RULE NO. 424(b)(5)
REGISTRATION NO. 33-51559
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 17, 1993
$300,000,000
PHILLIPS PETROLEUM COMPANY
7.125% DEBENTURES DUE MARCH 15, 2028
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Interest on the Debentures is payable semiannually on March 15 and September
15, beginning September 15, 1998. The Debentures will be redeemable on not
less than 30 nor more than 60 days' notice at the option of the Company, as a
whole or in part, at any time from March 15, 2008 to and including March 14,
2009 at 102.700%, at decreasing prices thereafter to and including March 14,
2018, and thereafter at 100%. The Debentures are general unsecured obligations
of the Company. The Debentures will be issued only in registered form in
denominations of $1,000 and integral multiples thereof.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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INITIAL PUBLIC
OFFERING UNDERWRITING PROCEEDS TO
PRICE(1) DISCOUNT(2) COMPANY(1)(3)
-------------- ------------ -------------
Per Debenture..................... 98.274% 0.875% 97.339%
Total............................. $294,822,000 $2,625,000 $292,197,000
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(1) Plus accrued interest, if any, from March 20, 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting estimated expenses payable by the Company of $279,000.
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The Debentures offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
Debentures will be ready for delivery in New York, New York, on or about March
20, 1998, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
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The date of this Prospectus Supplement is March 17, 1998.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1997, which has previously been filed by the Company with the Commission, is
incorporated by reference in this Prospectus.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the
date of this Prospectus Supplement and prior to the termination of the
offering of the Debentures shall be deemed to be incorporated by reference in
this Prospectus Supplement and to be a part hereof from the date of filing of
such documents. Any statement contained in this Prospectus Supplement or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus
Supplement to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus Supplement.
The Company will provide without charge to each person to whom a copy of
this Prospectus Supplement has been delivered, upon the written or oral
request of such person, a copy of any or all of the documents referred to
above which have been or may be incorporated by reference herein (other than
exhibits to such documents unless such exhibits are specifically incorporated
by reference in such documents). Requests for such copies should be directed
to Dale J. Billam, Secretary, Phillips Petroleum Company, 1234 Adams Building,
Bartlesville, Oklahoma 74004 (telephone (918) 661-5638).
S-2
USE OF PROCEEDS
The net proceeds from the sale of the Debentures may be used for the
reduction of outstanding short-term debt or for general corporate purposes.
Pending application for specific purposes, the net proceeds may be invested in
short-term marketable securities.
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
YEAR ENDED DECEMBER 31
------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Ratio of earnings to fixed charges............... 5.4 6.9 3.4 3.2 2.3
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income before income taxes and extraordinary items, plus
fixed charges (excluding capitalized interest and the portion of the preferred
dividend requirements of a subsidiary not previously deducted from pretax
income, but including amortization of amounts previously capitalized), less
equity in undistributed earnings of companies owned less than 50 percent.
Fixed charges consist of interest (including capitalized interest) on all
indebtedness, amortization of debt discount and expense, that portion of
rental expense which the Company believes to be representative of interest and
the amounts accrued to cover the preferred stock dividend requirements of a
subsidiary and capital trusts.
DESCRIPTION OF DEBENTURES
The Debentures are limited to $300,000,000 in aggregate principal amount.
The Debentures are to be issued under an Indenture dated as of September 15,
1990, as supplemented by Supplemental Indenture No. 1 dated May 23, 1991 (as
so supplemented hereinafter referred to as the "Indenture"), between the
Company and First Trust National Association (as successor to Continental
Bank, National Association), as Trustee (hereinafter referred to as the
"Trustee"). The following description of the particular terms of the
Debentures offered hereby supplements the description of the general terms and
provisions of the Securities under "Description of Securities" in the
accompanying Prospectus dated December 17, 1993.
Interest on the Debentures will accrue from March 20, 1998, and will be
payable semiannually on each March 15 and September 15, commencing September
15, 1998, to the persons in whose names the Debentures are registered at the
close of business on the March 1 or September 1 prior to the payment date at
the annual rate set forth on the cover page of this Prospectus Supplement.
Principal of and interest on the Debentures will be payable, and the
Debentures may be presented for transfer and exchange, at the corporate trust
office or agency of the Trustee in New York, New York, or Chicago, Illinois.
Payment of interest may also be made by check mailed to the registered
holders, at the option of the Company.
Neither the Indenture nor the Debentures contains covenants or other
provisions to afford protection to the holders of the Debentures in the event
of a recapitalization, holding company merger, or other transaction (leveraged
or otherwise) with the Company, its management or affiliates, except to the
limited extent described under "Description of Securities--Limitation on
Mergers and Sales of Assets" in the accompanying Prospectus dated December 17,
1993.
S-3
REDEMPTION
The Debentures may be redeemed upon not less than 30 nor more than 60 days'
notice, at the option of the Company, as a whole or in part, at any time on or
after March 15, 2008, at the following redemption prices (expressed in
percentages of principal amount), if redeemed during the 12-month period
beginning March 15:
YEAR PERCENTAGE
---- ----------
2008 102.700%
2009 102.430
2010 102.160
2011 101.890
2012 101.620
2013 101.350
2014 101.080
2015 100.810
2016 100.540
2017 100.270
YEAR PERCENTAGE
---- ----------
2018 100.000%
2019 100.000
2020 100.000
2021 100.000
2022 100.000
2023 100.000
2024 100.000
2025 100.000
2026 100.000
2027 100.000
S-4
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the Underwriters named below, and
each of the Underwriters has severally agreed to purchase, the principal
amount of Debentures set forth opposite its name below.
PRINCIPAL
AMOUNT OF
UNDERWRITER DEBENTURES
----------- ------------
Goldman, Sachs & Co.......................................... $ 60,000,000
Credit Suisse First Boston Corporation....................... 60,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........... 60,000,000
J.P. Morgan Securities Inc................................... 60,000,000
Morgan Stanley & Co. Incorporated............................ 60,000,000
------------
Total...................................................... $300,000,000
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Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Debentures, if any
are taken.
The Underwriters propose to offer the Debentures in part directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus and in part to certain securities dealers at such price less a
concession of 0.500% of the principal amount of the Debentures. The
Underwriters may allow, and such dealers may reallow, a concession not to
exceed 0.250% of the principal amount of the Debentures to certain brokers and
dealers. After the Debentures are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Underwriters.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
In connection with the offering, the Underwriters may purchase and sell the
Debentures in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover short positions created by
the Underwriters in connection with the offering. Stabilizing transactions
consist of certain bids or purchases for the purpose of preventing or
retarding a decline in the market price of the Debentures and short positions
created by the Underwriters involve the sale by the Underwriters of a greater
number of Debentures than they are required to purchase from the Company in
the offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to broker-dealers in respect of the securities sold in the
offering may be reclaimed by the Underwriters if such Debentures are
repurchased by the Underwriters in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Debentures, which may be higher than the price that might otherwise prevail in
the open market; and these activities, if commenced, may be discontinued at
any time. These transactions may be effected in the over-the-counter market or
otherwise.
The Company is considering, but has not yet determined, whether it will
apply for listing of the Debentures on a national securities exchange. The
Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Debentures, but that they are not obligated to do so and
may discontinue to make a market at any time without notice. No assurance can
be given as to the liquidity of the trading markets for the Debentures.
S-5
$500,000,000
PHILLIPS PETROLEUM COMPANY
DEBT SECURITIES
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Phillips Petroleum Company (the "Company"), directly, through agents
designated from time to time, or through dealers or underwriters also to be
designated, may sell from time to time up to $500,000,000 aggregate principal
amount of its debt securities (the "Securities"), on terms to be determined at
the time of sale. The Securities will be general unsecured obligations of the
Company. The specific designation, aggregate principal amount, maturity, rate
and time of payment of interest, purchase price, any terms for redemption, any
other specific terms of the Securities, and the agent, dealer or underwriter,
if any, in connection with the sale of the Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement ("Prospectus Supplement"). The Company reserves the sole right to
accept and, together with its agents from time to time, to reject in whole or
in part any proposed purchase of Securities to be made directly or through
agents.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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If an agent of the Company or a dealer or underwriter is involved in the
sale of the Securities in respect of which this Prospectus is being delivered,
the agent's commission, dealer's purchase price, or underwriter's discount is
set forth in, or may be calculated from, the Prospectus Supplement and the net
proceeds to the Company from such sale will be the purchase price of such
Securities less such commission in the case of an agent, the purchase price of
such Securities in the case of a dealer or the public offering price less such
discount in the case of an underwriter, and less, in each case, the other
attributable issuance expenses. See "Plan of Distribution" for possible
indemnification arrangements for the agents, dealers and underwriters.
December 17, 1993
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY OR OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION IN SUCH JURISDICTION.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Kluczynski Federal Building, 230 South Dearborn Street, Chicago,
Illinois 60604; and 75 Park Place, New York, New York 10007. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, such material can be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005, and the Pacific Stock Exchange, Incorporated, 301 Pine Street, San
Francisco, California 94104, on which certain of the Company's securities are
listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1992, as amended by Amendment No. 1 thereto filed on Form 10-K/A and its
Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and
September 30, 1993, all of which have previously been filed by the Company
with the Commission, are incorporated by reference in this Prospectus.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing of such documents. Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document that also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents referred to above which have
been or may be incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents). Requests for such copies should be directed to Dale J.
Billam, Secretary, Phillips Petroleum Company, 1234 Adams Building,
Bartlesville, Oklahoma 74004 (telephone (918) 661-5638).
2
PHILLIPS PETROLEUM COMPANY
Phillips Petroleum Company, incorporated in Delaware in 1917, is a fully
integrated oil company engaged in petroleum exploration and production on a
worldwide basis, petroleum refining and marketing, and natural gas gathering
and processing, principally in the United States. Phillips also produces and
distributes chemicals worldwide. Its principal executive offices are located
in the Phillips Building, Bartlesville, Oklahoma 74004 (telephone (918) 661-
6600).
The words "Company" and "Phillips" as used in this Prospectus refer to
Phillips Petroleum Company or Phillips Petroleum Company and its consolidated
subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
NINE MONTHS
ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
-------------- ------------------------
1993 1992 1992 1991 1990 1989 1988
------ ------ ---- ---- ---- ---- ----
Ratio of earnings to fixed charges....... 2.7 1.9 2.1 2.0 2.8 1.9 2.5
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income before income taxes, extraordinary items and
cumulative effect of change in accounting principle, plus fixed charges
(excluding capitalized interest and the portion of the preferred dividend
requirements of a subsidiary not previously deducted from pretax income, but
including amortization of amounts previously capitalized), less equity in
undistributed earnings of companies owned less than 50 percent. Fixed charges
consist of interest (including capitalized interest) on all indebtedness,
amortization of debt discount and expense, that portion of rental expense
which the Company believes to be representative of interest and the amounts
accrued to cover the preferred stock dividend requirements of a subsidiary. A
statement setting forth the computation of the unaudited ratios of earnings to
fixed charges is filed as an exhibit to the Registration Statement of which
this Prospectus is a part.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be used for general
corporate purposes, which may include repayment of debt, working capital and
capital expenditures. Pending application for specific purposes, the net
proceeds may be invested in short-term marketable securities.
DESCRIPTION OF SECURITIES
The Securities offered hereby will be issued under an Indenture dated as of
September 15, 1990, as supplemented by Supplemental Indenture No. 1 dated as
of May 23, 1991 (as so supplemented, hereinafter referred to as the
"Indenture") between the Company and Continental Bank, National Association,
as Trustee (hereinafter referred to as the "Trustee"). The following
statements are subject to the detailed provisions of the Indenture, a copy of
which is incorporated by reference in the Registration Statement. Wherever
references are made to particular provisions of the Indenture, such provisions
are incorporated by reference as a part of the statements made and such
statements are qualified in their entirety by such reference. Certain defined
terms are capitalized. References in italics are to the Indenture.
GENERAL
The Indenture does not limit the amount of Securities which may be issued
thereunder. The Prospectus Supplement sets forth the following terms of the
Securities in respect of which this
3
Prospectus is delivered: (1) the designation of such Securities; (2) the
aggregate principal amount of such Securities; (3) the percentage of their
principal amount at which such Securities will be issued; (4) the date or
dates on which such Securities will mature; (5) the rate or rates, if any, per
annum, at which such Securities will bear interest, or the method of
determination of such rate or rates; (6) the times at which such interest, if
any, will be payable; (7) provisions for a sinking purchase or other analogous
fund, if any; (8) the date or dates, if any, after which such Securities may
be redeemed at the option of the Company or the holder and the redemption
price or prices; and (9) any other specific terms of the Securities.
Principal, premium, if any, and interest, if any, will be payable, and the
Securities offered hereby will be transferable, at the corporate trust office
of the Trustee in New York, New York, or Chicago, Illinois, provided that
payment of interest, if any, may be made at the option of the Company by check
mailed to the address of the person entitled thereto as it appears in the
Security Register. (Section 3.01)
If a Prospectus Supplement specifies that a series of Securities is
denominated in a currency or currency unit other than United States dollars,
such Prospectus Supplement shall also specify the denomination in which such
Securities will be issued and the coin or currency in which the principal,
premium, if any, and interest, if any, on such Securities will be payable,
which may be United States dollars based upon the exchange rate for such other
currency or currency unit existing on or about the time a payment is due.
The Securities will be unsecured and will rank pari passu with all other
unsecured and unsubordinated indebtedness of the Company.
The Securities offered hereby will be issued only in fully registered form
without coupons and, unless otherwise specified in the Prospectus Supplement,
in denominations of $1,000 and multiples of $1,000. (Section 2.05) Securities
may be issued hereunder in book-entry form, without certificates. Any such
issue will be described in the Prospectus Supplement relating to such
Securities. No service charge will be made for any transfer or exchange of the
Securities, but the Company or the Trustee may require payment of a sum
sufficient to cover any tax or other government charge payable in connection
therewith. (Section 2.07)
The Indenture contains no covenants or other provisions to afford protection
to holders of the Securities in the event of a highly leveraged transaction or
a change in control of the Company, except to the limited extent described
under "Limitation on Mergers and Sales of Assets" below.
CERTAIN COVENANTS OF THE COMPANY
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, incur, issue, assume or guarantee any indebtedness
for borrowed money secured by a mortgage, pledge or other lien ("Mortgage") on
any Restricted Property, or on any shares of stock or indebtedness of a
Restricted Subsidiary, without providing that the Securities shall be secured
equally and ratably with (or prior to) such secured indebtedness, unless after
giving effect thereto the aggregate amount of all such indebtedness so secured
(other than indebtedness secured by excepted Mortgages referred to in the
following sentence), together with all Attributable Debt of the Company and
its Restricted Subsidiaries in respect of sale and leaseback transactions
involving Restricted Property, except sale and leaseback transactions, the
proceeds of which are applied to the retirement of funded debt, would not
exceed 10 percent of Consolidated Adjusted Net Assets as shown on the
Company's latest audited consolidated financial statements. This restriction
will not apply to (a) Mortgages on property of, or on any shares of stock or
indebtedness of, any corporation existing at the time such corporation becomes
a Subsidiary, (b) Mortgages on property existing at the time of acquisition
thereof (including acquisition through merger or consolidation) or to secure
the payment of all or any part of the purchase price or construction cost
thereof or to secure any indebtedness incurred prior to, at the time of, or
within six months after such acquisition or completion of such property for
the purpose of
4
financing all or any part of the purchase price or construction cost thereof,
(c) Mortgages on substantially unimproved property to secure the cost of
exploration, drilling or development of, or improvements to, such property,
and (d) Mortgages in favor of the Company or a Restricted Subsidiary, and will
not apply to any extension, renewal or replacement of any Mortgage referred to
in the foregoing clauses (a) through (d), inclusive. The following types of
transactions are not deemed to create indebtedness secured by Mortgage: (a)
the sale or transfer of crude oil, natural gas or natural gas liquids in place
for a period of time until, or in an amount such that, the purchaser will
realize therefrom a specified amount of money or of such oil, gas or gas
liquids, or any other interest in property commonly referred to as a
"production payment," and (b) the Mortgage of any property of the Company or
any Subsidiary in favor of governmental bodies to secure partial, progress,
advance or other payments to the Company or any Subsidiary pursuant to any
contract or statute, or the Mortgage of any property to secure indebtedness of
the pollution control or industrial revenue bond type. (Section 3.05)
Limitation on Sales and Leasebacks. Neither the Company nor any Restricted
Subsidiary may enter into any sale and leaseback transaction involving any
Restricted Property which has been owned or operated by the Company or such
Restricted Subsidiary for more than six months unless (a) the Company or such
Restricted Subsidiary could mortgage such property in an amount equal to the
Attributable Debt with respect to the sale and leaseback transaction without
equally and ratably securing the Securities of each series, (b) since the date
of the Indenture and within a period commencing 12 months prior to the
consummation of the sale and leaseback transaction and ending 12 months after
the consummation of such sale and leaseback transaction, the Company or any
Restricted Subsidiary has expended or will expend for any Restricted Property
an amount equal to (i) the greater of (x) the net proceeds of such sale and
leaseback transaction and (y) the fair market value of the Restricted Property
so leased at the time of entering into such transaction, as determined by the
Board of Directors of the Company (the greater of the sums specified in
clauses (x) and (y) being referred to herein as the "Net Proceeds of such
transaction"), and the Company elects to designate such amount as satisfying
any obligation it would otherwise have under clause (c) hereof, or (ii) a part
of the Net Proceeds of such transaction and the Company elects to designate
such amount as satisfying part of the obligation it would otherwise have under
clause (c) hereof and applies an amount equal to the remainder of such Net
Proceeds as provided in clause (c) hereof, or (c) the Company, within 12
months of the consummation of any such sale and leaseback transaction, applies
an amount equal to the Net Proceeds of such transaction (less any amount
elected under clause (b) hereof) to the retirement of Funded Debt of the
Company ranking on a parity with the Securities of each series. This
restriction will not apply to certain sale and leaseback transactions (a)
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries, or (b) involving the taking back of a lease for a period of less
than three years. (Section 3.06)
Certain Definitions. "Attributable Debt" is defined to mean the total net
amount of rent (discounted at the rate per annum indicated in the Indenture)
required to be paid during the remaining term of any lease. (Section 1.01)
"Consolidated Adjusted Net Assets" is defined to mean the total amount of
assets after deducting therefrom (a) all current liabilities (excluding any
thereof which are by their terms extendible or renewable at the option of the
obligor thereon to a time more than 12 months after the time as of which the
amount thereof is being computed), and (b) total prepaid expenses and deferred
charges. (Section 1.01)
"Restricted Property" is defined to mean (a) any interest in property
located in the United States (including any interest in property located off
the coast of the United States operated pursuant to leases from any
governmental body) which is producing crude oil, natural gas or natural gas
liquids in paying quantities, or (b) any refining or manufacturing plant
located in the United States, except (i) related transportation or marketing
facilities, or (ii) any refining or manufacturing plant or portion
5
thereof which, in the opinion of the Board of Directors of the Company, is not
a principal plant in relation to the activities of the Company and its
Restricted Subsidiaries as a whole. (Section 1.01)
"Restricted Subsidiary" is defined to mean any Subsidiary which owns a
Restricted Property if substantially all of the tangible property in which
such Subsidiary has an interest is (a) located in the United States, or (b) is
located off the coast of the United States and is operated pursuant to leases
from any governmental body. (Section 1.01) The Company currently has no
Restricted Subsidiaries.
"Subsidiary" is defined to mean a corporation, a majority of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. (Section 1.01)
LIMITATION ON MERGERS AND SALES OF ASSETS
The Company shall not consolidate with, or merge into, any corporation or
convey or transfer its properties and assets substantially as an entirety to
any Person unless the successor entity shall be a corporation organized under
the laws of the United States or any State or the District of Columbia and
shall expressly assume the obligations of the Company under the Indenture.
(Section 10.01) If, upon any such consolidation, merger, conveyance or
transfer of the Company with or into any Person or of any Restricted
Subsidiary with or to any other Subsidiary, any Restricted Property of the
Company or of any Restricted Subsidiary or any shares of stock or indebtedness
of any Restricted Subsidiary would thereupon become subject to any Mortgage
(other than a Mortgage permitted under the limitation on liens described
above, without the Company's having to secure the Securities equally and
ratably), the Company will secure the Securities (together with, if the
Company shall so determine, other securities ranking on a parity with the
Securities) prior to all liens other than any theretofore existing. (Section
10.03)
EVENTS OF DEFAULT, WAIVER, AND NOTICE
As to each series of Securities, an Event of Default is defined in the
Indenture as being: default for 30 days in payment of any interest on the
Securities of that series; default in payment of principal and premium, if
any, on the Securities of that series when due either at maturity, upon
redemption, by declaration or otherwise; default by the Company in the
performance of any other of the covenants or agreements in the Indenture which
shall not have been remedied for a period of 90 days after notice; and certain
events of bankruptcy, insolvency, and reorganization of the Company. (Section
5.01) The Indenture provides that the Trustee may withhold notice to the
Securityholders of any default (except in payment of principal or of interest
or premium on the Securities) if the Trustee considers it in the interest of
Securityholders to do so. (Section 5.08)
The Indenture provides that, (a) if an Event of Default due to the default
in the payment of principal, interest or premium, if any, on any series of
Securities shall have occurred and be continuing, either the Trustee or the
holders of 25 percent in principal amount of the Securities of all series
affected thereby then outstanding may declare the principal of all such
Securities to be due and payable immediately, and (b) if an Event of Default
resulting from default in the performance of any other of the covenants or
agreements in the Indenture or certain events of bankruptcy, insolvency and
reorganization of the Company, either the Trustee or the holders of 25 percent
in principal amount of all Securities then outstanding (treated as one class)
may declare the principal of all Securities to be due and payable immediately,
but upon certain conditions such declarations may be annulled and past
defaults may be waived (except defaults in payment of principal of or interest
or premium on the Securities) by the holders of a majority in principal amount
of the Securities of such series (or of all series, as the case may be) then
outstanding. (Section 5.01)
The holders of a majority in principal amount of the Securities of any and
all series affected and then outstanding shall have the right to direct the
time, method and place of conducting any
6
proceeding for any remedy available to the Trustee under the Indenture,
provided that the Securityholders shall have offered to the Trustee reasonable
indemnity against expenses and liabilities. (Sections 5.07 and 5.04) The
Indenture requires the annual filing by the Company with the Trustee of a
certificate as to the absence of certain defaults under the Indenture.
(Section 3.07)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66 2/3 percent in principal
amount of the Securities of all series affected by such modification at the
time outstanding, to modify the Indenture or any supplemental indenture or the
rights of the holders of the Securities; provided that no such modification
shall (i) extend the fixed maturity of any Security, or reduce the principal
amount thereof (including in the case of a discounted Security the amount
payable thereon in the event of acceleration or the amount provable in
bankruptcy) or any redemption premium thereon, or reduce the rate or extend
the time of payment of interest thereon, or make the principal of, or interest
or premium on, the Securities payable in any coin or currency other than that
provided in the Securities, or impair or affect the right of any
Securityholder to institute suit for the payment thereof or the right of
prepayment, if any, at the option of the holder, without the consent of the
holder of each Security so affected, or (ii) reduce the aforesaid percentage
of Securities the consent of the holders of which is required for any such
modification without the consent of the holders of each Security affected.
(Section 9.02)
DEFEASANCE
The Indenture provides that the Company, at the Company's option: (a) will
be Discharged from any and all obligations in respect of the Securities of a
series (except for certain obligations to register the transfer or exchange of
Securities, replace stolen, lost or mutilated Securities, maintain paying
agencies and hold moneys for payment in trust) or (b) need not comply with
certain restrictive covenants of the Indenture (including those described
under "Particular Covenants of the Company"), in each case if the Company
deposits, in trust with the Trustee or the Defeasance Agent, money or U.S.
Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money, in an
amount sufficient to pay all the principal (including any mandatory sinking
fund payments) of, and interest and premium, if any, on, the Securities of
such series on the dates such payments are due in accordance with the terms of
such Securities. To exercise any such option, the Company is required to
deliver to the Trustee and the Defeasance Agent, if any, an opinion of counsel
to the effect that (i) the deposit and related defeasance would not cause the
holders of the Securities of such series to recognize income, gain or loss for
federal income tax purposes and, in the case of a Discharge pursuant to clause
(a), such opinion shall be accompanied by a private letter ruling to the
effect received from the United States Internal Revenue Service or a revenue
ruling pertaining to a comparable form of transaction to the effect published
by the United States Internal Revenue Service, and (ii) if listed on any
national securities exchange, such Securities would not be delisted from such
exchange as a result of the exercise of such option. (Section 11.05)
THE TRUSTEE
The Company may have normal banking relationships with the Trustee in the
ordinary course of business.
7
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby in any of, or any
combination of, the following ways: (i) directly to purchasers, (ii) through
agents, (iii) through underwriters, and (iv) through dealers.
Offers to purchase Securities may be solicited directly by the Company or by
agents designated by the Company from time to time. Any such agent, who may be
deemed to be an underwriter as that term is defined in the Securities Act of
1933, involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be
acting in a best efforts basis for the period of its appointment (ordinarily
five business days or less). Agents, dealers and underwriters may be customers
of, engage in transactions with, or perform services for the Company in the
ordinary course of business.
If an underwriter or underwriters are utilized in the sale, the Company will
execute an underwriting agreement with such underwriters at the time of sale
to them and the names of the underwriters and the terms of the transaction
will be set forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Securities in respect of which this
Prospectus is delivered to the public.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale. The
name of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement.
Agents, underwriters, and dealers may be entitled under the relevant
agreements to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act of 1933.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the accompanying Prospectus
Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities in respect of which this
Prospectus is being delivered will be passed on for the Company by Robert C.
Koch, Esq., an attorney employed by the Company in the position of Senior
Counsel, and for the underwriters and certain other purchasers by Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017. As of November 30,
1993, Mr. Koch beneficially owned 3,455 shares of the Company's common stock.
EXPERTS
The consolidated financial statements and schedules of Phillips Petroleum
Company appearing or incorporated by reference in its Annual Report on Form
10-K for the year ended December 31, 1992, as amended, have been audited by
Ernst & Young, independent auditors, as set forth in their reports thereon
appearing or incorporated therein and incorporated herein by reference. Such
consolidated financial statements and schedules are, and audited financial
statements to be included in subsequently filed documents will be,
incorporated herein in reliance upon the reports of Ernst & Young pertaining
to such financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given upon the authority of such firm as
experts in accounting and auditing.
8
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PRO-
SPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CRE-
ATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COM-
PANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Incorporation of Certain Documents by Reference............................ S-2
Use of Proceeds............................................................ S-3
Ratio of Earnings to Fixed Charges......................................... S-3
Description of Debentures.................................................. S-3
Underwriting............................................................... S-5
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Phillips Petroleum Company................................................. 3
Ratio of Earnings to Fixed Charges......................................... 3
Use of Proceeds............................................................ 3
Description of Securities.................................................. 3
Plan of Distribution....................................................... 8
Legal Opinions............................................................. 8
Experts.................................................................... 8
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$300,000,000
PHILLIPS PETROLEUM
COMPANY
7.125% DEBENTURES DUE MARCH 15, 2028
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PROSPECTUS SUPPLEMENT
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GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
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