Exhibit 99(e)
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 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 STORE SAVINGS 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 Store Savings 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 Store Savings Plan Committee has duly
caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
TOSCO CORPORATION
STORE SAVINGS PLAN
/s/ Rand C. Berney
----------------------------
Rand C. Berney
Member
Tosco Corporation
Store Savings Plan Committee
June 19, 2002
1
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Index To Financial Statements Tosco Corporation
And Schedule Store Savings 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 ............. 12
2
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Report Of Independent Auditors
The Store Savings Plan Committee
Tosco Corporation Store Savings Plan
We have audited the accompanying statement of net assets available
for benefits of the Tosco Corporation Store Savings 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 Store Savings 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 Store Savings 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 Store Savings
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 Store Savings Plan
Thousands of Dollars
--------------------
2001 2000
At December 31 --------------------
Assets
Investments
Merrill Lynch Retirement
Preservation Trust $15,656 15,257
Income Fund of America 5,130 5,042
Davis New York Venture Fund 6,217 8,017
American New Perspective Fund 3,157 3,461
Phillips Petroleum Company
common stock 1,457 -
Tosco Corporation common stock - 753
Loans to Plan participants 2,141 2,236
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33,758 34,766
Cash 38 19
Contributions Receivable - 170
Interest and Dividends Receivable 31 30
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Total Assets 33,827 34,985
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Net Assets Available for Benefits $33,827 34,985
=================================================================
See Notes to Financial Statements.
5
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Statement Of Changes In Net Tosco Corporation
Assets Available For Benefits Store Savings Plan
Thousands
of Dollars
Year Ended December 31, 2001 ----------
Additions
Contributions
Participants $ 2,192
Rollovers 44
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2,236
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Investment Income
Interest and dividend income 1,504
Interest on participant loans 163
Net depreciation in fair value
of investments (959)
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708
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Total 2,944
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Deductions
Distributions to
Participants or Their
Beneficiaries 4,098
Administrative Expense 4
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Total 4,102
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Net Change (1,158)
Net Assets Available for Benefits
Beginning of Year 34,985
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End of Year $33,827
=================================================================
See Notes to Financial Statements.
6
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Notes To Financial Statements Tosco Corporation
Store Savings Plan
Note 1--Plan Description
The following description of the Tosco Corporation Store Savings
Plan (the Plan) provides only general information. Participants
should refer to the Plan Documents for a more complete
description of the Plan's provisions.
General
The Plan was established in 1985 as the Circle K Kash Plus Plan
and has been amended and restated at various times since its
formation. Effective January 1, 1998, the Plan was amended to
change its name to the Tosco Corporation Store Savings Plan. The
Plan is a defined contribution, 401(k) profit sharing plan,
covering substantially all of the full-time store employees of
Tosco Marketing Company, a division of Tosco Corporation
(Sponsor), who have reached the age of 18 and completed one
continuous year of employment with the Sponsor. On September 14,
2001, Tosco Corporation (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. 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 Merrill Lynch Trust
Company (Merrill Lynch). Merrill Lynch is also maintaining the
individual participant account records and serving as custodian
for the Plan's investments. The Plan is administered by the
Store Savings 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.
Contributions
Participants may contribute between 1 and 12 percent of their
eligible compensation (up to $170,000 in 2001) to the Plan.
Effective January 1, 1998, the Plan was amended so that no future
Sponsor matching contributions would be made. 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.
7
Participant Accounts
Each participant's account is credited with the participant's
contribution and Plan earnings, and charged with an allocation of
investment expenses. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from
the participant's vested account.
Vesting
Participants are fully vested in their entire account balance.
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 origination date. A loan from the
Plan will be made for up to 50 percent of the participant's
account balance and 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. Participant loans are
collateralized by the participants' vested account balances. The
maturity on these loans cannot exceed five years.
Distributions
Benefits under the Plan are payable upon reaching normal
retirement, early retirement, termination, or in the event of
death or disability. All distributions from the Plan are made in
one lump sum. 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.
Administration Fees
All Plan investment management fees are paid from the investment
earnings of the individual investment funds. All other
administration fees are paid by the Plan or the Sponsor. Fees
paid by the Sponsor 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.
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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
schedules. Actual results could differ from those estimates and
assumptions.
Reclassification
Certain amounts in the 2000 financial statements have been
reclassified to conform to 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 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
prices. The Merrill Lynch Retirement Preservation Trust is a
collective investment of assets. The assets in this fund include
investment contracts, money market instruments, and U.S.
government agency obligations. Investment contracts are valued
at contract value. Money market instruments and U.S. government
agency obligations are valued at amortized cost. Participant
loans are valued at cost, which approximates fair value.
Purchases and sales of investments are recorded on a trade date
basis.
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
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Income Fund of America $ (64)
Davis New York Venture Fund (911)
American New Perspective Fund (337)
Phillips Petroleum Company common stock 38
Tosco Corporation common stock 315
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$(959)
=================================================================
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Note 4--Tax Status
The Internal Revenue Service (IRS) determined on April 15, 1996,
that the Plan, as amended through December 28, 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 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.
Note 6--Party-In-Interest Transactions
Certain investments of the Plan are in shares of mutual funds
managed by Merrill Lynch. As Merrill Lynch is the Plan's
trustee, these transactions qualify as party-in-interest
transactions. 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 2001, administrative expenses related to the Plan totaling
$86,282 were paid by the Sponsor from available forfeitures.
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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 $33,827 34,985
Amounts allocated to withdrawing
participants at December 31 (13) (270)
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Net assets available for benefits
as reported in the Form 5500 $33,814 34,715
=================================================================
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 $4,098
Amount allocated to withdrawing participants
at December 31, 2001 13
Amount allocated to withdrawing
participants at December 31, 2000 (270)
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Distributions to participants as reported
in the Form 5500 $3,841
=================================================================
Note 8--Subsequent Events
Effective January 1, 2002, the Plan was amended to increase the
maximum participant contribution percentage from 12 percent to
20 percent.
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.
11
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Schedule of Assets (Held at End of Year) Tosco Corporation
Schedule H, Line 4i Store Savings 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, 24,181 shares ** $ 1,457
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Merrill Lynch* Retirement Preservation Trust ** 15,656
15,655,632 shares
American Funds Income Fund of America ** 5,130
324,274 shares
Davis Funds Davis New York Venture Fund ** 6,217
244,468 shares
American Funds New Perspective Fund ** 3,157
145,556 shares
Tosco Corporation Loans to Plan participants
Store Savings at 6 percent to
Plan* 10.08 percent ** 2,141
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$33,758
=============================================================================
*Party-in-interest
**Historical cost information is not required for participant-directed
investments.
12
Exhibit 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 on Forms S-4, Post-Effective Amendment No. 2,
File No. 333-55932) pertaining to the Tosco Corporation Store
Savings 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 Store Savings 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. 2 (Registration No. 333-55932) of the Tosco
Corporation Store Savings Plan and in the related Prospectus of
our report dated June 19, 2002, relating to the financial
statement of the Tosco Corporation Store Savings Plan at
December 31, 2000, which appears in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
June 19, 2002