan are in shares of mutual funds
managed by Vanguard. As Vanguard is the Plan's trustee, these
transactions qualify as party-in-interest transactions. As
American Express is the trustee of the American Express Income
Fund, American Express also qualifies as a party-in-interest. In
addition, certain Plan investments are in Phillips' common stock
or were in Tosco Corporation common stock prior to September 14,
2001. These transactions also qualify as party-in-interest
transactions.
During the year ended December 31, 2001, the Sponsor paid
administrative expenses totaling $83,877 on behalf of the Plan.
Note 7--Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for
benefits as of December 31, 2001 and 2000, as reflected in these
financial statements, to the amounts reflected in the Plan's Form
5500:
Thousands of Dollars
--------------------
2001 2000
--------------------
Net assets available for benefits as
reported in the financial statements $458,598 412,135
Amounts allocated to withdrawing
Participants at December 31 (469) (1,264)
- -----------------------------------------------------------------
Net assets available for benefits
as reported in the Form 5500 $458,129 410,871
=================================================================
The following is a reconciliation of distributions to
participants for the year ended December 31, 2001, as reflected
in these financial statements, to the amount reflected in the
Plan's Form 5500:
Thousands of
Dollars
------------
Distributions to participants as reported
in the financial statements $22,953
Amount allocated to withdrawing participants
at December 31, 2001 469
Amount allocated to withdrawing
participants at December 31, 2000 (1,264)
- -----------------------------------------------------------------
Distributions to participants as reported
in the Form 5500 $22,158
=================================================================
12
Note 8--Subsequent Events
Effective January 1, 2002, the Plan was amended to make all
employees not covered by a collective bargaining agreement
ineligible to make or receive any contribution except the Pension
Contribution.
On March 12, 2002, stockholders of Phillips and Conoco Inc.
approved a merger of the two companies to form ConocoPhillips.
The merger is conditioned upon, among other things, customary
regulatory clearances and is expected to close in the second half
of 2002. Under the terms of the merger agreement, each
outstanding Phillips share, including all those held by the Plan,
will automatically be converted into a share of the new
ConocoPhillips common stock.
13
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Schedule of Assets (Held at End of Year) Tosco Corporation
Schedule H, Line 4i Capital Accumulation Plan
At December 31, 2001
(a)(b) Identity of (c) Description of investment Thousands of Dollars
issue, borrower, including maturity date, --------------------------
lessor, or similar rate of interest, collateral, (d) Historical (e) Current
party par or maturity value Cost Value
- -------------------- ----------------------------- -------------- -----------
Phillips Petroleum Common Stock, $1.25 par
Company* value, 1,731,609 shares ** $104,347
- -----------------------------------------------------------------------------
The Vanguard Group* 2,255,514 units, Vanguard
PRIMECAP Fund ** 116,204
1,926,008 units, Vanguard
Wellington Fund ** 52,503
27,441,162 units, Vanguard
Federal Money Market Fund ** 27,441
670,727 units, Vanguard
500 Index Fund ** 71,023
1,134,848 units, Vanguard
Long-Term Treasury Fund ** 12,211
779,245 units, Vanguard
International Growth Fund ** 11,697
29,573 units, Vanguard
Explorer Fund ** 1,784
228,806 units Vanguard
Total Bond Market Index Fund ** 2,929
34,882 units, Vanguard
Extended Market Index Fund ** 805
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296,597
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American Express* 43,037,361 units, American Express
Income Fund ** 43,037
Warburg Pincus 524,599 units, Credit Suisse
Warburg Pincus Value II ** 7,024
Tosco Corporation
Capital
Accumulation Plan* Loans to Plan Participants
at 7 percent to 10 percent - 7,583
- -----------------------------------------------------------------------------
$458,588
=============================================================================
*Party-in-interest
**Historical cost information is not required for participant-directed
investments.
14
Exhibit 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 on Form S-4, Post-Effective Amendment No. 1,
File No. 333-55932) pertaining to the Tosco Corporation Capital
Accumulation Plan and in the related Prospectus of our report
dated June 19, 2002, with respect to the financial statements and
schedule of the Tosco Corporation Capital Accumulation Plan
included in this Annual Report (Form 11-K) for the year ended
December 31, 2001.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 19, 2002
Exhibit 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 to the Form S-4, Post-Effective
Amendment No. 1 (Registration No. 333-55932) of the Tosco
Corporation Capital Accumulation Plan and in the related
Prospectus of our report dated June 19, 2002, relating to the
financial statement of the Tosco Corporation Capital Accumulation
Plan at December 31, 2000, which appears in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
June 19, 2002